Janus | Equity Funds
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1998 Annual Report
Janus Fund Janus Olympus Fund
Janus Balanced Fund Janus Overseas Fund
Janus Enterprise Fund Janus Special Situations Fund
Janus Equity Income Fund Janus Twenty Fund
Janus Growth and Income Fund Janus Venture Fund
Janus Mercury Fund Janus Worldwide Fund
[LOGO] JANUS
<PAGE>
Janus | Equity Funds
Table of Contents
To Our Shareholders ........................................ 1
Portfolio Manager's Commentary and Schedule of Investments
Janus Fund .............................................. 2
Janus Balanced Fund ..................................... 6
Janus Enterprise Fund ................................... 10
Janus Equity Income Fund ................................ 13
Janus Growth and Income Fund ............................ 17
Janus Mercury Fund ...................................... 22
Janus Olympus Fund ...................................... 26
Janus Overseas Fund ..................................... 30
Janus Special Situations Fund ........................... 36
Janus Twenty Fund ....................................... 39
Janus Venture Fund ...................................... 42
Janus Worldwide Fund .................................... 46
Statements of Operations ................................... 52
Statements of Assets and Liabilities ....................... 54
Statements of Changes in Net Assets ........................ 56
Financial Highlights ....................................... 59
Notes to Schedules of Investments .......................... 65
Notes to Financial Statements .............................. 67
Explanations of Charts and Tables .......................... 70
Report of Independent Accountants .......................... 73
Euro-Conversion Discussion ................................. 73
Year 2000 Discussion ....................................... 73
[LOGO] JANUS
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To Our | Shareholders
[PHOTO]
Tom Bailey
chairman
Throughout the first half of the fiscal year, low interest rates and benign
inflation continued to fuel economic expansion both in the U.S. and in Europe,
creating a healthy environment for corporate fundamentals. As production
capacity surged and unemployment dropped, equities in these markets advanced
considerably, with many reaching all-time highs.
Asia, however, was an altogether different story. Fears surrounding the
Continent's economic malaise subsided early in the period but resurfaced when
Japan slipped into a recession at midyear. Nonetheless, the Japanese government
continued to react somewhat impassively toward getting its economy back on
track, raising concerns about corporate profits, which then heightened global
volatility.
In August, other developing economies began to "catch" the Asian flu. Russia was
one of the first to be affected, and its financial breakdown created fear of
further turmoil in Brazil, Argentina and other emerging markets. Stocks
worldwide declined sharply on these negative developments, regardless of a
company's size or strength.
Leading these downturns were financial services companies with exposure to
developing countries. This created somewhat of a liquidity shortage in the U.S.
banking system and, as large parts of the credit markets began to dry up, the
likelihood of a credit crunch increased. While the tightness in credit markets
became severe, it was relieved by the strong action of the Federal Reserve to
reduce interest rates. When the Fed unexpectedly cut rates a second time, people
believed Fed Chairman Alan Greenspan was willing to do whatever it took to ease
credit problems.
Meanwhile, the domestic economy remained relatively favorable with consumer
spending strong, housing investments proceeding at a healthy clip, and virtually
no sign of inflation. In fact, near the end of the period, the U.S. stock market
regained some of its lost ground, and the earlier flight to the highest-quality,
most liquid investments became less pronounced.
Looking ahead, I believe the eight-year growth spurt our economy has enjoyed
will slow in tandem with economies worldwide. But, as our portfolio managers
will tell you in their letters, even in a slow-growth environment, there are
always companies out there that can perform well. Finding them is the
challenging part. Although my outlook for corporate earnings is generally less
positive, I'm confident our time-tested stock-picking approach will continue to
lead us to dominant franchise leaders that can grow their earnings, regardless
of economic movements.
In conclusion, I'd like to thank you again for your continued investment in
Janus funds.
/s/ Tom
Tom Bailey
Janus Equity Funds / October 31, 1998 1
<PAGE>
Janus | Fund
[PHOTO]
James P. Craig
portfolio manager
Janus Fund finished the 12-month period ended October 31, 1998, with a return of
15.12% compared to the S&P 500 Index, which gained 22.01%.(1) Despite
underperforming its index, the Fund earned a first-quartile ranking, placing
44th out of 240 capital appreciation funds tracked by Lipper Analytical
Services, Inc., a mutual fund rating company.(2)
During the first six months of the year, low interest rates, benign inflation
and steady corporate earnings propelled the stock market to new heights.
Throughout this period, I continued to increase the Fund's focus on companies
with sustainable earnings growth, believing the days of easy gains from
excessive P/E-multiple expansion were numbered. As it turned out, those days
ended during the latter part of the period when fallout from the Asian economic
crisis began to spread globally. The markets retreated following downward
revisions in earnings estimates for companies with exposure to emerging markets.
In addition, the collapse of Russia's economy and Brazil's subsequent currency
slide heightened concerns for countries dependent on foreign capital. These
events also created panic in the markets as investors began to indiscriminately
sell stocks based on the fear that emerging market breakdowns would ultimately
drag the U.S. into a recession.
However, I stayed focused through this nervousness and stuck to my guns,
investing only in strong franchises I believe can grow earnings across a variety
of economic conditions. In fact, stock sell-offs sparked by global concerns
actually presented some great buying opportunities. As a result, I increased our
positions in companies that are somewhat less sensitive to economic events, as
well as high-growth industries undergoing dynamic changes, including technology,
pharmaceutical and cable companies.
Throughout most of the period, steady PC sales and explosive Internet growth
drove selected technology stocks, with Dell Computer, Cisco Systems and
Microsoft posting solid gains for the Fund. We remain optimistic about prospects
for these companies based on their solid business models, rapid product
development and high earnings growth - characteristics that have thus far
enabled them to successfully manage the effects of economic turmoil.
The Fund's pharmaceutical stocks also held up well. Several of these companies
benefited from breakthroughs in drug therapies. Sales for Viagra, Pfizer's male
impotence treatment, were brisk upon its introduction. And Warner-Lambert's
Lipitor, a cholesterol-lowering drug, and Rezulin, a treatment for diabetes,
both gained considerable market share throughout the year.
After a relatively flat first half, our cable stocks rallied on news of
Tele-Communications, Inc.'s (TCI's) acquisition by AT&T. This merger helped
validate our theory about the cable industry: that new, value-added services
such as telephony, data and video-on-demand (all offered through existing
operating platforms) will generate significant addi-
Portfolio Profile October 31, 1998 October 31, 1997
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Equities 91.8% 97.4%
Foreign 4.6% 18.6%
European 2.9% 17.6%
Top 10 Equities (% of Assets) 44.4% 25.9%
Number of Stocks 55 110
Cash & Cash Equivalents 8.2% 2.6%
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Top 5 Industries October 31, 1998 October 31, 1997
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Cable Television 14.6% 3.0%
Medical - Drugs 10.3% 8.4%
Multimedia 7.8% 1.1%
Computer Software 6.1% 6.4%
Diversified Operations 5.8% 9.8%
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Top 10 Equity Holdings October 31, 1998 October 31, 1997
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Microsoft Corp. 6.0% 2.6%
Cisco Systems, Inc. 5.7% 2.6%
Time Warner, Inc. 5.5% 0.8%
Comcast Corp. - Special Class A 5.4% 0.6%
Tyco International, Ltd. 4.2% 1.9%
Tele-Communications, Inc. - Class A 3.9% 2.3%
Warner-Lambert Co. 3.6% 2.5%
Pfizer, Inc. 3.6% 2.2%
MediaOne Group, Inc. 3.5% --
Bank of New York Co., Inc. 3.0% 1.8%
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(1) All returns include reinvested dividends.
(2) A capital appreciation fund is defined as one that "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, 1998, Janus Fund
ranked 28/96 of capital appreciation funds for the 5-year period and 5/55
for the 10-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.
2 Janus Equity Funds / October 31, 1998
<PAGE>
tional cash flow, which can be used to enhance shareholder value for these
companies. I believe our positions in TCI, Time Warner, Comcast and MediaOne
Group all stand to benefit.
Of course, the Fund was not without disappointments. Oil prices collapsed during
the first half of the year, and I liquidated our holdings in the oil services
industry at cost. Our financial services stocks were also bruised, primarily
because of loans and hedge fund investments in struggling emerging market
economies. These included BankAmerica and UBS, both of which were eliminated
from the Fund at a loss.
Another stock that took an especially hard hit was Parametric Technology, a
software developer in computer-aided design and manufacturing. Parametric's
earnings fell short of estimates as management lost sight of its core business
during the introduction of a new product. We ended up liquidating the position
at a loss.
Looking ahead, I don't believe a recession is in our immediate future. I do,
however, anticipate a slowdown in economic growth. The combination of slower
growth and moderate inflation should keep long-term interest rates low. In this
less exuberant environment, I believe companies that can meet or exceed earnings
estimates will be rewarded. These are precisely the type of companies I plan to
stay focused on.
Thank you for investing in Janus Fund.
Performance Overview
[Graphic Omitted]
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 shaded area
of green. The S&P 500 Index is represented by a solid 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, 1998. The lower
right quadrant reflects the ending value of the hypothetical investment in Janus
Fund ($882,493) as compared to the S&P 500 Index ($373,122).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 15.12%
Five Year, 16.08%
Ten Year, 17.93%
Since 2/5/70*, 16.85%
Janus Fund - $882,493
S&P 500 Index - $373,122
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
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Common Stock - 91.7%
Advertising Sales - 0.2%
2,335,560 Outdoor Systems, Inc.* ................. $ 51,528,292
Agricultural Biotechnology - 1.5%
7,748,760 Monsanto Co. ........................... 314,793,375
Automotive - Truck Parts and Equipment - 1.2%
4,475,635 Federal-Mogul Corp.# ................... 242,523,472
Broadcast Services and Programming - 1.1%
5,779,000 Tele-Communications Liberty Media
Group, Inc. - Class A* ................. 219,963,188
Cable Television - 14.6%
22,659,300 Comcast Corp. - Special Class A# ....... 1,118,802,938
7,006,694 Cox Communications, Inc. - Class A* 384,492,333
17,108,785 MediaOne Group, Inc.* .................. 723,915,465
19,198,931 Tele-Communications, Inc. - Class A* ... 808,754,968
3,035,965,704
Chemicals - Diversified - 0.2%
2,068,700 Solutia, Inc. .......................... 45,382,106
Chemicals - Speciality - 0.4%
3,420,725 Cytec Industries, Inc.*,# ............ 82,097,400
Circuits - 4.3%
7,677,715 Linear Technology Corp.# ............... 457,783,757
12,256,900 Maxim Integrated Products, Inc.*,# ..... 437,418,119
895,201,876
Commercial Banks - 1.2%
3,221,610 Star Banc Corp. ........................ $ 243,634,256
Computer Software - 6.0%
11,834,980 Microsoft Corp.* ....................... 1,253,028,508
Computers - Integrated Systems - 2.0%
19,355,625 Cadence Design Systems, Inc.*,# ........ 413,726,484
Computers - Memory Devices - 1.4%
3,822,660 EMC Corp.* ............................. 246,083,737
678,620 VERITAS Software Corp.* ................ 34,015,827
280,099,564
Computers - Micro - 2.5%
7,774,550 Dell Computer Corp.* ................... 510,204,844
Consulting Services - 0.2%
1,852,940 Gartner Group, Inc. - Class A*,# ....... 36,827,183
Cruise Lines - 1.2%
6,854,215 Carnival Corp. ......................... 221,905,211
878,305 Royal Caribbean Cruises, Ltd. .......... 24,482,752
246,387,963
Diversified Operations - 5.8%
3,867,200 General Electric Co. ................... 338,380,000
14,039,940 Tyco International, Ltd. ............... 869,598,784
1,207,978,784
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 3
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Janus | Fund
Shares or Principal Amount Market Value
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Drug Delivery Systems - 0.7%
3,187,500 ALZA Corp.* ............................ $ 152,601,562
Electronic Components - Semiconductors - 1.8%
5,862,135 Texas Instruments, Inc. ................ 374,810,257
Finance - Consumer Loans - 0.9%
5,335,003 Household International, Inc. .......... 195,061,047
Finance - Investment Bankers/Brokers - 2.0%
8,500,937 Charles Schwab Corp. ................... 407,513,667
Finance - Other Services - 1.7%
6,726,127 Newcourt Credit Group, Inc. ............ 219,136,839
3,987,078 Newcourt Credit Group, Inc. ............
- New York Shares ...................... 131,075,189
350,212,028
Human Resources - 0.9%
4,642,573 Robert Half International, Inc.*,# ..... 186,283,242
Life and Health Insurance - 0%
3,349 Schweizerische Lebensversicherungs-und
Rentenanstalt .......................... 2,015,693
Medical - Drugs - 10.3%
2,465,705 Merck & Co., Inc. ...................... 333,486,601
6,895,345 Pfizer, Inc. ........................... 739,956,710
1,192,000 Pharmacia & Upjohn, Inc. ............... 63,101,500
2,481,465 Schering-Plough Corp. .................. 255,280,712
9,580,850 Warner-Lambert Co. ..................... 750,899,119
2,142,724,642
Medical - Wholesale Drug Distributors - 0.1%
195,885 McKesson Corp. ......................... 15,083,145
Medical Instruments - 0.5%
1,620,000 Medtronics, Inc. ....................... 105,300,000
Money Center Banks - 3.0%
19,547,530 Bank of New York Co., Inc. ............. 616,968,916
Multimedia - 7.8%
12,113,600 CBS Corp. .............................. 338,423,700
3,691,905 Meredith Corp.# ........................ 136,600,485
12,205,281 Time Warner, Inc. ...................... 1,132,802,643
1,607,826,828
Networking Products - 5.7%
18,741,400 Cisco Systems, Inc.* ................... 1,180,708,200
Pharmacy Services - 0.4%
2,466,720 Omnicare, Inc. ......................... 85,256,010
Publishing - Periodicals - 2.8%
2,961,781 Wolters Kluwer N.V.**,# ................ 574,062,939
Radio - 2.8%
8,455,000 Chancellor Media Corp.*,# .............. 324,460,625
5,636,078 Clear Channel Communications, Inc.* .... 256,793,804
581,254,429
Retail - Building Products - 0.3%
1,545,085 Home Depot, Inc. ....................... 67,211,197
Retail - Discount - 2.2%
7,995,475 Costco Companies, Inc.* ................ 453,743,206
Retail - Regional Department Stores - 0.8%
3,120,000 Fred Meyer, Inc.* ...................... 166,335,000
Super-Regional Banks - 0.7%
2,076,795 Northern Trust Corp. ................... 153,163,631
Telecommunication Equipment - 0.1%
133,740 Nokia Oyj (ADR) - Class A .............. 12,446,179
Telephone - Long Distance - 1.8%
6,668,725 MCI WorldCom, Inc.* .................... $ 368,447,056
Television - 0.6%
4,217,889 Univision Communications, Inc. - Class A*,# 124,427,726
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Total Common Stock (cost $13,388,064,805) ................. 19,002,799,599
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Preferred Stock - 0.1%
Computer Software - 0.1%
33,593 SAP A.G. (cost $20,092,291) ............ 16,368,752
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Money Market - 1.9%
$400,000,000 Janus Government Money Market Fund
5.31% (cost $400,000,000) ............ 400,000,000
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Repurchase Agreements - 0.1%
18,300,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$18,308,723 collateralized by
$9,161,471 in Fannie Mae, 0%-13.00%,
11/1/98- 9/25/28; $8,365,907 in
Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $18,921 in Sallie
Mae, 4.947%, 11/10/98; $14,786,653 in
Government National Mortgage
Association, 4.50%-10.50%,
6/15/13-9/20/28; $341,176 in Federal
Farm Credit, 5.63%-8.16%, 9/5/00-
10/7/09; $1,367,543 in Federal Home
Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $103,306 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$6,436,782, $6,400,315, $19,144,
$10,583,630, $374,630, $1,395,394,
and $4,533 (cost $18,300,000) ........ 18,300,000
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Short-Term Corporate Notes - 3.1%
Associates Corp. N.A.
400,000,000 5.69%, 11/2/98 ....................... 399,936,778
Deutsche Bank A.G.
50,000,000 5.28%, 11/13/98 ...................... 49,912,000
UBS Financial, Inc.
200,000,000 5.32%, 11/6/98 ....................... 199,852,083
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Total Short-Term Corporate Notes
(amortized cost $649,700,861) .......... 649,700,861
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Time Deposit - 1.7%
Sun Trust Bank EDT
350,000,000 5.50%, 11/2/98 (cost $350,000,000) ... 350,000,000
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U.S. Government Agencies - 1.0%
Fannie Mae
100,000,000 5.10%, 11/20/98 ...................... 99,730,833
Federal Home Loan Bank System:
50,000,000 4.75%, 12/18/98 ...................... 49,689,931
50,000,000 4.76%, 1/29/99 ....................... 49,409,500
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Total U.S. Government Agencies (cost $198,832,375) ........ 198,830,264
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Total Investments (total cost $15,024,990,332) - 99.6% .... 20,635,999,476
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Cash, Receivables and Other Assets, net of Liabilities - 0 4% 85,262,440
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Net Assets - 100% ......................................... $20,721,261,916
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See Notes to Schedules of Investments.
4 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
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Canada 1.7% $ 350,212,028
Finland 0.1% 12,446,179
Germany 0.1% 16,368,752
Netherlands 2.8% 574,062,939
Switzerland -- 2,015,693
United States++ 95.3% 19,680,893,885
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Total 100.0% $ 20,635,999,476
++Includes Short-Term Securities (87.5% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
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Dutch Guilder 11/19/98 450,000,000 $ 241,468,126 ($ 15,904,216)
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Total $ 241,468,126 ($ 15,904,216)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 5
<PAGE>
Janus | Balanced Fund
[PHOTO]
Blaine P. Rollins
portfolio manager
For the fiscal year ended October 31, 1998, Janus Balanced Fund returned 15.48%
while the Standard & Poor's 500 Index gained 22.01% and the Lehman Brothers
Government/Corporate Bond Index gained 10.28%.(1) I'm pleased to report that the
Fund placed 35th out of 395 balanced funds (top 9%) ranked by Lipper Analytical
Services, Inc., a mutual fund rating company.(2)
While the past year has been a difficult one for many investors, the Janus
research team has excelled at uncovering the best investment opportunities
available for the Fund. Without the team's tireless efforts, including countless
hours and miles on the road researching our companies - their managements,
competitors, suppliers and customers - the gains we've achieved simply would not
have been possible.
Despite increased market volatility and a slowing economy late in the period, my
investment strategy remained focused. The Fund, as always, is constructed on a
bottom-up basis, security by security, and includes equities, convertible
stocks, as well as fixed-income instruments of the best companies we can find.
Characteristics we look for in our companies include top-line growth, strong
earnings growth potential, improving returns on capital, growing free cash flow
generation, and managements that reinvest their cash back into their companies.
Looking back, we had many successes during the year, particularly among cable
companies. Janus' exceptional work in this area allowed us to get in early on
some great ones, such as Time Warner (via the Houston Industries convertible
preferred stock), Comcast, Tele-Communications, Inc. and MediaOne Group. It has
become clearer during the past year that the value-added revenue streams of
digital cable, cable telephony and cable Internet modem services are likely to
accelerate the free cash flow generation of these companies. As a result, our
common stocks and convertible stocks in this area have become big winners for
the Fund.
We were also able to find investments in smaller, privately held cable operators
through high-yield fixed-income investments. Not only can the rising cash flow
streams of these operators help them repay debt more quickly, but the increasing
values of all cable assets should also enable them to access the equity markets
and become investment grade rated sooner than expected.
When many companies in the S&P 500 Index began to confront earnings difficulties
and investors focused only on those with the strongest earnings streams,
pharmaceutical stocks benefited. Our investments in Warner-Lambert and Pfizer
performed extremely well (up 66% and 53%, respectively, for the year) as several
of their high-profile treatments took center stage and drove earnings growth to
among the highest in the industry.
My pick for CEO of the year, John Chambers, continued to lead Cisco Systems on
its torrid pace of developing the best hardware for the networking industry.
Under Mr. Chambers' leadership, Cisco grew its revenues 31% and earnings 33% in
the 12 months ended July 31, 1998. The news should only get better as the voice,
video and data markets continue to converge, boosting demand for the equipment
necessary to carry out these functions.
Portfolio Profile October 31, 1998 October 31, 1997
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Equities 36.9% 51.9%
Fixed-Income Securities
U.S. Treasury Notes 9.9% 18.2%
Investment-Grade
Corporate Bonds 7.2% 6.3%
High-Yield/High-Risk
Corporate Bonds 19.7% 8.0%
Foreign Corporate Bonds -- 1.4%
Preferred Stock 17.4% 10.6%
Top 10 Equities/Preferred
(% of Assets) 29.6% 16.6%
Number of Stocks 47 87
Cash & Cash Equivalents 8.9% 3.6%
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Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Cable Television 18.4% 4.2%
Electric - Integrated 6.7% --
Cruise Lines 5.5% 4.4%
Computer - Micro 4.7% 1.5%
Radio 4.7% --
- --------------------------------------------------------------------------------
Top 10 Equity/Preferred Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Houston Industries, Inc., convertible, 7.00% 6.7% 2.3%
Dell Computer Corp. 3.7% 0.8%
Royal Caribbean Cruises, Ltd.,
convertible, 7.25% 3.4% 2.1%
Comcast Corp. - Special Class A 3.3% --
MediaOne Group, Inc., convertible, 4.50% 3.2% --
TCI Pacific Communications, convertible, 5.00% 2.6% 1.9%
Microsoft Corp. 1.9% 1.0%
Charles Schwab Corp. 1.7% 1.1%
Cisco Systems, Inc. 1.6% 1.0%
Chancellor Media Corp., convertible, $3.00 1.5% --
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends.
(2) A balanced fund is defined by Lipper as "a fund whose primary objective is
to conserve principal by maintaining at all times a balanced fund of both
stocks and bonds. Typically the stock/bond ratio ranges around 60%/40%." As
of October 31, 1998, Janus Balanced Fund ranked 9/150 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.
6 Janus Equity Funds / October 31, 1998
<PAGE>
On the traditional fixed-income side, a concentrated weighting in intermediate
maturity U.S. Treasury and corporate bonds also helped our performance. The Fund
benefited from the fall in the U.S. Treasury 10-year yield, which dropped from
5.8% to 4.6%. With low growth in world economies, nonexistent inflationary
pressures and the U.S. government now running the budget at a surplus, interest
rates could head lower, further lifting the prices of our 7-10 year bonds.
Amid the successes, there were also disappointments. Our financial stocks,
namely Household International and BankAmerica, were hurt by credit issues
related to economic pressures in emerging markets. Earnings at Parametric
Technology fell short of expectations when a new product introduction shifted
management's attention away from its core business. And despite threats of a
global economic slowdown late in the period which punished our holdings in Royal
Caribbean Cruises and Carnival Corporation, business fundamentals appear firmly
in place for both. Increasingly affordable cruise vacations continue to take
share from land-based vacations. As newer, more profitable ships are added to
their fleets, we look for these companies' margins, returns on capital and cash
flow generation to improve.
I could go on, but I'll sum it all up by saying 1998 was a great year for many
of our companies, and I expect many others to exceed our own high projections in
1999.
Thank you for your continued investment in Janus Balanced Fund.
Performance Overview
[Graphic Omitted]
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 shaded
area of green. The S&P 500 Index is represented by a solid black line. The
Lehman Brothers Government/Corporate Bond Index is represented by a solid gray
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,
1998. The lower right quadrant reflects the ending value of the hypothetical
investment in Janus Balanced Fund, ($25,319) as compared to the S&P 500 Index
($30,629) and the Lehman Brothers Government/Corporate Bond Index ($15,890).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 15.48%
Five Year, 15.35%
Since 9/1/92*, 16.26%
Janus Balanced Fund - $25,319
S&P 500 Index - $30,629
Lehman Brothers Gov't
Corp. Bond Index - $15,890
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 36.9%
Airlines - 0.3%
88,325 Ryanair Holdings PLC (ADR)* ............ $ 2,594,547
Cable Television - 3.3%
553,041 Comcast Corp. - Special Class A ........ 27,306,399
Chemicals - Diversified - 0.5%
186,625 Solutia, Inc. .......................... 4,094,086
Circuits - 2.7%
160,730 Linear Technology Corp. ................ 9,583,526
295,190 Maxim Integrated Products, Inc.* ....... 10,534,593
95,225 SIPEX Corp.* ........................... 2,642,494
22,760,613
Commercial Banks - 1.4%
5,930 M & T Bank Corp. ....................... 2,956,105
68,825 Star Banc Corp. ........................ 5,204,891
51,075 U.S. Trust Corp. ....................... 3,252,839
11,413,835
Computer Software - 2.7%
151,270 Microsoft Corp.* ....................... 16,015,711
155,050 Wind River Systems, Inc.* .............. 6,793,128
22,808,839
Computers - Integrated Systems - 0.5%
198,745 Cadence Design Systems, Inc.* .......... 4,248,174
Computers - Micro - 3.7%
469,190 Dell Computer Corp.* ................... $ 30,790,594
Cruise Lines - 1.7%
185,335 Carnival Corp. ......................... 6,000,221
272,775 Royal Caribbean Cruises, Ltd. .......... 7,603,603
157,905 Royal Olympic Cruise Lines, Inc.* ...... 572,406
14,176,230
Electric Components - Semiconductors - 0.6%
76,150 Texas Instruments, Inc. ................ 4,868,841
Electronic Safety Devices - 0.1%
40,450 Pittway Corp. - Class A ................ 927,822
Finance - Investment Bankers/Brokers - 1.7%
300,160 Charles Schwab Corp. ................... 14,388,920
Finance - Other Services - 1.3%
71,815 HealthCare Financial Partners, Inc.* ... 2,199,334
138,850 Newcourt Credit Group, Inc. ............ 4,523,725
136,645 Newcourt Credit Group, Inc. ............
- New York Shares ...................... 4,492,204
11,215,263
Human Resources - 1.5%
222,687 Robert Half International, Inc.* ....... 8,935,316
179,420 Romac International, Inc.* ............. 3,139,850
12,075,166
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 7
<PAGE>
Janus | Balanced Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Instruments - Scientific - 1.2%
379,795 Dionex Corp.* .......................... $ 10,112,042
Medical - Drugs - 2.8%
79,775 American Home Products Corp. ........... 3,889,031
50,100 Pfizer, Inc. ........................... 5,376,356
38,270 Schering-Plough Corp. .................. 3,937,026
128,475 Warner-Lambert Co. ..................... 10,069,228
23,271,641
Medical Instruments - 0.6%
76,690 Medtronics, Inc. ....................... 4,984,850
Money Center Banks - 1.4%
378,665 Bank of New York Co., Inc. ............. 11,951,614
Multimedia - 1.0%
230,360 Meredith Corp. ......................... 8,523,320
Music/Clubs - 0.3%
103,320 Steinway Musical Instruments, Inc.* .... 2,279,498
Networking Products - 1.6%
210,075 Cisco Systems, Inc.* ................... 13,234,725
Optical Supplies - 0.4%
59,600 Allergan, Inc. ......................... 3,721,275
Radio - 0.5%
92,440 Heftel Broadcasting Corp. - Class A* ... 3,801,595
Retail - Discount - 1.0%
139,175 Costco Companies, Inc.* ................ 7,898,181
Retail - Regional Department Stores - 1.1%
165,440 Fred Meyer, Inc.* ...................... 8,820,020
Schools - 0.3%
83,880 Apollo Group, Inc. - Class A* .......... 2,694,645
Super-Regional Banks - 0.6%
62,975 Northern Trust Corp. ................... 4,644,406
Telecommunication Equipment - 1.0%
89,295 Nokia Oyj (ADR) - Class A .............. 8,310,016
Television - 1.1%
301,417 Univision Communications, Inc. - Class A* 8,891,802
- --------------------------------------------------------------------------------
Total Common Stock (cost $247,432,586) .................... 306,808,959
- --------------------------------------------------------------------------------
Corporate Bonds - 26.9%
Advertising Services - 0.4%
$ 3,050,000 AKI, Inc., 10.50%
senior notes, due 7/1/08+ ............ 2,897,500
Brewery - 0.8%
6,350,000 Anheuser Busch Co., 5.65%
notes, due 9/15/08 ................... 6,461,125
Cable Television - 9.3%
Adelphia Communications Corp.:
10,295,000 9.25%, senior notes, due 10/1/02 ..... 10,545,168
9,380,000 8.375%, senior notes, due 2/1/08 ..... 9,356,550
6,260,000 Classic Cable, Inc., 9.875%
senior subordinated notes, due 8/1/08+ 6,306,950
11,000,000 Falcon Holdings Group L.P., 8.375%
debentures, due 4/15/10 .............. 10,890,000
6,000,000 FrontierVision, 11.00%
senior subordinated notes, due 10/15/06 6,630,000
Cable Television - continued
$ 8,015,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 $ 8,616,125
11,805,000 Jones Intercable, Inc., 7.625%
senior notes, due 4/15/08 ............ 11,923,050
4,000,000 Lenfest Communications, Inc., 7.625%
senior notes, due 2/15/08 ............ 4,000,000
6,000,000 Mediacom L.L.C., 8.50%
senior notes, due 4/15/08 ............ 5,940,000
2,635,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 2,832,625
77,040,468
Casino Hotels - 0.4%
Station Casinos, Inc.:
1,786,000 9.625%, senior subordinated notes,
due 6/1/03 ........................... 1,772,605
1,759,000 10.125%, senior subordinated notes,
due 3/15/06 .......................... 1,745,807
3,518,412
Computer Software - 1.2%
6,857,000 Aspen Technology, Inc., 5.25%
subordinated debenture, due 6/15/05+ . 3,454,214
6,000,000 Wind River Systems, Inc., 5.00%
convertible subordinated notes,
due 8/1/02 ........................... 6,427,500
9,881,714
Computers - Mainframe - 0.5%
4,000,000 IBM Corp., 6.375%
notes, due 6/15/00 ................... 4,090,000
Computers - Memory Devices - 0.8%
5,000,000 Veritas Software Corp., 5.25%
convertible subordinated notes,
due 11/1/04 .......................... 6,856,250
Computers - Micro - 1.0%
8,175,000 Dell Computer Corp., 6.55%
senior notes, due 4/15/08 ............ 8,369,156
Cosmetics and Toiletries - 0.7%
6,000,000 Procter and Gamble Co., 5.25%
notes, due 9/15/03 ................... 6,082,500
Cruise Lines - 0.4%
Royal Caribbean Cruises, Ltd.:
2,050,000 7.00%, senior notes, due 10/15/07 .... 2,103,813
1,100,000 6.75%, senior notes, due 3/15/08 ..... 1,104,125
3,207,938
Distribution and Wholesale - 0.6%
5,000,000 Aviation Sales Co., 8.125%
company guaranteed notes, due 2/15/08 4,550,000
Drug Delivery Systems - 0.6%
3,765,000 ALZA Corp., 5.00%
convertible subordinated debentures,
due 5/1/06 ........................... 5,068,631
Food - Canned - 0.7%
5,500,000 Campbell Soup Co., 4.75%
notes, due 10/1/03 ................... 5,465,625
See Notes to Schedules of Investments.
