B-1 STATEMENT OF ADDITIONAL INFORMATION Dated May 1 ...

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that substantially differs from domestic standards and practices. Janus will generally vote internationalissuer proxies using the Guidelines unless; the application of the Guidelines is inconsistent with corporategovernance standards and practices in the foreign market, in which case Janus may refer to the research,analysis and recommendations provided by the Proxy Voting Service.The Janus funds may participate in a securities lending program under which shares of an issuer may beon loan while that issuer is conducting a proxy solicitation. Generally, if shares of an issuer are on loanduring a proxy solicitation, a fund cannot vote the shares. Janus fund managers have discretion to instructthe Proxy Administrator to pull back lent shares before proxy record dates and vote proxies.In circumstances where the Janus funds held a security as of record date, but Janus sells its holdings priorto the shareholder meeting, Janus will abstain from voting that proxy.The following guidelines are grouped according to the types of proposals generally presented toshareholders.Board of Directors IssuesThe quality of management is a key consideration in the decision to invest in a company. Becausemanagement is in the best possible position to evaluate the qualifications and needs of a particular board,Janus considers the recommendation of management to be an important factor in making these decisions.1. For domestic market and applicable foreign market issuers, Janus will generally vote in favor ofslates of director candidates that have a majority of independent directors (as determined by theProxy Voting Service) and oppose slates of director candidates that do not have a majorityindependent director.2. After taking into consideration country-specific practices, Janus will generally vote in favor ofuncontested director candidates, unless they:• attend less than 75% of the board and committee meetings without a valid excuse;• ignore or otherwise fail to support shareholder proposals that are approved by a majorityof the shares outstanding;• are non-independent directors and sit on the audit, compensation or nominatingcommittees;• are non-independent directors and the board does not have an audit, compensation, ornominating committees;• are audit committee members and the non-audit fees paid to the auditor are excessive (asdetermined by the Proxy Voting Service);• are audit committee members and poor accounting practices rise to a level of seriousconcern, or other serious issues surrounding the audit process or arrangement exist (asdetermined by the Proxy Voting Service);• serve as directors on an excessive number of boards (“Overboarded”) (as determined bythe Proxy Voting Service); or• are compensation committee members and the company has poor compensation practices(as determined by the Proxy Voting Service).3. Janus will evaluate proposals relating to contested director candidates and/or contested slates ofdirectors on case-by-case basis. *4. Janus will generally vote in favor of proposals to increase the minimum number of independentdirectors.5. Janus believes that attracting qualified director candidates is important to overall companysuccess and effective corporate governance. As such, Janus will generally vote in favor ofproposals regarding director indemnification arrangements.B-134
6. Janus will generally vote in favor of proposals to increase the size of a board of directors so longas the board has a majority independent directors.7. If the purpose of the proposal is to promote anti-takeover measures, Janus will generally voteagainst proposals relating to decreasing the size of a board of directors.8. Janus will generally vote against proposals advocating classified or staggered boards of directors.9. Janus will generally vote with management regarding proposals to declassify a board.10. Janus will generally vote in favor of proposals to separate the role of the Chairman from the roleof the CEO.Auditors11. Janus will vote in favor of proposals asking for approval of auditors, unless: (1) an auditor has afinancial interest in or association with the company, and is therefore not independent; (2) fees fornon-audit services are excessive (as determined by the Proxy Voting Service); or (3) there isreason to believe that the independent auditor has rendered an opinion, which is neither accuratenor indicative of the company's financial position.12. Janus will evaluate proposals relating to contested auditors on a case-by-case basis. *13. Janus will generally vote in favor of proposals to appoint internal statutory auditors.Equity Based Compensation PlansEquity based compensation plans are important tools in attracting and retaining desirable employees.Janus believes these plans should be carefully applied with the intention of maximizing shareholdervalue. With this in mind, Janus will evaluate proposals relating to executive and directorcompensation plans on a case-by-case basis.Janus will assess the potential cost of an equity based compensation plan using the research providedby the Proxy Voting Service. The research is designed to estimate the total cost of a proposed planand identify factors that demonstrate good stewardship of investors’ interests regarding executivecompensation. The Proxy Voting Service evaluates whether the estimated cost is reasonable bycomparing the cost to an allowable cap. The allowable cap is industry-specific, market cap-based,and pegged to the average amount paid by companies performing in the top quartile of their peergroups. If the proposed cost is above the allowable cap, Janus will generally vote against the plan.In addition, Janus will generally oppose plans that:• provide for re-pricing of underwater options;• provide for automatic replenishment (“evergreen”) or reload options;• create an inconsistent relationship between long term share performance andcompensation increases; and/or• are proposed by management and do not demonstrate good stewardship of investors’interests regarding executive compensation or are a vehicle for poor compensationpractices (as determined by the Proxy Voting Service).Other Compensation Related Proposals14. Janus will generally vote in favor of proposals relating to ESPPs – so long as shares purchasedthrough plans are priced no less than 15% below market value.B-135
