DRIFF

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON DECEMBER 10, 2012

REGISTRATION NO. [                      ]

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-14

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

o PRE-EFFECTIVE AMENDMENT NO. o POST-EFFECTIVE AMENDMENT NO.
(Check appropriate Box or Boxes)

JANUS INVESTMENT FUND

(Exact Name of Registrant as Specified in Charter)

151 DETROIT STREET, DENVER, COLORADO 80206-4805
(Address of Principal Executive Offices)

303-333-3863
(Registrant’s Telephone No., including Area Code)

STEPHANIE GRAUERHOLZ-LOFTON, ESQ.
151 DETROIT STREET
DENVER, COLORADO 80206-4805
(Name and Address of Agent for Service)

     APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after this Registration Statement becomes effective under the Securities Act of 1933.

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

     No filing fee is required because an indefinite number of shares of beneficial interest with $0.01 par value, of the Registrant have previously been registered pursuant to Section 24(f) of the Investment Company Act of 1940, as amended.

 

 

 

For shareholders of
Janus World Allocation Fund

 

 

[                    , 2012]

 

Dear Shareholder:

 

We are writing to inform you, as a shareholder of Janus World Allocation Fund, that the Trustees of your Fund have approved Janus’ proposal to merge the Fund into Janus Moderate Allocation Fund, effective on or about [          , 2013]. As described in the enclosed Prospectus/Information Statement, Janus Moderate Allocation Fund recently changed its principal investment strategies, and they are now substantially similar to those of Janus World Allocation Fund. Given these strategy changes, Janus is proposing to merge the two funds based largely on the resulting similarities in the funds’ investment objectives, strategies and policies, as well as the potential for expense efficiencies due to the larger combined asset base of the merged funds.

 

Both Janus World Allocation Fund and Janus Moderate Allocation Fund are managed by Dan Scherman, who will continue to manage Janus Moderate Allocation Fund after the merger. Following the merger, Janus Moderate Allocation Fund will continue to be managed to seek total return through growth of capital and income, which is similar to Janus World Allocation Fund’s investment objective of long-term growth of capital with a secondary emphasis on income.

 

As of the merger closing date, you will automatically receive the same class of shares of Janus Moderate Allocation Fund as you currently hold in Janus World Allocation Fund. You do not need to take any action related to the merger as your shares will be transferred automatically on the merger date.

 

We believe investors will benefit from this fund merger given the efficiencies that may occur as a result. You will also pay a lower management fee than you paid as a shareholder of Janus World Allocation Fund. In addition, this merger is designed to qualify as a tax-free merger, so you should not realize a tax gain or loss as a direct result of the merger, nor will you pay any of the expenses associated with the merger.

 

Enclosed you will find a Q&A and Prospectus/Information Statement with additional details describing the merger. If you have additional questions, please contact your financial advisor/intermediary for assistance, or call a Janus Representative at 1-800-525-0020.

 

We value the trust and confidence you have placed with us and look forward to continuing our relationship with you.

 

Sincerely,

 

Robin C. Beery

Chief Executive Officer and President

Janus Investment Fund

PROSPECTUS/INFORMATION STATEMENT

[          , 2012]

 

Relating to the acquisition of the assets of

 

JANUS WORLD ALLOCATION FUND

 

by and in exchange for shares of beneficial interest of

 

JANUS GLOBAL ALLOCATION FUND – MODERATE

each, a series of Janus Investment Fund

 

151 Detroit Street

Denver, Colorado 80206-4805

1-800-525-0020

 

INTRODUCTION

 

This Prospectus/Information Statement is being furnished to shareholders of Janus World Allocation Fund in connection with an Agreement and Plan of Reorganization (the “Plan”), pursuant to which Janus World Allocation Fund (“World Allocation Fund”) will merge into Janus Moderate Allocation Fund (together with World Allocation Fund, the “Funds” and each, a “Fund”). Under the Plan, shareholders of World Allocation Fund will receive shares of Janus Moderate Allocation Fund approximately equal in value to their holdings in World Allocation Fund as of the closing date of the reorganization, referred to as the “Merger.” After the Merger is complete, World Allocation Fund will be liquidated. The Merger is expected to be completed on or about [          , 2013] (the “Closing Date”).

 

Effective [          , 2013], Moderate Allocation Fund will change its principal investment strategies to include an allocation of approximately 40% of its net assets to non-U.S. investments. In connection with this change to a global investment strategy, the Fund will be renamed Janus Global Allocation Fund – Moderate (“Moderate Allocation Fund”) and will change its primary benchmark index from the S&P 500 ^® Index to the Morgan Stanley Capital International (“MSCI”) All Country World Index ^sm . The MSCI All Country World Index ^sm is an unmanaged, free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of global developed and emerging markets. Janus Moderate Allocation Fund will also change the composition of its secondary benchmark index, the Moderate Allocation Index, from an internally-calculated, hypothetical combination of total returns from the Dow Jones Wilshire 5000 Index (40%), the Barclays U.S. Aggregate Bond Index (40%), the MSCI EAFE ^® Index (18%), and the MSCI Emerging Markets Free Index ^sm (2%) to an internally-calculated, hypothetical combination of total returns from the MSCI All Country World Index ^sm (60%) and the Barclays Global Aggregate Bond Index (40%).

 

As part of Moderate Allocation Fund’s strategy changes, the Fund will decrease the percentage of its net assets to be invested in its current equity and fixed-income asset categories and will add an “alternative investments” asset category to its asset allocation. The Fund’s alternative investments allocation will initially be achieved by investing in a new underlying Janus fund, Janus Diversified Alternatives Fund, which seeks returns uncorrelated with the returns of stocks and bonds by providing exposure to alternative investments and alternative investment strategies. The alternative investments category will also include Janus Global Real Estate Fund.

 

The Board of Trustees of Janus Investment Fund (the “Trust”) determined that the Merger is in the best interests of the shareholders of World Allocation Fund and of Moderate Allocation Fund. The Board of Trustees considered many factors in making this determination, which are summarized below in the Q&A section and discussed in detail in this Prospectus/Information Statement. Among the factors considered, the Board noted that the Funds share similar investment objectives and investment strategies and, as a general matter, the larger combined Fund is expected to have lower total gross and net operating expenses than World Allocation Fund would have if it continued to operate as a standalone Fund. In addition, the Trustees noted that Janus Capital Management LLC (“Janus Capital” or “Janus”) is paying all costs of the Merger, and the Merger will be treated as a tax-free transaction for World Allocation Fund and its shareholders.

 

Shares of the Funds have not been approved or disapproved by the SEC nor has the SEC passed upon the accuracy or adequacy of this Prospectus/Information Statement. Any representation to the contrary is a criminal offense.

World Allocation Fund and Moderate Allocation Fund are each a series of the Trust, an open-end, registered management investment company organized as a Massachusetts business trust. Janus is responsible for the day-to-day management of World Allocation Fund’s and Moderate Allocation Fund’s investment portfolios and furnishes continuous advice and recommendations concerning each Fund’s investments. Janus Capital will remain the investment adviser of Moderate Allocation Fund after the Merger. As one of the larger mutual fund sponsors in the United States, Janus sponsored           mutual funds and had approximately $      billion in assets under management as of [          , 2012]. The Merger is expected to offer shareholders the potential for increased operational efficiencies while giving them continued access to Janus’ experience and resources in managing mutual funds.

 

This Prospectus/Information Statement, which you should read carefully and retain for future reference, sets forth the information that you should know about World Allocation Fund, Moderate Allocation Fund, and the Merger. This Prospectus/Information Statement is being mailed on or about [          , 2012.]

 

Incorporation by Reference

For more information about the investment objectives, strategies, restrictions and risks of World Allocation Fund and Moderate Allocation Fund, see:

 

 

These documents have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are incorporated by reference herein as appropriate. World Allocation Fund’s Prospectus and its Annual Report and most recent Semiannual Report have previously been delivered to World Allocation Fund shareholders.

 

The Funds provide annual and semiannual reports to their shareholders that highlight relevant information, including investment results and a review of portfolio changes. Additional copies of each Fund’s most recent annual and semiannual report are available, without charge, by contacting your plan sponsor, broker-dealer, or financial intermediary, or by contacting a Janus representative at 1-877-335-2687. The reports are also available, without charge, at janus.com/info, or by sending a written request to the Secretary of the Trust at 151 Detroit Street, Denver, Colorado 80206-4805.

 

A Statement of Additional Information dated [          , 2012] relating to the Merger has been filed with the SEC and is incorporated by reference into this Prospectus/Information Statement. You can obtain a free copy of that document by contacting your plan sponsor, broker-dealer, or financial intermediary or by contacting a Janus representative at 1-877-335-2687.

