Global Sector Views Report… · A sector-by-sector outlook from the Janus Equity Team SUMMER 2016 GLOBAL SECTOR VIEW. 2 | Global Sector View For four decades, fundamental, bottom-up

Global Sector Views ReportA sector-by-sector outlook from the Janus Equity Team

SUMMER 2016

GLOBAL SECTOR VIEW

2 | Global Sector View

For four decades, fundamental, bottom-up research has been at the core of the Janus investment process. Our deep team of analysts covers approximately 1,500 stocks around the globe. Each takes a do-it-yourself, unconstrained approach to research. We believe this differentiates us from our peers and drives results for our clients and the investors they serve.

Every quarter, our seven global sector teams share their bottom-up perspective on key themes in the equity markets and how those themes impact their sectors and areas of coverage.

The opinions are those of the authors as of June 2016 and are subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes.

TABLE OF CONTENTS

> Communications 4

> Consumer 6

> Energy + Utilities 8

> Financials 10

> Health Care 12

> Industrials + Materials 14

> Technology 16

Global Sector Views from the Janus Equity Team | 3

Once again, summer comes with volatility out of Europe. The 43-year marriage between the UK and its continental neighbors moves to a messy and long divorce negotiation – with a lot of assets at stake.

On the day the Brexit results were announced, global equities shed a remarkable – and a record – $2.1 trillion in value, only to climb back in the final days of June. The fall and subsequent bounce likely presage a volatile summer for stocks and many other asset classes. Beyond the uncertainty in the UK and on the continent, as the currencies and stock markets weaken, Brexit has implications for China and Japan, and for U.S. companies sensitive to a stronger dollar. We see an environment where portfolios that have lower exposure to volatility and a lower beta should hold up on a relative basis. In the last year, more volatile stocks have been exceptionally poor contributors for active investors.

Brexit is another sign that populism is taking hold of the electorate, many of whom suffered in the global financial crisis and feel that they haven’t fully participated in the recovery. Mildly improving economies and healthier sovereign balance sheets are slim comfort to many who are struggling to regain a pre-crisis standard of living.

Against the economic backdrop, along with the migrant crisis and specter of terrorism, which are unfairly linked, we may see additional political turmoil leading market disruption. It is easier to leave the EU than to leave the euro, but the rise of populist parties in Europe suggests we may see calls for both in the coming months. Many key European elections happen over the next year.

Step back from the politics, however, and the picture improves. Consumer confidence and activity is generally holding up. Companies once again have flush balance sheets. While they are cautious on expansion capital expenditures, companies are using cash to buy shares or pay dividends. Several of the key issues from earlier this year seem less vexing. Oil has recovered and China seems to be on a more certain path. Federal Reserve policy remains tough to foresee, however, but should be data dependent. A rate hike, therefore, might be a strong signal of economic strength and therefore positive for equity markets.

For active investors, the key is to try to hold the line during this period of volatility. We do not think that it is a time to try to run to defensive stocks or to broaden a portfolio so much that it solely mimics an index. It is too difficult to predict when markets calm and fundamentals matter more. The last several years have been conducive for passive investing. A defensive market can penalize active investors, especially those with a growth bent or who own smaller than average companies. When markets calms, active investing can recover.

Certain sectors can hold up better, and we highlight our sector views in the following pages. The outlooks for technology and health care have not changed much with the Brexit vote. The shift to the cloud and the challenge to legacy tech companies carry on and provide attractive investment opportunities. The innovation of medicine and the demographic shifts we have often discussed remain. Both sectors are cheaper following the turmoil but no less attractive. Other sectors face a tougher row. Financials, which fell stunningly following Brexit, face the difficult problems of challenging economic conditions, corporate uncertainty about borrowing, negative interest rates and shrinking margins. UK banks also must endure an uncertain regulatory environment. Industrials could struggle with a strong U.S. dollar and weak global markets.

The road of crisis seems a little too well traveled lately. Whether Brexit is like Cyprus – a noisy event with few long-term implications – or like Lehman – which sparked a global panic with ripples still touching us today – remains to be seen. Our leaning is toward the former but it doesn’t mean the summer won’t be tough for equities. Active equity could struggle more in the near term because it is typically less exposed to large cap, to yield and to defensiveness overall than most indices. Longer term, the importance of growth and innovation should matter more in a sluggish global economy. Our focus on these companies is not changing.