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APPENDIX F - Proxy Voting Policies
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stocks that make up that index. Str
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Interest rate swaps do not involve
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the Adviser or Sub-Adviser will not
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Forward Contracts. The Portfolios m
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principal amount as the call writte
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Options on Foreign Currencies. The
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securities. The issuers of the unde
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the former pools. However, timely p
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CMO residuals are generally purchas
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utilize the underlying assets may r
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include range floaters which are a
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par unless the price of the underly
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to changes in interest rates genera
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corresponding floaters. The underly
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A Portfolio will not enter into suc
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egulations. The presence of an issu
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Portfolio TurnoverPortfolio turnove
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The ability of the Portfolio to ach
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Advisors, LLC, in accordance with t
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OWNERSHIP OF SHARES OF THE FUNDAll
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on the next $50 million, 0.50% on t
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Independent Registered Public Accou
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Name of Portfolio 2008 2007 2006Int
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Broker High Yield Bond BalancedAsse
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and cost of trade execution of Port
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Effective April 30, 2008, the Fund
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TAXES AND DIVIDENDSEach Portfolio i
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APPENDIX A - Credit RatingsDescript
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F2Good credit quality. A satisfacto
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. Moody’s Commercial Paper (short
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Plus (+) or minus (-)The ratings fr
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APPENDIX B - Directors and Officers
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Name, Address, andYear of BirthDavi
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APPENDIX C - Ownership of Shares of
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SMALL CAP VALUE PORTFOLIOGeneral Ac
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APPENDIX D - Portfolio ManagersOthe
Page 84 and 85: PortfolioManager(s)FundRegisteredIn
Page 86 and 87: Compensation of Portfolio ManagersM
Page 88 and 89: management firms. Performance is pr
Page 90 and 91: Portfolio managers are eligible for
Page 92 and 93: PortfolioPortfolio Manager(s)Dollar
Page 94 and 95: On August 25, 2005, the Court enter
Page 96 and 97: MSA’s Equity Trading Department s
Page 98 and 99: ERISA ClientsIn the case of client
Page 100 and 101: Shareholder Ability to Call Special
Page 102 and 103: • Exercise price• Participation
Page 104 and 105: Amend Quorum RequirementsVote propo
Page 106 and 107: Vote proposals to increase blank ch
Page 108 and 109: employees of Investment Manager and
Page 110 and 111: will not support the position of a
Page 112 and 113: company specifies the voting, divid
Page 114 and 115: egarding whether Investment Manager
Page 116 and 117: 3. The issuer is an entity particip
Page 118 and 119: manager(s) are responsible for maki
Page 120 and 121: Global Corporate Governance: Invest
Page 122 and 123: 13. The Proxy Group will review the
Page 124 and 125: determined by those investment comm
Page 126 and 127: T. Rowe Price has adopted these Pro
Page 128 and 129: shareholders and the effect on shar
Page 130 and 131: portfolio company could have influe
Page 132 and 133: The Proxy Voting Service will refer
Page 136 and 137: 15. Janus will generally vote in fa
Page 138 and 139: 46. For shareholder proposals outsi
Page 140 and 141: 2. Staggered BoardIf a company has
Page 142 and 143: proposed for a legitimate business
Page 144 and 145: APPENDIX G - Portfolio Holdings Dis
Page 146: ICP Securities LLCIntermonte Securi
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B-1 STATEMENT OF ADDITIONAL INFORMATION Dated May 1 ...

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