8 Janus Equity Funds / October 31, 1998
<PAGE>
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Hotels and Motels - 0.3%
$ 2,706,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 $ 2,678,940
Internet - Software - 0.6%
2,070,000 America Online, Inc., 4.00%
convertible subordinated notes,
due 11/15/02 ......................... 5,195,700
Medical - Nursing Home - 0.2%
1,623,000 HMH Properties, Inc., 7.875%
company guaranteed notes, due 8/1/08 . 1,570,253
Multimedia - 1.8%
8,000,000 Time Warner, Inc., 8.11%
notes, due 8/15/06 ................... 9,030,000
Walt Disney Co. (The):
3,400,000 6.375%, senior notes, due 3/30/01 .... 3,514,750
2,500,000 6.75%, senior notes, due 3/30/06 ..... 2,696,875
15,241,625
Radio - 2.7%
5,500,000 Chancellor Media Corp., 8.125%
senior subordinated notes, due 12/15/07 5,211,250
22,500,000 Jacor Communications, Inc., zero coupon
convertible senior notes, due 6/12/11 16,987,500
22,198,750
Retail - Building Products - 0.7%
3,100,000 Home Depot, Inc., 3.25%
convertible subordinated notes,
due 10/1/01 .......................... 5,901,625
Retail - Music Store - 0.6%
5,102,000 MTS, Inc., 9.375%
senior subordinated notes, due 5/1/05 4,566,290
Retail - Regional Department Stores - 0.6%
5,000,000 Fred Meyer, Inc., 7.45%
company guaranteed notes, due 3/1/08 . 5,237,500
Telecommunication Services - 2.0%
15,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 ............. 14,137,500
2,410,000 Qwest Communications International, Inc.,
10.875%, senior notes, due 4/1/07 .... 2,786,563
16,924,063
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $223,288,971) ................. 223,004,065
- --------------------------------------------------------------------------------
Preferred Stock - 17.4%
Cable Television - 5.8%
306,365 MediaOne Group, Inc., convertible, 4.50% 26,596,312
97,019 TCI Pacific Communications,
convertible, 5.00% ................... 21,344,180
47,940,492
Cruise Lines - 3.4%
322,253 Royal Caribbean Cruises, Ltd.,
convertible, 7.25% ................... 28,499,250
Electric - Integrated - 6.7%
684,075 Houston Industries, Inc., convertible, 7.00% 55,452,830
Radio - 1.5%
163,570 Chancellor Media Corp., convertible, $3 00 12,410,874
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $127,539,473) ................. 144,303,446
- --------------------------------------------------------------------------------
U.S. Government Obligations - 9.9%
U.S. Treasury Notes:
$ 2,000,000 6.625%, due 4/30/02 .................. $ 2,142,000
9,000,000 6.625%, due 5/15/07 .................. 10,214,280
23,275,000 6.125%, due 8/15/07 .................. 25,693,505
41,000,000 5.625%, due 5/15/08 .................. 44,154,950
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $76,247,255) ...... 82,204,735
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 6.2%
Ford Motor Credit Corp.
20,000,000 5.06%, 11/6/98 ....................... 19,985,944
Household Finance Corp.
31,600,000 5.72%, 11/2/98 ....................... 31,594,979
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $51,580,923) ............................ 51,580,923
- --------------------------------------------------------------------------------
U.S. Government Agency - 1.8%
Federal Home Loan Bank System
15,000,000 4.81%, due 1/27/99 (cost $14,825,638) 14,826,900
- --------------------------------------------------------------------------------
Total Investments (total cost $740,914,846) - 99.1% ....... 822,729,028
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.9% 7,320,411
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 830,049,439
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 1.1% $ 9,015,929
Finland 1.0% 8,310,016
Ireland 0.3% 2,594,547
United States++ 97.6% 802,808,536
- --------------------------------------------------------------------------------
Total 100.0% $ 822,729,028
++ Includes Short-Term Securities (89.5% excluding Short-Term Securities)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 9
<PAGE>
Janus | Enterprise Fund
{PHOTO]
James P. Goff
portfolio manager
For the fiscal year ended October 31, 1998, Janus Enterprise Fund returned
11.79% compared to a 6.71% gain posted by its benchmark, the S&P MidCap 400
Index.(1) These gains placed the Fund 14th out of 302 mid-cap funds tracked by
Lipper Analytical Services, Inc., a mutual fund rating company, earning it a
top-quartile ranking.(2)
During the period, small- and mid-cap stocks continued to linger in the shadows
of their larger counterparts. The liquidity and perceived safety offered by
large caps averted investors' attention from the fact that earnings growth among
smaller companies has, in recent quarters, outpaced that of the larger names.
However, investors' enthusiasm for all stocks was curbed late in the period as a
result of a slowdown in worldwide economic growth caused by the spread of the
"Asian Contagion." Effects from Asia's economic breakdown not only found their
way into Russia and Brazil, but were also felt throughout Europe and the U.S.
This global turmoil substantially compressed earnings growth for U.S. companies
of all shapes and sizes, particularly those with exposure to emerging economies.
Even so, my objective has always been to find companies that can write their own
script, where the economy and competitors are mere background noise. I believe
we've been successful on this front. As corporate profits across America
weakened, the earnings growth among our companies grew an average of 30%. That
said, we're particularly excited about opportunities in education and technology
- - areas that aided the Fund's performance.
A rise in compensation for college graduates versus high school graduates has
driven an increase in demand for college degrees among working adults, which in
turn boosted the earnings growth of several of our education stocks. One
standout was Apollo Group, which offers accredited degree programs to adult
students through subsidiaries such as the University of Phoenix. I believe
Apollo is uniquely positioned to gain from these positive trends, which should
continue to contribute to its strong earnings growth potential.
Turning to our technology holdings, several of our positions weathered a
negative environment, especially in the semiconductor industry. Vitesse
Semiconductor, the Fund's largest holding, appreciated thanks to the substantial
increase in demand from the telecommunications and data communications areas
that continue to be propelled by Internet traffic growth (currently doubling
every 100 days). We were also impressed with results posted by Veritas Software,
one of the Fund's newer technology positions and another beneficiary of Internet
growth. This company designs software to help manage and store data (a
flourishing business, considering the amount of data currently being generated).
In fact, more data have been stored in 1998 than in the previous five years
combined. Going forward, I believe Veritas should prosper as the demand for data
storage continues its dramatic rise.
The Fund's performance was also influenced by its substantial weighting in media
stocks, which
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 96.4% 98.3%
Foreign 10.2% 18.3%
Top 10 Equities (% of Assets) 48.6% 41.4%
Number of Stocks 43 79
Cash & Cash Equivalents 3.6% 1.7%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Radio 13.5% 5.5%
Schools 10.6% 2.9%
Circuits 8.5% 1.0%
Medical - Drugs 5.5% 0.3%
Retail - Restaurants 4.7% 7.8%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Vitesse Semiconductor Corp. 8.5% --
Apollo Group, Inc. - Class A 7.6% 2.9%
PizzaExpress PLC 4.7% 5.5%
Heftel Broadcasting
Corp. - Class A 4.3% 1.6%
VERITAS Software Corp. 4.3% --
Jacor Communications, Inc. 4.1% --
Paychex, Inc. 4.0% 3.4%
Sofamor Danek Group, Inc. 4.0% 2.0%
Omnicare, Inc. 3.9% 4.0%
HealthCare Financial Partners, Inc. 3.2% 0.3%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A mid-cap fund is defined by Lipper as "a fund that by prospectus or
portfolio practice invests primarily in companies with market
capitalizations less than $5 billion at the time of purchase." As of
October 31, 1998, Janus Enterprise Fund ranked 31/101 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.
10 Janus Equity Funds / October 31, 1998
<PAGE>
produced strong results in the first half before being somewhat restrained by
concerns of a potential economic recession late in the period. However, more so
than a strong economy, our companies are driven by the consolidation of this
industry, which benefits their revenues and expenses. Therefore, my outlook
remains positive for our positions in Chancellor Media, Univision
Communications, Jacor Communications, and Heftel Broadcasting.
In an attempt to make the Fund more recession proof, we liquidated several
disappointing cyclical or economically sensitive growth stocks, including
Fastenal, Littlefuse and Barnett. And despite impressive earnings growth,
Healthcare Financial Partners, a financing company for healthcare service
providers, declined on negative perceptions surrounding most financial-related
companies. Nonetheless, we remain impressed with its solid business fundamentals
and have, in fact, increased our position in the stock.
Despite the volatility that recently rocked the financial markets, I remind you
that interest rates and earnings are what ultimately drive stock prices. The
good news for stocks is that interest rates are low and trending lower. Even so,
it's critical that we continue to uncover names we believe can triumph during
good times and bad. As always, we're confident our dedication and intense
research will lead us to these companies.
Thank you for your investment in Janus Enterprise Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 400 MidCap Index is represented
by a solid 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, 1998. The lower right quadrant reflects the ending value of
the hypothetical investment in Janus Enterprise Fund ($27,275) as compared to
the S&P 400 MidCap Index ($26,014).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 11.79%
Five Year, 13.34%
Since 9/1/92*, 17.68%
Janus Enterprise Fund - $27,295
S&P MidCap 400 Index - $26,014
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 96.4%
Advertising Sales - 2.6%
215,210 HA-LO Industries, Inc.* ................ $ 6,079,682
393,145 Outdoor Systems, Inc.* ................. 8,673,762
14,753,444
Advertising Services - 1.4%
222,105 Snyder Communications, Inc.* ........... 7,926,372
Aerospace and Defense Equipment - 1.1%
185,425 Orbital Sciences Corp.* ................ 6,119,025
Airlines - 1.4%
261,866 Ryanair Holdings PLC (ADR)* ............ 7,692,314
Audio and Video Products - 2.0%
200,000 Gemstar International Group, Ltd.* ..... 10,925,000
Cable Television - 2.0%
139,940 Adelphia Communications Corp. - Class A* 5,265,242
105,605 Comcast Corp. - Special Class A ........ 5,214,247
16,670 TCA Cable TV, Inc. ..................... 461,551
10,941,040
Cellular Telecommunications - 1.3%
568,585 Crown Castle International Corp.* ...... 7,320,532
Circuits - 8.5%
1,476,925 Vitesse Semiconductor Corp.* ........... 47,630,831
Commercial Banks - 4.5%
8,825 M & T Bank Corp. ....................... $ 4,399,262
224,795 Star Banc Corp. ........................ 17,000,122
63,885 U.S. Trust Corp. ....................... 4,068,676
25,468,060
Computer Services - 4.0%
446,803 Paychex, Inc. .......................... 22,228,449
Computers - Integrated Systems - 0.5%
61,915 Equant N.V. - New York Shares* ......... 2,708,781
Computers - Memory Devices - 4.3%
475,955 VERITAS Software Corp.* ................ 23,857,244
Electric - Generation - 0.9%
128,170 AES Corp.* ............................. 5,246,959
Finance - Investment Bankers/Brokers - 1.3%
151,092 Charles Schwab Corp. ................... 7,242,973
Finance - Other Services - 3.2%
585,427 HealthCare Financial Partners, Inc.* ... 17,928,702
Human Resources - 1.4%
772,687 Capita Group PLC** ..................... 7,796,464
Internet Software - 3.3%
101,445 America Online, Inc.* .................. 12,889,855
131,345 Lycos, Inc.* ........................... 5,335,891
18,225,746
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 11
<PAGE>
Janus | Enterprise Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 5.5%
227,994 MedImmune, Inc.* ....................... $ 15,332,597
229,130 Sepracor, Inc.* ........................ 15,724,046
31,056,643
Medical - Generic Drugs - 1.0%
96,615 Watson Pharmaceuticals, Inc.* .......... 5,374,209
Medical Instruments - 4.0%
216,770 Sofamor Danek Group, Inc.* ............. 22,029,251
Music/Clubs - 1.4%
244,050 SFX Entertainment, Inc. - Class A* ..... 7,718,081
Networking Products - 1.1%
75,000 Broadcom Corp. - Class A* .............. 6,220,313
Pharmacy Services - 3.9%
634,835 Omnicare, Inc. ......................... 21,941,485
Radio - 13.5%
386,600 Chancellor Media Corp.* ................ 14,835,775
299,275 Clear Channel Communications, Inc.* .... 13,635,717
584,230 Heftel Broadcasting Corp. - Class A* ... 24,026,459
419,230 Jacor Communications, Inc.* ............ 23,057,650
75,555,601
Resorts and Theme Parks - 1.4%
349,195 Premier Parks, Inc.* ................... 7,747,764
Retail - Drug Store - 2.0%
243,595 CVS Corp. .............................. 11,129,247
Retail - Internet - 0.4%
20,210 Amazon.com, Inc.* ...................... 2,555,302
Retail - Pubs - 2.2%
3,653,369 J.D. Wetherspoon PLC** ................. 12,114,228
Retail - Restaurants - 4.7%
2,088,139 PizzaExpress PLC** ..................... 26,577,249
Schools - 10.6%
1,319,506 Apollo Group, Inc. - Class A* .......... 42,389,130
200,000 EduTrek International, Inc.* ........... 1,450,000
514,160 ITT Educational Services, Inc.* ........ 15,264,125
59,103,255
Television - 1.0%
186,635 Univision Communications, Inc. - Class A* 5,505,733
- --------------------------------------------------------------------------------
Total Common Stock (cost $417,346,125) .................... 538,640,297
- --------------------------------------------------------------------------------
Repurchase Agreement - 6.8%
$ 38,300,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$38,318,256 collateralized by
$19,174,007 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $17,508,975 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $39,588 in Sallie Mae,
4.947%, 11/10/98; $30,946,929 in
Government National Mortgage
Association, 4.50%- 10.50%,
6/15/13-9/20/28; $714,046 in Federal
Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $2,862,125 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $216,210 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$13,471,516, $13,395,194, $40,066,
$22,150,438, $784,062, $2,920,415,
and $9,486 (cost $38,300,000) ........ $ 38,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $455,646,125) - 103.2% ...... 576,940,297
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (3.2%) (17,940,956)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 558,999,341
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Ireland 1.4% $ 7,692,314
Netherlands 0.5% 2,708,781
United Kingdom 8.0% 46,487,941
United States++ 90.1% 520,051,261
- --------------------------------------------------------------------------------
Total 100.0% $ 576,940,297
++Includes Short-Term Securities (83.5% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 4/7/99 12,500,000 $20,765,000 $188,750
- --------------------------------------------------------------------------------
Total $20,765,000 $188,750
See Notes to Schedules of Investments.
12 Janus Equity Funds / October 31, 1998
<PAGE>
Janus | Equity Income Fund
[PHOTO]
Blaine P. Rollins
portfolio manager
For the fiscal year ended October 31, 1998, Janus Equity Income Fund returned
19.21%, while the Standard & Poor's 500 Index gained 22.01%.(1) Despite
underperforming its benchmark, the Fund achieved top-quartile performance,
ranking 10th out of 214 equity income funds tracked by Lipper Analytical
Services, Inc., a mutual fund rating company.(2)
While this has been a difficult year for many investors, our research team has
excelled at uncovering some of the best investment opportunities out there.
Without the team's tireless efforts, including spending a great deal of time on
the road researching companies (their managements, competitors, suppliers and
customers), the gains we achieved would not have been possible.
While the market's volatility and economic backdrop has changed in recent
months, my strategy for running the Fund has not. I am still focused on
achieving the highest returns possible with below-average volatility, while
investing 61% of the portfolio in income-producing securities. The Fund is
constructed on a bottom-up basis, security by security. It is my intent to
assemble a portfolio of the best companies I can find that have the following
attributes: top-line growth, strong earnings potential, improving returns on
capital, growing free cash flow, and managements that reinvest their cash back
into their companies.
Looking back on our successes during the year, we see many highlights,
particularly in the cable industry. Janus' exceptional work on cable enabled the
Fund to invest early in companies such as Time Warner (via the Houston
Industries convertible preferred stock), Comcast, Tele-Communications, Inc., and
MediaOne Group. Since investing in these companies, it has become clearer that
new value-added services including digital cable, telephony and Internet modem
services will likely accelerate their free cash flow.
Among my favorite cable stocks is Time Warner, a company that encapsulates many
of the attributes we look for in an ideal investment. To summarize Time Warner's
story in three quick terms: cable, content and cash flow. Not only is this
company positioned to benefit from rising cable valuations, but, more
importantly, from the increasing number of media distribution outlets and demand
for superior programming content. Few companies have either a better existing
library or lineup of current artists and creators than Time Warner. With its
cable and content hitting the fundamentals, Time Warner should begin to gush
free cash flow over the next three years, which it will likely use to increase
shareholder value by paying down debt and repurchasing stock.
Another highlight was Dell Computer, which continued to exceed all expectations,
posting a 227% gain for the 12-month period. Its direct model business of
desktop, laptop and server manufacturing has quickly set the standard for all
manufacturing industries. Because it manufactures and ships its products within
hours of taking orders over the Internet, phone or fax, Dell has very little raw
material or finished inventory needs and thus produces returns on capital
significantly above its competitors. In fact, for the last quarter reported,
Dell produced a return of $2.17 for every dollar of invested capital. This
incredible return on invested capital has allowed it to generate substantial
free cash flow and repurchase nearly 1.5% of its shares outstanding in each of
the last two quarters.
(continued on next page)
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 61.6% 87.6%
Fixed-Income Securities
Investment-Grade
Corporate Bonds 0.7% 0.8%
High-Yield/High-Risk
Corporate Bonds 9.5% --
Preferred Stock 21.6% 6.5%
Top 10 Equities/Preferred
(% of Assets) 40.7% 23.7%
Number of Stocks 42 111
Cash & Cash Equivalents 6.6% 5.1%
- --------------------------------------------------------------------------------
Top 5 Industries October 31,1998 October 31, 1997
- --------------------------------------------------------------------------------
Cable Television 15.1% 4.5%
Computer Software 7.4% 4.2%
Electric - Integrated 7.0% --
Cruise Lines 6.6% 3.8%
Radio 5.7% --
- --------------------------------------------------------------------------------
Top 10 Equity/Preferred Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Houston Industries, Inc., convertible, 7.00% 7.0% 2.0%
Dell Computer Corp. 5.0% 1.2%
Comcast Corp. - Special Class A 4.8% --
Bank of New York Co., Inc. 4.3% 0.6%
MediaOne Group, Inc., convertible, 4.50% 4.3% --
TCI Pacific Communications, convertible, 5.00% 4.0% 2.3%
Royal Caribbean Cruises, Ltd.,
convertible, 7.25% 3.7% 0.5%
Charles Schwab Corp. 2.6% 1.9%
Chancellor Media Corp., convertible, $3.00 2.6% --
Dionex Corp. 2.5% 3.1%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) 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, 1998 13
<PAGE>
Another area that did well for the Fund was pharmaceuticals. Beyond posting
solid gains during the period, our convertible bond position in Alza should
continue to appreciate following the release of Ditropan, its new urinary
incontinence drug. Ditropan has proven extremely effective in clinical trials
and will likely benefit from the growing acceptance of incontinence drugs.
Unfortunately, not all of our stocks met our expectations. Some of the Fund's
media positions were bruised by fears of a possible economic recession,
including Univision Communications, a Spanish TV broadcasting company, and
Heftel Broadcasting, a Spanish-language radio broadcaster. Hispanic advertising,
however, is growing at twice the rate of all ad spending. Therefore, our outlook
for these companies remains positive, and we continue to hold on to their
stocks.
Our cruise ship companies, Royal Caribbean Cruises and Carnival Corporation,
also declined on fears related to economic turbulence. Even so, the business
fundamentals for both companies remain strong. Going forward, we look for them
to benefit from the increasing popularity of cruise-based vacations, which
continue to take share away from land-based vacations as a result of the greater
affordability and higher customer satisfaction. Furthermore, the addition of
newer, more-profitable ships to these companies' fleets should improve margins,
returns on capital and cash flow generation.
While 1998 was a great year for many of our companies, I expect many others to
exceed our own high projections in 1999. As always, your continued investment in
Janus Equity Income Fund is greatly appreciated.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented by a
solid 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, 1998. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Equity Income Fund ($17,468) as compared to the
S&P 500 Index ($17,074).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 19.21%
Since 6/28/96*, 27.00%
Janus Equity Income Fund - $17,468
S&P 500 Index - $17,074
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 61.6%
Cable Television - 5.3%
31,045 Adelphia Communications Corp. - Class A* $ 1,168,068
193,509 Comcast Corp. - Special Class A ........ 9,554,507
10,722,575
Chemicals - Diversified - 0.7%
65,545 Solutia, Inc. .......................... 1,437,893
Circuits - 5.1%
72,685 Linear Technology Corp. ................ 4,333,843
133,490 Maxim Integrated Products, Inc.* ....... 4,763,924
43,095 SIPEX Corp.* ........................... 1,195,886
10,293,653
Commercial Banks - 3.0%
3,185 M & T Bank Corp. ....................... 1,587,723
30,150 Star Banc Corp. ........................ 2,280,094
33,405 U.S. Trust Corp. ....................... 2,127,481
5,995,298
Computer Software - 4.3%
45,705 Microsoft Corp.* ....................... 4,839,017
85,030 Wind River Systems, Inc.* .............. 3,725,377
8,564,394
Computers - Integrated Systems - 1.0%
94,075 Cadence Design Systems, Inc.* .......... $ 2,010,853
Computers - Micro - 5.0%
153,770 Dell Computer Corp.* ................... 10,091,156
Cruise Lines - 2.9%
122,955 Carnival Corp. ......................... 3,980,668
62,918 Royal Caribbean Cruises, Ltd. .......... 1,753,839
5,734,507
Electronic Components - Semiconductors - 1.0%
29,895 Texas Instruments, Inc. ................ 1,911,412
Finance - Investment Bankers/Brokers - 2.6%
110,735 Charles Schwab Corp. ................... 5,308,359
Finance - Other Services - 1.5%
57,280 Newcourt Credit Group, Inc. ............ 1,866,179
31,870 Newcourt Credit Group, Inc. ............
- New York Shares ...................... 1,047,726
2,913,905
Human Resources - 1.6%
78,722 Robert Half International, Inc.* ....... 3,158,720
Instruments - Scientific - 2.5%
187,315 Dionex Corp.* .......................... 4,987,262
See Notes to Schedules of Investments.
14 Janus Equity Funds / October 31, 1998
<PAGE>
Janus | Equity Income Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 5.3%
17,650 American Home Products Corp. ........... $ 860,437
24,515 Pfizer, Inc. ........................... 2,630,766
28,000 Schering-Plough Corp. .................. 2,880,500
54,800 Warner-Lambert Co. ..................... 4,294,950
10,666,653
Medical Instruments - 0.8%
24,915 Medtronics, Inc. ....................... 1,619,475
Money Center Banks - 4.3%
270,410 Bank of New York Co., Inc. ............. 8,534,816
Multimedia - 1.2%
66,825 Meredith Corp. ......................... 2,472,525
Networking Products - 2.2%
70,837 Cisco Systems, Inc.* ................... 4,462,731
Optical Supplies - 1.1%
34,025 Allergan, Inc. ......................... 2,124,436
Property and Casualty Insurance - 0.8%
48,735 Mutual Risk Management, Ltd. ........... 1,647,852
Radio - 1.7%
82,930 Heftel Broadcasting Corp. - Class A* ... 3,410,496
Retail - Discount - 2.4%
85,895 Costco Companies, Inc.* ................ 4,874,541
Retail - Regional Department Stores - 1.1%
41,392 Fred Meyer, Inc.* ...................... 2,206,711
Super-Regional Banks - 0.7%
18,715 Northern Trust Corp. ................... 1,380,231
Telecommunication Equipment - 1.4%
30,150 Nokia Oyj (ADR) - Class A .............. 2,805,834
Television - 2.1%
145,368 Univision Communications, Inc. - Class A* 4,288,356
- --------------------------------------------------------------------------------
Total Common Stock (cost $104,651,875) .................... 123,624,644
- --------------------------------------------------------------------------------
Corporate Bonds - 10.2%
Cable Television - 1.5%
$ 1,150,000 Adelphia Communications Corp., 8.375%
senior notes, due 2/1/08 ............. 1,147,125
1,865,000 Classic Cable, Inc., 9.875%
senior subordinated notes, due 8/1/08+ 1,878,988
3,026,113
Casino Hotels - 0.2%
Station Casinos, Inc.:
155,000 9.625%, senior subordinated notes,
due 6/1/03 ........................... 153,838
154,000 10.125%, senior subordinated notes,
due 3/15/06 .......................... 152,845
306,683
Computer - Memory Devices - 0.2%
250,000 Veritas Software Corp., 5.25%
convertible subordinated notes,
due 11/1/04 .......................... 342,813
Computer Software - 3.7%
4,647,000 Aspen Technology, Inc., 5.25%
subordinated debenture, due 6/15/05+ . 2,340,926
4,815,000 Wind River Systems, Inc., 5.00%
convertible subordinated notes,
due 8/1/02 ........................... 5,158,069
7,498,995
Drug Delivery Systems - 1.3%
$ 2,000,000 ALZA Corp., 5.00%
convertible subordinated debentures,
due 5/1/06 ........................... $ 2,692,500
Hotels and Motels - 0.1%
235,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 232,650
Internet Software - 1.0%
815,000 America Online, Inc., 4.00%, convertible
subordinated notes, due 11/15/02 ..... 2,045,650
Medical - Nursing Home - 0.1%
142,000 HMH Properties, Inc., 7.875%
company guaranteed notes, due 8/1/08 . 137,385
Radio - 1.4%
3,610,000 Jacor Communications, Inc., zero coupon
convertible senior notes, due 6/12/11 2,725,550
Retail - Building Products - 0.7%
725,000 Home Depot, Inc., 3.25%, convertible
subordinated notes, due 10/1/01 ...... 1,380,219
Retail - Music Store - 0%
95,000 MTS, Inc., 9.375%
senior subordinated notes, due 5/1/05 85,025
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $21,178,162) .................. 20,473,583
- --------------------------------------------------------------------------------
Preferred Stock - 21.6%
Cable Television - 8.3%
98,157 MediaOne Group, Inc., convertible, 4.50% 8,521,255
36,598 TCI Pacific Communications,
convertible, 5.00% ................... 8,051,560
16,572,815
Cruise Lines - 3.7%
83,645 Royal Caribbean Cruises, Ltd.,
convertible, 7.25% ................... 7,397,355
Electric - Integrated - 7.0%
173,550 Houston Industries, Inc.,
convertible, 7.00% ................... 14,068,397
Radio - 2.6%
69,616 Chancellor Media Corp., convertible, $3 00 5,282,114
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $40,325,566) .................. 43,320,681
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 15
<PAGE>
Janus | Equity Income Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Repurchase Agreement - 5.5%
$11,100,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$11,105,291 collateralized by
$5,556,958 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $5,074,403 in
Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $11,476 in Sallie
Mae, 4.947%, 11/10/98; $8,968,953 in
Government National Mortgage
Association, 4.50%-10.50%, 6/15/13-
9/20/28; $206,943 in Federal Farm
Credit, 5.63%-8.16%, 9/5/00-10/7/09;
$829,493 in Federal Home Loan Bank
System, 1.70%-6.135%,
11/6/98-8/21/28; $62,661 in Tennessee
Valley Authority, 0%, 5/1/13; with
respective values of $3,094,278,
$3,882,158, $11,612, $6,419,579,
$227,235, $846,387, and $2,749 (cost
$11,100,000) ......................... $ 11,100,000
- --------------------------------------------------------------------------------
Total Investments (total cost $177,255,603) - 98.9% ....... 198,518,908
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.1% 2,262,760
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 200,781,668
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 1.5% $ 2,913,905
Finland 1.4% 2,805,834
United States++ 97.1% 192,799,169
- --------------------------------------------------------------------------------
Total 100.0% $ 198,518,908
++Includes Short-Term Securities (91.5% excluding Short-Term Securities)
See Notes to Schedules of Investments.
16 Janus Equity Funds / October 31, 1998
<PAGE>
Janus | Growth and Income Fund
[PHOTO]
David J. Corkins
portfolio manager
Your fund performed well this past fiscal year, gaining 16.73% for the period
ended October 31, 1998. This placed it 175th out of 726, or in the top 24%, of
all growth and income funds tracked by Lipper Analytical Services, Inc., a
mutual fund rating company.(2) While we were able to achieve top-quartile
performance relative to our competitors, we lagged the return of the S&P 500
Index of 22.01%.(1)
Substantial volatility has marked global capital markets this past year. The S&P
500 Index moved 30% from its lows to highs. So how does this impact your
investment? Such volatility creates a very attractive environment for
fundamentally driven investors like Janus. This is a stock-picker's market. We
are able to take advantage of this volatility and invest in well-managed,
high-return businesses selling at attractive prices. We are looking for
companies with significant growth opportunities in the next few years that are
not fully appreciated by the market. This strategy emulates Wayne Gretzky's, who
said, "Go to where the puck is going to be, not to where it is."
We selectively added to many of our positions, especially in the cable and
pharmaceutical areas. Our positions in Time Warner, Comcast and Cox
Communications all posted exceptional gains during the year. Let me reiterate
our two main reasons why we maintain our cable investments: network upgrades are
nearing completion, meaning substantial increases in free cash flow, and, at the
same time, new services are garnering additional revenue. During recent visits
to several cable firms, I was able to test these new value-added services:
digital tiers, enhanced video, faster Internet access, cheaper phone service,
all channeled into the household through a single cable wire. We remain
optimistic about the prospects for cable, as corporate leaders such as Microsoft
and AT&T continue to invest in the industry.
Strong product pipelines, high returns on capital and declining interest rates
have also lead our pharmaceutical stocks to outperform. Pfizer remains a
standout in this group as it is the marketing partner of choice in the sector.