If the summer of our discontent is made glorious, therefore, it will be because investors focus on better fundamentals and ignore the political uncertainty. We recognize the fragility of the economic recovery and the stretched policies of central banks, but our base case remains positive on equities. In previous periods of market pique, defensive environments gave way to stronger equity markets that favor active managers with a tolerance for volatility, growth and higher than average multiples. Our vote (and our money) goes there.

Adam Schor, CFADirector of Global Equity Strategies

Carmel WellsoDirector of Research

The Summer of Our Discontent


Opportunities & Trends> Mobile e-commerce and advertising have become mainstream. We hit an

inflection point in the second half of 2015, and mobile search and advertising revenues have since become even more pivotal drivers of revenue growth for Internet companies.

> Social media is becoming a hub for original content development and discovery. Entertainment content is being shared with greater frequency. Creators are seeking new ways to develop content for this medium and participate in the monetization derived from it.

> We anticipate that there will be an increase in new pay-TV products and service bundles as we exit 2016. The integration of existing pay-TV and digital content will create opportunities for both new and existing providers to add value and differentiate their offers. While we expect increased competition, we also expect legacy distributors that have invested in additional content rights, better navigation tools and enhanced network services will be able to gain market share with the highest-value customers.

> We expect the next wave of advertising growth to be driven by effective data analytics across a range of distribution platforms. As these capabilities grow, brands and agencies will be able to measure – in a standardized manner – returns across delivery platforms, thus enabling campaigns to reach the right audience on the right platform and be priced in a manner that provides increased value to advertisers and media owners.

Risks & Headwinds> It is unclear how existing distributors will be impacted by the increased product

offers and service bundles.

> The shift in television viewing is happening faster than distributors and content companies can develop advertising and measurement models around it. More content than ever will be viewed, but this will occur across a range of platforms, rendering existing business models less effective. Future advertising revenues for content companies are harder to predict.

> Despite the large reach of social media, content on these channels lacks the duration of traditional media, which is a prerequisite in attracting advertising time.

Investment Implications> We like Internet service companies with dominant digital advertising platforms.

Large platforms benefit from a positive feedback loop. The scale of their platforms creates enriched customer data that should add more value for the consumer and the advertisers seeking to better understand the viewing and consumption habits.

> Given the demand for analytics to compare advertising campaigns across platforms, we are investing in companies that are tackling this challenge. It also helps inform the media we own.

> Among pay-TV distributors, we prefer companies that can package multiple services with their robust broadband offerings and are investing in technology that enhances the value of the content bundle to consumers. We like the heightened new product development in video services that is leading to greater consumer choice.

COMMUNICATIONS

We anticipate an

increase in new

pay-TV products

and service

bundles as we

exit 2016.


Share of Viewers’ Time Spent in Channel vs. Share of Advertising Dollars

Source: Interactive Advertising Bureau, KPCB Internet Trends 2016; U.S. Market 2015.

While now commanding 25% of viewing time, mobile dramatically lags in ad spending allocated toward it.

0%

5%

10%

15%

20%

25%

30%

35%

40%

MobileInternetTVRadioPrint

Time Spent Advertising Spending

4%

16%13%

10%

36%

39%

22% 23%25%

12%


Opportunities & Trends> The focus of the consumer on experiences over “things” remains, and the gap

has only widened. The change has been fueled, in part, by social media enriching experiences as these platforms facilitate greater sharing.

> U.S. home improvement spending and car sales continue to grow at a strong pace. Rising home values are encouraging households to invest in home improvement projects they delayed after the 2008 financial crisis. These purchases tend to be “late cycle,” as consumers are more apt to use credit on such items.

> The popularity of mobile ordering and loyalty programs at restaurants is increasing. It creates opportunities for these companies to gather more data on their customers, which can translate to targeted ad campaigns and additional purchases.