 

The shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution or the U.S. Government, are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency, and involve risk, including the possible loss of the principal amount invested.

 

Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended (the “1940 Act”), and files reports, proxy materials, and other information with the SEC. You may review and copy information about the Funds at the Public Reference Room of the SEC or get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Commission’s Public Reference Section, Washington, D.C. 20549-1520 (1-202-551-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Funds from the Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC’s website at http://www.sec.gov.

 

This Prospectus/Information Statement is for informational purposes only. You do not need to take any action in response to this Prospectus/Information Statement. We are not asking you for a proxy or written consent, and you are requested not to send us a proxy or written consent.

The following chart outlines the impacted share classes and their respective ticker symbols:

 

 

This Prospectus/Information Statement provides a brief overview of the key features and other matters typically of concern to shareholders affected by a merger between mutual funds. These responses are qualified in their entirety by the remainder of this Prospectus/Information Statement, which you should read carefully. It contains additional information and further details regarding the Merger. The description of the Merger is qualified by reference to the full text of the Plan, which is attached as Appendix A.

 

 

 

 

 

 

This section provides a summary of each Fund, including but not limited to, each Fund’s investment objective, primary investment strategies, restrictions, fees, and historical performance. Please note that this is only a brief discussion and is qualified in its entirety by reference to the complete information contained herein. There is no assurance that a Fund will achieve its stated objective.

World Allocation Fund seeks long-term growth of capital with a secondary emphasis on income. Moderate Allocation Fund seeks total return through growth of capital and income.

The types of expenses currently paid by each class of shares of World Allocation Fund are the same types of expenses to be paid by the corresponding share classes of Moderate Allocation Fund. Currently, the Funds have substantially similar investment advisory agreements but each pays a different investment advisory fee rate. The annual investment advisory fee rate payable under the advisory agreements for World Allocation Fund and Moderate Allocation Fund are currently 0.07% and 0.05%, respectively, of the Fund’s average daily net assets.

 

Current and Pro Forma Fees and Expenses

The following tables compare the fees and expenses you may bear directly or indirectly as an investor in World Allocation Fund versus Moderate Allocation Fund, and show the projected (“ pro forma ”) estimated fees and expenses of Moderate Allocation Fund, calculated assuming the Merger had occurred on June 30, 2012. Fees and expenses shown for World Allocation Fund and Moderate Allocation Fund were determined based on each Fund’s average net assets as of the fiscal year ended June 30, 2012. The pro forma fees and expenses are estimated in good faith and are hypothetical, and do not reflect any change in expense ratios resulting from a change in assets under management since June 30, 2012 for either Fund. Total net assets as of these dates are shown in a footnote to the table. More current total net asset information is available at janus.com/advisor/mutual-funds. It is important for you to know that a decline in a Fund’s average net assets during the current fiscal year and after the Merger, as a result of market volatility or other factors, could cause the Fund’s expense ratio to be higher than the fees and expenses shown, which means you could pay more if you buy or hold shares of the Fund. Changes in the allocations to the underlying Janus funds can also result in changes to total expenses. The Funds will not pay any fees of the Merger.

 

Annual Fund Operating Expenses

Annual Fund Operating Expenses are paid out of a Fund’s assets and include fees for portfolio management and administrative services, including recordkeeping, accounting or subaccounting, and other shareholder services. You do not pay these fees directly, but as the examples in the tables below show, these costs are borne indirectly by all shareholders.

 

The Annual Fund Operating Expenses shown in the table below represent annualized expenses for World Allocation Fund and for Moderate Allocation Fund, as well as those estimated for Moderate Allocation Fund on a pro forma basis, assuming consummation of the Merger, for the fiscal year ended June 30, 2012. The pro forma expense information in the “Annual Fund Operating Expenses” table below assumes that Moderate Allocation Fund has an annual fixed investment advisory fee rate of 0.05% post-Merger. In addition, the pro forma information below reflects an estimated increase to “Acquired Fund Fees and Expenses” for Moderate Allocation Fund post-Merger that is expected to occur in connection with certain changes to Moderate Allocation Fund’s principal investment strategies and resulting allocations to underlying funds that pursue global and alternative investments strategies. Information is not presented for Class D Shares because World Allocation Fund does not offer Class D Shares. Acquired Fund Fees and Expenses for Class D Shares of Moderate Allocation Fund before and after the Merger are expected to be 0.84%.

 

Expense Limitations

“Total Annual Fund Operating Expenses After Fee Waiver” shown in the table below include any expense limitations agreed to by Janus Capital. Currently, through November 1, 2013, pursuant to a contract between Janus Capital and World Allocation Fund, Janus Capital reduces its annual investment advisory fee rate paid by World Allocation Fund by the amount by which the total annual fund operating expenses allocated to any class of the Fund exceed 0.45% of average daily net assets for the fiscal year (after reduction of any applicable share class level expenses). For purposes of this waiver, operating expenses do not include any expenses of an underlying fund (acquired fund fees and expenses), the distribution and shareholder servicing (12b-1) fees (applicable to Class A Shares, Class C Shares, and Class S Shares), administrative services fees payable pursuant to the Transfer Agency Agreement (except for networking and omnibus fees for Class A Shares, Class C Shares, and Class I Shares), or items not normally considered operating expenses, such as interest, dividends, taxes, brokerage commissions and extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs, and any indemnification related thereto). Janus Capital has a similar expense limitation agreement for Moderate Allocation Fund whereby Janus Capital reduces its annual investment advisory fee rate paid by Moderate Allocation Fund by the amount by which the total annual fund operating expenses allocated to any class of the Fund exceed 0.39% of average daily net assets for the fiscal year (after reduction of any applicable share class level expenses and excluding the same expenses noted above). During the period shown in the table below, Moderate Allocation Fund’s total annual fund operating expenses, after reduction of any applicable share class level expenses, did not exceed 0.39% of average daily net assets. Therefore, the Fee Waiver amounts shown for Moderate Allocation Fund pre- and post-Merger are 0.00%.

Changes to expenses and asset levels of both World Allocation Fund and Moderate Allocation Fund at the time of the Merger could trigger application of Moderate Allocation Fund’s 0.39% expense limit, resulting in a possible reduction of other expenses for certain classes and the investment advisory fee rate payable to Janus Capital by Moderate Allocation Fund.

 

 

 

EXAMPLES:

The following Examples are based on expenses without waivers. These Examples are intended to help you compare the cost of investing in World Allocation Fund, Moderate Allocation Fund before the Merger, and Moderate Allocation Fund after the Merger with the cost of investing in other mutual funds. The Examples assume that you invest $10,000 in World Allocation Fund, Moderate Allocation Fund, and the combined Fund after the Merger for the time periods indicated and reinvest all dividends and distributions. The Examples also assume that your investment has a 5% return each year and that the Funds’ operating expenses (including the operating expenses of the underlying funds) without waivers remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

 

Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Examples, affect the Funds’ performance. During the fiscal year ended June 30, 2012, World Allocation Fund’s portfolio turnover rate was 36% of the average value of its portfolio and Moderate Allocation Fund’s portfolio turnover rate was 18% of the average value of its portfolio.

Principal Investment Strategies

Each Fund pursues its investment objective by allocating its investments among various underlying funds. The following chart compares the Funds’ overall investment strategies.

 

The following is a summary of the principal risks associated with investing in each Fund. Both Funds invest in underlying funds. The risks of investing in the Funds are tied to the securities in which the underlying funds invest. In addition, World Allocation Fund may invest directly up to 10% of its net assets in unaffiliated pooled investment vehicles, such as exchange-traded funds, and derivatives; Moderate Allocation Fund will have exposure to such instruments as part of its alternatives investment allocation. The biggest risk of investing in the Funds is that the Funds’ and the underlying funds’ returns will vary, and you could lose money. The additional risks discussed below are described in greater detail later in this Prospectus/Information Statement under “Additional Information about the Funds – Risks of the Funds and Underlying Funds.” The fact that a particular risk is not

identified does not mean that a Fund as part of its overall investment strategy does not invest in, or is precluded from investing in, securities that give rise to that risk.

 

Allocation Risk.   A Fund’s ability to achieve its investment objective depends largely upon the portfolio manager’s allocation of assets among the underlying funds and/or unaffiliated pooled investment vehicles and derivatives. You could lose money on your investment in the Fund as a result of these allocations. A Fund will typically invest in a number of different underlying funds; however, to the extent that a Fund invests a significant portion of its assets in a single underlying fund, it will be more sensitive to the risks associated with that fund and any investments in which that fund concentrates.