We believe the stock can continue to gain ground on optimism surrounding a new
arthritis drug known as Celebrex, which it co-markets with Monsanto; this drug
has higher efficacy and lower side effects than other current arthritis
treatments. We have maintained our position in Warner-Lambert, another stellar
performer, and have built new positions in Merck & Co. and Pharmacia & Upjohn.
Technology was another sector that performed well for us this past year. In
fast-moving sectors like technology, I focus on excellent management and
competitive position. Industry leaders Dell Computer, Microsoft and Cisco
Systems continued to out-execute competitors and generate substantial wealth for
shareholders. I also added a sizable investment in America Online, an extremely
attractive franchise with a huge subscriber base and attractive business model.
We did have some disappointments toward the end of the year. Monsanto declined
in value after calling off its merger with American Home Products. Management
also failed to meet earnings targets. I look for long-term value, but also for
companies to deliver decent results in the near term. Even Alice, after
listening to the Queen lecture her about "jam
(continued on next page)
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 74.7% 91.2%
Foreign 5.6% 8.0%
European 4.2% 7.8%
Fixed-Income Securities
High-Yield/High-Risk
Corporate Bonds 2.6% --
Preferred Stock 6.6% 1.2%
Top 10 Equities (% of Assets) 28.7% 33.9%
Number of Stocks 72 64
Cash & Cash Equivalents 16.1% 7.6%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Medical - Drugs 14.2% 10.3%
Cable Television 12.5% 1.1%
Diversified Operations 4.7% 6.4%
Multimedia 4.5% 2.7%
Computer Software 3.9% 4.8%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Time Warner, Inc. 3.8% 2.7%
Comcast Corp. - Special Class A 3.7% --
Warner-Lambert Co. 3.4% 4.0%
Dell Computer Corp. 3.3% 3.0%
Microsoft Corp. 3.0% 2.3%
General Electric Co. 2.7% 2.6%
Pfizer, Inc. 2.5% 3.3%
MCI WorldCom, Inc. 2.4% --
Tyco International, Ltd. 2.0% --
Cox Communications, Inc. 1.9% --
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) Lipper Analytical Services, Inc. defines a growth and income fund as one
that "combines a growth of earnings orientation and an income requirement
for level and/or rising dividends." As of October 31, 1998, Janus Growth
and Income Fund ranked 23/296 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, 1998 17
<PAGE>
tomorrow," finally retorted "It must come sometimes to jam today." Accordingly,
I substantially reduced our holding.
Some of our financial services picks declined in sympathy with global market
weakness. I trimmed positions, but believe these stocks can recover with
increased earnings and capital management next year. Fears of a recession also
caused Porsche's stock to drop substantially, although its earnings beat
expectations. Porsche continues to improve its manufacturing processes, enjoying
huge demand and a brand-name franchise.
The performances of our cable, pharmaceutical and technology stocks demonstrate
that Mae West was right when she said, "Too much of a good thing can be
wonderful." While these dynamic industries make up a large part of the
portfolio, we're still committed to mitigating volalility. Accordingly, I
flattened the position sizes of many holdings and increased the weighting of
convertible preferred stocks that offer higher yields and downside protection.
Global political and economic turmoil has created uncertainty, but also
opportunity. Our goals going forward remain top-quartile performance and
Index-beating returns with lower volatility. Even so, I take no solace in
meeting only half of these goals this past year. However, I remain excited about
many of the great companies we've uncovered. The research team at Janus is
energized to continue to do what we do best: intensive fundamental research to
find great growth investments.
Thank you for your continued investment in Janus Growth and Income Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented
by a solid 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, 1998. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Growth and Income Fund ($38,801) as compared to
the S&P 500 Index ($35,806).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 16.73%
Five Year, 20.01%
Since 5/15/91*, 19.94%
Janus Growth and Income Fund - $38,801
S&P 500 Index - $35,806
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 74.7%
Advertising Sales - 1.0%
1,300,000 Outdoor Systems, Inc.* ................. $ 28,681,250
Agricultural Biotechnology - 0.2%
171,985 Monsanto Co. ........................... 6,986,891
Agricultural Operations - 1.3%
1,101,000 Delta and Pine Land Co. ................ 36,745,875
Automotive - Cars and Light Trucks - 1.0%
300,000 Ford Motor Co. ......................... 16,275,000
283,916 Renault S.A.** ......................... 12,134,525
28,409,525
Beverages - Non-Alcoholic - 1.2%
912,035 Coca-Cola Enterprises, Inc. ............ 32,890,262
Broadcast Services and Programming - 0.8%
600,000 Tele-Communications Liberty Media
Group, Inc. - Class A* ................. 22,837,500
Cable Television - 9.1%
2,098,220 Comcast Corp. - Special Class A ........ 103,599,612
1,000,000 Cox Communications, Inc. - Class A* .... 54,875,000
930,000 MediaOne Group, Inc.* .................. 39,350,625
400,000 Tele-Communications, Inc. - Class A* ... 16,850,000
2,300,000 Tele-Communications TCI Ventures
Group - Class A* ....................... 42,837,500
257,512,737
Cellular Telecommunications - 0.4%
1,639,605 Telecom Italia S.p.A.** ................ $ 11,856,151
Chemicals - Diversified - 0.5%
600,000 Solutia, Inc. .......................... 13,162,500
Chemicals - Specialty - 0.3%
339,060 Cytec Industries, Inc.* ................ 8,137,440
Circuits - 0.2%
141,630 Maxim Integrated Products, Inc.* ....... 5,054,421
Commercial Banks - 2.5%
525,000 Firstar Corp. .......................... 29,793,750
551,000 Star Banc Corp. ........................ 41,669,375
71,463,125
Computer Software - 3.9%
790,000 Microsoft Corp.* ....................... 83,641,250
600,000 Wind River Systems, Inc.* .............. 26,287,500
109,928,750
Computers - Integrated Systems - 0.2%
225,590 Cadence Design Systems, Inc.* .......... 4,821,986
Computers - Micro - 3.2%
1,400,000 Dell Computer Corp.* ................... 91,875,000
Cruise Lines - 1.0%
1,000,000 Royal Caribbean Cruises, Ltd. .......... 27,875,000
See Notes to Schedules of Investments.
18 Janus Equity Funds / October 31, 1998
<PAGE>
Janus | Growth and Income Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.7%
400,000 Citigroup, Inc. ........................ $ 18,825,000
Diversified Operations - 4.7%
865,000 General Electric Co. ................... 75,687,500
900,000 Tyco International, Ltd. ............... 55,743,750
131,431,250
Electronic Components - Semiconductors - 0.7%
150,000 Intel Corp. ............................ 13,378,125
136,345 Texas Instruments, Inc. ................ 8,717,558
22,095,683
Finance - Consumer Loans - 0.8%
589,140 Household International, Inc. .......... 21,540,431
Finance - Investment Bankers/Brokers - 0.9%
500,000 Charles Schwab Corp. ................... 23,968,750
Finance - Mortgage Loan Banker - 1.3%
500,000 Fannie Mae ............................. 35,406,250
Finance - Other Services - 1.4%
482,879 Newcourt Credit Group, Inc. ............ 15,732,171
700,000 Newcourt Credit Group, Inc. ............
- New York Shares ...................... 23,012,500
38,744,671
Internet Content - 0.4%
250,000 At Home Corp. - Class A* ............... 11,062,500
Internet Software - 1.6%
350,000 America Online, Inc.* .................. 44,471,875
Life and Health Insurance - 1.0%
393,450 SunAmerica, Inc. ....................... 27,738,225
Medical - Drugs - 14.2%
551,660 American Home Products Corp. ........... 26,893,425
806,147 Astra A.B. - Class A** ................. 13,045,847
410,000 Bristol-Myers Squibb Co. ............... 45,330,625
465,000 Eli Lilly and Co. ...................... 37,635,937
228,215 Merck & Co., Inc. ...................... 30,866,079
660,320 Pfizer, Inc. ........................... 70,860,590
900,000 Pharmacia & Upjohn, Inc. ............... 47,643,750
305,000 Schering-Plough Corp. .................. 31,376,875
1,235,000 Warner-Lambert Co. ..................... 96,793,125
400,446,253
Money Center Banks - 1.4%
470,000 BankAmerica Corp. ...................... 26,995,625
49,708 UBS A.G ................................ 13,637,558
40,633,183
Multi-Line Insurance - 0.9%
74,530 American Bankers Insurance Group, Inc. . 3,330,559
623,489 Assicurazioni Generali** ............... 22,235,805
25,566,364
Multimedia - 4.5%
700,000 CBS Corp. .............................. 19,556,250
1,150,000 Time Warner, Inc. ...................... 106,734,375
126,290,625
Networking Products - 1.9%
860,000 Cisco Systems, Inc.* ................... 54,180,000
Oil Companies - Integrated - 0.4%
499,680 Conoco, Inc. - Class A* ................ $ 12,429,540
Optical Supplies - 0.4%
163,175 Allergan, Inc. ......................... 10,188,239
Pharmacy Services - 0.5%
450,000 Omnicare, Inc. ......................... 15,553,125
Radio - 1.3%
500,000 Chancellor Media Corp.* ................ 19,187,500
420,000 Heftel Broadcasting Corp. - Class A* ... 17,272,500
36,460,000
Retail - Building Products - 1.0%
670,000 Home Depot, Inc. ....................... 29,145,000
Retail - Discount - 1.4%
700,000 Costco Companies, Inc.* ................ 39,725,000
Retail - Regional Department Stores - 1.8%
950,000 Fred Meyer, Inc.* ...................... 50,646,875
Super-Regional Banks - 1.2%
950,380 U.S. Bancorp ........................... 34,688,870
Telecommunication Equipment - 1.1%
215,000 Lucent Technologies, Inc. .............. 17,240,312
138,880 Nokia Oyj (ADR) - Class A .............. 12,924,520
30,164,832
Telephone - Long Distance - 2.4%
1,206,235 MCI WorldCom, Inc.* .................... 66,644,484
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,613,093,577) .................. 2,106,285,438
- --------------------------------------------------------------------------------
Corporate Bonds - 2.6%
Cable Television - 0.3%
$ 1,249,000 Mediacom L.L.C., 8.50%
senior notes, due 4/15/08 ............ 1,236,510
5,985,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 6,433,875
7,670,385
Casino Hotels - 0.2%
3,000,000 Sun International Hotels, Ltd., 9.00%
company guaranteed notes, due 3/15/07 3,052,500
4,000,000 Venetian Casino Resort, 12.25%
company guaranteed notes, due 11/15/04 3,560,000
6,612,500
Distribution and Wholesale - 0.2%
6,000,000 Aviation Sales Co., 8.125%
company guaranteed notes, due 2/15/08 5,460,000
Food - Retail - 0.1%
4,000,000 Marsh Supermarkets, Inc., 8.875%
company guaranteed notes, due 8/1/07 . 3,960,000
Gambling - Non Hotel Casinos - 0.1%
3,000,000 Lady Luck Gaming Corp., 11.875%
first mortgage notes, due 3/1/01 ..... 2,973,750
Hotels and Motels - 0.3%
4,000,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 3,960,000
4,000,000 Host Marriott Corp., 9.50%
senior notes, due 5/15/05 ............ 4,110,000
8,070,000
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 19
<PAGE>
Janus | Growth and Income Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Metal Processors and Fabricators - 0.1%
$ 3,000,000 Haynes International, Inc. 11.625%
senior notes, due 9/1/04 ............. $ 3,000,000
Music/Clubs - 0.1%
4,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 4,120,000
Radio - 0.1%
3,000,000 Chancellor Media Corp., 8.125%
senior subordinated notes, due 12/15/07 2,842,500
Recreational Centers - 0.1%
2,000,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 1,835,000
Retail - Diversified - 0.1%
2,000,000 Eye Care Centers of America, Inc., 9.125%
senior subordinated notes, due 5/1/08+ 1,720,000
Retail - Regional Department Stores - 0.4%
10,000,000 Fred Meyer, Inc., 7.45%
company guaranteed notes, due 3/1/08 . 10,475,000
Steel - Producers - 0%
1,000,000 Weirton Steel Corp., 11.375%
senior notes, due 7/1/04 ............. 867,500
Telecommunication Services - 0.5%
5,000,000 Global Crossing Holding, Ltd., 9.625%
senior notes, due 5/15/08+ ........... 4,887,500
10,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 ............. 9,425,000
14,312,500
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $77,671,528) .................. 73,919,135
- --------------------------------------------------------------------------------
Preferred Stock - 6.6%
Automotive - Cars and Light Trucks - 1.2%
18,934 Porsche A.G.** ......................... 33,496,794
Automotive - Truck Parts and Equipment - 0.7%
324,872 Federal-Mogul Financial Trust, 7.00% ... 19,370,493
Cable Television - 3.1%
554,875 MediaOne Group, Inc., convertible, 4.50% 48,170,086
151,000 MediaOne Group, Inc., convertible, 6.25% 8,135,125
136,560 TCI Pacific Communications, convertible,
5.00% ................................ 30,043,200
86,348,411
Cruise Lines - 0.2%
71,000 Royal Caribbean Cruises, Ltd., convertible,
7.25% ................................ 6,279,063
Electric - Integrated - 1.0%
361,000 Houston Industries, Inc., convertible, 7.00% 29,263,562
Radio - 0.4%
162,417 Chancellor Media Corp., convertible, $3 00 12,323,390
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $182,274,776) ................. 187,081,713
- --------------------------------------------------------------------------------
Repurchase Agreement - 3.6%
$100,000,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$100,047,667 collateralized by
$50,062,681 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $45,715,340 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $103,391 in Sallie Mae,
4.947%, 11/10/98; $80,801,380 in
Government National Mortgage
Association, 4.50%- 10.50%,
6/15/13-9/20/28; $1,864,351 in
Federal Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $7,472,911 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $564,516 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$35,173,672 $34,974,397, $104,610,
$57,834,042, $2,047,159, $7,625,104,
and $24,768 (cost $100,000,000) ...... $ 100,000,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 3.9%
Household Finance Corp.
109,500,000 5.72%, 11/2/98
(amortized cost $109,482,602) ........ 109,482,602
U.S. Government Agencies - 8.8%
Fannie Mae
50,000,000 5.60%, 11/20/98 49,865,417
Federal Home Loan Bank System
50,000,000 4.75%, 12/4/98 49,782,292
Freddie Mac:
100,000,000 5.10%, 11/12/98 99,844,167
50,000,000 5.45%, 1/20/99 49,460,000
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $248,962,986) ........ 248,951,876
- --------------------------------------------------------------------------------
Total Investments (total cost $2,331,485,469) - 100.2% .... 2,825,720,764
- --------------------------------------------------------------------------------
Liabilities, net of Cash,
Receivables and Other Assets - (0.2%) ................... (6,641,852)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 2,819,078,912
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
20 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 1.4% $ 38,744,670
Finland 0.4% 12,924,520
France 0.4% 12,134,524
Germany 1.2% 33,496,794
Italy 1.2% 34,091,955
Sweden 0.5% 13,045,846
Switzerland 0.5% 13,637,558
United States++ 94.4% 2,667,644,897
- --------------------------------------------------------------------------------
Total 100.0% $ 2,825,720,764
++Includes Short-Term Securities (78.2% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
French Franc 11/12/98 49,000,000 $ 8,837,587 ($292,321)
German Deutschemark
11/12/98 13,300,000 8,043,544 (270,156)
German Deutschemark
11/19/98 21,700,000 13,128,441 (868,554)
German Deutschemark
1/26/99 17,000,000 10,317,412 199,243
Italian Lira 11/27/98 28,400,000,000 17,357,670 (1,307,031)
Italian Lira 1/26/99 22,100,000,000 13,533,720 100,547
Swedish Krona 11/6/98 81,000,000 10,416,533 (223,124)
Swedish Krona 4/7/99 15,000,000 1,937,733 (61,328)
- --------------------------------------------------------------------------------
Total $83,572,640 ($2,722,724)
See Notes to Schedules of Investments.
Janus Equity Funds /s October 31, 1998 21
<PAGE>
Janus | Mercury Fund
[PHOTO]
Warren B. Lammert
portfolio manager
I'm pleased to report that Janus Mercury Fund gained 24.75% during the fiscal
year ended October 31, 1998, outpacing its benchmark, the S&P 500 Index, which
appreciated 22.01%.(1) As a result of these impressive gains, the Fund ranked
8th out of 240 capital appreciation funds tracked by Lipper Analytical Services,
Inc., a leading mutual fund rating company.(2) This ranking placed Janus Mercury
Fund among Lipper's top-quartile performers for the 12-month period ended
October 31, 1998.
For most of the year, a low-interest-rate, inflation-free backdrop bolstered
both the U.S. economy and the stock market. However, many stocks experienced
sharp setbacks late in the period, as fallout from the Asian crisis created
difficult global economic head winds. Most notably, this fallout included the
Russian credit collapse and potential currency devaluations in Latin America.
Although fears relating to the deterioration of emerging economies produced a
lot of noise in domestic and international markets, Janus Mercury Fund
prevailed. Its performance was aided by strategic adjustments geared toward
portfolio consolidation. We reduced the number of positions in the Fund from 100
as of October 31, 1997, to 57 as of October 31, 1998. We also intensified our
focus on businesses we view as being less sensitive to economic weakness. In
response to disappointing fundamental developments, we sold several significant
European holdings, including Philips Electronics, Volkswagen and Electrolux.
Accordingly, our European weighting has declined to 6.4% from its previous 23%
on October 31, 1997. Among the areas that contributed most to our performance
were cable, pharmaceuticals and selected technology stocks.
Our strongest cable stocks included MediaOne Group, Time Warner, Comcast and Cox
Communications - all of which continue to drive the evolution of this industry.
In the very early stages of this evolution, we began a rigorous analysis of each
company, visiting with their managements, scrutinizing the financials, and
evaluating new value-added services currently being introduced to customers,
such as telephony and data services. In doing so, we came to understand the
revenue potential of these new services much sooner than Wall Street did. We
continue to closely monitor progress at these companies and expect a
simultaneous decrease in capital spending and increase in free cash flow as they
near network upgrade completions.
Our life sciences positions also gained steadily as investors continued to favor
these stocks for their perceived economic immunity and visible earnings growth.
Pfizer, Warner-Lambert and Pharmacia & Upjohn's stocks were all invigorated by
successful product launches. We also added a new position in IMS Health, a
company that compiles and sells prescription drug-use data to pharmaceutical
companies to help them gain insight into competitive industry trends. The
increasing flow of successful new drug therapies emerging from the research labs
of the pharmaceutical industry has been instrumental in boosting IMS Health's
revenue.
- --------------------------------------------------------------------------------
Portfolio Profile October 31,1998 October 31, 1997
Equities 88.1% 97.4%
Foreign 6.8% 23.6%
European 6.4% 23.0%
Top 10 Equities (% of Assets) 42.1% 34.2%
Number of Stocks 57 100
Cash & Fixed Income Securities 11.9% 2.6%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Cable Television 18.7% 0.9%
Medical - Drugs 10.8% 6.6%
Multimedia 6.0% 1.0%
Telecommunication Equipment 4.6% 2.0%
Networking Products 4.0% 2.0%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Time Warner, Inc. 5.6% 1.0%
Comcast Corp. - Special Class A 5.2% --
Warner-Lambert Co. 4.7% 5.8%
Tele-Communications, Inc. 4.6% 0.9%
Nokia Oyj (ADR) - Class A 4.3% 1.4%
Cisco Systems, Inc. 4.0% 2.0%
MediaOne Group, Inc. 3.9% --
Tele-Communications TCI Ventures Group
- Class A 3.6% 0.2%
Microsoft Corp. 3.2% 1.6%
Pfizer, Inc. 3.0% --
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A capital appreciation fund is defined by Lipper as one that "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,
1998, Janus Mercury Fund ranked 4/96 of capital appreciation funds 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.
22 Janus Equity Funds / October 31, 1998
<PAGE>
Our technology weighting also performed well, led by Dell Computer, Microsoft
and Cisco Systems. New product cycles at these companies should advance their
stocks even further; however, I'm concerned that the strong secular forces
currently bolstering these companies' prospects may be threatened by the growing
possibility of an economic slowdown. With that said, we continue to monitor this
situation closely.
Not all of our ideas, however, contributed to the Fund's impressive gains.
Several of our financial services companies dragged on the Fund's performance as
a result of either real or perceived loan exposure to emerging economies. We
have reduced the Fund's weighting in this industry. We were also disappointed in
Parametric Technology's performance. The company suffered from a sharp slowdown
in the domestic sales of its computer-aided engineering software. Parametric's
problems included increased competition from lower-priced competitors and a loss
of focus by management. We subsequently sold this position at a loss.
Going forward, although I believe market volatility will probably continue, I'm
convinced much of it has already been factored in to stock prices. But,
attractive prices should continue to present themselves (even for some of the
very strong franchises), and when they do, we'll take advantage of them.
In closing, I'd like to thank you for your continued confidence and investment
in Janus Mercury Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented by a solid 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, 1998.
The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Mercury Fund ($30,592) as compared to the S&P 500 Index
($28,153).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 24.75%
Five Year, 21.20%
Since 5/3/93*, 22.54%
Janus Mercury Fund - $30,592
S&P 500 Index - $28,153
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 88.1%
Advertising Sales - 1.5%
498,836 Lamar Advertising Co. - Class A* ....... $ 15,573,036
895,474 Outdoor Systems, Inc.* ................. 19,756,395
35,329,431
Advertising Services - 0.4%
645,200 Penton Media, Inc. ..................... 9,678,000
Aerospace and Defense - 0.5%
365,630 Orbital Sciences Corp.* ................ 12,065,790
Agricultural Biotechnology - 2.1%
1,220,461 Monsanto Co. ........................... 49,581,228
Applications Software - 2.4%
436,575 Intuit, Inc.* .......................... 22,047,037
787,445 Sapient Corp.* ......................... 35,484,240
57,531,277
Automotive - Truck Parts and Equipment - 0.1%
59,895 Federal-Mogul Corp. .................... 3,245,560
Broadcast Services and Programming - 1.5%
580,855 Tele-Communications Liberty
Media Group, Inc. - Class A* ......... 22,108,793
1,078,105 United International Holdings, Inc.
- Class A* ........................... 14,015,365
36,124,158
Cable Television - 18.7%
2,488,500 Comcast Corp. - Special Class A ........ $ 122,869,688
596,595 Cox Communications, Inc. - Class A* .... 32,738,151
2,204,695 MediaOne Group, Inc.* .................. 93,286,157
2,592,697 Tele-Communications, Inc. - Class A* ... 109,217,361
4,584,220 Tele-Communications TCI Ventures Group
- Class A* ............................. 85,381,098
443,492,455
Cellular Telecommunications - 0.7%
831,615 Western Wireless Corp. - Class A* ...... 16,840,204
Circuits - 1.9%
593,100 Maxim Integrated Products, Inc.* ....... 21,166,256
716,720 Vitesse Semiconductor Corp.* ........... 23,114,220
44,280,476
Commerical Banks - 1.4%
217,890 Firstar Corp. .......................... 12,365,258
275,740 Star Banc Corp. ........................ 20,852,838
33,218,096
Computer Services - 0.2%
457,460 Technology Solutions Co.* .............. 5,489,520
Computer Software - 3.9%
711,120 Microsoft Corp.* ....................... 75,289,830
361,747 Wind River Systems, Inc.* .............. 15,849,040
91,138,870
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 23
<PAGE>
Janus | Mercury Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Computers - Micro - 0.9%
333,060 Dell Computer Corp.* ................... $ 21,857,062
Diversified Operations - 2.1%
811,481 Tyco International, Ltd. ............... 50,261,104
Drug Delivery Systems - 2.5%
1,247,315 ALZA Corp.* ............................ 59,715,206
Electronic Safety Devices - 1.3%
1,311,280 Pittway Corp. - Class A ................ 30,077,485
Finance - Consumer Loans - 0.5%
343,120 Household International, Inc. .......... 12,545,325
Finance - Other Services - 0.4%
259,570 Newcourt Credit Group, Inc.
- New York Shares .................... 8,533,364
Food - Diversified - 0.9%
1,660,544 Raisio Group PLC** ..................... 22,312,429
Internet Content - 1.0%
519,440 At Home Corp. - Class A* ............... 22,985,220
Internet Software - 2.9%
540,254 America Online, Inc.* .................. 68,646,024
Life and Health Insurance - 0.4%
206,129 UNUM Corp. ............................. 9,159,857
Medical - Biomedical and Genetic - 1.9%
1,012,030 Centocor, Inc.* ........................ 45,035,335
Medical - Drugs - 10.8%
555,235 Eli Lilly and Co. ...................... 44,939,333
669,145 Pfizer, Inc. ........................... 71,807,623
514,700 Pharmacia & Upjohn, Inc. ............... 27,246,931
1,419,390 Warner-Lambert Co. ..................... 111,244,691
255,238,578
Medical Information Systems - 1.9%
675,570 IMS Health Inc. ........................ 44,925,405
Medical Instruments - 2.0%
458,130 Sofamor Danek Group, Inc.* ............. 46,557,461
Money Center Banks - 2.0%
1,531,585 Bank of New York Co., Inc. ............. 48,340,652
Multimedia - 5.6%
1,417,460 Time Warner, Inc. ...................... 131,558,006
Networking Products - 4.0%
1,503,228 Cisco Systems, Inc.* ................... 94,703,364
Oil - Field Services - 0.4%
18,533,941 Ocean Rig ASA*,# ....................... 8,296,520
Oil and Gas Drilling - 1.2%
738,895 Transocean Offshore, Inc. .............. 27,292,934
Pharmacy Services - 0.7%
475,131 Omnicare, Inc. ......................... 16,421,715
Radio - 1.0%
77,420 Capstar Broadcasting Corp. - Class A* .. 1,345,173
596,545 Chancellor Media Corp.* ................ 22,892,414
24,237,587
Retail - Discount - 0.8%
350,505 Costco Companies, Inc.* ................ 19,891,159
Retail - Internet - 0.7%
122,280 Amazon.com, Inc.* ...................... 15,460,778
Savings/Loan/Thrifts - 0.1%
102,515 Ambanc Holding Co., Inc. ............... 1,588,983
Schools - 0.4%
309,750 Apollo Group, Inc. - Class A* .......... $ 9,950,719
Super-Regional Banks - 0.8%
535,650 U.S. Bancorp ........................... 19,551,225
Telecommunication Equipment - 4.6%
344,590 General Instrument Corp.* .............. 8,851,656
1,084,375 Nokia Oyj (ADR) - Class A .............. 100,914,648
109,766,304
Telecommunication Services - 1.0%
64,600 Global Crossing, Ltd.* ................. 1,857,250
2,851,216 Telecom Italia S.p.A.** ................ 20,617,434
22,474,684
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,592,606,469) .................. 2,085,399,550
- --------------------------------------------------------------------------------
Corporate Bonds - 0.7%
Retail - Internet - 0.7%
$ 30,572,000 Amazon.com, Inc., zero coupon
senior discount notes, 1/15/99
(cost $18,676,527) ................... 17,426,040
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 8.3%
CIT Group Holdings, Inc.
100,000,000 5.67%, 11/2/98 ....................... 99,984,250
Prudential Funding Corp.
97,200,000 5.66%, 11/2/98 ....................... 97,184,718
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $197,168,968) ........................... 197,168,968
- --------------------------------------------------------------------------------
U.S. Government Agency - 2.1%
Freddie Mac
50,000,000 5.45%, 1/20/99
(cost $49,471,111) ................... 49,460,000
- --------------------------------------------------------------------------------
Total Investments (total cost $1,857,923,075) - 99.2% ..... 2,349,454,558
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.8% 18,622,282
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 2,368,076,840
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
24 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 0.4% $ 8,533,364
Finland 5.2% 123,227,077
Italy 0.9% 20,617,434
Norway 0.3% 8,296,520
United States++ 93.2% 2,188,780,163
- --------------------------------------------------------------------------------
Total 100.0% $ 2,349,454,558
++Includes Short-Term Securities (82.7% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Finnish Markka 11/6/98 47,000,000 $ 9,346,352 ($189,699)
Finnish Markka 11/12/98 265,000,000 52,713,240 (2,029,485)
Italian Lira 11/12/98 1,800,000,000 1,099,810 (80,384)
Italian Lira 1/26/99 20,650,000,000 12,645,761 184,213
- --------------------------------------------------------------------------------
Total $75,805,163 ($2,115,355)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 25
<PAGE>
Janus | Olympus Fund
[PHOTO]
Claire Young
portfolio manager
Janus Olympus Fund gained 23.10% for our fiscal year ended October 31, 1998.
During the same period, the S&P 500 Index gained 22.01%.(1) The Fund also
achieved a top-quartile ranking for the period, placing it 12th out of 240
capital appreciation funds tracked by Lipper Analytical Services, Inc., a mutual
fund rating company.(2)
During fiscal 1998, there were two distinct periods in the market. In the first
half, the market shrugged off the Asian currency turmoil and posted steadily
improving returns. U.S. companies with steady earnings streams benefited from
strong investor demand. In the second half, the market initially continued
upward, but many valuation measures were approaching uncharted levels. When
Russia missed certain debt repayment schedules, investors revisited their fears
of the far-reaching, long-lasting impact of the Asian crisis. They chose to move
their money from stocks into the safe, liquid U.S. 30-year Treasury bond. After
two successive rate cuts by the Fed, which restored investors' confidence in
stocks, the market rebounded.
I am pleased with the Fund's performance, especially during the volatile second
half. I believe our focus on companies in dynamic growth industries with
superior product offerings and shareholder-driven management teams was rewarded.
The fundamentals of our investments shone during a year fraught with
disappointing results from many companies.
The exploding corporate and consumer utilization of the Internet provided many
attractive investment opportunities for us this past year. On the corporate
side, many companies are deploying intranets as communication tools and as
access-to-information repositories for employees, customers and suppliers. By
embracing this new technology, they are finding ways to cut development and
delivery times, eliminate errors and redundancies, and share information more
easily.
Cisco Systems, the market leader in computer networking technology, provides the
"plumbing" for these intranets. Cisco is also a leading proponent of using the
Internet to run its own business, as it receives $20 million per day in orders
and provides much of its customer service over the Internet. Veritas Software
creates end-to-end storage management solutions to control the data that reside
on computer systems. As more and more information is stored and accessed on the
Internet, Veritas is one of the key vendors helping corporations manage the
growth and reliability of their network data.
On the consumer side, people are using the Internet as an entertainment medium,
information resource and communication tool. America Online is the leading
Internet and online service provider, with 13 million subscribers. It is
becoming a key destination for content and services, as well as marketing
dollars from corporations interested in reaching consumers through the Internet.