Risks & Headwinds> The shift toward e-commerce sales is accelerating. Foot traffic in malls is

steadily declining. The price transparency from mobile and online shopping hurts a number of apparel and retail companies. These companies are being forced to make large investments to improve the multi-channel shopping experience, and such expenditures stand to squeeze margins over the near term.

> Amazon presents challenges to legacy brick and mortar stores. The company continues to gain market share, and its free shipping policies are putting further pressure on its competitors’ profitability. Physical retailers continue to suffer from excess capacity as companies have been hesitant to cede market share. This has acted as a weight on margins.

> The deflationary environment in Europe continues to be a headwind. Luxury purchases have also been hampered, to a certain degree, by terrorism-related activity weighing on tourism.

> The smaller market for physical goods has created a headwind for these stores’ margins. Smaller footprints reduce these companies’ economies of scale, especially with regard to purchasing and inventory management.

Investment Implications> We prefer consumer discretionary companies that are less impacted by the

migration toward online and mobile sales. Many of our companies sell products that require a consultative sale, or are too large to ship.

> Given the growing preference for e-commerce, we are avoiding mall-based apparel retailers, especially companies that don’t sell their own brands. Lower mall traffic has also led to a decrease in spontaneous purchases.

> The potential for sector consolidation may result in optionality on certain stocks. While several pockets of the sector suffer myriad headwinds, some companies have attractive assets that may command a premium to existing stock prices should a wave of consolidation commence.

CONSUMER

Mobile ordering

and loyalty

programs are

increasing in

popularity.


Starbucks Loyalty Program Membership (U.S.)

0

2

4

6

8

10

12

20152014201320122011

Loyalty Customers

CAGR*: 27.2%

Source: Starbucks. *Compound Annual Growth Rate

Mem

bers

(Mill

ions

)

Average growth over the past five years of 27% is all the more valuable given that program members are three times more likely to make a purchase.


Rationalized

supply and tepid

global demand

should keep oil

prices range-

bound for much

of the remainder

of the year.

Opportunities & Trends> Our expectation of equilibrium returning to oil markets in 2016 has occurred

more quickly than anticipated. While the curtailment of North American production – which we foresaw – has been a factor, other supply-side developments have also contributed to rationalization. Fires in Canada’s oil sands and unrest in Nigeria have taken a substantial level of production offline.

> Despite these supply shocks already pushing the price of crude toward $50 per barrel, we maintain our view that prices will be bound between $50 and $60 for the remainder of 2016.

Risks & Headwinds> Crude prices, at present, do not appear to have significant upside. With North

American shale companies being marginal producers, we expect near-term prices to be capped around $60 per barrel as these companies can quickly bring idled wells online. Another risk to pricing is Iranian production continuing to enter the market more quickly than projected.

> Demand remains a risk. Energy use is tied to global economic growth, especially as much incremental demand has come from inefficient emerging-market users. A worse-than-expected slowdown in China would weigh on industry prospects, as would recession in the U.S.

> Midstream operators are at risk of slowing North American supply. A business model geared toward volume-based revenue insulated energy transporters and storage providers, to a certain degree, as prices declined during 2014 and 2015. Lower volumes associated with reduced demand may place pressure on these companies’ earnings prospects.

Investment Implications> As equilibrium returns to North American markets, we view larger service

companies as advantaged over smaller peers. These companies had the financial strength to maintain equipment and capital expenditure (Capex) during the downturn, which now enables them to more rapidly meet the needs of drillers. Halliburton, which focuses on North American production, is one company that we view as especially well positioned to maintain – or gain – market share.

> Seasoned management teams matter. The downturn exposed which companies could effectively allocate capital and manage balance sheets. Some producers resisted the temptation of raising additional equity, which would have diluted existing shareholders. Disciplined companies are also likely to use the upturn to reduce debt and judiciously increase production.

> Contrary to prevailing sentiment, we see potential value in large-cap E&P companies. It may seem that these companies are thwarted by having committed to capital-intensive oil sands or offshore projects. Development expenses, however, are being disbursed in a deflationary environment, meaning the initially projected returns on capital may not be far off the mark. We have identified opportunities to gain exposure to long-life, slow-declining assets that have benefited from a lower-than-projected Capex environment.