 

Derivatives Risk.   World Allocation Fund and certain underlying funds in which each Fund invests may invest in derivatives. Derivatives can be highly volatile and involve risks in addition to the risks of the underlying referenced securities. Gains or losses from a derivative investment can be substantially greater than the derivative’s original cost, and can therefore involve leverage. Leverage may cause the Funds to be more volatile than if they had not used leverage. Derivatives can be less liquid than other types of investments and entail the risk that the counterparty will default on its payment obligations.

 

Commodity-Linked Investments Risk.   World Allocation Fund and certain of the underlying funds in which each Fund invests may include derivative investments that have exposure to the commodities markets. This exposure may subject the Fund to greater volatility than investments in traditional securities. The value of a commodity-linked derivative investment typically is based upon the price movements of a physical commodity (such as heating oil, livestock, or agricultural products), a commodity futures contract or commodity index, or some other readily measurable economic variable. The value of commodity-linked derivative instruments may therefore be affected by changes in overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry or commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.

 

Exchange-Traded Funds Risk.   World Allocation Fund and the underlying funds in which each Fund invests may purchase shares of ETFs to gain exposure to a particular portion of the market. ETFs are pooled investment vehicles, which may be managed or unmanaged, that generally seek to track the performance of a specific index. ETFs are traded on an exchange at market prices that may vary from the net asset value of their underlying investments. When the Fund invests in an ETF, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the ETF’s expenses. ETFs have certain inherent risks generally associated with investments in a portfolio of securities in which the ETF is invested, including the risk that the general level of stock prices may decline, thereby adversely affecting the value of each unit of the ETF. ETFs also involve the risk that an active trading market for an ETF’s shares may not develop or be maintained.

 

Alternative Investments Allocation Risk.   In connection with the Moderate Allocation Fund’s allocation to alternative investments, the Fund will invest in a new Janus underlying fund, Janus Diversified Alternatives Fund, which seeks to provide returns having low correlation to the returns generated by investments in stocks and bonds. In addition, as part of its alternative investments allocation, the Fund may invest in Janus Global Real Estate Fund. Janus Diversified Alternatives Fund’s ability to achieve its investment objective depends largely upon the successful evaluation of the risk, potential returns, and correlation properties with respect to its investments. There is a risk that the returns provided by alternative investments may be subject to high volatility and that an underlying fund’s portfolio managers’ beliefs about the risk, expected returns and correlation properties of one or more of an underlying fund’s investments may be incorrect. There is also a risk that an underlying fund’s investments will correlate with the performance of stocks and bonds to a greater degree than anticipated. Janus Capital does not have prior experience managing the investment strategy of Janus Diversified Alternatives Fund, and there is no guarantee that the investment techniques and analysis used by the underlying fund’s portfolio managers will produce the desired results. All of these factors may negatively affect your investment in the Fund and you could lose money. Investment in this underlying fund also involves derivatives, counterparty, leverage, real estate-related and commodity-linked investment risks as described above and in the “Additional Information About the Funds – Risks of the Funds” section.

 

Affiliated Fund Risk.   Janus has the authority to select and substitute the underlying affiliated mutual funds in which the Funds may invest. The fees paid to Janus Capital by other Janus mutual funds are higher than the fees paid to Janus Capital by the Funds or by other funds and share classes available for investment by the Funds. These conditions may create a conflict of interest when selecting underlying affiliated mutual funds and share classes for investment. However, Janus Capital is a fiduciary to each Fund and its shareholders and is legally obligated to act in each Fund’s shareholders’ best interest when selecting underlying affiliated mutual funds.

 

Market Risk.   The Funds, through the underlying funds’ investments in equity securities, are subject to the risks associated with investments in common stocks, which tend to be more volatile than many other investment choices. The value of an underlying

fund’s portfolio may decrease if the value of an individual company or security, or multiple companies or securities, in the portfolio decreases or if a portfolio manager’s belief about a company’s intrinsic worth is incorrect. Further, regardless of how well individual companies or securities perform, the value of an underlying fund’s portfolio could also decrease if there are deteriorating economic or market conditions. It is important to understand that the value of your investment may fall, sometimes sharply, in response to changes in the market, and you could lose money.

 

Fixed-Income Securities Risk.   Through a Fund’s investments in underlying funds holding fixed-income securities, the Fund is subject to the risks associated with investments in a variety of fixed-income securities, which may be less volatile than underlying funds that invest most of their assets in common stocks. However, returns and yields will vary, and you could lose money. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause an underlying fund’s net asset value to likewise decrease. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. Fixed-income securities are also subject to credit risk, prepayment risk, valuation risk, and liquidity risk. Credit risk is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. Prepayment risk is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as mortgage- and asset-backed securities, may be prepaid by their issuers thereby reducing the amount of interest payments. Valuation risk is the risk that one or more of the fixed-income securities in which an underlying fund invests are priced incorrectly due to factors such as incomplete data, market instability, or human error. Liquidity risk is the risk that fixed-income securities may be difficult or impossible to sell at the time that an underlying fund’s portfolio manager would like or at the price that the portfolio manager believes the security is currently worth. The Funds may have exposure to high-yield/high-risk securities through the underlying funds’ investments in such securities. High-yield/high-risk securities may be more sensitive to economic changes, political changes, or adverse developments specific to the issuer, which may adversely affect the value of the underlying funds’ investments in such securities.

 

Foreign Exposure Risk.   Each Fund and certain underlying funds in which either Fund may invest will have significant exposure to foreign markets as a result of their investments in foreign securities, including investments in emerging markets, which can be more volatile than the U.S. markets. As a result, each Fund’s and the underlying funds’ returns and net asset value may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund or an underlying fund has invested a significant amount of its assets may have a greater effect on the Fund’s or an underlying fund’s performance than it would in a more geographically diversified portfolio. Each Fund’s or an underlying fund’s investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries.

 

Emerging Markets Risk.   The risks of foreign investing mentioned above are heightened when investing in emerging markets. Emerging markets securities involve a number of additional risks, which may result from less government supervision and regulation of business and industry practices (including the potential lack of strict finance and accounting controls and standards), stock exchanges, brokers, and listed companies, making these investments potentially more volatile in price and less liquid than investments in developed securities markets, resulting in greater risk to investors. In addition, each Fund’s or an underlying fund’s investments may be denominated in foreign currencies and therefore, changes in the value of a country’s currency compared to the U.S. dollar may affect the value of the Fund’s or an underlying fund’s investments. To the extent that a Fund or an underlying fund invests a significant portion of its assets in the securities of issuers in or companies of a single country or region, it is more likely to be impacted by events or conditions affecting that country or region, which could have a negative impact on a Fund’s performance. Some of the risks of investing directly in foreign and emerging market securities may be reduced when a Fund or an underlying fund invests indirectly in foreign securities through various other investment vehicles including derivatives, which involve other risks.

 

Mortgage-Backed Securities Risk.   Some of the underlying funds in which the Funds can invest may invest in mortgage-backed securities. Mortgage-backed securities tend to be more sensitive to changes in interest rates than other types of securities. Investments in mortgage-backed securities are subject to both extension risk, where borrowers extend the duration of their mortgages in times of rising interest rates, and prepayment risk, where borrowers pay off their mortgages sooner than expected in times of declining interest rates. These risks may reduce the Fund’s returns. In addition, investments in mortgage-backed securities, including those comprised of subprime mortgages, may be subject to a higher degree of credit risk, valuation risk, and liquidity risk than various other types of fixed-income securities.

Sovereign Debt Risk.   An underlying fund in which the Funds invest may invest in U.S. and foreign government debt securities (“sovereign debt”). Investments in U.S. sovereign debt are considered low risk. However investments in non-U.S. sovereign debt can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner.

 

An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

 

     World Allocation Fund

The following information provides some indication of the risks of investing in the Fund by showing how the Fund’s performance has varied over time. Class I Shares, Class A Shares, Class C Shares, and Class S Shares of the Fund commenced operations on July 6, 2009, after the reorganization of each corresponding class of shares of Janus Adviser Modular Portfolio Construction ^® Fund (“JAD predecessor fund”) into each respective share class of the Fund. Class T Shares of the Fund commenced operations on July 6, 2009.

 

 

If Class T Shares of the Fund had been available during periods prior to July 6, 2009, the performance shown may have been different. The performance shown for periods following the Fund’s commencement of Class I Shares, Class A Shares, Class C Shares, Class S Shares, and Class T Shares reflects the fees and expenses of each respective share class, net of any applicable fee and expense limitations or waivers.