After years of monopoly status, the U.S. and European telecommunications
industries are undergoing structural changes. Technology is allowing new
entrants to quickly enter markets with competitive pricing, and new applications
are driving traffic growth. Colt Telecom Group is an alternative local telephone
company operating in 11 European cities. By providing superior quality and high
customer service at competitive prices, the company is winning large customers
away from incumbent operators. WorldCom, a leading provider of services
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 80.3% 93.8%
Foreign 7.4% 14.7%
European 7.4% 12.9%
Top 10 Equities (% of Assets) 35.6% 40.7%
Number of Stocks 49 57
Cash & Cash Equivalents 19.7% 6.2%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Medical - Drugs 11.8% 20.6%
Networking Products 6.3% 0.4%
Computer Software 4.6% 8.7%
Computers-Micro 4.3% 4.7%
Telecommunication Services 4.3% 2.5%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Warner-Lambert Co. 5.0% 5.1%
Microsoft Corp. 4.6% 5.1%
Cisco Systems, Inc. 4.5% 0.4%
Dell Computer Corp. 4.3% 4.7%
Time Warner, Inc. 3.4% 1.0%
Pfizer, Inc. 3.4% 5.6%
America Online, Inc. 3.3% 1.4%
Comcast Corp. - Special Class A 2.7% --
Nokia Oyj (ADR) - Class A 2.2% 1.5%
Fred Meyer, Inc. 2.2% 1.0%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A capital appreciation fund is defined by Lipper as one that "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." 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.
26 Janus Equity Funds / October 31, 1998
<PAGE>
to U.S. and European businesses, recently merged with MCI Communications. The
new company has many opportunities for cost-saving synergies and for becoming a
premier global telecommunications force.
Drug utilization continued to show dramatic increases this year as the
population ages and managed care companies focus on pharmaceutical use rather
than alternative procedures to treat disease. A number of leading prescription
drugs continued to demonstrate strong sales growth. Warner-Lambert's Lipitor
gained market share in the cholesterol-lowering arena. Pfizer's Viagra was the
fastest prescription drug launch in history. Schering-Plough's Claritin
continues to benefit from weak competition and increased consumer awareness from
a successful marketing campaign.
I sold our oil services companies on fears of weak oil demand because of lower
Asian consumption. I also sold BankAmerica Corporation as banks began to
quantify their exposure to emerging markets' debt losses.
Looking ahead, the Fed's recent moves have demonstrated the government's
commitment to supporting the U.S. economy, which should bolster confidence of
consumers and businesses. Many companies have analyzed the magnitude of the
slowdown in other economies and are taking steps to minimize the impact. While
we may still see some volatility in the months ahead, I believe the underlying
fundamentals for our holdings remain intact and will be rewarded over time.
Thank you for your continued investment in Janus Olympus Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented by a solid 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,
1998. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Olympus Fund ($19,068) as compared to the S&P 500 Index
($18,797).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 23.10%
Since 12/29/95*, 25.55%
Janus Olympus Fund - $19,068
S&P 500 Index - $18,797
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 79.7%
Applications Software - 1.0%
20,000 Intuit, Inc.* .......................... $ 1,010,000
258,900 J.D. Edwards & Co.* .................... 8,478,975
9,488,975
Audio and Video Products - 0.6%
100,000 Gemstar International Group, Ltd.* ..... 5,462,500
Automotive - Truck Parts and Equipment - 0.9%
100,080 Valeo**,+ .............................. 8,662,867
Cable Television - 4.1%
525,000 Comcast Corp. - Special Class A ........ 25,921,875
310,000 Tele-Communications, Inc. - Class A* ... 13,058,750
38,980,625
Cellular Telecommunications - 1.2%
175,000 Cellular Communications
International, Inc.* ................. 10,877,344
Circuits - 0.8%
135,000 Linear Technology Corp. ................ 8,049,375
Commercial Banks - 1.8%
300,000 Firstar Corp. .......................... 17,025,000
Computer Software - 4.6%
415,000 Microsoft Corp.* ....................... 43,938,125
Computers - Integrated Systems - 0.6%
274,005 Cadence Design Systems, Inc.* .......... 5,856,857
Computers - Memory Devices - 3.5%
200,000 EMC Corp.* ............................. $ 12,875,000
400,002 VERITAS Software Corp.* ................ 20,050,100
32,925,100
Computers - Micro - 4.3%
620,000 Dell Computer Corp.* ................... 40,687,500
Cruise Lines - 1.5%
500,000 Royal Caribbean Cruises, Ltd. .......... 13,937,500
Drug Delivery Systems - 0.8%
160,000 ALZA Corp.* ............................ 7,660,000
Finance - Investment Bankers/Brokers - 1.2%
244,808 Charles Schwab Corp. ................... 11,735,483
Human Resources - 0.7%
370,035 Select Appointments Holdings PLC (ADR) . 6,290,595
Internet Content - 1.1%
225,000 At Home Corp. - Class A* ............... 9,956,250
Internet Software - 3.3%
245,000 America Online, Inc.* .................. 31,130,313
Lasers - Systems and Components - 1.2%
225,000 Uniphase Corp.* ........................ 11,137,500
Medical - Biomedical and Genetic - 1.1%
150,000 Immunex Corp.* ......................... 10,359,375
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 27
<PAGE>
Janus | Olympus Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 11.8%
200,000 American Home Products Corp. ........... $ 9,750,000
125,000 Eli Lilly and Co. ...................... 10,117,188
300,000 Pfizer, Inc. ........................... 32,193,750
125,000 Schering-Plough Corp. .................. 12,859,375
600,000 Warner-Lambert Co. ..................... 47,025,000
111,945,313
Medical - Wholesale Drug Distributors - 1.6%
200,000 McKesson Corp. ......................... 15,400,000
Medical Information Systems - 1.4%
200,000 IMS Health, Inc. ....................... 13,300,000
Money Center Banks - 1.0%
300,000 Bank of New York Co., Inc. ............. 9,468,750
Multimedia - 3.4%
350,000 Time Warner, Inc. ...................... 32,484,375
Networking Products - 6.3%
210,000 Broadcom Corp. - Class A* .............. 17,416,875
675,000 Cisco Systems, Inc.* ................... 42,525,000
59,941,875
Radio - 0.8%
185,925 Chancellor Media Corp.* ................ 7,134,872
Retail - Building Products - 1.4%
310,000 Home Depot, Inc. ....................... 13,485,000
Retail - Discount - 1.5%
250,000 Costco Companies, Inc.* ................ 14,187,500
Retail - Drug Store - 1.3%
245,000 Walgreen Co. ........................... 11,928,438
Retail - Office Supplies - 1.2%
350,000 Staples, Inc.* ......................... 11,418,750
Retail - Regional Department Stores - 2.2%
391,000 Fred Meyer, Inc.* ...................... 20,845,188
Schools - 1.5%
626,500 DeVry, Inc.*,# ......................... 13,783,000
Schools - Day Care - 0.8%
395,425 Bright Horizons Family Solutions, Inc.*,# 7,315,363
Telecommunication Equipment - 2.2%
227,320 Nokia Oyj (ADR) - Class A .............. 21,154,967
Telecommunication Services - 4.3%
1,301,396 COLT Telecom Group PLC*,** ............. 16,999,693
280,000 COLT Telecom Group PLC (ADR)*,** ....... 14,385,000
53,400 Level 3 Communications, Inc.* .......... 1,738,837
204,200 Qwest Communications
International, Inc.* ................. 7,989,325
41,112,855
Telephone - Integrated - 0.8%
200,000 Global TeleSystems Group, Inc.* ........ 8,012,500
Telephone - Long Distance - 1.9%
324,390 MCI WorldCom, Inc.* .................... 17,922,547
- --------------------------------------------------------------------------------
Total Common Stock (cost $485,539,634) .................... 755,002,577
- --------------------------------------------------------------------------------
Preferred Stock - 0.6%
Automotive - Cars and Light Trucks - 0.6%
3,000 Porsche A.G.** (cost $6,883,155) ....... 5,307,404
Repurchase Agreement - 9.1%
$ 86,500,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$86,541,232 collateralized by
$43,304,219 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $39,543,769 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $89,433 in Sallie Mae,
4.947%, 11/10/98; $69,893,194 in
Government National Mortgage
Association, 4.50%- 10.50%,
6/15/13-9/20/28; $1,612,663 in
Federal Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $6,464,068 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $488,306 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$30,425,226, $30,252,853, $90,488,
$50,026,447, $1,770,792, $6,595,715,
and $488,306 (cost $86,500,000) ...... $ 86,500,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 8.4%
American Express Credit Corp.
40,000,000 5.00%, 11/4/98 39,983,333
Ford Motor Credit Corp.
40,000,000 5.06%, 11/6/98 39,971,889
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $79,955,222) ............................ 79,955,222
- --------------------------------------------------------------------------------
U.S. Government Agency - 2.6%
25,000,000 Federal Home Loan Bank System
5.45%, 1/15/99 (cost $24,753,646) .... 24,751,750
- --------------------------------------------------------------------------------
Total Investments (total cost $683,631,657) - 100.4% ...... 951,516,953
- --------------------------------------------------------------------------------
Liabilities, net of Cash,
Receivables and Other Assets - (0.4%) .................. (4,022,836)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 947,494,117
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
28 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Finland 2.2% $ 21,154,967
France 0.9% 8,662,867
Germany 0.6% 5,307,404
United Kingdom 3.8% 36,231,893
United States++ 92.5% 880,159,822
- --------------------------------------------------------------------------------
Total 100.0% $ 951,516,953
++Includes Short-Term Securities (72.4% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/19/98 2,500,000 $ 4,180,500 ($129,750)
British Pound 4/7/99 7,000,000 11,628,400 107,350
Finnish Markka 11/6/98 45,000,000 8,948,635 (363,394)
Finnish Markka 11/12/98 31,000,000 6,166,454 (84,240)
French Franc 11/12/98 39,000,000 7,033,998 153,485
German Deutschemark
11/12/98 6,800,000 4,112,489 (271,309)
German Deutschemark
1/26/99 1,500,000 910,360 18,893
- --------------------------------------------------------------------------------
Total $42,980,836 ($568,965)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 29
<PAGE>
Janus | Overseas Fund (closed to new investors)
[PHOTO]
Helen Young Hayes
portfolio manager
[PHOTO]
Laurence Chang
portfolio manager
Despite a strong performance for the first nine months of the fiscal year, Janus
Overseas Fund turned in a disappointing performance for the 12 months ended
October 31, 1998. The Fund returned 3.55%, versus the MSCI EAFE Index's return
of 9.65%.(1)
The year was characterized by generally buoyant equity markets for the first
nine months, fueled by lower interest rates and positive earnings reports coming
primarily out of the U.S. and Western Europe. The Japanese and Asian economies
and stock markets were soft, as we had expected. However, in July, global
markets began to capsize, precipitated by the Russian currency devaluation and
subsequent debt crisis. The Russian situation had unexpectedly severe
repercussions on all financial markets, exacerbated by the highly leveraged and
precarious Russian positions held by some hedge funds. Many hedge funds had to
liquidate large positions, putting tremendous pressure on the dollar, corporate
bonds and equity markets in general. Other emerging markets sold off in tandem.
These events, coupled with political and economic uncertainties in Japan,
Germany and the U.S., led to almost unprecedented volatility in the financial
markets.
The sell-off in financial markets was felt most sharply in Europe, which had the
largest gains year-to-date. The German DAX Index illustrates this point: from
July to October, the DAX dropped 38% and, despite a 30% rally off the bottom, is
still down 24% from its high. The volatility in Europe had a large impact on the
Fund, which has more than two-thirds of its holdings in the region. Our
relatively low weighting in Japan also hurt the performance versus the MSCI EAFE
Index, as the Japanese market proved more resilient than Europe's. Despite
hitting a 12-year low during the fourth quarter, the Nikkei average has
underperformed dramatically for years and simply did not have large gains to
give up.
Our two biggest disappointments were our positions in UBS, the large Swiss
banking and financial services conglomerate, and Alcatel, a French telecom
equipment vendor. UBS got hit by the Russian debt crisis and had to write down
not only its loans to Russia, but also its exposure to hedge funds and Russian
bonds. The stock suffered additionally from the general sell-off that hit all
financial stocks. Alcatel, on the other hand, reported very disappointing order
trends in its public telephone business. Weaker global economic growth also put
pressure on its revenue and profit outlook. As a result, our earnings
expectations for both UBS and Alcatel were cut dramatically, and we reduced both
positions at a loss.
Other European financial stocks held by the Fund, such as Deutsche Bank, Bank
Austria and the Italian banks, were also hit during the financial crisis.
Holdings in these positions were either sold or reduced as the potential risks
to earnings from Russia, hedge funds and poor market conditions outweighed the
potential upside. However, we opted to hold other European financial services
stocks given their underlying fundamentals and inexpensive valuations.
Additional stocks that sold off during the fourth quarter were either very
rapidly growing companies, such as Colt Telecom Group in the UK, or economically
sensitive companies, such as Renault in France. In the first case, investors
were unwilling to hold
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 85.7% 89.1%
Foreign 83.1% 88.1%
Top 10 Equities (% of Assets) 23.1% 22.6%
Number of Stocks 146 211
Cash & Fixed Income Securities 14.3% 10.9%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Diversified Operations 7.9% 9.8%
Medical - Drugs 6.5% 3.7%
Telecommunication Services 5.9% 2.4%
Telephone - Integrated 5.4% 2.2%
Computer Services 5.1% 4.1%
- --------------------------------------------------------------------------------
Top 5 Countries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
United Kingdom 16.6% 20.3%
France 9.9% 12.0%
Japan 9.4% 7.1%
Germany 7.9% 7.5%
Netherlands 7.8% 12.4%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31,1998 October 31, 1997
- --------------------------------------------------------------------------------
Wolters Kluwer N.V 3.2% 0.9%
Mannesmann A.G 3.1% --
Nokia Oyj - Class A 2.8% 1.8%
NTT Mobile Communication Network, Inc. 2.4% --
Rentokil Initial PLC 2.3% 2.2%
Telecom Italia Mobile S.p.A 2.1% --
Elan Corp. PLC 2.0% --
Colt Telecom Group PLC 1.8% --
Vivendi 1.7% --
Nokia Oyj (ADR) - Class A 1.7% 0.1%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends. 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.
Past performance does not guarantee future results.
30 Janus Equity Funds / October 31, 1998
<PAGE>
stocks with strong earnings potential but a small current earnings base. In the
case of cyclical or economically sensitive businesses, investors have already
priced a global recession into many of these stocks. Both categories of stocks
have rebounded (with some back at all-time highs), but cyclicals remain below
recent levels as well as historical valuation measures.
Despite the disappointments in the fourth quarter, the Fund had many outstanding
stocks during the year. Among these were: Wolters Kluwer, a Dutch publisher and
long-time holding in the Fund; Nokia, the Finnish telecom equipment company;
Rentokil Initial, a UK support services company; Cap Gemini, the French
information technology company; and Capita Group, a UK outsourcing company. Also
notable were Securitas, the Swedish security firm, and Assa Abloy, a Swedish
lock manufacturer, both of which we have mentioned before. Compass Group, a UK
catering company and a relatively new holding, was another winner. On average,
these stocks were up more than 50%, and several more than doubled.
Looking ahead, we believe the worst of the volatility is behind us and remain
positive on the outlook for global interest rates. Despite an anticipated
softening in economic growth rates, we still expect modest growth for the
upcoming year. Stock price valuations in foreign markets have come down to
levels we haven't seen for quite a while. In addition, positive secular trends
in Europe (such as increased focus on profitability and shareholder value) are
continuing. Given these factors, we are cautiously optimistic about the equity
markets and look forward to continuing to find good investment opportunities
overseas. Thank you for your continued confidence.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The Morgan Stanley
Capital International EAFE Index is represented by a solid 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, 1998. The lower right
quadrant reflects the ending value of the hypothetical investment in Janus
Overseas Fund ($19,294) as compared to the Morgan Stanley Capital International
EAFE Index ($13,168).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 3.55%
Since 5/2/94*, 15.72%
Janus Overseas Fund - $19,294
Morgan Stanley Capital
International EAFE Index - $13,168
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 82.8%
Advertising Agencies - 0%
69,085 WPP Group PLC** ........................ $ 341,305
Airlines - 0.2%
319,614 SAS Norge A.S.A. - Class B ............. 3,316,664
518,899 SAS Sverige A.B.** ..................... 5,642,470
8,959,134
Appliances - 1.2%
3,215,106 Electrolux A.B.** ...................... 48,328,205
Audio and Video Products - 0.8%
465,800 Sony Corp.** ........................... 29,580,557
Automotive - Cars and Light Trucks - 1.4%
528,000 Honda Motor Co., Ltd.** ................ 15,859,048
904,549 Renault S.A ............................ 38,660,281
54,519,329
Automotive - Truck Parts and Equipment - 1.1%
498,649 Valeo S.A.+ ............................ 43,162,771
Beverages - Non-Alcoholic - 0.2%
349,380 Coca-Cola Femsa S.A. (ADR) ............. 5,764,770
Beverages - Wine and Spirits - 0.4%
444,162 Allied Domecq PLC** .................... 4,091,110
1,034,409 Diageo PLC** ........................... 11,173,495
15,264,605
Brewery - 0.5%
1,773,000 Kirin Brewery Co., Ltd.** .............. $ 19,323,580
Broadcast Services and Programming - 0.4%
614,500 Grupo Televisa S.A. (GDR)* ............. 16,668,313
Building - Heavy Construction - 0.1%
44,266 Compagnie Francaise d'Etudes et
de Construction Technip .............. 4,500,783
Building and Construction - 0.8%
167,625 Suez Lyonnaise des Eaux ................ 30,014,504
Building Products - Cement and Aggregate - 0.2%
227,030 Cimpor-Cimentos de Portugal S.A ........ 7,854,309
Cellular Telecommunications - 5.0%
387,512 Cellular Communications International, Inc.* 24,086,293
9,240,000 China Telecom, Ltd.* ................... 17,356,747
44,205 MobilCom A.G.** ........................ 12,838,365
14,057,268 Telecom Italia Mobile S.p.A ............ 81,681,747
5,147,909 Telecom Italia S.p.A ................... 37,225,056
1,589,867 Vodafone Group PLC** ................... 21,273,777
194,461,985
Chemicals - Diversified - 0.6%
356,273 Akzo Nobel N.V.** ...................... 13,848,972
257,924 Hoechst A.G.** ......................... 10,776,832
24,625,804
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 31
<PAGE>
Janus | Overseas Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Commercial Banks - 1.7%
1,149,171 Banco Central Hispanoamericano ......... $ 12,663,083
93,032 Bayerische Vereinsbank A.G.** .......... 7,386,715
62,510 BG Bank A/S ............................ 3,623,950
964,248 Corporacion Bancaria de Espana S.A ..... 20,943,229
946,504 Den norske Bank A.S.A .................. 3,325,343
2,055 Julius Baer Holding A.G. - Class B** ... 6,298,127
2,428,205 Unicredito Italiano S.p.A .............. 13,076,309
67,316,756
Computer Services - 5.1%
113,894 Atos S.A ............................... 21,479,859
425,959 Cap Gemini S.A.+ ....................... 64,006,425
989,904 Getronics N.V.** ....................... 41,076,438
1,497,790 Logica PLC** ........................... 50,605,937
2,047,717 Misys PLC** ............................ 14,437,402
221,980 WM-Data A.B. - Class B** ............... 8,064,913
199,670,974
Computer Software - 0.6%
448,190 JBA Holdings PLC** ..................... 2,101,635
157,587 Merkantildata A.S.A .................... 1,581,854
626,076 Tieto Corp. ............................ 19,011,933
22,695,422
Computers - Integrated Systems - 0.9%
143,265 Equant N.V.*,** ........................ 6,208,203
168,040 Equant N.V. - New York Shares*,** ...... 7,351,750
2,853,485 SEMA Group PLC** ....................... 22,829,865
36,389,818
Cosmetics and Toiletries - 1.5%
2,944,000 Kao Corp.** ............................ 59,624,527
Cruise Lines - 0.1%
1,135,213 NCL Holdings A.S.A ..................... 2,941,203
Diversified Operations - 7.9%
295,437 Vivendi ................................ 67,467,684
3,313,849 Hays PLC** ............................. 48,865,134
334,497 Lagardere S.C.A ........................ 13,459,636
14,807,129 Rentokil Initial PLC** ................. 90,823,320
8,613,268 Siebe PLC** ............................ 35,340,368
2,517,507 Tomkins PLC** .......................... 11,657,431
248,834 Unilever N.V.** ........................ 18,465,920
86,945 VEBA A.G.** ............................ 4,856,010
2,851,912 Williams PLC** ......................... 17,802,914
308,738,417
Drug Delivery Systems - 2.0%
1,108,429 Elan Corp. PLC (ADR)* .................. 77,659,307
Electronic Components - 1.2%
252,109 Electrocomponents PLC** ................ 1,663,495
380,958 Koninklijke Philips Electronics N.V.** . 20,275,029
418,108 Philips Electronics N.V. - New York Shares** 22,943,677
44,882,201
Electronic Components - Semiconductors - 0.4%
168,000 Rohm Co., Ltd.** ....................... 14,936,340
Electronic Measuring Instruments - 0.2%
8,929 Cie des Signaux S.A .................... $ 610,438
43,975 Simac Techniek N.V.** .................. 5,274,142
5,884,580
Eletric - Integrated - 0.1%
150,747 Endesa S.A ............................. 3,792,289
Finance - Other Services - 0.8%
687,860 Newcourt Credit Group, Inc. ............ 22,410,440
239,630 Newcourt Credit Group, Inc. ............
- New York Shares .................... 7,877,836
30,288,276
Food - Catering - 1.0%
3,899,117 Compass Group PLC** .................... 39,309,704
Food - Diversified - 1.2%
114,009 Danone ................................. 30,139,096
1,845 Nestle S.A.** .......................... 3,924,103
972,742 Raisio Group PLC ....................... 13,070,558
47,133,757
Food - Retail - 1.1%
23,290 Disco S.A. (ADR)* ...................... 342,072
1,222,830 Koninklijke Ahold N.V.** ............... 40,658,905
41,000,977
Hotels and Motels - 0%
9,900 EIH, Ltd.+ ............................. 51,480
Human Resources - 2.0%
55,037 Adecco S.A.** .......................... 21,948,256
3,936,167 Capita Group PLC** ..................... 39,716,191
1,150,018 Select Appointments Holdings PLC** ..... 10,014,863
348,805 Select Appointments Holdings PLC (ADR)** 5,929,685
77,608,995
Investment Companies - 0.5%
121,515 Ratin A/S - B Shares ................... 20,851,930
Investment Management and Advisory Services - 0.1%
661,208 Amvescap PLC** ......................... 5,071,549
Life and Health Insurance - 0.2%
14,482 Schweizerische Lebensversicherungs-und
Rentenanstalt** ...................... 8,716,410
Machinery - General Industrial - 3.2%
1,242,361 Mannesmann A.G.** ...................... 122,272,464
Medical - Drugs - 6.5%
751,257 Astra A.B. - Class A** ................. 12,157,564
633,786 Glaxo Wellcome PLC** ................... 19,699,609
284,686 Merck KGaA** ........................... 11,688,755
45,476 Pharmacia & Upjohn, Inc.** ............. 2,321,254
1,099,625 Pharmacia & Upjohn, Inc. ............... 58,211,398
571,624 Rhone-Poulenc - Class A ................ 26,128,439
151,251 Sanofi S.A ............................. 23,680,278
661,375 SmithKline Beecham PLC (ADR) ........... 42,162,656
1,796,000 Takeda Chemical Industries** ........... 58,414,503
254,464,456
Medical Products - 0%
151,195 Ortivus A.B.*,**,# ..................... 1,025,134
Metal Processors and Fabricators - 1.4%
1,337,625 Assa Abloy A.B. - Class B** ............ 53,218,455
See Notes to Schedules of Investments.
32 Janus Equity Funds / October 31, 1998
<PAGE>
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Money Center Banks - 3.9%
3,758,647 Banca Commerciale Italiana ............. $ 23,237,425
22,753,569 Banca di Roma* ......................... 39,681,907
476,871 Banco Bilbao Vizcaya, S.A .............. 6,420,649
223,195 Bank Austria A.G. ...................... 12,144,199
3,131,556 Lloyds TSB Group PLC** ................. 38,677,574
163,800 National Westminster Bank PLC** ........ 2,754,131
79,471 Schroders PLC** ........................ 1,510,572
1,274,954 Skandinaviska Enskilda Banken - Class A** 12,885,139
31,950 UBS A.G.** ............................. 8,765,591
97,385 Unidanmark A/S - Class A ............... 7,424,601
153,501,788
Mortgage Banks - 1.0%
469,059 Deutsche Pfandbrief-und
Hypothekenbank A.G.** ................ 37,101,547
Multi-Line Insurance - 1.7%
20,574 Baloise Holding Ltd. - Class R** ....... 16,986,818
12,804 ERGO Versicherungs Gruppe A.G.** ....... 2,122,175
79,133 Royal & Sun Alliance Insurance
Group PLC** ............................ 724,906
592,466 Sampo Insurance Co., Ltd. - Class A .... 18,461,665
186,390 Storebrand A.S.A.* ..................... 1,453,801
41,314 Zurich Versicherungs-Gesellschaft** .... 25,110,108
64,859,473
Office Furnishings - 0.2%
349,129 Koninklijke Ahrend Groep N.V.**,# ...... 7,084,727
Oil Companies - Integrated - 0.4%
315,058 British Petroleum Co. PLC** ............ 4,680,057
43,967 Elf Aquitaine S.A ...................... 5,087,531
43,280 Total S.A .............................. 4,992,460
14,760,048
Publishing - Periodicals - 3.2%
636,475 Wolters Kluwer N.V.** .................. 123,363,851
Recycling - 0.3%
446,547 Tomra Systems A.S.A .................... 12,538,679
Reinsurance - 0%
1,405 Muenchener Rueckversicherungs
- Gesellschaft A.G.** ................ 639,648
Retail - Building Products - 0.2%
42,313 Castorama Dubois Investisse ............ 7,545,999
Retail - Restaurants - 0.4%
1,883,796 TelePizza S.A.* ........................ 15,351,688
Rubber - Tires - 0.2%
340,000 Bridgestone Corp.** .................... 7,484,132
Security Services - 1.5%
1,357,041 Prosegur Companhia de Seguridad S.A .... 16,396,146
3,518,656 Securitas A.B. - Class B** ............. 43,213,112
59,609,258
Telecommunication Equipment - 5.0%
23,795 Alcatel S.A ............................ $ 2,650,609
230,650 Alcatel S.A. (ADR) ..................... 5,074,300
1,216,031 Nokia Oyj - Class A .................... 110,780,959
698,930 Nokia Oyj (ADR) - Class A .............. 65,044,173
17,516 Telefonaktiebolaget L.M. Ericsson - Class B** 394,380
401,857 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B** .......................... 9,092,015
193,036,436
Telecommunication Services - 5.9%
5,342,567 COLT Telecom Group PLC*,** ............. 69,788,136
59,369 Deutsche Telekom A.G.** ................ 1,617,417
2,763,695 Energis PLC*,** ........................ 37,026,880
4,440 NTT Data Corp.** ....................... 18,784,733
2,540 NTT Mobile Communication Network, Inc.** 91,767,934
414,040 STET Hellas Telecommunications
S.A. (ADR)* .......................... 10,868,550
229,853,650
Telephone - Integrated - 5.0%
424,110 Companhia de Telecommunicaciones de
Chile S.A. (ADR) ..................... 9,303,913
507,943 Global TeleSystems Group, Inc. ......... 20,349,466
6,947 Nippon Telegraph & Telephone Corp.** ... 54,370,995
161,718 Swisscom A.G.*,** ...................... 54,817,920
237,990 Telecom Argentina Stet S.A. (ADR) ...... 7,675,178
17,155 Telecomunicacoes Brasileiras S.A. (ADR) 1,302,708
426,175 Telefonica de Argentina S.A. (ADR) ..... 14,090,411
482,771 Telefonica de Espana S.A ............... 21,758,187
76,835 Telefonica de Espana S.A. (ADR) ........ 10,521,593
194,190,371
Transportation - Air Freight - 0.1%
279,757 SAS Danmark A/S ........................ 3,950,232
Travel Services - 1.2%
12,782 Kuoni Reisen A.G. - Class B** .......... 45,687,320
- --------------------------------------------------------------------------------
Total Common Stock (cost $2,660,026,330) .................. 3,219,474,222
- --------------------------------------------------------------------------------
Foreign Bond - 0.1%
Cellular Telecommunications - 0.1%
ECU
5,500,000 Cellular Communications International, Inc.
zero coupon, senior discount notes,
4/1/05 (cost $4,319,553) ............. 4,694,767
- --------------------------------------------------------------------------------
Preferred Stock - 2.9%
Automotive - Cars and Light Trucks - 1.5%
32,413 Porsche A.G.** ......................... 57,342,959
Computer Software - 0.5%
43,002 SAP A.G.** ............................. 20,953,445
Insurance Brokers - 0.5%
37,161 Marschollek, Lautenschlaeger und
Partner A.G.*,** ..................... 18,959,957
Telephone - Integrated - 0.4%
221,500 Telecomunicacoes Brasileiras S.A. (ADR)* 16,820,156
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $138,199,865) ................. 114,076,517
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 33
<PAGE>
Janus | Overseas Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Warrants - 0%
1,405 Muenchener Rueckversicherungs
- Gesellschaft A.G.*,** (cost $0) .... $ 61,080
- --------------------------------------------------------------------------------
Repurchase Agreement - 2.2%
$ 85,200,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$85,240,612 collateralized by
$42,653,404 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $38,949,470 in
Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $88,089 in Sallie
Mae, 4.947%, 11/10/98; $68,842,776 in
Government National Mortgage
Association, 4.50%-10.50%,
6/15/13-9/20/28; $1,588,427 in
Federal Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $6,366,921 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $480,968 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$29,967,969, $29,798,186, $89,125,
$49,274,604, $1,744,179, $6,496,589,
and $21,102 (cost$ 85,200,000) ....... 85,200,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 7.7%
Deutsche Bank A.G.
100,000,000 5.28%, 11/13/98 ...................... 99,824,000
Norwest Financial Corp.
100,000,000 5.00%, 12/14/98 ...................... 99,402,778
Prudential Funding Corp.