ENERGY + UTILITIES


U.S. Crude Production off Recent Highs

Source: U.S. Department of Energy, Bloomberg.

20152014 2016 5-Year Range

Production rationalization in the face of a weak pricing environment is finally being reflected in recent supply data.

1,00

0 Ba

rrel

s / D

ay

2,000

4,500

7,000

9,500

12,000

MayAprMarFebJanDecNovOctSepAugJulJun


Opportunities & Trends> The sell-off in global banks sparked by the UK’s decision to exit the EU has

resulted in a stubbornly high intra-sector correlation. While recent developments are negative for financials, we recognize that the global financial architecture has become more robust since exiting the global financial crisis and European sovereign debt crisis and that bank balance sheets are better capitalized and enjoy much stronger liquidity positions. Despite this, many banks – especially in Europe – trade at valuations which imply imminent crisis. This scenario is possible if political disunity raises redenomination risk once again, but that is not our base case.

> The prospects of financial data providers have increased. As the volume of data collected by companies has grown, the breadth and quality of the analytics provided has improved as well. Such data are in high demand for functions such as trading, execution, index construction and risk management.

Risks & Headwinds> Subdued global growth prospects and low-to-negative interest rates remain a

drag on the sector’s prospects. Consequently, consensus earnings forecast have been dialed back over the past few months and sharply post Brexit, which dropped global rate curves. Tepid economic growth has weighed on loan growth, and low rates maintained downward pressure on banks’ net-interest margins, a key profitability metric. Not only are the BOE and ECB in no positions to raise rates in the wake of the Brexit referendum, we doubt the Fed has appetite to raise rates at least until 2017.

> Retrenchment within previously lucrative investment-banking businesses limits earnings growth. Early-year volatility curtailed new securities offerings. We expect that additional flare-ups may lead to a similarly weak environment. Secular pressures – namely a vast increase in regulations – have also impacted these business lines, as has market illiquidity, which has been acutely felt in fixed income trading.

> The green shoots of credit growth that we have identified in European banks will likely stall as the lack of clarity on an exact path forward for the UK’s exit will disincentivize long-term investment.

Investment Implications> While we remain extremely cautious on European banks, we believe that core

northern European banks with retail operations and pricing power represent the most attractive method to maintain exposure to the sector within the region.

> The ongoing transition to electronic payments, in our view, remains one of the more attractive spaces in financials. Among our largest holdings within the sector are companies that we believe stand to benefit from growth in electronic payments and private-label credit cards. The latter segment has the potential to be especially accretive for businesses given the associated ability to collect data and build customer loyalty.

> We believe that global insurance companies represent the most attractive exposure to secular demand growth from Asian customers. Well-recognized brands, breadth of products and management expertise will place multinational providers at a competitive advantage versus their regional peers.

FINANCIALS

Improved data

collection

and analytics

represent a

tremendous

opportunity

for financial

companies.


Net Interest Margin Trends of Major U.S. Banks

Source: Bloomberg.

As short-term interest rates have remained low, margins at U.S. banks have been squeezed.

0%

1%

2%

3%

4%

5%

20152014201320122011

Wells Fargo & Co.Citigroup, Inc. JPMorgan Chase Bank of America


Opportunities & Trends> Driven in part by compelling valuations, deal activity has picked up. Low stock

prices have translated into significant premiums in recent deals, a trend we expect to continue. The flurry of activity is not isolated to biotechnology. Device makers, including those focused on cardiovascular and spinal care, have commanded attractive prices.

> Pharmaceutical companies have continually had to readjust their portfolios to accommodate an increasing focus on value, not just safety and efficacy. As a consequence, we’re witnessing a high and sustained level of licensing activity, with areas like oncology, immunology and cardio-metabolic diseases receiving the greatest attention. We believe this portfolio rationalization process will help bolster the flagging biotech sector by giving selective companies the opportunity to pursue non-dilutive financing alternatives.

> Innovation continues to drive growth. While we do not expect Food & Drug Administration (FDA) approvals to top last year’s record of 45, 2016 should still register a robust number. Quicker approvals are the hallmark of the increased efficacy of many new treatments and their ability to address high, unmet medical needs.