 

The bar chart depicts the change in performance from year to year during the periods indicated. Performance information for each underlying fund is available in its prospectus and/or the most recent annual or semiannual report. The bar chart figures do not include any applicable sales charges that an investor may pay when they buy or sell Class A Shares or Class C Shares of the Fund. If sales charges were included, the returns would be lower. The table compares the Fund’s average annual returns for the periods indicated to broad-based securities market indices. The indices are not actively managed and are not available for direct investment. All figures assume reinvestment of dividends and distributions. For certain periods, the Fund’s performance reflects the effect of expense waivers. Without the effect of these expense waivers, the performance shown would have been lower.

 

World Allocation Fund’s past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available at janus.com/advisor/mutual-funds or by calling 1-877-335-2687.

 

 

The Fund’s year-to-date return as of the calendar quarter ended September 30, 2012 was 8.19%.

 

 

     Moderate Allocation Fund

The following information provides some indication of the risks of investing in the Fund by showing how the Fund’s performance has varied over time. Class T Shares (formerly named Class J Shares, the initial share class) of the Fund commenced operations with the Fund’s inception. Class A Shares, Class C Shares, Class S Shares, and Class I Shares of the Fund commenced operations on July 6, 2009.

 

If Class A Shares, Class C Shares, Class S Shares, and Class I Shares of the Fund had been available during periods prior to July 6, 2009, the performance shown for each respective share class may have been different. The performance shown for periods following the Fund’s commencement of Class A Shares, Class C Shares, Class S Shares, and Class I Shares reflects the fees and expenses of each respective share class, net of any applicable fee and expense limitations or waivers.

 

The bar chart depicts the change in performance from year to year during the periods indicated. Performance information for each underlying fund is available in its prospectus and/or the most recent annual or semiannual report. The bar chart figures do not include any applicable sales charges that an investor may pay when they buy or sell Class A Shares or Class C Shares of the Fund. If sales charges were included, the returns would be lower. The table compares the Fund’s average annual returns for the periods indicated to broad-based securities market indices. The indices are not actively managed and are not available for direct investment. All figures assume reinvestment of dividends and distributions. For certain periods, the Fund’s performance reflects the effect of expense waivers. Without the effect of these expense waivers, the performance shown would have been lower.

 

Moderate Allocation Fund’s past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Updated performance information is available at janus.com/advisor/mutual-funds or by calling 1-877-335-2687.

 

 

The Fund’s year-to-date return as of the calendar quarter ended September 30, 2012 was 10.26%.

 

 

For World Allocation Fund, after-tax returns are calculated using distributions for the Fund’s Class I Shares for periods following July 6, 2009; and for the JAD predecessor fund’s Class I Shares for periods prior to July 6, 2009. For Moderate Allocation Fund, after-tax returns are calculated using distributions for the Fund’s Class T Shares (formerly named Class J Shares, the initial share class). After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or an IRA.

 

After-tax returns are only shown for Class I Shares of World Allocation Fund and Class T Shares of Moderate Allocation Fund. After-tax returns for the other classes of shares will vary from those shown due to varying sales charges (as applicable), fees, and expenses among the classes.

Investment Adviser:   Janus Capital is the investment adviser for each Fund and will remain the investment adviser of Moderate Allocation Fund after the Merger.

 

Portfolio Manager:   Daniel G. Scherman , CFA, is Executive Vice President and Portfolio Manager of each Fund and will continue as portfolio manager of Moderate Allocation Fund after the Merger.

Purchase and Sale of Fund Shares

 

Minimum Investment Requirements*

 

 

With the exception of certain Class I Shares shareholders, purchases, exchanges, and redemptions can generally be made only through institutional channels, such as financial intermediaries and retirement platforms. Class I Shares may be purchased directly with the Funds in certain circumstances as outlined in Appendix C . You should contact your financial intermediary or refer to your plan documents for information on how to invest in a Fund. Requests must be received in good order by the Fund or its agents (financial intermediary or plan sponsor, if applicable) prior to the close of the regular trading session of the New York Stock Exchange in order to receive that day’s net asset value. For additional information, refer to “Purchases,” “Exchanges,” and/or “Redemptions” in Appendix C .

Each Fund’s distributions are taxable, and will be taxed as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account.

If you purchase shares of a Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment or to recommend one share class over another.

 

 

The Plan sets forth the terms and conditions under which the Merger will be implemented. Significant provisions of the Plan are summarized below; however, this summary is qualified in its entirety by reference to the Plan, which is attached hereto as Appendix A .

 

The Plan contemplates: (i) Moderate Allocation Fund’s acquisition of all or substantially all of the assets of World Allocation Fund in exchange solely for shares of Moderate Allocation Fund and the assumption by Moderate Allocation Fund of all of World Allocation Fund’s liabilities, if any, as of the Closing Date; (ii) the distribution on the Closing Date of those shares to the shareholders of World Allocation Fund; and (iii) the complete liquidation of World Allocation Fund.

 

The value of World Allocation Fund’s assets to be acquired and the amount of its liabilities to be assumed by Moderate Allocation Fund and the net asset value (“NAV”) of a share of World Allocation Fund will be determined as of the close of regular trading on the NYSE on the Closing Date, after the declaration by World Allocation Fund of distributions, if any on the Closing Date, and will be determined in accordance with the valuation methodologies described in World Allocation Fund’s currently effective Prospectus and Statement of Additional Information (“SAI”). The Plan provides that Janus Capital will pay all of the fees of the Merger, including the costs and expenses incurred in the preparation and mailing of this Prospectus/Information Statement. The Closing Date is expected to be on or about [          , 2013].

 

As soon as practicable after the Closing Date, World Allocation Fund will distribute pro rata to its shareholders of record the shares of Moderate Allocation Fund it receives in the Merger, so that each shareholder of World Allocation Fund will receive a number of full and fractional shares of Moderate Allocation Fund approximately equal in value to his or her holdings in World Allocation Fund, and World Allocation Fund will be liquidated.

Such distribution will be accomplished by opening accounts on the books of Moderate Allocation Fund in the names of World Allocation Fund shareholders and by transferring to those accounts the shares of Moderate Allocation Fund previously credited to the account of World Allocation Fund on those books. Each shareholder account will be credited with the pro rata number of Moderate Allocation Fund’s shares due to that shareholder. All issued and outstanding shares of World Allocation Fund will simultaneously be canceled on the books of the Trust. Accordingly, immediately after the Merger, each former shareholder of World Allocation Fund will own shares of Moderate Allocation Fund that will be approximately equal to the value of that shareholder’s shares of World Allocation Fund as of the Closing Date. Any special options will automatically transfer to the new fund accounts.

 

The implementation of the Merger is subject to a number of conditions set forth in the Plan. The Plan also requires receipt of a tax opinion indicating that, for federal income tax purposes, the Merger qualifies as a tax-free Merger. The Plan may be terminated and the Merger abandoned at any time prior to the Closing Date by the Board of Trustees if the Trustees determine that the Merger is not in the best interests of the Funds’ shareholders. Please review the Plan carefully.

As discussed in the Introduction, after the repositioning of Moderate Allocation Fund to include increased allocations to non-U.S. investments and a new allocation to alternative investments, World Allocation Fund and Moderate Allocation Fund will have substantially similar investment strategies. Therefore, the Merger allows Janus to reorganize its mutual fund platform by consolidating similar Funds. Janus believes that these efforts will provide the potential for both meaningful short-and long-term benefits to Fund shareholders, including clearer product differentiation, a reduction in overlapping offerings, and a resulting larger, more stable asset base. The Funds have similar investment objectives, principal investment strategies, policies and risks. There is potential to increase operational efficiencies, including the potential to eliminate duplicative costs and other inefficiencies that can arise from having comparable mutual funds in the same family of funds. Janus and its affiliates that provide services to the Funds expect to provide the same level of services to shareholders after the Merger.

 

Janus met with the Trustees, none of whom are considered “interested persons” (as defined in the 1940 Act) (“Independent Trustees”), on October 4, 2012 and November 8, 2012 to discuss Janus’ proposal to merge the Funds. The Independent Trustees also discussed this proposal and the Plan with their independent counsel in executive session. During the course of these meetings, the Trustees requested and considered such information as they deemed relevant to their deliberations.