100,000,000 5.66%, 11/2/98 ....................... 99,984,278
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $299,211,056) ........................... 299,211,056
- --------------------------------------------------------------------------------
U.S. Government Agencies - 5.1%
Fannie Mae:
$ 50,000,000 5.60%, 11/16/98 ...................... $ 49,894,167
50,000,000 5.04%, 12/9/98 ....................... 49,734,000
Freddie Mac
100,000,000 5.60%, 12/17/98 ...................... 99,358,556
- --------------------------------------------------------------------------------
Total U.S. Government Agencies
(amortized cost $198,986,723) ........................... 198,986,723
- --------------------------------------------------------------------------------
Total Investments (total cost $3,385,943,527) - 100.8% .... 3,921,704,365
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.8%) (32,606,764)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 3,889,097,601
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
34 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 0.6% $ 22,107,660
Austria 0.3% 12,144,199
Brazil 0.5% 18,122,863
Canada 0.8% 30,288,276
Chile 0.2% 9,303,912
Denmark 0.9% 35,850,713
Finland 5.8% 226,369,287
France 9.9% 388,661,093
Germany 7.9% 308,617,372
Greece 0.3% 10,868,550
Hong Kong 0.4% 17,356,752
India -- 51,480
Ireland 2.0% 77,659,306
Italy 5.0% 194,902,444
Japan 9.4% 370,146,348
Mexico 0.6% 22,433,082
Netherlands 7.8% 306,551,612
Norway 0.6% 25,157,543
Portugal 0.2% 7,854,309
Spain 2.7% 107,846,863
Sweden 5.0% 196,342,640
Switzerland 4.9% 192,254,653
United Kingdom 16.6% 650,073,706
United States++ 17.6% 690,739,702
- --------------------------------------------------------------------------------
Total 100.0% $ 3,921,704,365
++Includes Short-Term Securities (2.7% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/6/98 132,480,000 $221,705,280 ($5,696,640)
British Pound 11/27/98 22,000,000 36,770,800 (998,800)
British Pound 4/7/99 121,520,000 201,869,024 1,912,702
Dutch Guilder 11/12/98 89,000,000 47,736,537 (3,397,047)
Dutch Guilder 11/27/98 38,000,000 20,400,494 (1,551,288)
Dutch Guilder 12/2/98 54,750,000 29,402,288 (2,026,809)
German Deutschemark
11/4/98 41,300,000 24,966,751 (1,726,902)
German Deutschemark
12/2/98 166,500,000 100,799,128 (6,923,115)
Japanese Yen 11/19/98 7,130,000,000 61,387,829 (9,306,017)
Japanese Yen 12/2/98 5,800,000,000 49,937,793 (9,016,268)
Japanese Yen 2/12/99 17,700,000,000 152,412,903 308,014
Japanese Yen 4/21/99 870,000,000 7,492,159 293,076
Swedish Krona 11/6/98 21,000,000 2,700,583 (46,521)
Swedish Krona 11/19/98 25,000,000 3,216,510 (118,616)
Swedish Krona 11/27/98 84,500,000 10,874,881 (289,888)
Swedish Krona 4/7/99 231,000,000 29,841,106 (944,433)
Swiss Franc 11/4/98 8,500,000 6,288,377 (397,872)
Swiss Franc 11/19/98 4,000,000 2,964,720 (271,117)
Swiss Franc 4/7/99 15,000,000 11,276,500 44,255
- --------------------------------------------------------------------------------
Total $1,022,043,663 ($40,153,286)
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 35
<PAGE>
Janus | Special Situations Fund
[PHOTO]
David C. Decker
portfolio manager
These last few months have seen tremendous levels of volatility in the markets.
While I was not surprised to see a correction of many stock valuations that in
my mind were overextended, I was surprised by the magnitude of the correction
and the indiscriminate nature of the selling that accompanied it. For the fiscal
year ended October 31, 1998, the Fund returned 8.49%, while the S&P 500 Index
returned 22.01%, the NASDAQ Composite Index returned 11.16%, and the Russell
2000 Index returned (11.84%).(1) I am certainly not pleased or satisfied with
our results, however, I am very confident in the outlook for the companies we've
selected.
In light of the severity of the global market volatility, I want to take a
moment to discuss my views on the turmoil and how it affected my investment
decisions. It is easy to forget that any market requires buyers and sellers to
stay in equilibrium. An excess of one or the other creates an imbalance and
causes prices to rise or fall, often dramatically. More importantly, price moves
don't necessarily have to be based on intrinsic value, but can be due to
perception and psychology.
The series of events that culminated in the correction in September came like a
cry of "Fire!" in a movie theater. The ensuing stampede to the exit was as
irrational as I have seen. High-quality stocks were dropping with seemingly no
bottom because there simply were no buyers. Valuation became irrelevant and
liquidity became paramount. In other words, the most important question for
buyers and sellers wasn't "What is this stock worth?"; instead, it was "Can I
sell this stock if I need to?" Cytec Industries, one of my favorite specialty
chemical companies, declined from $54 to $15 in a period of four weeks. At its
bottom, it was selling for six and one-half times free cash flow, in my mind
equivalent to a new Porsche selling for $5,000. Federal-Mogul, the largest
position in the Fund, declined from $72 to $33 at its lowest point. This stock
also sold for about six and one-half times free cash flow.
While it was certainly frustrating to watch what the correction was doing to the
wealth of my shareholders, from a different perspective, it was a very unique
opportunity to reload the Fund with great companies at reasonable prices. I
doubled my position in Cytec at an average cost of roughly $18. It is now $24,
and I expect this stock to continue to perform well. I was able to buy more
Federal-Mogul at $33, a price not seen since early 1997. The stock is now $54. I
also purchased a substantial amount of Bally Total Fitness and Chancellor Media.
Bally, which I purchased in the low teens after the stock fell from $37, is now
$19, and Chancellor, which I purchased in the low $20s, is now $38.
Cable companies, a significant weighting in the Fund, are also among my
favorites. The stocks have been excellent performers over the past year, and I
believe this will continue to be the case in the future. My original thesis on
these companies was that, as current capital spending budgets decline over the
next couple of years, a substantial amount of free cash flow
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 98.6% 97.1%
Foreign 4.2% 17.1%
Top 10 Equities (% of Assets) 61.2% 42.3%
Number of Stocks 36 58
Cash & Cash Equivalents 1.4% 2.9%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Cable Television 21.9% 5.0%
Multimedia 13.6% 0.6%
Automotive - Truck Parts
and Equipment 10.3% 7.3%
Radio 8.0% 1.3%
Printing - Commercial 5.8% 7.5%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Federal-Mogul Corp. 10.3% 7.3%
Time Warner, Inc. 9.0% 0.5%
Tele-Communications, Inc.
- Class A 7.8% 5.0%
Chancellor Media Corp. 6.7% --
Comcast Corp. - Special Class A 6.1% --
CBS Corp. 4.6% 3.8%
Bally Total Fitness Holding Corp. 4.6% 4.3%
MediaOne Group, Inc. 4.2% --
Cytec Industries, Inc. 4.1% 2.6%
TCA Cable TV, Inc. 3.8% --
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends.
Past performance does not guarantee future results. Investing in special
situation companies may entail greater risks.
36 Janus Equity Funds / October 31, 1998
<PAGE>
will be generated. This is still the case. Now, however, it is also becoming
clear that even more cash flow will be generated from new services such as
voice, data and digital cable. As investors come to better understand this, I
believe these stocks will continue to outperform.
One can look at a correction in different ways. It can be viewed as an
opportunity to sell, or it can be viewed as an opportunity to buy. Those who
viewed it as an opportunity to sell were doing so without regard to valuation
and often sold their stocks at substantial discounts to their true worth. Those
who viewed it as an opportunity to buy were simply taking advantage of the state
of panic that had caused many to make irrational decisions. We viewed it as an
opportunity to buy.
I want to thank you for sticking with the Fund, even when things looked bleak. I
also want you to know that I have never sold a share of the Fund and, in fact,
took the recent opportunity to add to my personal holdings in the Fund. There
will again be occasions when things look bleak, and the easy move will be to
sell. I urge to you not to take the easy way out. If you are a long-term
investor, the best time to invest is often when the consensus view would suggest
otherwise. This contradiction is precisely what creates the special situations
in which this fund invests. Thank you again for your support.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented
by a solid 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, 1998. The upper right quadrant reflects the ending value of
the hypothetical investment in Janus Special Situations Fund ($15,277) as
compared to the S&P 500 Index ($15,289).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 8.49%
Since 12/31/96*, 26.00%
Janus Special Situations Fund - $15,277
S&P 500 Index - $15,289
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 97.6%
Automotive - Truck Parts and Equipment - 10.3%
1,493,665 Federal-Mogul Corp. $ .................. 80,937,972
Broadcast Services and Programming - 3.4%
699,055 Tele-Communications Liberty Media
Group, Inc. - Class A* ............... 26,607,781
Cable Television - 21.9%
966,360 Comcast Corp. - Special Class A ........ 47,714,025
779,740 MediaOne Group, Inc.* .................. 32,992,749
1,085,780 TCA Cable TV, Inc. ..................... 30,062,534
1,450,000 Tele-Communications, Inc. - Class A* ... 61,081,250
171,850,558
Chemicals - Specialty - 4.1%
1,330,000 Cytec Industries, Inc.* ................ 31,920,000
Circuits - 2.4%
105,000 Linear Technology Corp. ................ 6,260,625
350,000 Maxim Integrated Products, Inc.* ....... 12,490,625
18,751,250
Computer Services - 1.2%
448,800 Wang Laboratories, Inc.* ............... 9,593,100
Computers - Micro - 3.6%
770,000 Apple Computer, Inc.* .................. 28,586,250
Cosmetics and Toiletries - 2.8%
1,674,200 Playtex Products, Inc.* ................ 22,078,512
Direct Marketing - 1.8%
294,880 Catalina Marketing Corp.* .............. $ 14,062,090
Diversified Operations - 2.9%
372,968 Tyco International, Ltd. ............... 23,100,705
Heart Monitors - 0%
4,635 Endocardial Solutions, Inc.* ........... 32,445
Human Resources - 0.3%
276,423 Capita Group PLC** ..................... 2,789,127
Medical Products - 0.4%
100,000 Mallinckrodt, Inc. ..................... 2,850,000
Multimedia - 13.6%
1,283,800 CBS Corp. .............................. 35,866,163
767,365 Time Warner, Inc. ...................... 71,221,064
107,087,227
Oil Companies - Exploration and Production - 0.9%
1,753,075 Magnum Hunter Resources, Inc.*,# ....... 6,793,166
Optical Supplies - 1.8%
230,000 Allergan, Inc. ......................... 14,360,625
Printing - Commercial - 5.8%
461,000 Valassis Communications, Inc.* ......... 18,382,375
900,000 World Color Press, Inc.* ............... 27,337,500
45,719,875
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 37
<PAGE>
Janus | Special Situations Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Publishing - Periodicals - 0.8%
988,330 Ziff-Davis, Inc.* ...................... $ 6,547,686
Radio - 8.0%
216,600 Capstar Broadcasting Corp. - Class A* .. 3,763,425
1,381,595 Chancellor Media Corp.* ................ 53,018,708
79,110 Clear Channel Communications, Inc.* .... 3,604,449
50,000 Jacor Communications, Inc.* ............ 2,750,000
63,136,582
Real Estate Investment Trusts - 0%
100,000 Property Capital Trust ................. 112,500
Recreational Centers - 4.6%
1,897,600 Bally Total Fitness Holding Corp.*,# ... 35,817,200
Retail - Jewelry - 0.4%
171,500 Claire's Stores, Inc. .................. 2,904,781
Seismic Data Collection - 0.2%
92,160 Veritas DGC, Inc.* ..................... 1,716,480
Shipbuilding - 1.3%
380,500 Newport News Shipbuilding, Inc. ........ 10,011,906
Television - 5.1%
1,305,000 Scandinavian Broadcasting System S.A.*,# 30,015,000
321,200 Young Broadcasting Corp. - Class A* .... 10,137,875
40,152,875
- --------------------------------------------------------------------------------
Total Common Stock (cost $725,503,715) .................... 767,520,693
- --------------------------------------------------------------------------------
Preferred Stock - 1.0%
Electric - Integrated - 1.0%
97,000 Houston Industries, Inc., convertible,
7.00% (cost $7,474,820) .............. 7,863,063
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 1.8%
Household Finance Corp.
$ 14,200,000 5.72%, 11/2/98
(amortized cost $14,197,744) ......... 14,197,744
- --------------------------------------------------------------------------------
Total Investments (total cost $747,176,279) - 100.4% ...... 789,581,500
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.4%) (3,264,723)
- --------------------------------------------------------------------------------
Net Assets - 100% ................................... $ 786,316,777
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Luxembourg 3.8% $ 30,015,000
United Kingdom 0.4% 2,789,127
United States++ 95.8% 756,777,373
- --------------------------------------------------------------------------------
Total 100.0% $ 789,581,500
++Includes Short-Term Securities (94.0% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/27/98 1,250,000 $ 2,089,250 ($37,791)
British Pound 4/7/99 250,000 415,300 6,550
- --------------------------------------------------------------------------------
Total $ 2,504,550 ($31,241)
See Notes to Schedules of Investments.
38 Janus Equity Funds / October 31, 1998
<PAGE>
Janus | Twenty Fund
[PHOTO]
Scott W. Schoelzel
portfolio manager
It's truly been an extraordinary year in many ways and I'd like to thank all of
you for your continued commitment and confidence. For the 12-month period ended
October 31, 1998, Janus Twenty Fund outperformed the S&P 500 Index, posting a
gain of 40.58% compared to 22.01% for the Index.(1) These results earned the
Fund a first-quartile ranking, placing it 2nd out of 240 capital appreciation
funds tracked by Lipper Analytical Services, Inc., a mutual fund rating
company.(2)
One principle of the Fund is to invest in companies that simply provide more and
more of the goods and services you and I use in our everyday lives. The pace of
innovation of products and services in the telecommunications, technology,
pharmaceuticals, financial services, retailing and media arenas has been nothing
short of phenomenal, and at times it's difficult just to keep up. Nevertheless,
our research analysts have done an extraordinary job identifying and analyzing
the opportunities which have presented themselves, and no letter would be
complete without acknowledging their outstanding work.
I genuinely believe the Internet will be the single most influential phenomenon
affecting our lives over the next 10 years. As Internet use infiltrates the way
we work, learn, and entertain ourselves, there should be an explosion of new
investment opportunities. We've chosen to invest in many companies we believe
will play a key role in this evolution. That said, our positions in Dell
Computer, Microsoft and America Online (AOL) in particular have added
significantly to the performance of the Fund. For the year, Microsoft's stock
price advanced more than 60%, while Dell and AOL gained more than 220%.
Life sciences, and more particularly pharmaceuticals, is another area where we
continue to see a proliferation of opportunities. Our positions in Pfizer,
Warner-Lambert and Eli Lilly all benefited from the increased acceptance of a
number of recently launched drugs, all which have proven to be very successful
in treating everything from elevated cholesterol levels to osteoporosis to
reducing the incidence of breast cancer. Going forward, we expect the pipeline
of "blockbuster" drugs to accelerate throughout the entire life sciences
industry.
Telecommunications continues to offer great potential as well. Gains from our
relatively new position in Nokia, a leader in the cellular phone equipment
industry, were driven by the increasing use of cellular phones both in the U.S.
and around the world. There are currently about 250 million subscribers
worldwide, and we expect an increase to more than 600 million in the next couple
of years. We believe Nokia is well-positioned to continue to maintain its
leadership.
Despite the Fund's noteworthy returns, there were stocks that fell short of our
expectations. Our financial services positions, once thought to be some of the
more stable and predictable in the portfolio, proved to be some of the most
volatile. The Asian economic crisis, Russian debt fiasco, hedge fund meltdowns,
and assimilation difficulties with some of the higher-profile banking mergers
all contributed to our loss of confidence. We chose to liquidate our positions
in both Citigroup and BankAmerica, but will continue to monitor future
developments at
(continued on next page)
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 81.1% 91.0%
Foreign 7.0% 4.2%
Top 20 Equities (% of Assets) 79.1% 80.1%
Top 10 Equities (% of Assets) 59.6% 53.1%
Number of Stocks 23 34
Cash & Fixed Income Securities 18.9% 9.0%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Medical - Drugs 15.2% 14.4%
Computers - Micro 11.4% 5.7%
Computer Software 9.3% 5.0%
Internet Software 7.4% 1.8%
Telecommunication Equipment 7.0% 5.2%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Dell Computer Corp. 10.7% 5.7%
America Online, Inc. 7.4% 1.8%
Microsoft Corp. 7.3% 5.0%
Time Warner, Inc. 5.8% 2.4%
Pfizer, Inc. 5.6% 5.2%
Warner-Lambert Co. 5.5% 4.6%
Nokia Oyj (ADR) - Class A 5.1% --
Cisco Systems, Inc. 4.8% 1.5%
General Electric Co. 3.9% 4.4%
MCI WorldCom, Inc. 3.5% 0.4%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A capital appreciation fund is defined by Lipper as one that "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,
1998, Janus Twenty Fund ranked 2/96 for the 5-year period, and 1/55 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.
Janus Equity Funds / October 31, 1998 39
<PAGE>
both of these firms as well as the entire financial services sector.
Fortunately, the disappointing returns posted by these stocks weren't enough to
meaningfully impact the Fund's overall performance.
Looking ahead, I believe market volatility is here to stay. The speed at which
information is now being disseminated, combined with its sheer volume and the
impact it has on the world's financial systems, will almost guarantee that the
volatility we have seen is only a precursor to future market actions. Despite
this increase in volatility, I remain very bullish on the longer-term prospects
for financial assets, particularly growth stocks. I would, however, urge you to
maintain realistic expectations going forward. The average return on stocks over
the past 30 years is around 11%, not 40%, and some years even produce losses.
(Yes, it can actually happen!)
Finally, managing Janus Twenty Fund is so much more than just a job to me. As
many of you know, 100% of my personal portfolio is invested in the Fund, side by
side with each of you. So next time the market swoons, rest assured that your
portfolio manager knows firsthand what you are going through and is working hard
to navigate the uncertainties of the marketplace with your best interests in
mind.
Thank you for your continued investment in Janus Twenty Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The S&P 500 Index is represented by a solid 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, 1998.
The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Twenty Fund ($107,077) as compared to the S&P 500 Index
($90,691).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 40.58%
Five Year, 23.22%
Ten Year, 23.41%
Since 4/30/85*, 19.20%
Janus Twenty Fund - $107,077
S&P 500 Index - $90,691
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 79.1%
Applications Software - 0.6%
1,431,377 Intuit, Inc.* .......................... $ 72,284,539
Cable Television - 1.2%
3,265,160 Tele-Communications, Inc. - Class A* ... 137,544,865
Computer Software - 7.3%
7,718,485 Microsoft Corp.* ....................... 817,194,599
Computers - Memory Devices - 1.5%
2,614,365 EMC Corp.* ............................. 168,299,747
Computers - Micro - 11.4%
2,100,000 Apple Computer, Inc. ................... 77,962,500
18,363,640 Dell Computer Corp.* ................... 1,205,113,875
1,283,076,375
Diversified Operations - 3.9%
5,041,960 General Electric Co. ................... 441,171,500
Finance - Mortgage Loan Banker - 2.8%
4,400,445 Fannie Mae ............................. 311,606,512
Internet Software - 7.4%
6,597,200 America Online, Inc.* .................. 838,256,725
Medical - Drugs - 15.2%
4,619,435 Eli Lilly and Co. ...................... 373,885,520
1,421,145 Glaxo Wellcome PLC (ADR) ............... 88,466,276
5,846,015 Pfizer, Inc. ........................... 627,350,485
7,867,175 Warner-Lambert Co. ..................... 616,589,841
1,706,292,122
Multi-Line Insurance - 2.5%
3,250,000 American International Group, Inc. ..... $ 277,062,500
Multimedia - 5.8%
7,073,784 Time Warner, Inc. ...................... 656,535,577
Networking Products - 4.8%
8,574,445 Cisco Systems, Inc.* ................... 540,190,035
Retail - Building Products - 2.1%
5,394,800 Home Depot, Inc. ....................... 234,673,800
Super-Regional Banks - 1.4%
4,282,365 U.S. Bancorp ........................... 156,306,323
Telecommunication Equipment - 7.0%
2,800,365 Lucent Technologies, Inc. .............. 224,554,268
6,107,975 Nokia Oyj (ADR) - Class A .............. 568,423,423
792,977,691
Telecommunication Services - 0.7%
2,000,000 Qwest Communications
International, Inc.* ................. 78,250,000
Telephone - Long Distance - 3.5%
7,037,380 MCI WorldCom, Inc.* .................... 388,815,245
- --------------------------------------------------------------------------------
Total Common Stock (cost $5,327,548,802) .................. 8,900,538,155
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
40 Janus Equity Funds / October 31, 1998
<PAGE>
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 2.2%
Retail - Regional Department Stores - 0.6%
Fred Meyer, Inc.:
$ 40,000,000 7.375%, senior notes, due 3/1/05 ..... $ 41,400,000
25,000,000 7.45%, senior notes, due 3/1/08 ...... 26,187,500
67,587,500
Telecommunication Services - 1.6%
190,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 ............. 179,075,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $254,165,308) ................. 246,662,500
- --------------------------------------------------------------------------------
Preferred Stock - 2.0%
Computer Software - 2.0%
456,089 SAP A.G.*,**(cost $228,493,327) ........ 222,237,009
- --------------------------------------------------------------------------------
U.S. Government Obligation - 1.9%
$195,000,000 U.S. Treasury Note, 6.125%,
due 11/15/27 (cost $200,892,158) ..... 219,837,150
- --------------------------------------------------------------------------------
Money Market - 5.2%
85,000,000 Janus Government Money Market
Fund, 5.31% .......................... 85,000,000
500,000,000 Janus Money Market Fund, 5.46% ......... 500,000,000
- --------------------------------------------------------------------------------
Total Money Market (cost $585,000,000) .................... 585,000,000
- --------------------------------------------------------------------------------
Repurchase Agreement - 0.2%
29,100,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$29,113,871 collateralized by
$14,568,240 in Fannie Mae,
0.%-13.00%, 11/1/98-9/25/28;
$13,303,164 in Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $30,087 in Sallie
Mae, 4.947%, 11/10/98; $23,513,202 in
Government National Mortgage
Association, 4.50%-10.50%, 6/15/13-
9/20/28; $542,526 in Federal Farm
Credit, 5.63%-8.16%, 9/5/00-10/7/09;
$2,174,617 in Federal Home Loan Bank
System, 1.70%-6.135%,
11/6/98-8/21/28; $164,274 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$10,235,539, $10,177,549, $30,442,
$16,829,706, $595,723, $2,218,905,
and $7,208 (cost $29,100,000) ........ 29,100,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 2.2%
Ford Motor Credit Corp.
150,000,000 5.25%, 11/13/98 ...................... 149,737,500
Norwest Financial Corp.
100,000,000 5.23%, 11/23/98 ...................... 99,680,389
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $249,417,889) ........................... 249,417,889
- --------------------------------------------------------------------------------
Time Deposit - 0.9%
$100,000,000 Wachovia - North Carolina Bank Note
5.50%, 11/2/98 (cost $100,000,000) ... $ 100,000,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 5.1%
Fannie Mae:
100,000,000 5.04%, 12/9/98 ....................... 99,468,000
50,000,000 5.45%, 1/6/99 ........................ 49,557,500
50,000,000 5.45%, 2/2/99 ........................ 49,384,000
Freddie Mac:
50,000,000 5.14%, 11/13/98 ...................... 49,914,333
100,000,000 5.05%, 11/30/98 ...................... 99,609,306
100,000,000 5.06%, 12/7/98 ....................... 99,494,000
75,000,000 5.45%, 1/25/99 ....................... 74,154,750
50,000,000 5.45%, 1/26/99 ....................... 49,429,500
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $571,000,847) ........ 571,011,389
- --------------------------------------------------------------------------------
Total Investments (total cost $7,545,618,331) - 98.8% ..... 11,123,804,092
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1 2% 131,065,658
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 11,254,869,750
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Finland 5.1% $ 568,423,423
Germany 2.0% 222,237,009
United States++ 92.9% 10,333,143,660
- --------------------------------------------------------------------------------
Total 100.0% $ 11,123,804,092
++Includes Short-Term Securities (79.1% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
German Deutschemark
11/4/98 68,000,000 $41,107,484 ($1,920,332)
German Deutschemark
1/26/99 92,000,000 55,835,407 879,813
- --------------------------------------------------------------------------------
Total $96,942,891 ($1,040,519)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 41
<PAGE>
Janus | Venture Fund (closed to new investors)
[PHOTO]
James P. Craig
portfolio manager
[PHOTO]
William H. Bales
portfolio manager
[PHOTO]
Jonathan Coleman
portfolio manager
While the small- and mid-cap sectors of the market continued to lag large caps
through most of the fiscal year, Janus Venture Fund returned 1.07% for the
12-month period ended October 31, 1998, outperforming its benchmark, the Russell
2000 Index, which returned (11.84%) for the same period.(1)
Additionally, the Fund's performance exceeded that of many of its peers during
the period. It ranked 21st out of 588 small-company growth funds tracked by
Lipper Analytical Services, Inc., a mutual fund rating company, which placed the
Fund in the top quartile for the year.(2)
In our letter to you at midyear, we mentioned our plans to restructure the Fund
by reducing the number of positions and adding to those where we saw the
strongest potential for growth. In effect, the Fund became more focused, though
no less diverse, as the number of names dropped from 197 at the beginning of the
year to 94 at fiscal year-end.
These changes enabled us to get back to our stock-picking roots, so to speak, by
providing even more time for on-site visits with company managements. In a
market intolerant of earnings shortfalls (particularly among small-cap
companies), this continues to be critical to our ongoing research.
Unfortunately, despite strong earnings for many of our companies, liquidity
concerns drove small-cap prices down a number of times throughout the year.
Nonetheless, we continued to treat these pricing inefficiencies as buying
opportunities, selectively adding to our favorite positions.
Among those we increased during the year were Veritas Software Corporation, TCA
Cable TV, Inc. and MedImmune, Inc. Veritas, a developer of data management and
storage software, will likely benefit from a data explosion created by rapid
Internet growth. We expect TCA to increase its cash flow by offering customers
new, value-added services, including telephony, data and video-on-demand. And
our optimism for MedImmune is based on continued strong sales from its
respiratory infection treatments, as well as a full product pipeline.
Despite a difficult environment for small technology stocks, our holdings in
this area continued to do well. Significant gains posted by Engineering
Animation (one of our largest positions) helped buoy the Fund's performance. The
company's stock appreciated as a result of the growing popularity of its
three-dimensional engineering software, particularly among car manufacturers who
benefit from reduced development time.
Another large technology holding that posted impressive returns was Wind River
Systems, Inc. Although the stock was flat throughout much of the year, it gained
late in the period following news of an agreement with Intel. The deal grants
royalties to Wind River for each computer chip Intel sells containing Wind
River's embedded software system.
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 90.0% 96.4%
Foreign 2.7% 5.6%
European 2.7% 3.8%
Top 10 Equities (% of Assets) 26.0% 17.1%
Number of Stocks 94 197
Cash & Cash Equivalents 10.0% 3.6%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Medical Drugs 5.7% 2.4%
Cable Television 5.1% --
Computer Software 4.5% 2.4%
Commercial Banks 4.4% 4.6%
Applications Software 4.2% 1.4%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Wind River Systems, Inc. 3.8% 0.9%
MedImmune, Inc. 3.1% --
TCA Cable TV, Inc. 2.7% --
Sepracor, Inc. 2.6% 0.7%
Metromedia Fiber Network, Inc. - Class A 2.6% --
Engineering Animation, Inc. 2.4% 0.5%
M & T Bank Corp. 2.4% 2.0%
Adelphia Communications Corp. - Class A 2.4% --
Heftel Broadcasting Corp.
- Class A 2.1% 0.7%
Henry Schein, Inc. 1.9% 0.9%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A small-cap fund is defined by Lipper as "a fund that by prospectus or
portfolio practice invests primarily in companies with market
capitalizations less than $1 billion at the time of purchase." As of
October 31, 1998, Janus Venture Fund ranked 93/190 for the 5-year period
and 21/65 for the 10-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.
42 Janus Equity Funds / October 31, 1998
<PAGE>
We were also pleased with MiniMed, Inc., a stock that gained from the movement
toward more intensive medical management of diabetes. The company has captured
nearly 90% of U.S. market share for insulin pumps and is currently awaiting FDA
approval for its new glucose sensor.
Two stocks that fell short of our expectations were Concentra Managed Care and
Computer Learning Centers. Although Concentra's financial profile appeared
solid, we trimmed our position when lackluster earnings growth caused the stock
to falter. We also liquidated our position in Computer Learning Centers at a
loss following the stock's decline on news that an inspection by the U.S.
Department of Education faulted the company for inaccurate record keeping.
The recent underperformance of the small-cap sector, coupled with the extreme
volatility of the overall market, has created tremendous opportunities in
small-company stocks. We are working hard to take advantage of the
inefficiencies we see and are hopeful for solid returns over the course of the
year.