Risks & Headwinds> The recent backlash on drug prices, along with consolidation among payers,

represents a possible impediment to what drug companies can charge. The pendulum started to swing after insurers were caught off guard by the extraordinary demand for Sovaldi, a hepatitis C therapy. Unless new drugs demonstrate important benefits for patients and value for the system, coverage becomes less certain. Already we see certain new cardiovascular therapies receiving greater scrutiny.

> Political rhetoric during an election year could create continued volatility. Still, as the field of presidential candidates has been winnowed and the election draws closer, investors should be in a better position to differentiate between rhetoric and what may ultimately be feasible.

> A backlog of pending approvals stands to put downward pressure on a select group of generic products with limited competition.

Investment Implications> We remain cautious on select specialty pharmaceutical companies, recognizing

that recent challenges have yet to fully dissipate. Debt-driven merger and acquisition activity has resulted in leveraged balance sheets. At the same time, external pressure has likely dented a business model reliant upon sizable price increases.

> Effective capital allocation remains critical to stock performance. Large-cap companies that have overpaid for acquisitions have been punished by investors while those that have consummated promising deals have been rewarded. Similarly, management teams that have a proven track record in allocating capital toward innovative products will continue to be perceived favorably by the market.

> As consolidation among payers threatens to weigh on revenue growth, innovative cancer therapies stand out as an area where insurers are more amenable to covering novel treatments.

HEALTH CARE

Companies are

rationalizing

their product

portfolios to

accommodate

shifts in the

economics of

the industry.


Metastatic Melanoma Two-Year Overall Survival Rate

Source: American Association of Cancer Research.

The combination of innovative therapies have resulted in survival rates more than doubling during past five years.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Opdivo plus Yervoy (October 2015):

Opdivo (December 2014):

Yervoy (March 2011):

Chemotherapy (1975-2010):

Two-

Year

Ove

rall

Surv

ival

Rat

e

Therapy Combination (year of approval/usage)

27%

53%58%

69%


Opportunities & Trends> For multinational industrial companies, headwinds in Europe were reignited by

the June Brexit vote. Low rates have continued to support slow but stable growth, particularly in western Europe. Autos have been particularly strong.

> The U.S. does not appear well positioned for a robust recovery. Although the first two months of 2016 were strong, growth has been sluggish since then. However, both residential and nonresidential construction segments have strengthened and, as a result, we see room for continued growth.

> Merger and acquisition activity remains high in nearly all segments of the industrials sector, and is being supplemented by companies able to provide cost synergies. Due to the sector’s recent weakness, topline growth has been achieved through streamlining as more companies look to acquire firms where they can apply their methods for improvement.

Risks & Headwinds> In China, fixed-asset investment is decelerating. Despite some weaker numbers

early in the second quarter, the outlook remains healthy for industrial companies tied to Chinese consumers.

> Despite recent strengthening in crude oil prices, energy companies are still at risk. The lack of stability in the sector has made it difficult for companies to effectively manage their projects.

> Currency continues to negatively impact multinationals. Weakness in international currencies due to the strong dollar has had a negative impact on companies’ reported financial performance, due to translation accounting. As Europe is a much bigger market for U.S. large-cap multinationals than emerging markets, currency concerns from Europe are a greater risk due to the recent Brexit vote.

Investment Implications> Without high-conviction cyclical growth factors, we generally focus on company-

specific drivers of value. We are concentrating our attention on companies with a proven record of superior capital allocation and quality management teams that have effectively guided their firms through the entire business cycle.

> We are playing close attention to improving industries that are being helped by consolidation.

INDUSTRIALS & MATERIALS

Merger and

acquisition activity

remains high in

nearly all areas

within industrials,

and is being

supplemented by

companies able

to execute cost

synergies.


-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

U.S. Residential and Nonresidential Fixed Investment

Source: Bureau of Economic Analysis, U.S. Census Bureau.

While gains have been registered, especially in residential construction, both are far below prerecession peaks, leaving room for growth.