 

At the meeting of the Board of Trustees of the Trust held on November 8, 2012, the Trustees approved the Plan after determining that (1) the Merger is in the best interests of World Allocation Fund and Moderate Allocation Fund; and (2) the Merger will not dilute the interests of existing shareholders of either Fund. In making these determinations, the Trustees considered the following factors, among others:

 

As a condition to the Merger, the Trust will receive a legal opinion from [          ], special counsel to Janus, subject to customary assumptions and representations, on the basis of the existing provisions of the Internal Revenue Code of 1986, as

amended (the “Code”), the Treasury Regulations promulgated thereunder and current administrative and judicial interpretations thereof, for federal income tax purposes substantially to the effect that:

 

 

The receipt of such an opinion is a condition to the consummation of the Merger. The Trust has not obtained an Internal Revenue Service (“IRS”) private letter ruling regarding the federal income tax consequences of the Merger, and the IRS is not bound by advice of counsel. If the transfer of the assets of World Allocation Fund in exchange for Moderate Allocation Fund shares and the assumption by Moderate Allocation Fund of all liabilities of World Allocation Fund does not constitute a tax-free Merger, each World Allocation Fund shareholder generally will recognize a gain or loss approximately equal to the difference between the value of Moderate Allocation Fund shares such shareholder acquires and the tax basis of such shareholder’s World Allocation Fund shares.

 

Prior to the Closing Date, World Allocation Fund may pay to its shareholders a cash distribution consisting of any undistributed investment company taxable income and/or any undistributed realized net capital gains, including any gains realized from any sales of assets prior to the Closing Date, which may be attributable to portfolio transitioning. This distribution would be taxable to shareholders that are subject to tax.

 

Shareholders of World Allocation Fund should consult their tax advisers regarding the effect, if any, of the Merger in light of their individual circumstances. Since the foregoing discussion relates only to the federal income tax consequences of the Merger, shareholders of World Allocation Fund should also consult tax advisers as to state and local tax consequences, if any, of the Merger.

World Allocation Fund and Moderate Allocation Fund are each organized as separate series of the Trust, a Massachusetts business trust, and are governed by the same Trust Instrument and Bylaws. As such, there are no key differences in the rights of shareholders of the Funds.

 

All shares of a fund within the Trust participate equally in dividends and other distributions by the shares of the same class of that fund, and in residual assets of that class of that fund in the event of liquidation. Shares of each Fund have no preemptive, conversion, or appraisal rights. Shares of all funds in the Trust have noncumulative voting rights, which means the holders of more than 50% of the value of shares of all funds of the Trust voting for the election of Trustees can elect 100% of the Trustees if they

choose to do so. Shares of a fund may be transferred by endorsement or stock power as is customary, but a fund is not bound to recognize any transfer until it is recorded on its books. The Funds have the right to redeem, at the then current NAV, the shares of any shareholder whose account does not meet certain minimum requirements as described in Appendix C .

Capitalization

The following table shows, the capitalization as of June 30, 2012 for World Allocation Fund and Moderate Allocation Fund, as well as pro forma capitalization giving effect to the Merger:

 

[To be updated]

 

The Funds’ Board of Trustees may change each Fund’s investment objective or non-fundamental principal investment strategies without a shareholder vote. A Fund will notify you in writing at least 60 days before making any such change it considers material. If there is a material change to a Fund’s objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that a Fund will achieve its investment objective.

 

Unless otherwise stated, the following additional investment strategies and general policies apply to each Fund and the underlying funds. Some strategies and policies may be a part of a Fund’s principal strategy. Other strategies and policies may be utilized to a lesser extent.

 

Cash Position

Each Fund may temporarily increase its cash position under certain unusual circumstances, such as to protect its assets or maintain liquidity in certain circumstances to meet unusually large redemptions. The Fund’s cash position may also increase

temporarily due to unusually large cash inflows. Under unusual circumstances such as these, the Fund may invest up to 100% of its assets in cash or similar investments. In this case, the Fund may take positions that are inconsistent with its investment objective. As a result, the Fund may not achieve its investment objective. To the extent the Fund invests its uninvested cash through a sweep program (meaning its uninvested cash is pooled with uninvested cash of other funds and invested in certain securities such as repurchase agreements), it is subject to the risks of the account or fund into which it is investing, including liquidity issues that may delay the Fund from accessing its cash.

 

Portfolio Turnover

Each Fund normally seeks long-term investment, although the Fund may sell shares of the underlying funds regardless of how long they have been held. Portfolio turnover is affected by the optimization process, market conditions, changes in the size of the Fund, the nature of the Fund’s investments, and the judgment of the portfolio manager. Changes are normally made in the Fund’s holdings whenever the optimization process suggests a change or the portfolio manager believes such changes are desirable. Portfolio turnover rates are generally not a factor in making decisions regarding asset allocations among the underlying funds. The Fund’s transactions in the underlying funds do not entail brokerage commissions, but may result in taxable capital gains. The “Financial Highlights” section of this Prospectus shows the Fund’s historical turnover rates.

Each Fund has certain additional fundamental investment restrictions that can only be changed with shareholder approval. The funds have substantially similar fundamental investment restrictions. Please see each Fund’s SAI for further information relating to those investment restrictions, each of which is incorporated by reference into this Prospectus/Information Statement and the SAI dated [          , 2012], related to this Merger.

 

Similar Risk Factors of the Funds and Underlying Funds

The value of your investment will vary over time, sometimes significantly, and you may lose money by investing in the Funds. Each Fund intends to allocate assets among underlying funds that invest in stocks, bonds, and alternative strategy investments, and may invest in money market instruments or cash/cash equivalents, while also making efforts to minimize risk exposure within the selection of investments in a variety of Janus funds. The allocation of the Fund’s assets to certain asset classes, asset categories, and underlying funds may not be successful in achieving the Fund’s objective. There is a risk that you may achieve lower returns by investing in the Fund instead of investing directly in an underlying fund. The Fund’s returns are directly related to the aggregate performance and expenses of the underlying funds in which it invests. Certain of the underlying funds in which the Fund may invest have operated for shorter time periods and therefore have limited investment results, smaller asset bases, and estimated expense ratios. Investments by the Fund in such an underlying fund may increase the indirect expenses paid by the Fund and may result in the Fund not achieving its investment objective.

 

There is additional risk for the Funds with respect to aggregation of holdings of underlying funds. The aggregation of holdings of underlying funds may result in the Fund indirectly having concentrated assets in a particular industry, geographical sector, or single company. Such indirect concentrated holdings may have the effect of increasing the volatility of the Fund’s returns. The Fund does not control the investments of the underlying funds, and any indirect concentration occurs as a result of the underlying funds following their investment objectives.

 

Each Fund is an actively managed investment portfolio and is therefore subject to the risk that the investment strategies employed for the Fund may fail to produce the intended results. The Fund may underperform its benchmark index or other mutual funds with similar investment objectives.

 

Janus manages many funds and numerous other accounts, which may include separate accounts and other pooled investment vehicles, such as hedge funds. Side-by-side management of multiple accounts, including the management of a cash collateral pool for securities lending and investing the Janus funds’ cash, may give rise to conflicts of interest among those accounts, and may create potential risks, such as the risk that investment activity in one account may adversely affect another account. For example, short sale activity in an account could adversely affect the market value of long positions in one or more other accounts (and vice versa). Side-by-side management may raise additional potential conflicts of interest relating to the allocation of investment opportunities and the aggregation and allocation of trades. Additionally, because Janus is the adviser to the Fund and the underlying funds, it is subject to certain potential conflicts of interest when allocating the assets of the Fund among underlying funds. The officers and Trustees of the Fund may also serve in the same capacity as officers and Trustees of the underlying funds. Conflicts may arise as the officers and Trustees seek to fulfill their fiduciary responsibilities to both the Fund and the underlying funds.

Purchases and redemptions of an underlying fund by the Fund due to reallocations or rebalancing may result in an underlying fund having to sell securities or invest cash when it otherwise would not do so. Such transactions could accelerate the realization of taxable income if sales of securities resulted in gains and could also increase an underlying fund’s transaction costs. Large redemptions by the Fund may cause an underlying fund’s expense ratio to increase due to a resulting smaller asset base. A further discussion of potential conflicts of interest and a discussion of certain procedures intended to mitigate such potential conflicts are contained in the Fund’s SAI.

 

The Fund invests in underlying funds that may invest substantially all of their assets in common stocks. The main risk associated with investing in those funds is the risk that the value of the stocks they hold might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. If this occurs, an underlying fund’s share price may also decrease.

 

An underlying fund’s performance may also be significantly affected, positively or negatively, by a portfolio manager’s use of certain types of investments, such as foreign (non-U.S.) securities, derivative investments, exchange-traded funds, noninvestment grade bonds (“junk bonds”), initial public offerings (“IPOs”), or securities of companies with relatively small market capitalizations. Note that a portfolio manager’s use of IPOs and other types of investments may have a magnified performance impact on an underlying fund with a small asset base and the underlying fund may not experience similar performance as its assets grow.

 

The following information is intended to help you better understand some of the risks of investing in the Fund. The impact of the following risks on the Fund may vary depending on the Fund’s investment allocation. The greater the Fund’s allocation to an underlying fund or investment, the greater the Fund’s exposure to the risks associated with that underlying fund or investment. Before investing in the Fund, you should consider carefully the risks that you assume when investing in the Fund.