In closing, we'd like to thank you for your continued support and investment in
Janus Venture Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The Russell 2000 Index is represented by
a solid 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, 1998. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Venture Fund ($68,206) as compared to the
Russell 2000 Index ($42,348).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 1.07%
Five Year, 10.28%
Ten Year, 14.55%
Since 4/30/85*, 15.28%
Janus Venture Fund - $68,206
Russell 2000 Index - $42,348
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 90.0%
Advertising Sales - 2.4%
552,795 Lamar Advertising Co. - Class A* ....... $ 17,257,568
349,965 Outdoor Systems, Inc.* ................. 7,721,102
24,978,670
Advertising Services - 0.5%
363,637 Penton Media, Inc. ..................... 5,454,555
Aerospace and Defense - 1.8%
573,695 Orbital Sciences Corp.* ................ 18,931,935
Airlines - 0.6%
200,000 Ryanair Holdings PLC (ADR)* ............ 5,875,000
Applications Software - 4.2%
375,000 HNC Software, Inc.* .................... 12,609,375
400,000 Policy Management Systems Corp.* ....... 18,175,000
200,000 Sapient Corp.* ......................... 9,012,500
250,000 Software A.G. Systems, Inc.* ........... 3,750,000
43,546,875
Audio and Video Products - 0.3%
50,000 Gemstar International Group, Ltd.* ..... 2,731,250
Automotive - Truck Parts and Equipment - 1.6%
309,000 Federal-Mogul Corp. .................... 16,743,938
Cable Television - 5.1%
649,545 Adelphia Communications Corp. - Class A* $ 24,439,130
1,008,440 TCA Cable TV, Inc. ..................... 27,921,183
52,360,313
Cellular Telecommunications - 0.3%
100,000 WinStar Communications, Inc.* .......... 2,700,000
Circuits - 3.0%
590,000 SIPEX Corp.* ........................... 16,372,500
450,900 Vitesse Semiconductor Corp.* ........... 14,541,525
30,914,025
Collectibles - 0.1%
50,000 Action Performance Companies, Inc.* .... 1,493,750
Commercial Banks - 4.4%
216,200 Investors Financial Services Corp. ..... 11,647,775
49,900 M & T Bank Corp. ....................... 24,875,150
145,700 U.S. Trust Corp. ....................... 9,279,268
45,802,193
Commercial Services - 2.3%
447,900 Central Parking Corp. .................. 18,783,806
156,250 NCO Group, Inc.* ....................... 4,921,875
23,705,681
Computer Graphics - 2.4%
575,000 Engineering Animation, Inc.*,# ......... 25,192,187
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 43
<PAGE>
Janus | Venture Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Computer Services - 3.3%
214,000 ARIS Corp.* ............................ $ 3,370,500
291,900 Ciber, Inc.* ........................... 5,728,537
105,600 DA Consulting Group, Inc.* ............. 1,584,000
167,465 ECsoft Group PLC (ADR)* ................ 3,684,230
342,855 Logica PLC ............................. 11,584,066
420,182 Technology Solutions Co.* .............. 5,042,184
229,300 Tier Technologies, Inc.* ............... 2,980,900
33,974,417
Computer Software - 4.5%
300,000 Brio Technology, Inc.* ................. 2,475,000
329,000 Micromuse, Inc.* ....................... 5,613,563
887,337 Wind River Systems, Inc.* .............. 38,876,452
46,965,015
Computers - Memory Devices - 1.5%
314,475 VERITAS Software Corp.* ................ 15,763,059
Consulting Services - 0.7%
116,050 Charles River Associates, Inc.* ........ 2,901,250
186,990 Professional Detailing, Inc.* .......... 4,370,891
7,272,141
Drug Delivery Systems - 0.2%
236,900 Atrix Laboratories, Inc.* .............. 2,398,613
Electronic Components - Semiconductors - 1.6%
125,000 Artisian Components* ................... 914,063
625,000 ATMI, Inc.* ............................ 8,593,750
192,200 MIPS Technologies, Inc.* ............... 4,444,625
100,000 SDL, Inc.* ............................. 2,200,000
16,152,438
Electronic Safety Devices - 1.6%
727,274 Pittway Corp. - Class A ................ 16,681,847
Fiber Optics - 2.6%
700,000 Metromedia Fiber Network, Inc. - Class A* 26,512,500
Finance - Mortgage Loan Banker - 0.3%
180,000 Doral Financial Corp. .................. 3,150,000
Finance - Other Services - 0.9%
300,000 HealthCare Financial Partners, Inc.* ... 9,187,500
Food - Retail - 0.5%
100,000 Dominick's Supermarkets, Inc.* ......... 4,881,250
Food - Wholesale - 1.6%
350,000 U.S. Foodservice, Inc.* ................ 16,625,000
Human Resources - 2.5%
250,000 ProBusiness Services, Inc.* ............ 9,140,625
888,325 Romac International, Inc.* ............. 15,545,688
72,985 Select Appointments Holdings PLC (ADR) . 1,240,745
25,927,058
Instruments - Scientific - 1.0%
406,100 Dionex Corp.* .......................... 10,812,413
Internet Content - 0.2%
47,695 Broadcast.com, Inc.* ................... 2,378,788
Internet Software - 0.4%
60,740 Lycos, Inc.* ........................... 2,467,563
125,000 Spyglass, Inc.* ........................ 1,625,000
4,092,563
Medical - Biomedical and Genetic - 0.8%
84,700 Incyte Pharmaceuticals, Inc.* .......... $ 2,583,350
100,000 QIAGEN N.V.* ........................... 6,075,000
8,658,350
Medical - Drugs - 5.7%
475,000 MedImmune, Inc.* ....................... 31,943,750
400,000 Sepracor, Inc.* ........................ 27,450,000
59,393,750
Medical - Generic Drugs - 1.6%
300,000 Watson Pharmaceuticals, Inc.* .......... 16,687,500
Medical Instruments - 1.0%
100,000 Sofamor Danek Group, Inc.* ............. 10,162,500
Medical Products - 3.7%
500,000 Henry Schein, Inc.* .................... 19,343,750
300,000 MiniMed, Inc.* ......................... 16,650,000
100,000 Osteotech, Inc.* ....................... 2,518,750
38,512,500
Music/Clubs - 1.4%
450,000 SFX Entertainment, Inc. - Class A* ..... 14,231,250
Network Software - 0.1%
27,900 Concord Communications, Inc.* .......... 1,035,788
Office Furnishings - 0.7%
275,200 Knoll, Inc.* ........................... 7,430,400
Optical Supplies - 1.2%
200,000 Allergan, Inc. ......................... 12,487,500
Pharmacy Services - 1.4%
335,000 NCS HealthCare, Inc. - Class A* ........ 5,904,375
250,000 Omnicare, Inc. ......................... 8,640,625
14,545,000
Printing - Commercial - 1.8%
469,225 Valassis Communications, Inc.* ......... 18,710,347
Professional Sports - 0.5%
200,000 Championship Auto Racing Teams, Inc.* .. 4,975,000
Property and Casualty Insurance - 1.0%
100,000 Mutual Risk Management, Ltd. ........... 3,381,250
304,650 Philadelphia Consolidated Holding Corp.* 7,121,194
10,502,444
Radio - 3.4%
351,500 Citadel Communications Corp.* .......... 7,205,750
183,590 Cox Radio, Inc. - Class A* ............. 6,873,151
526,195 Heftel Broadcasting Corp. - Class A* ... 21,639,769
35,718,670
Recreational Centers - 0.5%
250,000 Bally Total Fitness Holding Corp.* ..... 4,718,750
Rental Auto/Equipment - 1.4%
28,500 Home Choice Holdings, Inc.* ............ 368,719
400,000 Rent-Way, Inc.* ........................ 9,450,000
200,000 Renters Choice, Inc.* .................. 4,962,500
14,781,219
Resorts and Theme Parks - 1.5%
700,000 Premier Parks, Inc.* ................... 15,531,250
See Notes to Schedules of Investments.
44 Janus Equity Funds / October 31, 1998
<PAGE>
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Retail - Bedding - 1.0%
335,300 Linens `N Things, Inc.* ................ $ 10,373,344
Retail - Catalog Shopping - 1.2%
320,000 MSC Industrial Direct Co., Inc. - Class A* 6,800,000
350,000 School Specialty, Inc.* ................ 5,512,500
12,312,500
Retail - Internet - 0.2%
189,700 software.net Corp.* .................... 1,754,725
Retail - Pubs - 0.6%
1,813,155 J.D. Wetherspoon PLC ................... 6,012,252
Retail - Regional Department Stores - 1.5%
290,000 Fred Meyer, Inc.* ...................... 15,460,625
Retail - Restaurants - 1.5%
400,000 Papa John's International, Inc.* ....... 15,187,500
Schools - 0.1%
50,000 ITT Educational Services, Inc.* ........ 1,484,375
Telecommunication Equipment - 1.7%
125,000 Aware, Inc.* ........................... 1,515,625
600,000 GeoTel Communications Corp.* ........... 15,600,000
17,115,625
Telecommunication Services - 0.5%
494,360 Hyperion Telecommunications, Inc.
- Class A* ........................... 4,820,010
Television - 0.8%
279,185 Univision Communications, Inc. - Class A* 8,235,958
Wireless Equipment - 0.8%
400,000 American Tower Corp.* .................. 8,750,000
- --------------------------------------------------------------------------------
Total Common Stock (cost $706,896,146) .................... 932,794,106
- --------------------------------------------------------------------------------
Repurchase Agreement - 5.6%
$ 58,000,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$58,027,647 collateralized by
$29,036,355 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $25,514,897 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $59,967 in Sallie Mae,
4.947%, 11/10/98; $46,864,800 in
Government National Mortgage
Association, 4.50%- 10.50%,
6/15/13-9/20/28; $1,081,323 in
Federal Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $4,334,289 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $347,419 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$20,400,730, $20,285,150, $60,674,
$33,543,745, $1,187,352, $4,442,561,
and $14,366 (cost $58,000,000) ....... 58,000,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 4.8%
Federal Home Loan Bank System
$ 25,000,000 5.45%, 1/27/99 ....................... $ 24,711,500
Freddie Mac
25,000,000 5.45%, 1/14/99 ....................... 24,750,500
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $49,464,785) ......... 49,462,000
- --------------------------------------------------------------------------------
Total Investments (total cost $814,360,931) - 100.4% ...... 1,040,256,106
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.4%) (4,387,838)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 1,035,868,268
- --------------------------------------------------------------------------------
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Ireland 0.6% $ 5,875,000
United Kingdom 2.1% 22,521,293
United States++ 97.3% 1,011,859,813
- --------------------------------------------------------------------------------
Total 100.0% $ 1,040,256,106
++Includes Short-Term Securities (86.9% excluding Short-Term Securities)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 45
<PAGE>
Janus | Worldwide Fund
[PHOTO]
Helen Young Hayes
portfolio manager
For the 12-month period ended October 31, 1998, Janus Worldwide Fund appreciated
11.40% compared to the MSCI World Index, which returned 15.26%.(1) Despite
lagging its index, the Fund achieved a top-quartile ranking, placing 47th out of
211 global funds tracked by Lipper Analytical Services, Inc., a mutual fund
rating company.(2)
The fiscal year was the most volatile 12-month period in recent memory. The
first three quarters reflected generally buoyant equity markets, fueled by
continued modest growth and low interest rates primarily in the U.S. and Europe.
Asian markets and economies were relatively weak in comparison, but helped
contribute to the general optimism regarding sustainable global growth and low
interest rates. While the unresolved banking crisis in Japan was troublesome, it
was viewed more as a regional problem. However, the global equity markets began
to stumble in July when Russia devalued its currency and subsequently
restructured its debt obligations. This sent widespread shocks throughout the
global financial markets, primarily because of the highly leveraged Russian
positions held by hedge funds. Forced liquidations of hedge funds pressured the
dollar, corporate bonds and the broad equity markets, while fears of losses were
particularly pronounced among financial stocks. As a result, global growth
forecasts were slashed. Political concerns in Japan, Germany and the U.S. also
contributed to the sell-off. Hardest hit were the European bourses, which had
the largest gains to date.
In September and October, the Federal Reserve intervened with two interest rate
cuts, helping global markets rally. Although the U.S. market regained much of
its losses near the end of the period, the international markets remained well
below their summer highs. Intraday volatility returned to more normal levels,
and market participants focused once again on fundamentals.
The Fund had a number of winners and a few losers. Two of our U.S. technology
stocks, Microsoft and Cisco Systems, contributed solid gains, and we added to
these positions on market declines. Other strong U.S. performers included our
cable positions in Time Warner, Comcast and Tele-Communications, Inc., as well
as pharmaceutical powerhouses like Warner-Lambert and Bristol-Myers Squibb.
European information technology companies were also winners, including Cap
Gemini, Getronics and Atos. Business support services in Europe contributed
strongly to results, with Rentokil Initial, Securitas, Hays PLC and Compass
Group all posting large gains. Telecommunications equipment maker Nokia turned
in an outstanding performance, benefiting from huge global demand for cellular
telephony. Telecom service providers MCI-WorldCom and Swisscom (a new holding)
were strong performers as well.
However, European financial stocks, which we had held because of declining
interest rates and industry consolidation, were broadly hit by the financial
crisis mentioned earlier. Our biggest loser was UBS in Switzerland, which
suffered from exposure to both Russia and hedge funds. Despite the positive
benefits from cost-cutting and an attractive private banking business, the
earnings potential of UBS was impaired by write-downs and market volatility. We
significantly reduced this position at a loss. Some smaller financial holdings
were also hurt, such as Deutsche Bank and Bank Austria, and we liquidated and
cut these positions, respectively. However, we
Portfolio Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Equities 85.6% 94.1%
Foreign 60.7% 78.1%
European 52.1% 65.3%
Top 10 Equities (% of Assets) 24.4% 21.1%
Number of Stocks 155 207
Cash & Cash Equivalents 14.4% 5.9%
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Diversified Operations 10.1% 10.5%
Medical - Drugs 9.6% 6.8%
Telephone - Integrated 4.4% 2.8%
Computer Services 4.2% 3.4%
Telecommunication Services 4.1% 1.6%
- --------------------------------------------------------------------------------
Top 5 Countries October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
United States 39.4% 16.5%
United Kingdom 10.2% 15.3%
France 9.1% 11.2%
Japan 6.7% 6.6%
Germany 5.9% 7.4%
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 3.5% 1.4%
Tyco International, Ltd. 2.9% --
Mannesman A.G 2.9% --
Microsoft Corp. 2.8% 0.7%
Tele-Communications, Inc. 2.3% 1.1%
Time Warner, Inc. 2.1% --
Rentokil Initial PLC 2.0% 2.4%
NTT Mobile Communication Network, Inc. 2.0% --
Wolters Kluwer N.V 2.0% 1.0%
Nokia Oyj (ADR)- Class A 1.9% 0.2%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends. 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 that "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, 1998, Janus Worldwide Fund was
ranked 3/66 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.
46 Janus Equity Funds / October 31, 1998
<PAGE>
maintained our holdings in other European financials based upon positive
fundamentals and low valuations, and added select names to the portfolio.
Stocks with economic sensitivity were hit during the sell-off by growing fears
of a global recession. Even companies that exceeded earnings expectations, like
Renault, Porsche and Electrolux, declined. Two of our holdings, French telecom
equipment manufacturer Alcatel and Dutch consumer electronics company Philips
Electronics, experienced earnings shortfalls because of weakening global
economies. We cut these positions based upon our reduced earnings estimates.
Looking ahead, we foresee slower global economic growth and favorable interest
rates. Japan's economy is still decelerating, while its government stumbles
toward a solution for the banking crisis and economic malaise. Nonetheless, we
are finding select opportunities here. Asian economies have stabilized, but
equity valuations are expensive relative to earnings potential.
In Latin America, which is experiencing slower economic growth, we are currently
focusing on the telecom sector. While in the U.S. and Europe, we continue to
expect modest growth coupled with measures to improve profitability and
shareholder value. The bulk of our holdings is concentrated here.
Recent market volatility, while frustrating, has created many new investment
opportunities. By seeking out companies globally with strong franchises and
improving fundamentals, we hope to find good investment returns over the long
term regardless of short-term market movements.
Thank you for your continued investment in Janus Worldwide Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of green. The Morgan
Stanley Capital International World Index is represented by a solid 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, 1998. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Worldwide Fund ($36,706) as compared to the Morgan Stanley Capital
International World Index ($23,195).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 11.40%
Five Year, 17.60%
Since 5/15/91*, 19.04%
Janus Worldwide Fund - $36,706
Morgan Stanley Capital
International World Index - $23,195
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 84.2%
Advertising Agencies - 0%
210,256 WPP Group PLC** ........................ $ 1,038,741
Agricultural Biotechnology - 0.2%
764,630 Monsanto Co. ........................... 31,063,094
Agricultural Operations - 0.1%
312,525 Delta and Pine Land Co. ................ 10,430,522
Airlines - 0.2%
1,069,968 SAS Norge A.S.A. - Class B# ............ 11,103,157
1,782,045 SAS Sverige A.B.** ..................... 19,377,828
30,480,985
Appliances - 1.1%
9,942,915 Electrolux A.B.** ...................... 149,457,975
Applications Software - 0.5%
1,281,926 Intuit, Inc.* .......................... 64,737,263
Audio and Video Products - 0.8%
1,784,100 Sony Corp.** ........................... 113,298,994
Automotive - Cars and Light Trucks - 1.1%
1,735,000 Honda Motor Co., Ltd.** ................ 52,112,591
2,464,274 Renault S.A ............................ 105,322,680
157,435,271
Automotive - Truck Parts and Equipment - 1.0%
1,654,176 Valeo S.A.+ ............................ 143,184,527
Beverages - Non-Alcoholic - 0.1%
1,134,355 Coca-Cola Femsa S.A. (ADR) ............. $ 18,716,858
Beverages - Wine and Spirits - 0.4%
1,436,192 Allied Domecq PLC** .................... 13,228,549
3,546,216 Diageo PLC** ........................... 38,305,569
51,534,118
Brewery - 0.1%
1,372,000 Kirin Brewery Co., Ltd.** .............. 14,953,160
Broadcast Services and Programming - 0.4%
1,864,035 Grupo Televisa S.A. (GDR)* ............. 50,561,949
Building - Heavy Construction - 0.1%
146,640 Compagnie Francaise d'Etudes et de
Construction Technip ................. 14,909,744
Building and Construction - 0.7%
576,205 Suez Lyonnaise des Eaux ................ 103,173,793
Building Products - Cement and Aggregate - 0.2%
733,566 Cimpor-Cimentos de Portugal S.A ........ 25,378,383
Cable Television - 4.0%
3,923,085 Comcast Corp. - Special Class A ........ 193,702,322
892,500 MediaOne Group, Inc.* .................. 37,763,906
7,684,915 Tele-Communications, Inc. - Class A* ... 323,727,044
555,193,272
See Notes to Schedules of Investments.
Janus Equity Fund / October 31, 1998 47
<PAGE>
Janus | Worldwide Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Cellular Telecommunications - 1.9%
1,266,205 AirTouch Communications, Inc.* ......... $ 70,907,480
894,952 Cellular Communications
International, Inc.*,# ............... 55,626,860
6,184,000 China Telecom, Ltd.* ................... 11,616,248
13,860,425 Telecom Italia Mobile S.p.A ............ 80,537,963
2,945,601 Vodafone Group PLC** ................... 39,414,654
258,103,205
Chemicals - Diversified - 0.7%
1,271,885 Akzo Nobel N.V.** ...................... 49,440,455
825,327 Hoechst A.G.** ......................... 34,484,616
645,510 Solutia, Inc. .......................... 14,160,876
98,085,947
Commercial Banks - 1.6%
3,802,638 Banco Central Hispanoamericano ......... 41,902,486
165,593 Bayerische Vereinsbank A.G.** .......... 13,148,039
144,353 BG Bank A/S ............................ 8,368,710
3,135,860 Corporacion Bancaria de Espana S.A ..... 68,110,106
2,541,789 Den norske Bank A.S.A .................. 8,930,042
6,678 Julius Baer Holding A.G. - Class B** ... 20,466,615
10,795,404 Unicredito Italiano S.p.A .............. 58,135,140
219,061,138
Computer Services - 4.2%
481,331 Atos S.A.# ............................. 90,776,704
1,402,284 Cap Gemini S.A.+ ....................... 210,713,203
3,568,113 Getronics N.V.** ....................... 148,060,189
1,575,686 Logica PLC** ........................... 53,237,814
4,951,771 Misys PLC** ............................ 34,912,397
1,092,031 WM-Data A.B. - Class B** ............... 39,675,354
577,375,661
Computer Software - 2.9%
1,547,747 JBA Holdings PLC**,# ................... 7,257,633
595,751 Merkantildata A.S.A .................... 5,980,132
3,697,610 Microsoft Corp.* ....................... 391,484,459
404,722,224
Computers - Integrated Systems - 0.5%
483,291 Equant N.V.*,** ........................ 20,942,787
567,260 Equant N.V. - New York Shares*,** ...... 24,817,625
2,386,608 SEMA Group PLC** ....................... 19,094,523
64,854,935
Computers - Micro - 0.2%
488,560 Dell Computer Corp.* ................... 32,061,750
Cosmetics and Toiletries - 0.3%
714,000 Estee Lauder Companies, Inc. - Class A . 46,811,625
Cruise Lines - 0.1%
526,315 Carnival Corp. ......................... 17,039,448
Diversified Operations - 10.1%
11,120,732 Hays PLC** ............................. $ 163,983,350
1,122,336 Lagardere S.C.A ........................ 45,161,046
46,444,673 Rentokil Initial PLC** ................. 284,880,302
26,786,009 Siebe PLC** ............................ 109,903,397
8,892,034 Tomkins PLC** .......................... 41,174,968
6,484,018 Tyco International, Ltd. ............... 401,603,865
845,037 Unilever N.V.** ........................ 62,710,022
199,660 VEBA A.G.** ............................ 11,151,314
1,059,122 Vivendi ................................ 241,867,160
7,138,760 Williams PLC** ......................... 44,563,311
1,406,998,735
Drug Delivery Systems - 0.8%
1,617,585 Elan Corp. PLC (ADR)* .................. 113,332,049
Electric - Integrated - 0.1%
494,572 Endesa S.A ............................. 12,441,774
Electronic Components - 1.1%
439,254 Electrocomponents PLC** ................ 2,898,338
1,344,708 Koninklijke Philips Electronics N.V.** . 71,566,927
1,454,600 Philips Electronics N.V. - New York Shares** 79,821,175
154,286,440
Finance - Consumer Loans - 0.3%
1,084,550 Household International, Inc. .......... 39,653,859
Finance - Other Services - 0.1%
513,520 Newcourt Credit Group, Inc. ............ 16,881,970
Food - Catering - 0.9%
13,011,095 Compass Group PLC** .................... 131,173,878
Food - Diversified - 1.3%
488,013 Danone ................................. 129,009,734
6,177 Nestle S.A.** .......................... 13,137,768
3,272,464 Raisio Group PLC ....................... 43,971,505
186,119,007
Food - Retail - 0.6%
70,920 Disco S.A. (ADR)* ...................... 1,041,638
2,505,506 Koninklijke Ahold N.V.** ............... 83,307,681
84,349,319
Hotels and Motels - 0%
120,075 EIH, Ltd.+ ............................. 624,390
Human Resources - 0.5%
32,920 Adecco S.A.** .......................... 13,128,197
5,962,404 Capita Group PLC** ..................... 60,161,059
73,289,256
Investment Companies - 0.5%
406,009 Ratin A/S - B Shares ................... 69,670,998
Investment Management and Advisory Services - 0.3%
4,623,050 Amvescap PLC** ......................... 35,459,376
Life and Health Insurance - 0.2%
53,206 Schweizerische Lebensversicherungs-und
Rentenanstalt** ..................... 32,023,569
Machinery - General Industrial - 2.9%
4,054,149 Mannesmann A.G.** ...................... 399,007,043
See Notes to Schedules of Investments.
48 Janus Equity Funds / October 31, 1998
<PAGE>
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 9.6%
896,240 American Home Products Corp. ........... $ 43,691,700
5,551,916 Astra A.B. - Class A** ................. 89,846,448
1,327,375 Bristol-Myers Squibb Co. ............... 146,757,898
2,209,385 Glaxo Wellcome PLC** ................... 68,673,055
920,944 Merck KGaA** ........................... 37,812,500
918,465 Pfizer, Inc. ........................... 98,562,775
164,143 Pharmacia & Upjohn, Inc.** ............. 8,378,432
3,903,455 Pharmacia & Upjohn, Inc. ............... 206,639,149
1,908,605 Rhone-Poulenc - Class A ................ 87,240,685
261,954 Sanofi S.A ............................. 41,012,249
1,096,825 SmithKline Beecham PLC (ADR)** ......... 69,922,594
5,896,000 Takeda Chemical Industries** ........... 191,766,096
3,139,054 Warner-Lambert Co. ..................... 246,023,357
1,336,326,938
Metal Processors and Fabricators - 1.3%
4,661,434 Assa Abloy A.B. - Class B**,# .......... 185,458,793
Money Center Banks - 3.4%
12,969,673 Banca Commerciale Italiana ............. 80,183,588
56,674,239 Banca di Roma* ......................... 98,839,083
1,692,023 Banco Bilbao Vizcaya, S.A .............. 22,781,603
598,591 Bank Austria A.G ....................... 32,569,763
11,138,218 Lloyds TSB Group PLC** ................. 137,567,156
281,311 National Westminster Bank PLC** ........ 4,729,960
256,796 Schroders PLC** ........................ 4,881,139
4,202,693 Skandinaviska Enskilda Banken - Class A** 42,473,911
112,786 UBS A.G.** ............................. 30,943,221
325,804 Unidanmark A/S - Class A ............... 24,839,193
479,808,617
Mortgage Banks - 1.0%
1,777,707 Deutsche Pfandbrief-und
Hypothekenbank A.G.** ................ 140,612,759
Multi-Line Insurance - 1.4%
72,414 Baloise Holding Ltd. - Class R** ....... 59,788,251
205,448 ERGO Versicherungs Gruppe A.G.** ....... 34,051,600
204,294 Royal & Sun Alliance Insurance
Group PLC** .......................... 1,871,458
607,916 Storebrand A.S.A.* ..................... 4,741,608
143,034 Zurich Versicherungs-Gesellschaft** 86,934,193
187,387,110
Multimedia - 2.1%
3,194,975 Time Warner, Inc. ...................... 296,533,617
Networking Products - 3.5%
7,616,463 Cisco Systems, Inc.* ................... 479,837,169
Oil Companies - Integrated - 0.6%
1,106,618 British Petroleum Co. PLC** ............ 16,438,356
1,251,470 Conoco, Inc. - Class A* ................ 31,130,316
156,563 Elf Aquitaine S.A ...................... 18,116,296
156,070 Total S.A .............................. 18,003,078
83,688,046
Publishing - Books - 2.0%
1,419,991 Wolters Kluwer N.V.** .................. 275,227,712
Radio - 0.3%
776,605 Clear Channel Communications, Inc.* $ .. 35,384,065
Recycling - 0.3%
1,463,428 Tomra Systems A.S.A.# .................. 41,091,876
Reinsurance - 0%
4,661 Muenchener Rueckversicherungs
- Gesellschaft A.G.** ................ 2,121,992
Retail - Building Products - 0%
8,653 Castorama Dubois Investisse ............ 1,543,155
Retail - Diversified - 0.4%
968,000 Ito-Yokado Co., Ltd.** ................. 56,488,418
Rubber - Tires - 0.2%
1,214,000 Bridgestone Corp.** .................... 26,722,753
Security Services - 1.4%
15,812,424 Securitas A.B. - Class B**,# ........... 194,194,615
Telecommunication Equipment - 4.0%
82,227 Alcatel S.A ............................ 9,159,555
735,800 Alcatel S.A. (ADR) ..................... 16,187,600
2,905,526 Nokia Oyj - Class A .................... 264,694,696
2,483,035 Nokia Oyj (ADR) - Class A .............. 231,077,445
60,973 Telefonaktiebolaget L.M. Ericsson
- Class B** .......................... 1,372,833
1,377,659 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B** .......................... 31,169,535
553,661,664
Telecommunication Services - 4.1%
2,375,030 COLT Telecom Group PLC*,** ............. 31,024,209
198,728 Deutsche Telekom A.G.** ................ 5,414,039
13,066 NTT Data Corp.**,# ..................... 55,279,577
7,807 NTT Mobile Communication
Network, Inc.** ...................... 282,059,945
27,459,553 Telecom Italia S.p.A ................... 198,562,833
572,340,603
Telephone - Integrated - 4.0%
1,376,480 Companhia de Telecommunicaciones de
Chile S.A. (ADR) ..................... 30,196,530
18,024 Nippon Telegraph & Telephone Corp.** ... 141,065,612
582,617 Swisscom A.G.*,** 197,491,017
807,610 Telecom Argentina Stet S.A. (ADR) ...... 26,045,423
61,755 Telecomunicacoes Brasileiras S.A. (ADR)* 4,689,520
1,387,380 Telefonica de Argentina S.A. (ADR) ..... 45,870,251
1,690,361 Telefonica de Espana S.A ............... 76,183,513
272,490 Telefonica de Espana S.A. (ADR) ........ 37,314,099
558,855,965
Telephone - Long Distance - 1.1%
2,815,330 MCI WorldCom, Inc.* .................... 155,546,983
Transportation - Air Freight - 0.1%
962,569 SAS Danmark A/S ........................ 13,591,690
Travel Services - 0.3%
10,549 Kuoni Reisen A.G. - Class B** .......... 37,705,800
- --------------------------------------------------------------------------------
Total Common Stock (cost $9,051,507,310) .................. 11,723,106,585
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 49
<PAGE>
Janus | Worldwide Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Preferred Stock - 1.4%
Automotive - Cars and Light Trucks - 0.5%
37,477 Porsche A.G.** ......................... $ 66,301,857
Computer Software - 0.5%
150,744 SAP A.G.** ............................. 73,452,540
Insurance Brokers - 0%
9,945 Marschollek, Lautenschlaeger
und Partner A.G.*,** ................. 5,074,050
Telephone - Integrated - 0.4%
733,360 Telecomunicacoes Brasileiras S.A. (ADR) 55,689,525
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $271,512,250) ................. 200,517,972
- --------------------------------------------------------------------------------
Warrants - 0%
4,661 Muenchener Rueckversicherungs
- Gesellschaft A.G.*,** (cost $0) .... 202,631
- --------------------------------------------------------------------------------
Money Market - 3.5%
$185,000,000 Janus Government Money Market Fund,
5.31% ................................ 185,000,000
300,000,000 Janus Money Market Fund, 5.46% ......... 300,000,000
- --------------------------------------------------------------------------------
Total Money Market (cost $485,000,000) .................... 485,000,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 5.3%
Deutsche Bank A.G.:
150,000,000 5.28%, 11/9/98 ....................... 149,824,000
50,000,000 5.28%, 11/13/98 ...................... 49,912,000
IBM Credit Corp.
200,000,000 5.03%, 1/15/99 ....................... 197,878,000
Norwest Financial Corp.
100,000,000 5.18%, 11/9/98 ....................... 99,884,889
UBS Financial, Inc.
