Portfolio Commentary

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3Q17 Portfolio Commentary

Enterprise Fund Investment Environment Mid-cap stocks continued to climb higher during the period. The information technology sector was one of the top-performing sectors within the Russell Midcap Growth Index. The consumer staples sector was the only sector within the index to experience losses. Brian Demain, CFA Portfolio Manager

Performance Discussion The Fund underperformed its benchmark, the Russell Midcap Growth Index, during the period. Our Fund tends to emphasize “durable growth” companies that we believe have more predictable business models, recurring revenue streams, strong free-cash-flow growth and strong competitive positioning that should allow them to take market share and experience sustainable long-term growth across a variety of economic environments. We believe a collection of these higher-quality growth companies can help the Fund outperform when markets are down and drive relative outperformance over full market cycles. Many of our top contributors to performance this quarter exemplify the characteristics we typically seek in companies. athenahealth was one of our largest detractors. The stock experienced significant gains the previous quarter, after an activist investor got involved with the company. The health care IT company’s stock lost some ground after such a big jump, but our outlook on the company has not materially changed. We believe the company is uniquely positioned to make the entire health care system more efficient, as larger hospitals and physician groups adopt its software as a service (SaaS) platform for electronic health records, revenue cycle management and patient care coordination. We also like some of the plans laid out since activist shareholders became involved with the company. Lamar Advertising was another detractor. The company experienced weaker organic growth in the second quarter, which led the stock down, but we view this as temporary and our fundamental views on the company remain unchanged. We like the billboard operator’s growth potential as it uses more digital billboards, which allow it to display more advertisements on each sign. We also like that outdoor billboard advertisements are more insulated from the transition of traditional media advertising spending to digital media. Finally, advertising company Omnicom Group also detracted. Fear that online platforms will allow traditional advertisers to bypass advertising agencies such as Omnicom has weighed on the stock. While we acknowledge Omnicom’s competitive environment is evolving, we feel those concerns are more than reflected in the stock’s valuation, and continue to own the company.

Highlights • U.S. mid-cap stocks ended the quarter with strong gains. • The Fund underperformed its benchmark during the period. • On the margins, we’ve trimmed some stocks that have reached our valuation target, and invested in some new positions where the sustainability of earnings growth is less appreciated by the market. Page 1 of 4

Cody Wheaton, CFA Portfolio Manager

3Q17 Portfolio Commentary Our stock selection within the consumer discretionary sector was a large contributor to relative performance, as was our underweight to the sector. Within the sector, we’ve tended to avoid many of the traditional brick-andmortar retailers whose business models are getting disrupted by online retailers. We find it challenging to identify sustainable growth companies within the retail space. That positioning has helped performance not only for the quarter, but for the past year as the traditional brick-and-mortar retail business model continues to be challenged. While our positioning in the consumer discretionary sector aided relative performance, a number of our holdings outside the sector also added meaningfully to our results. A couple of technology companies, Lam Research and ON Semiconductor, were large contributors to performance this quarter. Both companies provide some of the building blocks that allow technology to push deeper into our lives, which is a broad investment

theme within our portfolio. Lam Research is a semiconductor equipment manufacturer. Many of the businesses it serves are in the memory market. Those customers have enjoyed healthy end markets due to the growth in machine learning and the “Internet of Things.” A strong spending cycle by these companies has led to strong demand for Lam’s equipment, and that has shown through in its last several earnings reports. ON Semiconductor, meanwhile, produces semiconductors for a wide range of fast-growing industrial end markets, including power management and automobiles, where image sensors are becoming more prevalent. The stock was up this quarter after the company announced quarterly results that demonstrated the strong synergies and costs savings ON can achieve from its recent acquisition of Fairchild. We continue to like the company’s growth potential, and also its potential to improve margins.

For detailed performance information, please visit janushenderson.com/performance.

Outlook For more than a decade, our investment process has focused on finding companies with sustainable growth opportunities, strong management teams and a history of generating high returns on invested capital. These companies’ earnings streams are often more predictable than other midcap companies. Some stocks with more predictable earnings models have been bid up by the market over the last several quarters as investors gravitate toward proven growth opportunities. Higher valuations have made it harder – but not impossible – to find new, reasonably valued investment ideas to include in our portfolio. That doesn’t mean we will veer from our approach. A focus on durable growth

companies has served our clients well through the years and we believe it is the best way to add value through an entire market cycle. But we’ve had to dig a little deeper to find those companies where the profitability model is still emerging, or where the competitive advantages supporting stable earnings growth may be less understood. On the margins, we’ve trimmed some stocks that have reached our valuation target, and invested in some new positions where the sustainability of earnings growth is less appreciated by the market. We plan to be opportunistic in case markets become volatile and we see a better buying opportunity for durable growth companies. In short, we know our hunting ground among mid-cap stocks and will be ready when opportunities present themselves.

Top Contributors and Detractors for the Quarter Ended 9/30/17 Top Contributors

Ending Weight (%)

Contribution (%) Top Detractors

Ending Weight (%)

Contribution (%)

Lam Research Corp

1.77

0.45

DexCom Inc

0.48

-0.25

ON Semiconductor Corp

1.72

0.42

athenahealth Inc

1.53

-0.21

TD Ameritrade Holding Corp

2.48

0.32

Lamar Advertising Co

2.07

-0.13

LPL Financial Holdings Inc

1.59

0.31

Omnicom Group Inc

0.98

-0.12

Sensata Technologies Holding NV

2.56

0.30

Wabtec Corp/DE

0.45

-0.10

The holdings identified in this table, in compliance with Janus Henderson policy, do not represent all of the securities purchased, held or sold during the period. To obtain a list showing every holding as a percentage of the portfolio at the end of the most recent publicly available disclosure period, contact 800.668.0434 or visit janushenderson.com/info.