 

Bank Loan Risk.   Bank loans are obligations of companies or other entities entered into in connection with recapitalizations, acquisitions, and refinancings. Certain underlying funds may invest in bank loans. An underlying fund’s investments in bank loans are generally acquired as a participation interest in, or assignment of, loans originated by a lender or other financial institution. These investments may include institutionally-traded floating and fixed-rate debt securities. Participation interests and assignments involve credit, interest rate, and liquidity risk. In addition, the bank loans underlying these securities often involve borrowers with low credit ratings whose financial conditions are troubled or uncertain, including companies that are highly leveraged or in bankruptcy proceedings.

 

Collateral Risk.   With respect to collateral received in repurchase transactions or other investments, an underlying fund may have significant exposure to financial services, mortgage markets, and government agencies not secured by the full faith and credit of the United States. Such exposure, depending on market conditions, could have a negative impact on an underlying fund, including minimizing the value of any collateral.

 

Commodity-Linked Derivative Investment Risk.   Certain underlying funds may invest in derivatives that have exposure to the commodities markets. This exposure may subject a Fund to greater volatility than investments in traditional securities. The value of a commodity-linked derivative investment typically is based upon the price movements of a physical commodity (such as heating oil, livestock, or agricultural products), a commodity futures contract or commodity index, or some other readily measurable economic variable. The value of commodity-linked derivative instruments may therefore be affected by changes in overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry or commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.

 

Concentration Risk.   An underlying fund may focus its investments in related industry groups. Because of this, companies in its portfolio may share common characteristics and react similarly to market developments. For example, many companies with a life science orientation are highly regulated and may be dependent upon certain types of technology. As a result, changes in government funding or subsidies, new or anticipated legislative changes, or technological advances could affect the value of such companies and, therefore, the underlying fund’s net asset value. In addition, an underlying fund that concentrates its assets in the real estate and real estate-related industries will be closely linked to performance of the real estate markets. Unanticipated economic, legal, cultural, political, or other developments may cause property values to decline, real estate investment trust (“REIT”) prices may drop, and changes in federal or state tax laws may affect the value of the securities held by an underlying fund. Real estate-related companies are also generally sensitive to interest rates, cash flow of underlying real estate assets, supply and demand, and management skill and creditworthiness of the issuer. As a result, such underlying funds may be subject to greater risks and their net asset value may fluctuate more than a fund that does not concentrate its investments.

Counterparty Risk.   Certain derivative and “over-the-counter” instruments, such as swaps and forwards, are subject to the risk that the other party to a contract will not fulfill its contractual obligations.

 

Credit Quality Risk.   Through the Fund’s investments in underlying funds holding fixed-income securities, the Fund is subject to the risks associated with the credit quality of the issuers of those fixed-income securities. Credit quality measures the likelihood that the issuer or borrower will meet its obligations on a bond. One of the fundamental risks for an underlying fund is credit risk, which is the risk that an issuer will be unable to make principal and interest payments when due, or default on its obligations. Higher credit risk may negatively impact an underlying fund’s returns and yield. U.S. Government securities are generally considered to be the safest type of investment in terms of credit risk. Municipal obligations generally rank between U.S. Government securities and corporate debt securities in terms of credit safety. Corporate debt securities, particularly those rated below investment grade, present the highest credit risk.

 

Many fixed-income securities receive credit ratings from services such as Standard & Poor’s, Fitch, and Moody’s. These services assign ratings to securities by assessing the likelihood of issuer default. The lower a bond issue is rated by an agency, the more credit risk it is considered to represent. Lower rated instruments and securities generally pay interest at a higher rate to compensate for the associated greater risk. Interest rates can fluctuate in response to economic or market conditions, which can result in a fluctuation in the price of a security and impact your return and yield. If a security has not received a rating, an underlying fund must rely upon Janus Capital’s credit assessment, which if incorrect can also impact the underlying fund’s returns and yield. Please refer to the “Explanation of Rating Categories” section of the SAI for a description of bond rating categories.

 

Derivatives Risk.   World Allocation Fund and certain underlying funds invested in by either Fund may invest in derivatives. Derivatives can be highly volatile and involve risks in addition to the risks of the underlying referenced securities. Gains or losses from a derivative can be substantially greater than the derivative’s original cost, and can therefore involve leverage. Derivatives can be complex instruments and may involve analysis that differs from that required for other investment types used by the Fund or an underlying fund. If the value of a derivative does not correlate well with the particular market or other asset class to which the derivative is intended to provide exposure, the derivative may not produce the anticipated result. Derivatives can also reduce the opportunity for gain or result in losses by offsetting positive returns in other investments. Derivatives can be less liquid than other types of investments and entail the risk that the counterparty will default on its payment obligations. If the counterparty to a derivative transaction defaults, the Fund or an underlying fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. To the extent the Fund or an underlying fund enters into short derivative positions, the Fund or underlying fund may be exposed to risks similar to those associated with short sales, including the risk that the Fund or underlying fund’s losses are theoretically unlimited.

 

Emerging Markets Risk.   Within the parameters of its specific investment policies, each Fund and an underlying fund may invest in securities of issuers or companies from or with exposure to one or more “developing countries” or “emerging markets.” Such countries include, but are not limited to, countries included in the MSCI Emerging Markets Index ^sm . For the underlying Janus Emerging Markets Fund, such countries include any country that has been determined by an international organization, such as the World Bank, to have a low to middle income economy and/or any country that is not included in the Morgan Stanley Capital International World Index ^sm , which measures the equity market performance of developed markets. To the extent that the Fund or an underlying fund invests a significant amount of its assets in one or more of these countries, its returns and net asset value may be affected to a large degree by events and economic conditions in such countries. The price of investments in emerging markets can experience sudden and sharp price swings. In many developing markets, there is less government supervision and regulation of business and industry practices (including the potential lack of strict finance and accounting controls and standards), stock exchanges, brokers, and listed companies than in more developed markets, making these investments potentially more volatile in price and less liquid than investments in developed securities markets, resulting in greater risk to investors. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on the Fund’s or an underlying fund’s investments. The securities markets of many of the countries in which the Fund or an underlying fund may invest may also be smaller, less liquid, and subject to greater price volatility than those in the United States. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Fund or an underlying fund to obtain or to enforce a judgment against the issuers of such securities. In addition, the Fund’s or an underlying fund’s investments may be denominated in foreign currencies and therefore, changes in the value of a country’s currency compared to the U.S. dollar may affect the value of the Fund’s or the underlying fund’s investments. To the extent that the Fund or an underlying fund invests a significant portion of its assets in the securities of issuers in or companies of a single country or region, it is more likely to be impacted by events or conditions affecting that country or region, which could have a negative impact on the Fund’s or underlying fund’s performance. The Fund or an underlying fund may be subject to emerging markets risk to the extent

that it invests in securities of issuers or companies which are not considered to be from emerging markets, but which have customers, products, or transactions associated with emerging markets. Some of the risks of investing directly in foreign and emerging market securities may be reduced when the Fund or an underlying fund invests indirectly in foreign securities through various other investment vehicles including derivatives, which also involve other risks.

 

Fixed-Income Securities Risk.   Through the Fund’s investments in underlying funds holding fixed-income securities, the Fund is subject to the risks associated with investments in a variety of fixed-income securities, which may be less volatile than underlying funds that invest most of their assets in common stocks; returns and yields will vary, and you could lose money. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause an underlying fund’s net asset value to likewise decrease. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are therefore more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. In addition, there is prepayment risk, which is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as mortgage- and asset-backed securities, may be prepaid by their issuers thereby reducing the amount of interest payments. This may result in an underlying fund having to reinvest its proceeds in lower yielding securities. Fixed-income securities may also be subject to valuation risk and liquidity risk. Valuation risk is the risk that one or more of the fixed-income securities in which an underlying fund is invested are priced incorrectly due to factors such as incomplete data, market instability, or human error. Liquidity risk is the risk that fixed-income securities may be difficult or impossible to sell at the time that an underlying fund would like or at the price that a portfolio manager believes the security is currently worth. Securities underlying mortgage- and asset-backed securities, which may include subprime mortgages, also may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.