250,000,000 5.32%, 11/5/98 ....................... 249,852,222
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (cost $747,377,278) ...... 747,351,111
- --------------------------------------------------------------------------------
Time Deposit - 1.4%
Wachovia-North Carolina Bank Note
195,700,000 5.4375%, 11/2/98 (cost $195,700,000) . 195,700,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 4.3%
Fannie Mae:
$ 50,000,000 5.37%, 11/9/98 ....................... $ 49,940,333
200,000,000 5.09%, 11/20/98 ...................... 199,462,722
50,000,000 5.39%, 11/30/98 ...................... 49,782,903
50,000,000 5.37%, 12/21/98 ...................... 49,627,083
Freddie Mac:
50,000,000 5.06%, 12/23/98 ...................... 49,634,556
200,000,000 5.01%, 1/6/99 ........................ 198,222,000
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $596,603,263) ........ 596,669,597
- --------------------------------------------------------------------------------
Total Investments (total cost $11,347,700,101) - 100.1% ... 13,948,547,896
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.1%) (16,557,685)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 13,931,990,211
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
50 Janus Equity Funds / October 31, 1998
<PAGE>
Summary of Investments by Country, October 31, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 0.5% $ 72,957,311
Austria 0.2% 32,569,763
Brazil 0.4% 60,379,044
Canada 0.1% 16,881,970
Chile 0.2% 30,196,529
Denmark 0.8% 116,470,591
Finland 3.9% 539,743,646
France 9.1% 1,275,381,225
Germany 5.9% 822,834,978
Hong Kong 0.1% 11,616,248
India -- 624,390
Ireland 0.8% 113,332,049
Italy 3.7% 516,258,606
Japan 6.7% 933,747,145
Mexico 0.5% 69,278,806
Netherlands 5.9% 815,894,573
Norway 0.5% 71,846,815
Portugal 0.2% 25,378,382
Spain 1.9% 258,733,580
Sweden 5.5% 761,405,724
Switzerland 3.5% 491,618,630
United Kingdom 10.2% 1,415,795,785
United States++ 39.4% 5,495,602,106
- --------------------------------------------------------------------------------
Total 100.0% $ 13,948,547,896
++Includes Short-Term Securities (24.9% excluding Short-Term Securities)
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/6/98 297,360,000 $497,631,960 ($12,786,480)
British Pound 11/27/98 65,000,000 108,641,000 (2,951,000)
British Pound 4/7/99 195,640,000 324,997,168 2,954,164
Dutch Guilder 11/12/98 153,000,000 82,063,935 (5,839,866)
Dutch Guilder 11/27/98 110,000,000 59,054,061 (4,490,569)
Dutch Guilder 12/2/98 137,300,000 73,733,956 (5,082,755)
German Deutschemark
11/4/98 133,400,000 80,643,211 (5,577,937)
German Deutschemark
12/2/98 422,100,000 255,539,412 (17,551,029)
Japanese Yen 11/19/98 8,000,000,000 68,878,351 (10,441,535)
Japanese Yen 12/2/98 12,000,000,000 103,319,572 (18,654,348)
Japanese Yen 2/12/99 42,000,000,000 361,657,736 1,090,303
Japanese Yen 4/8/99 4,006,000,000 34,497,784 704,325
Japanese Yen 4/21/99 18,994,000,000 163,570,195 6,398,485
Swedish Krona 11/6/98 395,900,000 50,912,411 (324,532)
Swedish Krona 4/7/99 703,114,000 90,829,867 (2,356,020)
Swiss Franc 4/7/99 62,691,000 47,129,003 184,959
- --------------------------------------------------------------------------------
Total $2,403,099,622 ($74,723,835)
See Notes to Schedules of Investments.
Janus Equity Funds / October 31, 1998 51
<PAGE>
Statements of | Operations
<TABLE>
<CAPTION>
Janus Janus
Janus Janus Equity Growth Janus
For the fiscal year ended October 31, 1998 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 $ 46,886 $ 13,427 $ 472 $ 633 $ 13,361 $ 4,544
Dividends 134,943 4,599 1,757 1,512 18,334 8,723
Foreign tax withheld (4,582) (77) (73) (20) (191) (272)
177,247 17,949 2,156 2,125 31,504 12,995
Expenses:
Advisory fees 135,223 3,870 3,982 1,002 16,513 14,071
Transfer agent fees and expenses 37,207 1,145 1,452 336 5,459 4,905
Registration fees 989 203 47 97 381 113
Postage and mailing expenses 2,389 66 133 34 468 471
Custodian fees 2,864 90 155 68 294 265
Printing expenses 2,626 101 176 57 576 522
Audit fees 12 9 3 6 29 20
Trustees' fees and expenses 137 5 5 3 21 24
Other expenses 308 23 10 12 41 39
Total Expenses 181,755 5,512 5,963 1,615 23,782 20,430
Expense and Fee Offsets (3,683) (102) (138) (33) (573) (572)
Net Expenses 178,072 5,410 5,825 1,582 23,209 19,858
Net Investment Income/(Loss) (825) 12,539 (3,669) 543 8,295 (6,863)
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 650,728 5,962 81,920 3,248 222,315 245,034
Net realized gain/(loss) from
foreign currency transactions (61,065) (116) (2,915) (1) (2,055) (1,113)
Net realized gain/(loss) from futures contracts -- -- -- -- -- --
Change in net unrealized appreciation
or depreciation of investments 2,210,595 49,716 (12,029) 13,912 104,949 204,681
Net Gain/(Loss) on Investments 2,800,258 55,562 66,976 17,159 325,209 488,602
Net Increase/(Decrease) in Net Assets
Resulting from Operations $2,799,433 $ 68,101 $ 63,307 $ 17,702 $ 333,504 $ 441,739
<CAPTION>
Janus
Janus Janus Special Janus Janus Janus
For the fiscal year ended October 31, 1998 Olympus Overseas Situations Twenty Venture Worldwide
(all numbers in thousands) Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Interest $ 2,771 $ 13,965 $ 757 $ 63,216 $ 4,665 $ 45,943
Dividends 3,280 52,651 3,371 39,938 2,889 151,275
Foreign tax withheld (106) (6,716) (104) (68) (62) (17,454)
5,945 59,900 4,024 103,086 7,492 179,764
Expenses:
Advisory fees 5,434 26,061 5,040 52,477 8,032 85,269
Transfer agent fees and expenses 1,721 7,463 1,729 16,368 2,341 24,426
Registration fees 144 363 319 1,259 56 399
Postage and mailing expenses 175 347 176 1,046 135 1,045
Custodian fees 110 3,019 155 636 133 7,556
Printing expenses 192 429 267 1,227 277 1,513
Audit fees 19 42 7 10 25 17
Trustees' fees and expenses 9 28 4 49 1 100
Other expenses 24 58 25 124 45 187
Total Expenses 7,828 37,810 7,722 73,196 11,045 120,512
Expense and Fee Offsets (248) (654) (211) (1,162) (173) (2,682)
Net Expenses 7,580 37,156 7,511 72,034 10,872 117,830
Net Investment Income/(Loss) (1,635) 22,744 (3,487) 31,052 (3,380) 61,934
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions (926) (152,593) (426) 103,105 89,190 (258,854)
Net realized gain/(loss) from
foreign currency transactions (3,091) (14,506) (1,644) (18,822) (251) (54,716)
Net realized gain/(loss) from futures contracts -- (6,994) -- -- -- (18,147)
Change in net unrealized appreciation
or depreciation of investments 150,137 200,570 9,074 2,427,694 (64,755) 1,260,143
Net Gain/(Loss) on Investments 146,120 26,477 7,004 2,511,977 24,184 928,426
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 144,485 $ 49,221 $ 3,517 $2,543,029 $ 20,804 $ 990,360
</TABLE>
See Notes to Financial Statements.
52 and 53 Janus Equity Funds / October 31, 1998
<PAGE>
Statements of | Assets & Liabilities
<TABLE>
<CAPTION>
Janus Janus
As of October 31, 1998 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 $15,024,990 $ 740,915 $ 455,646 $ 177,256 $ 2,331,485 $ 1,857,923
Investments at value $20,635,999 $ 822,729 $ 576,940 $ 198,519 $ 2,825,721 $ 2,349,455
Cash 3,298 558 1,622 670 1,091 1,722
Receivables:
Investments sold 113,649 6,615 2,237 3,233 7,502 14,825
Fund shares sold 21,376 7,946 7,740 934 6,533 21,721
Dividends 6,369 785 320 296 1,808 580
Interest 1,883 4,892 12 313 2,257 --
Other assets 144 2 4 1 12 9
Forward currency contracts -- -- 189 -- -- --
Total Assets 20,782,718 843,527 589,064 203,966 2,844,924 2,388,312
Liabilities:
Payables:
Investments purchased 16,166 12,029 23,625 2,238 18,678 14,262
Fund shares repurchased 13,474 676 5,941 718 1,880 1,921
Advisory fees 10,532 449 295 111 1,472 1,220
Transfer agent fees and expenses 2,976 138 115 36 484 312
Accrued expenses 2,404 186 89 81 608 405
Forward currency contracts 15,904 -- -- -- 2,723 2,115
Total Liabilities 61,456 13,478 30,065 3,184 25,845 20,235
Net Assets $20,721,262 $ 830,049 $ 558,999 $ 200,782 $ 2,819,079 $ 2,368,077
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 740,775 48,209 17,291 12,875 106,584 114,002
Net Asset Value Per Share $ 27.97 $ 17.22 $ 32.33 $ 15.59 $ 26.45 $ 20.77
<CAPTION>
Janus
As of October 31, 1998 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 Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at cost $ 683,632 $ 3,385,944 $ 747,176 $ 7,545,618 $ 814,361 $11,347,700
Investments at value $ 951,517 $ 3,921,704 $ 789,582 $11,123,804 $ 1,040,256 $13,948,548
Cash 1,071 1,062 551 1,559 1,730 570
Receivables:
Investments sold 5,395 42,931 6,764 35,001 107 117,064
Fund shares sold 10,439 13,841 1,585 104,655 198 62,187
Dividends 302 6,577 38 1,286 103 21,302
Interest 27 27 -- 15,694 18 785
Other assets 3 19 4 61 22 77
Forward currency contracts -- -- -- -- -- --
Total Assets 968,754 3,986,161 798,524 11,282,060 1,042,434 14,150,533
Liabilities:
Payables:
Investments purchased 17,617 43,390 9,884 9,429 5,014 113,989
Fund shares repurchased 2,248 10,089 1,436 7,659 705 18,154
Advisory fees 503 2,023 428 5,533 556 7,122
Transfer agent fees and expenses 133 578 134 1,742 172 2,068
Accrued expenses 190 830 294 1,787 119 2,486
Forward currency contracts 569 40,153 31 1,040 -- 74,724
Total Liabilities 21,260 97,063 12,207 27,190 6,566 218,543
Net Assets $ 947,494 $ 3,889,098 $ 786,317 $11,254,870 $ 1,035,868 $13,931,990
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 43,666 216,615 53,972 261,874 20,797 335,568
Net Asset Value Per Share $ 21.70 $ 17.95 $ 14.57 $ 42.98 $ 49.81 $ 41.52
</TABLE>
See Notes to Financial Statements.
54 and 55 Janus Equity Funds / October 31, 1998
<PAGE>
Statements of | Changes in Net Assets
<TABLE>
<CAPTION>
Janus Janus
Janus Balanced Enterprise
For the fiscal year ended October 31 Fund Fund Fund
(all numbers in thousands) 1998 1997 1998 1997 1998 1997
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ (825) $ 149,574 $ 12,539 $ 7,455 ($ 3,669) ($ 3,766)
Net realized gain/(loss)
from investment transactions 589,663 3,110,339 5,846 34,483 79,005 33,040
Change in unrealized net appreciation
or depreciation of investments 2,210,595 495,474 49,716 17,621 (12,029) (21,277)
Net Increase in Net Assets
Resulting from Operations 2,799,433 3,755,387 68,101 59,559 63,307 7,997
Dividends and Distributions to Shareholders:
Net investment income* (149,577) (120,830) (10,977) (6,418) -- --
Dividends (in excess of net investment income)* -- -- -- -- -- --
Net realized gain from investment transactions* (3,125,216) (1,689,077) (34,067) (19,020) (34,480) (30,151)
Net Decrease from Dividends and Distributions (3,274,793) (1,809,907) (45,044) (25,438) (34,480) (30,151)
Capital Share Transactions:
Shares sold 3,186,804 3,064,802 622,532 218,600 520,538 407,412
Reinvested dividends and distributions 3,186,148 1,766,166 44,048 24,763 33,924 29,668
Shares repurchased (4,205,664) (3,060,294) (219,747) (124,369) (576,118) (595,101)
Net Increase/(Decrease) from
Capital Share Transactions 2,167,288 1,770,674 446,833 118,994 (21,656) (158,021)
Net Increase/(Decrease) in Net Assets 1,691,928 3,716,154 469,890 153,115 7,171 (180,175)
Net Assets:
Beginning of period 19,029,334 15,313,180 360,159 207,044 551,828 732,003
End of period $20,721,262 $19,029,334 $ 830,049 $ 360,159 $ 558,999 $ 551,828
Net Assets Consist of:
Capital (par value and paid-in surplus)* $14,546,706 $12,379,736 $ 737,933 $ 291,100 $ 361,296 $ 382,952
Undistributed net investment income/(loss)* -- 160,515 4,165 2,406 -- --
Undistributed net realized gain/(loss)
from investments* 579,287 3,104,409 6,135 34,553 76,223 35,367
Unrealized appreciation of investments
and foreign currency 5,595,269 3,384,674 81,816 32,100 121,480 133,509
$20,721,262 $19,029,334 $ 830,049 $ 360,159 $ 558,999 $ 551,828
Transactions in Fund Shares:
Shares sold 113,579 114,499 37,044 14,343 16,290 13,843
Reinvested distributions 130,632 71,795 2,868 1,721 1,154 1,027
Total 244,211 186,294 39,912 16,064 17,444 14,870
Shares Repurchased (151,587) (112,847) (13,233) (8,152) (18,034) (20,455)
Net Increase/(Decrease) in Fund Shares 92,624 73,447 26,679 7,912 (590) (5,585)
Shares Outstanding Beginning of Period 648,151 574,704 21,530 13,618 17,881 23,466
Shares Outstanding End of Period 740,775 648,151 48,209 21,530 17,291 17,881
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $13,850,135 $23,008,189 $ 679,170 $ 411,623 $ 729,785 $ 654,058
Proceeds from sales of securities 16,162,138 20,176,583 337,939 334,092 804,426 835,021
Purchases of long-term
U.S. government obligations -- -- 45,545 63,848 -- --
Proceeds from sales of long-term
U.S. government obligations -- -- 34,603 45,558 -- --
<CAPTION>
Janus Janus Janus
Equity Income Growth and Income Mercury
For the fiscal year ended October 31 Fund Fund Fund
(all numbers in thousands) 1998 1997 1998 1997 1998 1997
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 543 $ 287 $ 8,295 $ 4,229 ($ 6,863) $ 4,299
Net realized gain/(loss)
from investment transactions 3,247 5,252 220,260 185,980 243,921 198,605
Change in unrealized net appreciation
or depreciation of investments 13,912 6,343 104,949 241,318 204,681 116,617
Net Increase in Net Assets
Resulting from Operations 17,702 11,882 333,504 431,527 441,739 319,521
Dividends and Distributions to Shareholders:
Net investment income* (233) (393) (3,592) (6,298) -- (8,225)
Dividends (in excess of net investment income)* -- -- -- -- (4,295) --
Net realized gain from investment transactions* (5,097) (992) (184,658) (97,951) (196,658) (250,204)
Net Decrease from Dividends and Distributions (5,330) (1,385) (188,250) (104,249) (200,953) (258,429)
Capital Share Transactions:
Shares sold 224,385 81,250 1,412,356 906,848 1,556,825 1,157,958
Reinvested dividends and distributions 5,387 1,306 184,420 101,813 196,626 252,800
Shares repurchased (115,687) (49,157) (811,950) (480,123) (1,597,209) (1,503,151)
Net Increase/(Decrease) from
Capital Share Transactions 114,085 33,399 784,826 528,538 156,242 (92,393)
Net Increase/(Decrease) in Net Assets 126,457 43,896 930,080 855,816 397,028 (31,301)
Net Assets:
Beginning of period 74,325 30,429 1,888,999 1,033,183 1,971,049 2,002,350
End of period $ 200,782 $ 74,325 $ 2,819,079 $ 1,888,999 $ 2,368,077 $ 1,971,049
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 175,807 $ 61,722 $ 2,102,737 $ 1,317,911 $ 1,644,255 $ 1,488,013
Undistributed net investment income/(loss)* 474 87 5,513 823 -- 5,512
Undistributed net realized gain/(loss)
from investments* 3,236 5,163 219,309 183,694 234,405 192,788
Unrealized appreciation of investments
and foreign currency 21,265 7,353 491,520 386,571 489,417 284,736
$ 200,782 $ 74,325 $ 2,819,079 $ 1,888,999 $ 2,368,077 $ 1,971,049
Transactions in Fund Shares:
Shares sold 15,102 6,443 54,594 40,425 80,428 65,228
Reinvested distributions 408 115 8,105 5,245 12,167 15,284
Total 15,510 6,558 62,699 45,670 92,595 80,512
Shares Repurchased (7,952) (3,936) (31,457) (21,857) (84,267) (84,844)
Net Increase/(Decrease) in Fund Shares 7,558 2,622 31,242 23,813 8,328 (4,332)
Shares Outstanding Beginning of Period 5,317 2,695 75,342 51,529 105,674 110,006
Shares Outstanding End of Period 12,875 5,317 106,584 75,342 114,002 105,674
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 228,057 $ 108,410 $ 2,442,458 $ 2,032,309 $ 2,114,889 $ 2,839,050
Proceeds from sales of securities 128,268 79,110 2,149,033 1,711,207 2,337,255 2,999,417
Purchases of long-term
U.S. government obligations -- 1,000 -- -- -- --
Proceeds from sales of long-term
U.S. government obligations -- 1,007 -- -- -- --
<CAPTION>
Janus Janus Janus
Olympus Overseas Special Situations
For the fiscal year ended October 31 Fund Fund Fund
(all numbers in thousands) 1998 1997 1998 1997 1998 1997 (1)
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) ($ 1,635) $ 1,357 $ 22,744 $ 16,993 ($ 3,487) ($ 109)
Net realized gain/(loss)
from investment transactions (4,017) 32,619 (174,093) 86,037 (2,070) 18,106
Change in unrealized net appreciation
or depreciation of investments 150,137 82,685 200,570 231,923 9,074 33,300
Net Increase in Net Assets
Resulting from Operations 144,485 116,661 49,221 334,953 3,517 51,297
Dividends and Distributions to Shareholders:
Net investment income* -- (3,648) (16,883) (2,552) -- --
Dividends (in excess of net investment income)* (1,358) -- -- -- -- --
Net realized gain from investment transactions* (24,652) -- (89,374) (15,609) (17,012) --
Net Decrease from Dividends and Distributions (26,010) (3,648) (106,257) (18,161) (17,012) --
Capital Share Transactions:
Shares sold 663,265 529,820 4,151,239 4,520,982 904,751 389,647
Reinvested dividends and distributions 25,635 3,545 103,249 17,781 16,542 --
Shares repurchased (475,532) (463,102) (3,513,551) (2,422,988) (455,258) (107,167)
Net Increase/(Decrease) from
Capital Share Transactions 213,368 70,263 740,937 2,115,775 466,035 282,480
Net Increase/(Decrease) in Net Assets 331,843 183,276 683,901 2,432,567 452,540 333,777
Net Assets:
Beginning of period 615,651 432,375 3,205,197 772,630 333,777 --
End of period $ 947,494 $ 615,651 $ 3,889,098 $ 3,205,197 $ 786,317 $ 333,777
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 685,433 $ 473,702 $ 3,548,643 $ 2,807,706 $ 745,046 $ 282,480
Undistributed net investment income/(loss)* -- 1,267 19,959 19,546 -- --
Undistributed net realized gain/(loss)
from investments* (5,261) 23,497 (175,453) 82,566 (1,103) 17,997
Unrealized appreciation of investments
and foreign currency 267,322 117,185 495,949 295,379 42,374 33,300
$ 947,494 $ 615,651 $ 3,889,098 $ 3,205,197 $ 786,317 $ 333,777
Transactions in Fund Shares:
Shares sold 32,029 33,016 220,566 262,026 59,478 32,037
Reinvested distributions 1,491 242 5,955 1,181 1,221 --
Total 33,520 33,258 226,521 263,207 60,699 32,037
Shares Repurchased (23,295) (28,918) (188,605) (136,692) (30,431) (8,333)
Net Increase/(Decrease) in Fund Shares 10,225 4,340 37,916 126,515 30,268 23,704
Shares Outstanding Beginning of Period 33,441 29,101 178,699 52,184 23,704 --
Shares Outstanding End of Period 43,666 33,441 216,615 178,699 53,972 23,704
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 915,583 $ 1,202,420 $ 4,221,837 $ 3,322,515 $ 1,255,119 $ 488,802
Proceeds from sales of securities 881,598 1,107,630 3,834,004 1,331,836 810,438 217,384
Purchases of long-term
U.S. government obligations -- -- -- -- -- --
Proceeds from sales of long-term
U.S. government obligations -- -- -- -- -- --
</TABLE>
(1) Period from December 31, 1996, (inception) to October 31, 1997. *See Note 3
in Notes to Financial Statements.
See Notes to Financial Statements.
56 and 57 Janus Equity Funds / October 31, 1998
<PAGE>
Statements of | Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Janus Janus Janus
Twenty Venture Worldwide
For the fiscal year ended October 31 Fund Fund Fund
(all numbers in thousands) 1998 1997 1998 1997 1998 1997
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 31,052 $ 16,587 ($ 3,380) $ 1,510 $ 61,934 $ 50,795
Net realized gain/(loss)
from investment transactions 84,283 755,954 88,939 195,359 (331,717) 655,178
Change in unrealized net appreciation
or depreciation of investments 2,427,694 546,527 (64,755) (52,099) 1,260,143 690,790
Net Increase in Net Assets
Resulting from Operations 2,543,029 1,319,068 20,804 144,770 990,360 1,396,763
Dividends and Distributions to Shareholders:
Net investment income* (16,587) (22,661) (52) -- (50,801) (21,409)
Dividends (in excess of net investment income)* -- -- (1,458) -- -- --
Net realized gain from investment transactions* (752,195) (663,308) (193,117) (155,029) (676,334) (285,338)
Net Decrease from Dividends and Distributions (768,782) (685,969) (194,627) (155,029) (727,135) (306,747)
Capital Share Transactions:
Shares sold 5,456,699 2,010,346 172,993 179,080 8,757,202 7,204,484
Reinvested dividends and distributions 754,471 653,113 188,622 150,172 706,814 299,515
Shares repurchased 2,601,617) (1,362,932) (404,265) (807,968) (6,153,476) (2,702,975)
Net Increase/(Decrease) from
Capital Share Transactions 3,609,553 1,300,527 (42,650) (478,716) 3,310,540 4,801,024
Net Increase/(Decrease) in Net Assets 5,383,800 1,933,626 (216,473) (488,975) 3,573,765 5,891,040
Net Assets:
Beginning of period 5,871,070 3,937,444 1,252,341 1,741,316 10,358,225 4,467,185
End of period $11,254,870 $ 5,871,070 $ 1,035,868 $ 1,252,341 $13,931,990 $10,358,225
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 7,560,146 $ 3,950,593 $ 720,685 $ 766,715 $11,702,483 $ 8,391,943
Undistributed net investment income/(loss)* 31,035 16,568 -- 3,432 61,968 69,045
Undistributed net realized gain/(loss)
from investments* 86,537 754,451 89,289 191,545 (359,700) 630,141
Unrealized appreciation of investments
and foreign currency 3,577,152 1,149,458 225,894 290,649 2,527,239 1,267,096
$11,254,870 $ 5,871,070 $ 1,035,868 $ 1,252,341 $13,931,990 $10,358,225
Transactions in Fund Shares:
Shares sold 137,366 62,858 3,296 3,277 204,904 190,176
Reinvested distributions 24,760 23,127 3,904 2,884 18,812 8,941
Total 162,126 85,985 7,200 6,161 223,716 199,117
Shares Repurchased (67,253) (42,422) (7,687) (15,340) (146,793) (69,584)
Net Increase/(Decrease) in Fund Shares 94,873 43,563 (487) (9,179) 76,923 129,533
Shares Outstanding Beginning of Period 167,001 123,438 21,284 30,463 258,645 129,112
Shares Outstanding End of Period 261,874 167,001 20,797 21,284 335,568 258,645
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 5,303,352 $ 5,967,189 $ 988,045 $ 1,754,415 $11,468,001 $10,485,393
Proceeds from sales of securities 3,789,475 5,818,841 1,284,642 2,388,474 10,368,469 5,673,413
Purchases of long-term
U.S. government obligations 388,670 -- -- -- -- --
Proceeds from sales of long-term
U.S. government obligations 188,367 -- -- -- -- --
</TABLE>
*See Note 3 in Notes to Financial Statements.
See Notes to Financial Statements.
58 Janus Equity Funds / October 31, 1998
<PAGE>
Financial | Highlights
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 29.36 $ 26.65 $ 23.37 $ 19.62 $ 20.81
Income from Investment Operations:
Net investment income (.02) .15 .31 .16 .17
Net gains or (losses) on securities
(both realized and unrealized) 3.70 5.69 4.23 3.99 (.03)
Total from Investment Operations 3.68 5.84 4.54 4.15 .14
Less Distributions:
Dividends (from net investment income) (.23) (.21) (.13) (.01) (.39)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (4.84) (2.92) (1.13) (.39) (.94)
Total Distributions (5.07) (3.13) (1.26) (.40) (1.33)
Net Asset Value, End of Period $ 27.97 $ 29.36 $ 26.65 $ 23.37 $ 19.62
Total Return* 15.12% 24.18% 20.31% 21.62% 0.75%
Net Assets, End of Period (in thousands) $20,721,262 $19,029,334 $15,313,180 $11,962,970 $ 9,647,245
Average Net Assets for the Period (in thousands) $20,777,322 $17,515,216 $13,753,157 $10,559,806 $ 9,338,807
Ratio of Gross Expenses to Average Net Assets**(1) 0.87% 0.87% 0.86% 0.87% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.86% 0.86% 0.85% 0.86% 0.91%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** -- 0.85% 0.91% 1.25% 1.12%
Portfolio Turnover Rate** 70% 132% 104% 118% 139%
<CAPTION>
For a share outstanding throughout Janus Balanced Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.73 $ 15.20 $ 13.72 $ 12.17 $ 12.23
Income from Investment Operations:
Net investment income .33 .36 .33 .61 .27
Net gains or (losses) on securities
(both realized and unrealized) 2.00 2.88 2.22 1.52 (.09)
Total from Investment Operations 2.33 3.24 2.55 2.13 .18
Less Distributions:
Dividends (from net investment income) (.35) (.36) (.26) (.58) (.24)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (1.49) (1.35) (.81) -- --
Total Distributions (1.84) (1.71) (1.07) (.58) (.24)
Net Asset Value, End of Period $ 17.22 $ 16.73 $ 15.20 $ 13.72 $ 12.17
Total Return* 15.48% 23.38% 19.39% 18.26% 1.51%
Net Assets, End of Period (in thousands) $ 830,049 $ 360,159 $ 207,044 $ 124,545 $ 93,546
Average Net Assets for the Period (in thousands) $ 536,524 $ 283,220 $ 158,607 $ 107,259 $ 86,361
Ratio of Gross Expenses to Average Net Assets**(1) 1.03% 1.12% 1.23% 1.35% NA
Ratio of Net Expenses to Average Net Assets**(1) 1.01% 1.10% 1.21% 1.32% 1.42%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 2.34% 2.63% 2.35% 2.52% 2.28%
Portfolio Turnover Rate** 73% 139% 151% 185% 167%
</TABLE>
(1) See "Explanation of the Charts and Tables."
*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 year periods.
See Notes to Financial Statements.
Janus Equity Funds / October 31, 1998 59
<PAGE>
Financial | Highlights (continued)
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Enterprise Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 30.86 $ 31.19 $ 27.14 $ 24.43 $ 21.87
Income from Investment Operations:
Net investment income/(loss) -- -- -- .52 (.06)
Net gains or (losses) on securities
(both realized and unrealized) 3.43 .95 5.85 3.09 3.18
Total from Investment Operations 3.43 .95 5.85 3.61 3.12
Less Distributions:
Dividends (from net investment income) -- -- -- (.52) (.02)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (1.96) (1.28) (1.80) (.38) (.54)
Total Distributions (1.96) (1.28) (1.80) (.90) (.56)
Net Asset Value, End of Period $ 32.33 $ 30.86 $ 31.19 $ 27.14 $ 24.43
Total Return* 11.79% 3.31% 22.43% 15.46% 14.56%
Net Assets, End of Period (in thousands) $ 558,999 $ 551,828 $ 732,003 $ 459,370 $ 370,028
Average Net Assets for the Period (in thousands) $ 551,467 $ 613,784 $ 596,313 $ 407,791 $ 269,595
Ratio of Gross Expenses to Average Net Assets**(1) 1.08% 1.07% 1.14% 1.26% NA
Ratio of Net Expenses to Average Net Assets**(1) 1.06% 1.04% 1.12% 1.23% 1.25%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** (0.67%) (0.61%) (0.78%) 0.02% (0.32%)
Portfolio Turnover Rate** 134% 111% 93% 194% 193%
<CAPTION>
For a share outstanding throughout Janus Equity Income Fund
each fiscal year ended October 31 1998 1997 1996(2)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.98 $ 11.29 $ 10.00
Income from Investment Operations:
Net investment income .05 .09 .07
Net gains or (losses) on securities
(both realized and unrealized) 2.47 3.11 1.25
Total from Investment Operations 2.52 3.20 1.32
Less Distributions:
Dividends (from net investment income) (.03) (.12) (.03)
Dividends (in excess of net investment income) -- -- --
Distributions (from capital gains) (.88) (.39) --
Total Distributions (.91) (.51) (.03)
Net Asset Value, End of Period $ 15.59 $ 13.98 $ 11.29
Total Return* 19.21% 29.46% 13.20%
Net Assets, End of Period (in thousands) $ 200,782 $ 74,325 $ 30,429
Average Net Assets for the Period (in thousands) $ 133,613 $ 46,054 $ 21,424
Ratio of Gross Expenses to Average Net Assets**(1) 1.21% 1.48% 1.79%
Ratio of Net Expenses to Average Net Assets**(1) 1.18% 1.45% 1.71%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 0.41% 0.62% 3.09%
Portfolio Turnover Rate** 101% 180% 325%
</TABLE>
(1) See "Explanation of the Charts and Tables."
(2) Fiscal period June 29, 1996 (inception) to October 31, 1996.