Top Contributors

Top Detractors

Lam Research: Lam Research Corp. engages in the manufacture and service of wafer processing semiconductor manufacturing equipment. The company has benefited from the continued shift to the Internet of Things. We expect that the market for semiconductors should continue to be strong as we don’t see this trend abating, and therefore Lam’s equipment should remain in high demand.

Dexcom: Dexcom manufactures and distributes continuous glucose monitoring (CGM) systems for diabetes management. We expect more rapid adoption of CGMs as the FDA moves more quickly to approve newer-generation technologies such as Dexcom’s G6 and Abbott’s Libre. Eventually, we believe that CGM will largely replace finger sticks not only for persons with Type 1 diabetes, but all insulin-using diabetics. We believe Dexcom has the industry’s most accurate sensor and

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3Q17 Portfolio Commentary Top Contributors (continued)

Top Detractors (continued)

ON Semiconductor: ON Semiconductor is a broad-based semiconductor supplier. Its portfolio of power and signal management, logic, discrete and custom devices helps customers solve their design challenges in automotive, communications, computing, consumer, industrial, light-emitting diode (LED) lighting, medical, military/aerospace, smart grid and power applications. The company has one of the broadest portfolio offerings as well as one of the lowest cost models in the business. Due to multi-decade relationships with many of its customers, the company is able to spend less on marketing and research while developing unique products for customers. We think the company can continue to generate attractive levels of profit and free cash flows in its competitive markets. We also believe ON’s acquisition of competitor Fairchild will enable significant margin expansion and free cash flow generation for the combined company.

strongest pipeline, and expect the company to benefit from this transition.

TD Ameritrade: We believe the online broker is a best-in-class asset gatherer. We also believe TD Ameritrade has a unique and differentiated business model, having outsourced the banking operations of the business to TD Bank, allowing it to run a capital-light business model, generate free cash flow in excess of net income, and deliver attractive returns, in our view. We like that the company does not typically take balance sheet risk. Going forward, we believe that the retirement wave of baby boomers is a tailwind for companies such as TD Ameritrade as financial assets will move from defined contribution plans to rollover IRAs. LPL Financial Holdings: LPL Financial provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions. Through its custody and clearing platform, the company provides access to diversified financial products and services enabling its advisors to offer independent financial advice and brokerage services to retail investors. We believe LPL is uniquely positioned to take advantage of the growing trend toward independent fee-based financial advice. We like the company for its significant percentage of recurring revenues and its high retention rate among financial advisors. It has also generated historically high margins and returns on invested capital.

athenahealth: athenahealth provides cloud-based business services for physician practices and hospitals. We think its products have the potential to remove significant inefficiency from the health care system. Additionally, we believe the company’s ability to exchange information and help physicians and hospitals navigate complex changes to the regulatory landscape will add meaningfully to its sales. Lamar Advertising: The company has an extensive network of billboards. We like the company’s growth potential as it uses more digital billboards, which allow it to display more advertisements on each sign. We also believe outdoor billboard advertisements are more insulated from the transition of traditional media advertising spending to digital media. Omnicom Group: Omnicom Group is an advertising and marketing holding company whose agencies and networks operate internationally. We believe that as media complexity continues to increase, the role of agencies will become more relevant in assisting advertisers. Wabtec: Wabtec provides technology-based equipment and services for the global rail industry. We like the company’s international expansion opportunities, and we think the firm has the potential to expand margins through its higher-growth, higher-margin divisions. We also like its high returns on capital and higher growth rate, relative to other industrials.

Sensata Technologies: The industrial technology company is engaged in the development, manufacture and sale of sensors and controls. We like that Sensata is a low-cost producer of low-priced products, holds a high market share and boasts a high retention rate in its client base, the majority of which are automakers. We also feel the company’s primary products are key beneficiaries of technology-enabled trends such as manufacturers’ greater emphasis on safety, lower emissions and better fuel economy in developed markets.

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3Q17 Portfolio Commentary

For more information, please visit janushenderson.com. Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, please call Janus Henderson at 800.668.0434 or download the file from janushenderson.com/info. Read it carefully before you invest or send money. Past performance is no guarantee of future results. Call 800.668.0434 or visit janushenderson.com/performance for current month-end performance. Discussion is based on the performance of Class I Shares. Closed to certain new investors. As of 9/30/17 the top ten portfolio holdings of Janus Henderson Enterprise Fund are: Sensata Technologies Holding NV (2.38%), TD Ameritrade Holding Corp (2.31%), TE Connectivity Ltd (2.02%), Aon PLC (1.98%), Lamar Advertising Co (1.92%), Constellation Software Inc/Canada (1.79%), PerkinElmer Inc (1.77%), Crown Castle International Corp (1.75%), Boston Scientific Corp (1.74%) and SS&C Technologies Holdings Inc (1.71%). There are no assurances that any portfolio currently holds these securities or other securities mentioned. The opinions are as of 9/30/17 and are subject to change at any time due to changes in market or economic conditions. Janus Henderson may have a business relationship with certain entities discussed. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Security contribution to performance is measured by using an algorithm that multiplies the daily performance of each security with the previous day’s ending weight in the portfolio and is gross of advisory fees. Fixed income securities and certain equity C-0917-13782 01-15-18

securities, such as private placements and some share classes of equity securities, are excluded. Performance may be affected by risks that include those associated with nondiversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and highrisk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details. Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets. Russell Midcap® Growth Index reflects the performance of U.S. mid-cap equities with higher price-to-book ratios and higher forecasted growth values. Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment. Janus Henderson is a trademark of Janus Henderson Investors. © Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Funds distributed by Janus Henderson Distributors

188-42-16683 11/17

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