 

Foreign Exposure Risk.   The Funds may have significant exposure to foreign markets as a result of the underlying funds’ investments in foreign securities, including investments in emerging markets, which can be more volatile than the U.S. markets. As a result, the Fund’s and an underlying fund’s returns and net asset value may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. In some foreign markets, there may not be protection against failure by other parties to complete transactions. It may not be possible for an underlying fund to repatriate capital, dividends, interest, and other income from a particular country or governmental entity. In addition, a market swing in one or more countries or regions where the Fund or an underlying fund has invested a significant amount of its assets may have a greater effect on the Fund’s or an underlying fund’s performance than it would in a more geographically diversified portfolio. To the extent the Fund or an underlying fund invests in foreign debt securities, such investments are sensitive to changes in interest rates. Additionally, investments in securities of foreign governments involve the risk that a foreign government may not be willing or able to pay interest or repay principal when due. The Fund’s or an underlying fund’s investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries.

 

Growth Securities Risk.   Certain underlying funds invest in companies after assessing their growth potential. Securities of companies perceived to be “growth” companies may be more volatile than other stocks and may involve special risks. If a portfolio manager’s perception of a company’s growth potential is not realized, the securities purchased may not perform as expected, reducing the underlying fund’s returns. In addition, because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “growth” stocks may perform differently from the market as a whole and other types of securities.

 

High-Yield/High-Risk Bond Risk.   A high-yield/high-risk bond (also called a “junk” bond) is a bond rated below investment grade by major rating agencies (i.e., BB+ or lower by Standard & Poor’s Ratings Services (“Standard & Poor’s”) and Fitch, Inc. (“Fitch”), or Ba or lower by Moody’s Investors Service, Inc. (“Moody’s”)) or is an unrated bond of similar quality. It presents greater risk of default (the failure to make timely interest and principal payments) than higher quality bonds. The underlying Janus High-Yield Fund may invest without limit in higher-yielding/higher-risk bonds. Other underlying funds have limits related to their investments in high-yield/high-risk bonds that range from 50% or less to 20% or less of their net assets. High-yield/high-risk bonds may be more sensitive than other types of bonds to economic changes, political changes, or adverse developments specific to the company that issued the bond, which may adversely affect their value. Issuers of high-yield/high-risk bonds may not be as strong financially as those issuing bonds with higher credit ratings and are more vulnerable to real or perceived economic changes, political changes, or adverse developments specific to the issuer. In addition, the junk bond market can experience sudden and

sharp price swings. Please refer to the “Explanation of Rating Categories” section of the SAI for a description of bond rating categories.

 

Industry Risk.   Although the Fund does not concentrate its investments in specific industries, certain underlying funds may invest in companies related in such a way that they react similarly to certain industry-specific market or economic developments. For example, competition among technology companies may result in increasingly aggressive pricing of their products and services, which may affect the profitability of companies in an underlying fund’s portfolio. In addition, because of the rapid pace of technological development, products or services developed by companies in an underlying fund’s portfolio may become rapidly obsolete or have relatively short product cycles. As a result, such underlying funds’ returns may be considerably more volatile than the returns of an underlying fund that does not invest in similarly related companies.

 

Interest Rate Risk.   Generally, a fixed-income security will increase in value when prevailing interest rates fall and decrease in value when prevailing interest rates rise. Longer-term securities are generally more sensitive to interest rate changes than shorter-term securities, but they generally offer higher yields to compensate investors for the associated risks. High-yield bond prices and floating rate debt security prices are generally less directly responsive to interest rate changes than investment grade issues or comparable fixed rate securities, and may not always follow this pattern.

 

Investment Process Risk.   The optimization process used by Janus and the proprietary mathematical investment process used by INTECH Investment Management LLC (“INTECH”), the subadviser to certain underlying funds, may not achieve the desired results. Additionally, the rebalancing techniques used by Janus Capital and INTECH may result in a higher portfolio turnover rate and related expenses compared to a “buy and hold” fund strategy. A higher portfolio turnover rate increases the likelihood of higher net taxable gains or losses for shareholders. There is a risk that if INTECH’s method of identifying stocks with higher volatility than the benchmark index or its method of identifying stocks that tend to move in the same or opposite direction relative to each other (correlation) does not result in selecting stocks with continuing volatility or the expected correlation, the underlying fund may not outperform its respective benchmark index. On a routine basis, INTECH considers changes to its mathematical investment process. These changes may result in changes to the portfolio, might not provide the intended results, and may adversely impact the Fund’s performance. In addition, others may attempt to utilize public information related to INTECH’s investment strategy in a way that may affect performance.

 

Leverage Risk.   Leverage occurs when an underlying fund increases its assets available for investment through borrowings or similar transactions. In accordance with an underlying fund’s investment policy, the underlying fund may engage in transactions that create leverage, including, but not limited to, borrowing money from banks to the extent permitted by the 1940 Act, including for investment purposes, as well as engaging in the use of short sales. An underlying fund’s use of leverage may result in risks and can magnify the effect of any gains or losses, causing the underlying fund to be more volatile than if it had not been leveraged. There is no assurance that a leveraging strategy will be successful.

 

Long/Short Position Risk.   The value of an underlying fund’s long portfolio may decrease if the value of an individual company or security, or multiple companies or securities, in the portfolio decreases or if an underlying fund’s portfolio managers are incorrect about their assessment of a company’s intrinsic worth. Further, regardless of how well individual companies or securities perform, the value of an underlying fund’s long portfolio could also decrease if there are deteriorating economic or market conditions. Conversely, an underlying fund’s short positions may result in a loss (which may be unlimited) if the value of an individual company or security, or multiple companies or securities, in the portfolio increases or if the stock market goes up, regardless of how well the businesses of individual companies or securities in the portfolio perform. If the value of an underlying fund’s portfolio decreases, the underlying fund’s net asset value will also decrease.

 

Market Risk.   Underlying funds investing in equity securities are subject to the risks associated with investments in common stocks, which tend to be more volatile than many other investment choices. The value of an underlying fund’s portfolio may decrease if the value of an individual company or security, or multiple companies or securities, in the portfolio decreases or if a portfolio manager’s belief about a company’s intrinsic worth is incorrect. Further, regardless of how well individual companies or securities perform, the value of an underlying fund’s portfolio could also decrease if there are deteriorating economic or market conditions, including, but not limited to, a general decline in prices on the stock markets, a general decline in real estate markets, a decline in commodities prices, or if the market favors different types of securities than the types of securities in which the underlying fund invests. If the value of the underlying fund’s portfolio decreases, an underlying fund’s net asset value will also decrease, resulting in a decrease in the Fund’s net asset value, which means if you sell your shares in the Fund you may lose money.

 

It is also important to note that events in both domestic and international equity and fixed-income markets have resulted, and may continue to result, in an unusually high degree of volatility in the markets, with issuers that have exposure to the real estate,

mortgage, and credit markets particularly affected. These events and the resulting market upheavals may have an adverse effect on an underlying fund, such as a decline in the value and liquidity of many securities held by the underlying fund, unusually high and unanticipated levels of redemptions, an increase in portfolio turnover, a decrease in net asset value, and an increase in underlying fund expenses. Because the situation is unprecedented and widespread, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude an underlying fund’s ability to achieve its investment objective. It is impossible to predict whether or for how long these conditions will continue. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.

 

Further, the instability experienced in the financial markets has resulted in the U.S. Government and various other governmental and regulatory entities taking actions to address the financial crisis. These actions include, but are not limited to, the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) in July 2010 which is expected to dramatically change the way in which the U.S. financial system is supervised and regulated. More specifically, the Dodd-Frank Act provides for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, over-the-counter derivatives, investment advisers, credit rating agencies, and mortgage lending, which expands federal oversight in the financial sector and may affect the investment management industry as a whole. Given the broad scope, sweeping nature, and the fact that many provisions of the Dodd-Frank Act must be implemented through future rulemaking, the ultimate impact of the Dodd-Frank Act, and any resulting regulation, is not yet certain. As a result, there can be no assurance that these government and regulatory measures will not have an adverse effect on the value or marketability of securities held by an underlying fund, including potentially limiting or completely restricting the ability of the underlying fund to use a particular investment instrument as part of its investment strategy, increasing the costs of using these instruments, or possibly making them less effective in general. Furthermore, no assurance can be made that the U.S. Government or any U.S. regulatory entity (or other authority or regulatory entity) will not continue to take further legislative or regulatory action in response to the economic crisis or otherwise, and the effect of such actions, if taken, cannot be known.

 

In addition, European markets have recently experienced volatility and adverse trends due to concerns about economic downturns, rising government debt levels, and the possible default of government debt in several European countries, including Greece, Ireland, Italy, Portugal, and Spain. A default or debt restructuring by any European country would adversely impact holders of that country’s debt and worldwide sellers of credit default swaps linked to that country’s creditworthiness. These trends have adversely affected the value and exchange rate of the euro and may continue to significantly affect the economies of all European countries, which in turn may have a material adverse effect on an underlying fund’s investments in such countries, other countries that depend on European countries for significant amounts of trade or investment, or issuers with exposure to European debt.