NA - Disclosure not applicable to prior periods.
*Total return not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
See Notes to Financial Statements.
60 Janus Equity Funds / October 31, 1998
<PAGE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Growth and Income Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 25.07 $ 20.05 $ 18.13 $ 14.69 $ 15.24
Income from Investment Operations:
Net investment income .08 .01 .16 .11 .19
Net gains or (losses) on securities
(both realized and unrealized) 3.72 6.98 4.01 3.43 (.31)
Total from Investment Operations 3.80 6.99 4.17 3.54 (.12)
Less Distributions:
Dividends (from net investment income) (.04) (.11) (.08) (.10) (.10)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (2.38) (1.86) (2.17) -- (.33)
Total Distributions (2.42) (1.97) (2.25) (.10) (.43)
Net Asset Value, End of Period $ 26.45 $ 25.07 $ 20.05 $ 18.13 $ 14.69
Total Return* 16.73% 37.78% 25.56% 24.20% (0.76%)
Net Assets, End of Period (in thousands) $ 2,819,079 $ 1,888,999 $ 1,033,183 $ 582,963 $ 489,942
Average Net Assets for the Period (in thousands) $ 2,478,899 $ 1,415,563 $ 773,343 $ 498,442 $ 499,831
Ratio of Gross Expenses to Average Net Assets**(1) 0.96% 0.98% 1.05% 1.19% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.94% 0.96% 1.03% 1.17% 1.22%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 0.33% 0.30% 0.70% 1.11% 1.26%
Portfolio Turnover Rate** 95% 127% 153% 195% 123%
<CAPTION>
For a share outstanding throughout Janus Mercury Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.65 $ 18.20 $ 17.38 $ 14.12 $ 11.70
Income from Investment Operations:
Net investment income/(loss) (.01) (.01) .14 .16 .02
Net gains or (losses) on securities
(both realized and unrealized) 4.07 2.82 2.74 3.37 2.40
Total from Investment Operations 4.06 2.81 2.88 3.53 2.42
Less Distributions:
Dividends (from net investment income) -- (.08) -- (.16) --
Dividends (in excess of net investment income) (.04) -- -- -- --
Distributions (from capital gains) (1.90) (2.28) (2.06) (.11) --
Total Distributions (1.94) (2.36) (2.06) (.27) --
Net Asset Value, End of Period $ 20.77 $ 18.65 $ 18.20 $ 17.38 $ 14.12
Total Return* 24.75% 17.07% 18.18% 25.53% 20.68%
Net Assets, End of Period (in thousands) $ 2,368,077 $ 1,971,049 $ 2,002,350 $ 1,520,768 $ 596,330
Average Net Assets for the Period (in thousands) $ 2,103,414 $ 2,045,901 $ 1,838,593 $ 1,116,377 $ 257,726
Ratio of Gross Expenses to Average Net Assets**(1) 0.97% 0.98% 1.02% 1.14% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.94% 0.96% 1.00% 1.12% 1.33%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** (0.33%) 0.21% 0.45% 0.50% 0.25%
Portfolio Turnover Rate** 105% 157% 177% 201% 283%
</TABLE>
(1) See "Explanation of the Charts and Tables."
*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, 1998 61
<PAGE>
Financial | Highlights (continued)
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Olympus Fund
each fiscal year ended October 31 1998 1997 1996(1)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.41 $ 14.86 $ 12.00
Income from Investment Operations:
Net investment income -- .04 .13
Net gains or (losses) on securities
(both realized and unrealized) 4.05 3.64 2.73
Total from Investment Operations 4.05 3.68 2.86
Less Distributions:
Dividends (from net investment income) -- (.13) --
Dividends (in excess of net investment income) (.04) -- --
Distributions (from capital gains) (.72) -- --
Total Distributions (.76) (.13) --
Net Asset Value, End of Period $ 21.70 $ 18.41 $ 14.86
Total Return* 23.10% 24.98% 23.83%
Net Assets, End of Period (in thousands) $ 947,494 $ 615,651 $ 432,375
Average Net Assets for the Period (in thousands) $ 774,434 $ 517,424 $ 276,006
Ratio of Gross Expenses to Average Net Assets**(2) 1.01% 1.06% 1.17%
Ratio of Net Expenses to Average Net Assets**(2) 0.98% 1.03% 1.15%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** (0.21%) 0.26% 1.64%
Portfolio Turnover Rate** 123% 244% 303%
<CAPTION>
For a share outstanding throughout Janus Overseas Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994(3)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.94 $ 14.81 $ 11.58 $ 10.36 $ 10.00
Income from Investment Operations:
Net investment income/(loss) .08 .04 .10 .12 (.02)
Net gains or (losses) on securities
(both realized and unrealized) .54 3.39 3.34 1.10 .38
Total from Investment Operations .62 3.43 3.44 1.22 .36
Less Distributions:
Dividends (from net investment income) (.10) (.04) (.11) -- --
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (.51) (.26) (.10) -- --
Total Distributions (.61) (.30) (.21) -- --
Net Asset Value, End of Period $ 17.95 $ 17.94 $ 14.81 $ 11.58 $ 10.36
Total Return* 3.55% 23.56% 30.19% 11.78% 3.60%
Net Assets, End of Period (in thousands) $ 3,889,098 $ 3,205,197 $ 772,630 $ 110,866 $ 64,065
Average Net Assets for the Period (in thousands) $ 3,948,710 $ 2,093,370 $ 335,098 $ 77,668 $ 36,645
Ratio of Gross Expenses to Average Net Assets**(2) 0.96% 1.03% 1.26% 1.76% NA
Ratio of Net Expenses to Average Net Assets**(2) 0.94% 1.01% 1.23% 1.73% 2.16%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 0.58% 0.81% 0.73% 0.36% (0.64%)
Portfolio Turnover Rate** 105% 72% 71% 188% 181%
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) See "Explanation of the Charts and Tables."
(3) Fiscal period from May 2, 1994, (inception) to October 31, 1994.
*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.
62 Janus Equity Funds / October 31, 1998
<PAGE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Special Situations Fund
each fiscal year ended October 31 1998 1997(1)
<S> <C> <C>
Net Asset Value, Beginning of Period $ 14.08 $ 10.00
Income from Investment Operations:
Net investment income -- --
Net gains or (losses) on securities
(both realized and unrealized) 1.15 4.08
Total from Investment Operations 1.15 4.08
Less Distributions:
Dividends (from net investment income) -- --
Dividends (in excess of net investment income) -- --
Distributions (from capital gains) (.66) --
Total Distributions (.66) --
Net Asset Value, End of Period $ 14.57 $ 14.08
Total Return* 8.49% 40.80%
Net Assets, End of Period (in thousands) $ 786,317 $ 333,777
Average Net Assets for the Period (in thousands) $ 716,123 $ 168,215
Ratio of Gross Expenses to Average Net Assets**(2) 1.08% 1.20%
Ratio of Net Expenses to Average Net Assets**(2) 1.05% 1.18%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** (0.49%) (0.08%)
Portfolio Turnover Rate** 117% 146%
<CAPTION>
For a share outstanding throughout Janus Twenty Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 35.16 $ 31.90 $ 30.12 $ 24.24 $ 25.85
Income from Investment Operations:
Net investment income/(loss) .12 (.09) .37 .01 .16
Net gains or (losses) on securities
(both realized and unrealized) 12.26 8.85 6.68 5.94 (1.07)
Total from Investment Operations 12.38 8.76 7.05 5.95 (.91)
Less Distributions:
Dividends (from net investment income) (.10) (.18) -- (.07) (.25)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (4.46) (5.32) (5.27) -- (.45)
Total Distributions (4.56) (5.50) (5.27) (.07) (.70)
Net Asset Value, End of Period $ 42.98 $ 35.16 $ 31.90 $ 30.12 $ 24.24
Total Return* 40.58% 31.65% 27.59% 24.67% (3.52%)
Net Assets, End of Period (in thousands) $11,254,870 $ 5,871,070 $ 3,937,444 $ 2,995,751 $ 2,742,812
Average Net Assets for the Period (in thousands) $ 8,025,121 $ 4,989,616 $ 3,385,561 $ 2,716,278 $ 3,051,194
Ratio of Gross Expenses to Average Net Assets**(2) 0.91% 0.93% 0.93% 1.00% NA
Ratio of Net Expenses to Average Net Assets**(2) 0.90% 0.91% 0.92% 0.99% 1.02%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 0.39% 0.33% 0.67% 0.62% 0.57%
Portfolio Turnover Rate** 54% 123% 137% 147% 102%
</TABLE>
(1) Fiscal period from December 31, 1996 (inception) to October 31, 1997.
(2) See "Explanation of the Charts and Tables."
NA - Disclosure not applicable to prior periods.
*Total return not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
See Notes to Financial Statements.
Janus Equity Funds / October 31, 1998 63
<PAGE>
Financial | Highlights (continued)
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Venture Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 58.84 $ 57.16 $ 59.53 $ 52.86 $ 53.25
Income from Investment Operations:
Net investment income/(loss) (.09) .16 -- .05 .11
Net gains or (losses) on securities
(both realized and unrealized) .43 6.80 5.09 9.49 4.40
Total from Investment Operations .34 6.96 5.09 9.54 4.51
Less Distributions:
Dividends (from net investment income) -- -- (.01) (.03) (.53)
Dividends (in excess of net investment income) (.07) -- -- -- --
Distributions (from capital gains) (9.30) (5.28) (7.45) (2.84) (4.37)
Total Distributions (9.37) (5.28) (7.46) (2.87) (4.90)
Net Asset Value, End of Period $ 49.81 $ 58.84 $ 57.16 $ 59.53 $ 52.86
Total Return* 1.07% 13.38% 9.28% 19.24% 9.23%
Net Assets, End of Period (in thousands) $ 1,035,868 $ 1,252,341 $ 1,741,316 $ 1,753,201 $ 1,550,476
Average Net Assets for the Period (in thousands) $ 1,174,220 $ 1,379,145 $ 1,822,801 $ 1,612,514 $ 1,562,521
Ratio of Gross Expenses to Average Net Assets**(1) 0.94% 0.94% 0.89% 0.92% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.93% 0.92% 0.88% 0.91% 0.96%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** (0.29%) 0.11% (0.33%) 0.29% 0.27%
Portfolio Turnover Rate** 90% 146% 136% 113% 114%
<CAPTION>
For a share outstanding throughout Janus Worldwide Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 40.05 $ 34.60 $ 27.65 $ 27.00 $ 24.16
Income from Investment Operations:
Net investment income/(loss) 1.26 (.08) .49 .81 .15
Net gains or (losses) on securities
(both realized and unrealized) 3.01 7.73 7.79 1.39 3.34
Total from Investment Operations 4.27 7.65 8.28 2.20 3.49
Less Distributions:
Dividends (from net investment income) (1.35) (.15) (.26) (.54) (.27)
Dividends (in excess of net investment income) -- -- -- -- --
Distributions (from capital gains) (1.45) (2.05) (1.07) (1.01) (.38)
Total Distributions (2.80) (2.20) (1.33) (1.55) (.65)
Net Asset Value, End of Period $ 41.52 $ 40.05 $ 34.60 $ 27.65 $ 27.00
Total Return* 11.40% 23.34% 31.00% 8.89% 14.76%
Net Assets, End of Period (in thousands) $13,931,990 $10,358,225 $ 4,467,185 $ 1,804,354 $ 1,587,120
Average Net Assets for the Period (in thousands) $13,078,350 $ 7,783,669 $ 2,953,495 $ 1,622,142 $ 1,244,194
Ratio of Gross Expenses to Average Net Assets**(1) 0.92% 0.97% 1.02% 1.24% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.90% 0.95% 1.01% 1.23% 1.12%
Ratio of Net Investment Income/(Loss)
to Average Net Assets** 0.47% 0.65% 0.73% 0.99% 0.42%
Portfolio Turnover Rate** 86% 79% 80% 142% 158%
</TABLE>
(1) See "Explanation of the Charts and Tables."
*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.
64 Janus Equity Funds / October 31, 1998
<PAGE>
Notes to | Schedules of Investments
ECU - European Currency Unit
*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.
Repurchase Agreements held by a fund are fully collateralized, and such
collateral is in the possession of the fund's custodian. The collateral is
evaluated daily to ensure its market value exceeds the current market value of
the repurchase agreements, including accrued interest. In the event of default
on the obligation to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. In the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral or proceeds may be subject to legal
proceedings.
# 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, 1998:
<TABLE>
<CAPTION>
Purchases Sales Realized Dividend Market Value
Shares Cost Shares Cost Gain/(Loss) Income at 10/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Cadence Design Systems, Inc.(1) 5,126,845 $ 143,655,668 263,220 $ 9,765,967 ($ 4,107,315) -- $ 413,726,484
Chancellor Media Corp.(2) 5,745,000 205,057,764 -- -- -- -- 324,460,625
Comcast Corp. - Special Class A 18,232,475 579,041,383 -- -- -- $ 1,623,917 1,118,802,938
Cytec Industries, Inc. 670,000 28,908,034 700,000 19,978,225 14,445,553 -- 82,097,400
Federal-Mogul Corp. 1,158,235 65,893,242 45,000 2,041,512 (55,304) 869,839 242,523,472
Gartner Group, Inc. - Class A 6,283,780 222,203,140 4,430,840 161,416,604 (50,493,303) -- 36,827,183
Linear Technology Corp. 6,766,000 450,845,508 92,385 6,312,895 (396,297) 1,452,629 457,783,757
Maxim Integrated Products, Inc.(3) 9,495,000 319,467,387 -- -- -- -- 437,418,119
Meredith Corp. 1,619,765 63,183,415 22,410 1,009,683 (402,598) 821,098 136,600,485
Parametric Technology Co.(4) 6,807,500 202,805,888 22,597,000 561,607,496 (303,943,296) -- --
Pioneer Natural Resources Co. -- -- 4,727,425 194,407,711 (86,655,644) -- --
Robert Half International, Inc. 2,181,035 105,224,477 -- -- -- -- 186,283,242
Smith International, Inc. 437,900 26,327,338 3,550,775 221,309,647 (32,392,269) -- --
Univision Communications, Inc.
- Class A(5) 2,383,389 77,752,639 -- -- -- -- 124,427,726
UNUM Corp. -- -- 7,956,450 180,106,386 221,608,938 2,211,769 --
Wang Laboratories, Inc. -- -- 2,125,000 49,510,822 (17,436) -- --
Wolters Kluwer N.V 1,275,041 184,125,528 608,700 92,358,845 (3,877,635) 5,288,428 574,062,939
- ------------------------------------------------------------------------------------------------------------------------------------
$2,674,491,411 $1,499,825,793 ($246,286,606) $12,267,680 $4,135,014,370
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Enterprise Fund
PriCellular Corp. - Class A -- -- 1,077,025 $ 8,443,876 $ 5,381,287 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Growth and Income Fund
Dime Community Bancorp, Inc. 10,000 $ 237,187 810,000 $ 9,730,937 $ 7,329,044 $ 56,920 --
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Mercury Fund
Ocean Rig A.S.A. -- -- 6,150,096 $ 12,634,794 ($ 6,019,211) -- $ 8,296,520
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Olympus Fund
Bright Horizons Family
Solutions, Inc.(6) 100,000 $ 2,245,000 -- -- -- -- $ 7,315,363
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Overseas Fund
Koninklijke Ahrend Groep N.V -- -- 547,367 $ 15,241,084 $ 1,324,919 -- $ 7,084,727
Ortivus A.B. - B Shares(7) -- -- 483,239 9,097,452 (1,939,182) -- 1,025,134
- ------------------------------------------------------------------------------------------------------------------------------------
-- $ 24,338,536 ($ 614,263) -- $ 8,109,861
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for 2-for-1 stock split 11/17/97.
(2) Adjusted for 2-for-1 stock split 1/13/98.
(3) Adjusted for 2-for-1 stock split 12/22/97.
(4) Adjusted for 2-for-1 stock split 3/9/98.
(5) Adjusted for 2-for-1 stock split 1/13/98.
(6) Name change from Corporate Family Solutions, Inc., following a merger with
Bright Horizons, Inc., effective 7/27/98.
(7) Adjusted for 2-for-1 stock split 4/23/98.
Janus Equity Funds / October 31, 1998 65
<PAGE>
Notes to | Schedules of Investments (continued)
<TABLE>
<CAPTION>
Purchases Sales Realized Dividend Market Value
Shares Cost Shares Cost Gain/(Loss) Income at 10/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Special Situations Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Bally Total Fitness Holding Corp. 1,097,600 $ 29,216,564 -- -- -- -- $ 35,817,200
ITEQ, Inc. 39,600 396,792 917,400 $ 8,650,963 ($ 1,770,547) -- --
Magnum Hunter Resources, Inc. 1,753,075 9,265,462 -- -- -- -- 6,793,166
Scandinavian Broadcasting
System S.A 1,305,000 35,762,003 -- -- -- -- 30,015,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 74,640,821 $ 8,650,963 ($ 1,770,547) -- $ 72,625,366
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund
UAL Corp. -- -- 3,679,625 $182,961,321 $ 127,028,215 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Venture Fund
Chester Bancorp, Inc. -- -- 103,725 $ 1,481,479 $ 309,833 $ 7,261 --
Community Financial Corp. -- -- 193,025 2,979,936 (744,513) 48,256 --
Engineering Animation, Inc.(8) 365,000 $ 15,680,258 -- -- -- -- $ 25,192,187
First Bergen Bancorp -- -- 192,125 2,579,339 578,632 28,819 --
SED International
Holdings, Inc.(9) -- -- 385,000 7,186,560 (2,294,851) -- --
South Street Financial Corp. -- -- 245,000 2,329,664 (107,505) 71,200 --
UTI Energy Corp. -- -- 350,000 13,037,164 (6,302,974) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
$ 15,680,258 $ 29,594,142 ($ 8,561,378) $ 155,536 $ 25,192,187
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund
Amer Group, Ltd. -- -- 1,248,452 $ 26,630,189 ($ 2,769,158) -- --
Assa-Abloy A.B. - Class B -- -- -- -- -- $1,050,688 $185,458,793
Atos S.A -- -- 106,789 9,834,792 8,772,154 -- 90,776,704
Cellular Communications
International, Inc.(10) 895,133 $ 45,001,279 180 9,134 1,158 -- 55,626,860
Grupo Casa Autrey S.A
de C.V. (ADR) -- -- 1,672,925 34,451,470 (21,325,885) 250,208 --
JBA Holdings PLC -- -- 1,165,249 8,031,497 2,557,140 223,626 7,257,633
NTT Data Corp.(11) 8,450 44,406,211 105,560 85,842,219 3,942,651 232,459 55,279,577
SAS Norge A.S.A. - Class B -- -- 448,449 4,902,246 1,643,908 639,235 11,103,157
Securitas A.B. - Class B(12) 1,341,724 14,944,732 -- -- -- 1,311,306 194,194,615
Tomra Systems A.S.A -- -- 538,608 7,711,619 5,551,346 78,736 41,091,876
- ------------------------------------------------------------------------------------------------------------------------------------
$104,352,222 $177,413,166 ($ 1,626,686) $3,786,258 $640,789,215
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(8) Adjusted for 3-for-2 stock split 3/2/98.
(9) Name change from Southern Electronics Corp. effective 11/25/97.
(10) Adjusted for 3-for-2 stock split 4/15/98.
(11) Adjusted for 10-for-1 stock split 8/3/98.
(12) Adjusted for 4-for-1 stock split 10/12/98.
66 Janus Equity Funds / October 31, 1998
<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.
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 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 are also calculated on payables and receivables that
are denominated in foreign currencies. The payables and receivables are
generally related to security transactions and income.
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.
Janus Equity Funds / October 31, 1998 67
<PAGE>
Notes to | Financial Statements (continued)
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 generally 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.
For the fiscal year ended October 31, 1998, the following percentages of
fiscal year distributions were considered long-term gains; Janus Fund - 73%,
Janus Twenty Fund - 66%, Janus Venture Fund - 98%, and Janus Enterprise Fund
- 100%.
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, 1998. 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
----------------------------------------------------------------
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, 1998, are noted
below.
DST Securities, Inc. Fund
Commissions Expense
Paid* Reduction* DST Fees
-----------------------------------------------------------------------------
Janus Fund $517,147 $387,860 $2,328,940
Janus Balanced Fund 9,864 7,398 116,247
Janus Enterprise Fund 9,121 6,841 250,379
Janus Equity Income Fund 1,944 1,458 51,803
Janus Growth and Income Fund 70,167 52,625 514,458
Janus Mercury Fund 17,664 13,248 665,246
Janus Olympus Fund 12,268 9,201 205,619
Janus Overseas Fund 4,968 3,726 457,627
Janus Special Situations Fund 21,682 16,262 230,553
Janus Twenty Fund 45,075 33,807 1,299,229
Janus Venture Fund 15,909 11,932 359,272
Janus Worldwide Fund 54,582 40,937 1,328,661
-----------------------------------------------------------------------------
*The difference between commissions paid to DST Securities, Inc. and expenses
reduced constituted commissions paid to an unaffiliated clearing broker.
68 Janus Equity Funds / October 31, 1998
<PAGE>
3. FEDERAL INCOME TAX
Net investment income distributions and capital gains distributions 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, 1998, 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 ($10,113,711) $ 10,431,694 ($ 317,983)
Janus Balanced Fund 196,852 (196,852) --
Janus Enterprise Fund 3,669,298 (3,668,816) (482)
Janus Equity Income Fund 77,646 (77,646) --
Janus Growth and Income Fund (13,443) 13,443 --
Janus Mercury Fund 5,645,862 (5,645,862) --
Janus Olympus Fund 1,725,835 (89,143) (1,636,692)
Janus Overseas Fund (5,448,159) 5,448,159 --
Janus Special Situations Fund 3,486,852 (19,141) (3,467,711)
Janus Twenty Fund 1,553 (1,553) --
Janus Venture Fund 1,459,363 1,921,509 (3,380,872)
Janus Worldwide Fund (18,210,319) 18,210,319 --
-----------------------------------------------------------------------------
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.
Net capital loss carryovers noted below as of October 31, 1998 are available
to off set future realized capital gains and thereby reduce further taxable
gains distributions. These carryovers expire October 31, 2006. 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, 1998, are as follows:
<TABLE>
<CAPTION>
Net
Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Carryovers Cost Appreciation (Depreciation) (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Fund -- $15,054,632,065 $6,013,498,568 ($432,131,157) $5,581,367,411
Janus Balanced Fund -- 740,914,848 102,467,892 (20,653,712) 81,814,180
Janus Enterprise Fund -- 456,187,650 130,279,937 (9,527,290) 120,752,647
Janus Equity Income Fund -- 177,255,603 29,539,060 (8,275,755) 21,263,305
Janus Growth and Income Fund -- 2,335,162,796 571,964,600 (81,406,632) 490,557,968
Janus Mercury Fund -- 1,860,539,985 529,791,060 (40,876,487) 488,914,573
Janus Olympus Fund ($ 3,168,252) 685,127,525 273,903,360 (7,513,932) 266,389,428
Janus Overseas Fund (185,573,334) 3,399,666,714 714,440,508 (192,402,857) 522,037,651
Janus Special Situations Fund -- 748,414,380 101,899,422 (60,732,302) 41,167,120
Janus Twenty Fund -- 7,547,106,924 3,654,045,668 (77,258,500) 3,576,787,168
Janus Venture Fund -- 814,693,672 271,668,653 (46,106,219) 225,562,434
Janus Worldwide Fund (355,430,675) 11,388,989,230 3,019,760,019 (460,201,353) 2,559,558,666
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Janus Worldwide and Janus Overseas Funds have elected to pass through to
shareholders foreign taxes under Section 853. Foreign taxes paid and foreign
source income for the Funds making the election are as follows:
Fund Foreign Foreign
Taxes Paid Source Income
------------------------------------------------------------------
Janus Worldwide Fund $17,450,732 $55,876,398
Janus Overseas Fund $ 6,714,761 $23,094,771
------------------------------------------------------------------
Janus Equity Funds / October 31, 1998 69
<PAGE>
Explanations of | Charts and Tables
1. PERFORMANCE OVERVIEWS
Performance overview graphs on the previous pages compare the performance of
a $10,000 investment in each Fund (from inception) to one or more widely used
market indexes through October 31, 1998.
When comparing the performance of a Fund with an index, keep in mind that
market indexes do not include brokerage commissions that would be incurred if
you purchased the individual securities in the index. They also do not
include taxes payable on dividends and interest or operating expenses
incurred if you maintained a portfolio invested in the index.
Average annual total returns are also quoted for each Fund. Average annual
total return is calculated by taking the growth or decline in value of an
investment over a period of time, including reinvestment of dividends and
distributions, then calculating the annual compounded percentage rate that
would have produced the same result had the rate of growth been constant
throughout the period.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Fund's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each Fund'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 is quoted as of the last day of the
reporting period. The value of securities denominated in foreign currencies
is converted into U.S. dollars.
Funds that invest in foreign securities also provide a summary of investments
by country. This summary reports the Fund's exposure to different countries
by providing the percentage of securities invested in each country.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Fund's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the
Fund's long-term holdings.
The table provides the name of the foreign currency, the settlement date of
the contract, the amount of the contract, the value of the currency in U.S.
dollars and the amount of unrealized gain or loss. The amount of unrealized
gain or loss reflects the change in currency exchange rates from the time the
contract was opened to the last day of the reporting period.
3. STATEMENT OF OPERATIONS
This statement details the Funds' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current portfolio holdings.
The first section in this statement, entitled "Investment Income," reports
the dividends earned from stocks and interest earned from interest-bearing
securities in the portfolio.
The next section reports the expenses and expense offsets incurred by the
Funds, including the advisory fee paid to the investment advisor, transfer
agent fees, shareholder servicing expenses, and printing and postage for
mailing statements, financial reports and prospectuses.
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. An unrealized gain (or loss) refers
to the change in net appreciation or depreciation of the Funds' portfolios
during the period. "Net Gain/(Loss) on Investments" is affected both by
changes in the market value of portfolio holdings and by gains (or losses)
realized during the reporting period.
70 Janus Equity Funds / October 31, 1998
<PAGE>
4. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the
assets and liabilities of the Funds on the last day of the reporting period.
The Funds' assets are calculated by adding the value of the securities owned,
the receivable for securities sold but not yet settled, the receivable for
dividends declared but not yet received on stocks owned and the receivable
for Fund shares sold to investors but not yet settled. The Funds' liabilities
include payables for securities purchased but not yet settled, Fund shares
redeemed but not yet paid and expenses owed but not yet paid. Additionally,
there may be other assets and liabilities such as forward currency contracts.
The last line of this statement reports the Funds' net asset value (NAV) per
share on the last day of the reporting period. The NAV is calculated by
dividing the Funds' net assets (assets minus liabilities) by the number of
shares outstanding.
5. STATEMENT OF CHANGES IN NET ASSETS
This statement reports the increase or decrease in the Funds' net assets
during the reporting period. Changes in the Funds' net assets are
attributable to investment operations, dividends, distributions and capital
share transactions. This is important to investors because it shows exactly
what caused the Funds' net asset size to change during the period.
The first section summarizes the information from the Statement of Operations
regarding changes in net assets because of the Funds' investment performance.
The Funds' net assets may also change as a result of dividend and capital
gains distributions to investors. If investors receive their dividends in
cash, money is taken out of the Fund to pay the distribution. If investors
reinvest their dividends, the Funds' net assets will not be affected. If you
compare each Fund's "Net Decrease from Dividends and Distributions" to the
"Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Fund's net assets. This is because
the majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share Transactions."
"Capital Shares" refers to the money investors contribute to the Funds
through purchases or withdraw via redemptions. The Fund's net assets will
increase and decrease in value as investors purchase and redeem shares from
the Fund.
The section entitled "Net Assets Consist of" breaks down the components of
the Funds' net assets. Because Funds must distribute substantially all
earnings, you'll notice that a significant portion of net assets is
shareholder capital.
Janus Equity Funds / October 31, 1998 71
<PAGE>
Explanations of | Charts and Tables (continued)
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect
the Funds' net asset value (NAV) for current and past reporting periods. Not
only does this table provide you with total return, it also reports total
distributions, asset size, expense ratios and portfolio turnover rate.
The first line in the table reflects the Funds' NAV per share at the
beginning of the reporting period. The next line reports the Funds' net
investment income per share, which comprises dividends and interest income
earned on securities held by the Funds. Following is the total of gains,
realized and unrealized. Dividends and distributions are then subtracted to
arrive at the NAV per share at the end of the period.
Also included 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.
These arrangements include the use of brokerage commissions, uninvested cash
balances earning interest or balance credits. The Statement of Operations
reflects total expenses before any such offset, the amount of offset and the
net expenses. The expense ratios listed in the Financial Highlights reflect
total expenses both prior to any expense offset and after the offsets.
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 ratio of net investment income summarizes 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 is the portfolio turnover rate, which measures the 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 means that an amount equal
to the value of the portfolio is sold every six months.
72 Janus Equity Funds / October 31, 1998
<PAGE>
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
(twelve of the portfolios constituting the Janus Investment Fund, hereafter
referred to as the "Funds") at October 31, 1998, the results of each of their
operations for the year then ended, the changes in each of their net assets and
the financial highlights for each of the periods indicated, in conformity with
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, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
December 1, 1998
Euro-Conversion | Discussion (unaudited)
On January 1, 1999, eleven European countries will convert to a common currency:
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
Netherlands, Portugal, and Spain. Investments traded in the markets of these
countries will be denominated in the new currency, referred to as the "Euro."
Conversion to the Euro may present certain risks to investments of the Funds
held in one of the currencies that is being replaced. Janus Capital, however,
does not believe that the conversion will have a material impact on the Funds'
investments.
Year 2000 | Discussion (unaudited)
Preparing for Year 2000 is a high priority for Janus Capital, which has
established a dedicated group to address this issue. Janus Capital has devoted
considerable internal resources and has engaged one of the foremost experts in
the field to help achieve Year 2000 readiness. Janus Capital does not anticipate
that Year 2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels; however, Janus
Capital cannot make any assurances that the steps it has taken to ensure Year
2000 readiness will be successful. In addition, there can be no assurance that
Year 2000 issues will not affect the companies in which the Funds invest or
worldwide markets and economies.
Janus Equity Funds / October 31, 1998 73
<PAGE>
Janus [LOGO]
100 Fillmore Street
Denver, Colorado 80206-4923
1-800-525-3713
Funds distributed by Janus Distributors, Inc. Member NASD.
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