 

Mortgage-Backed Securities Risk.   Rising interest rates tend to extend the duration of, or reduce the rate of prepayments on, mortgage-backed securities, making them more sensitive to changes in interest rates (“extension risk”). As a result, in a period of rising interest rates, the price of mortgage-backed securities may fall, causing an underlying fund that holds mortgage-backed securities to exhibit additional volatility. Mortgage-backed securities are also subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce an underlying fund’s returns because the underlying fund will have to reinvest that money at lower prevailing interest rates.

 

In addition to extension risk and prepayment risk, investments in mortgage-backed securities, including those comprised of subprime mortgages, may be subject to a higher degree of credit risk, valuation risk, and liquidity risk than various other types of fixed-income securities.

 

Nondiversification Risk.   Certain underlying funds are classified as nondiversified under the 1940 Act and may hold a greater percentage of their assets in a smaller number of issuers. As a result, an increase or decrease in the value of a single security held by an underlying fund may have a greater impact on the underlying fund’s net asset value and total return. Being nondiversified may also make an underlying fund more susceptible to financial, economic, political, or other developments that may impact a security. Although an underlying fund may satisfy the requirements for a diversified fund, its nondiversified classification gives the underlying fund’s portfolio manager more flexibility to hold larger positions in a smaller number of securities than an underlying fund that is classified as diversified. An underlying fund’s policy of concentrating its portfolio in a smaller number of holdings could result in more volatility in the underlying fund’s performance and its share price.

 

Portfolio Turnover Risk.   Increased portfolio turnover of underlying funds may result in higher costs for brokerage commissions, dealer mark-ups, and other transaction costs, and may also result in taxable capital gains. Higher costs associated with increased portfolio turnover also may have a negative effect on the Fund’s performance.

Real Estate Risk.   Investments in certain underlying funds may be subject to many of the same risks as a direct investment in real estate. The value of securities of issuers in the real estate and real estate-related industries, including REITs, is sensitive to changes in real estate values and rental income, property taxes, interest rates, tax and regulatory requirements, supply and demand, and the management skill and creditworthiness of the issuer. REITs that invest in real estate mortgages are also subject to prepayment risk. In addition to prepayment risk, investments in mortgage-backed securities comprised of subprime mortgages and investments in other asset-backed securities comprised of under-performing assets may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.

 

Short Sales Risk.   Short sales are speculative transactions and involve special risks, including a greater reliance on the ability of an underlying fund’s portfolio manager to accurately anticipate the future value of a security. An underlying fund will suffer a loss if it sells a security short and the value of the security rises rather than falls. An underlying fund’s losses are potentially unlimited in a short sale transaction. The use of short sales may also cause an underlying fund to have higher expenses than those of other underlying funds. In addition, due to the investment process of long and short positions, an underlying fund may be subject to additional transaction costs that may lower the underlying fund’s returns. An underlying fund’s use of short sales may also have a leveraging effect on the underlying fund’s portfolio.

 

Small- and Mid-Sized Companies Risk.   Due to certain underlying funds’ investments in securities issued by small- and mid-sized companies, the underlying funds’ net asset value may fluctuate more than that of an underlying fund investing primarily in large companies. An underlying fund’s investments in securities issued by small- and mid-sized companies, which tend to be smaller, start-up companies offering emerging products or services, may involve greater risks than are customarily associated with larger, more established companies. For example, while small- and mid-sized companies may realize more substantial growth than larger or more established issuers, they may also suffer more significant losses as a result of their narrow product lines, limited operating history, greater exposure to competitive threats, limited financial resources, limited trading markets, and the potential lack of management depth. Securities issued by small- and mid-sized companies tend to be more volatile and somewhat more speculative than securities issued by larger or more established companies and may underperform as compared to the securities of larger companies. These holdings are also subject to wider price fluctuations and tend to be less liquid than stocks of larger companies, which could have a significant adverse effect on an underlying fund’s returns, especially as market conditions change.

 

Sovereign Debt Risk.   Certain underlying funds may invest in U.S. and foreign government debt securities (“sovereign debt”). Investments in U.S. sovereign debt are considered low risk. However, investments in non-U.S. sovereign debt can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner. A sovereign debtor’s willingness or ability to satisfy its debt obligation may be affected by various factors, including its cash flow situation, the extent of its foreign currency reserves, the availability of foreign exchange when a payment is due, the relative size of its debt position in relation to its economy as a whole, the sovereign debtor’s policy toward international lenders, and local political constraints to which the governmental entity may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies, and other entities. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtor’s ability or willingness to timely service its debts. An underlying fund may be requested to participate in the rescheduling of such sovereign debt and to extend further loans to governmental entities, which may adversely affect the underlying fund’s holdings. In the event of default, there may be limited or no legal remedies for collecting sovereign debt and there may be no bankruptcy proceedings through which the underlying fund may collect all or part of the sovereign debt that a governmental entity has not repaid.

 

Value Investing Risk.   Certain underlying funds invest in “value” stocks. Because different types of stocks tend to shift in and out of favor depending on market and economic conditions, “value” stocks may perform differently than other types of stocks and from the market as a whole, and can continue to be undervalued by the market for long periods of time. It is also possible that a value stock will never appreciate to the extent expected.

Janus Capital Management LLC, 151 Detroit Street, Denver, Colorado 80206-4805, is the investment adviser to each Fund and the underlying funds. Janus is responsible for the day-to-day management of the Funds’ investment portfolios, as well as the investment portfolios of certain underlying funds, and furnishes continuous advice and recommendations concerning the Funds’ investments. Janus also provides certain administration and other services and is responsible for other business affairs of each Fund.

Janus (together with its predecessors) has served as investment adviser to Janus mutual funds since 1970 and currently serves as investment adviser to all of the Janus funds, acts as subadviser for a number of private-label mutual funds, and provides separate account advisory services for institutional accounts and other unregistered products.

 

Janus furnishes certain administration, compliance, and accounting services for the Moderate Allocation Fund and World Allocation Fund. In addition, employees of Janus and/or its affiliates serve as officers of the Trust. Janus provides office space for the Funds and generally pays the salaries, fees, and expenses of Fund officers with respect to services provided to the Funds, although some expenses related to compensation payable to the Janus funds’ Chief Compliance Officer and compliance staff are shared with the Janus funds.

 

Janus furnishes certain administration, compliance, and accounting services for World Allocation Fund and is reimbursed by the Fund for certain of its costs in providing those services (to the extent Janus seeks reimbursement and such costs are not otherwise waived). In addition, employees of Janus and/or its affiliates may serve as officers of the Trust. Janus provides office space for the Fund. Some expenses related to compensation payable to the Janus funds’ Chief Compliance Officer and compliance staff are shared with the Janus funds. World Allocation Fund also pays for salaries, fees, and expenses of certain Janus employees and Fund officers, with respect to certain specified administration functions they perform on behalf of the Janus funds. The Janus funds pay these costs based on out-of-pocket expenses incurred by Janus, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus provides to the Fund.

Each Fund pays Janus an investment advisory fee and incurs expenses, including distribution and shareholder servicing fees (12b-1 fee), administrative services fees payable pursuant to the Transfer Agency Agreement, any other transfer agent and custodian fees and expenses, legal and auditing fees, printing and mailing costs of sending reports and other information to existing shareholders, and Independent Trustees’ fees and expenses. Each Fund’s investment advisory fee is calculated daily and paid monthly. Each Fund’s advisory agreement details the investment advisory fee and other expenses that each Fund must pay. Janus also receives an investment advisory fee for managing the underlying funds. Refer to the underlying funds’ prospectuses for specific information about investment advisory fees.

 

The following table reflects each Fund’s contractual investment advisory fee rate (expressed as an annual rate), as well as the actual investment advisory fee rate paid by each Fund to Janus (gross and net of fee waivers). The rate shown is a fixed rate based on each Fund’s average daily net assets.

 

 

A discussion regarding the basis for the Trustees’ approval of the Funds’ investment advisory agreements is included in each Fund’s annual or semiannual report to shareholders. You can request the Funds’ annual or semiannual reports (as they become available), free of charge, by contacting your plan sponsor, broker-dealer, or financial intermediary, or by contacting a Janus representative at 1-877-335-2687. The reports are also available, free of charge, at janus.com/info.

 

Subadviser of Certain Underlying Funds

INTECH Investment Management LLC (“INTECH”) serves as subadviser to five of the available underlying funds: INTECH Global Dividend Fund, INTECH International Fund, INTECH U.S. Core Fund, INTECH U.S. Growth Fund, and INTECH U.S. Value Fund (together, the “INTECH Funds”). INTECH (together with its predecessors), CityPlace Tower, 525