Billi

on o

f U.S

. Dol

lars

(Cha

ined

, 200

9)

Year

-ove

r-Ye

ar C

hang

e in

U.S

. Hou

seho

lds

(3 m

onth

avg

.)

$200

$400

$600

$800

$1000

Structures (left)Residential (left) New Household Formation (right)

201520122009200620032000


Opportunities & Trends> The transition to the cloud is accelerating. In contrast to a few years ago when

customers experimented with cloud based services, mission-critical functions are now being placed on the cloud. Expense and security considerations are key drivers. The broad adoption of the cloud, including software as a service (SaaS) and infrastructure as a service(IaaS), has resulted in impressive growth rates for industry leaders, such as Salesforce.com and Amazon Web Services, even off large revenue bases. The same dynamic, however, has placed legacy software and hardware companies under pressure.

> Consolidation within semiconductors is reshaping the landscape. With topline growth elusive, companies are seeking to reap synergies from consolidation in order to fuel earnings growth. Aiding the trend are founders and CEOs of possible targets becoming more open to selling. Discounted valuations and cheap financing have also played a role in furthering deals.

> “Software eats the world” continues unabated. The declining cost of connectivity is enabling software to make myriad devices smarter. The breadth of applications utilized in automobiles illustrates this trend’s transformative nature. We expect novel applications to command a greater share of investment capital and ultimately account for a larger portion of returns.

Risks & Headwinds> The risks to legacy technology companies are underappreciated. While shares

in several legacy names have come under pressure, many investors continue to hold them due to attractive dividend yields and their still-dominant position in industry benchmarks. Yet, investors often do not understand the risks to underlying business models. This is especially true for software companies that were slow in adopting SaaS and hardware firms that overlooked the threat of the cloud.

> Privacy considerations may cast a shadow over certain Internet names. Technology has moved faster than regulation. Eventually, governments may reassert their influence. Alphabet’s Android mobile platform approaching 85% of global market share could serve as a catalyst for greater scrutiny. A spotlight on the issue may also cause Internet users, who have largely been complacent, to re-examine their attitude toward privacy.

> Global economic growth remains challenged. While low growth poses a risk across sectors, technology’s prospects could benefit from a weak environment as companies are required to achieve productivity gains to drive earnings growth. Investment in technology will be a key ingredient in harvesting such efficiencies. Investors must recognize, however, that the sector’s imbedded resilience is no longer present in many large-cap legacy names.

Investment Implications> We continue to avoid larger legacy companies whose existing business models

we seriously question. The early-year volatility enabled us to reposition the portfolio toward the higher-growth cloud names that we prefer.

> We see opportunity in segments of the semiconductor industry. While smartphones garner headlines, we believe that other segments, including autos and health care, may have more attractive growth trajectories, as they are earlier in the lifecycle of software adoption.

> Within enterprise architecture, a bifurcation is developing. We favor companies that do not have legacy product lines that must be wound down. New entrants with novel approaches and platforms stand to gain an ever greater level of market share.

TECHNOLOGY

The broad adoption of software by devices that historically did not utilize it has accelerated due to cheap connectivity.


0%

10%

20%

30%

40%

50%

Semiconductor Industry Merger & Acquisition Activity

Source: Bloomberg.

Since early 2015, both deal volume and average premiums have climbed considerably in an industry facing intense competitive pressures.

Quar

terly

Dea

l Vol

ume,

$ B

illio

n

Aver

age

Prem

ium

Pai

d Du

ring

Perio

d

$0

$10

$20

$30

$40

$50

$60

$70

$80

Q2 2016Q2 2015Q2 2014Q2 2013

Quarterly deal premium over past 5 years:

24.8%

> Invest with our clients’ interests first.

> Develop a deep understanding of the companies we research.

> Employ a strong valuation discipline focused on quality growth.

> Develop independent and differentiated views on our companies, supported by in-depth primary research.

> Spend as much time thinking about what could go wrong as about what could go right.

> Take a long-term view.

> Seek to anticipate change, don’t just analyze it.

> Attract the best and brightest analysts in the business, and foster an environment in which they can succeed on behalf of our investors.

GUIDING PRINCIPLES OF JANUS RESEARCH



JANUS GLOBAL EQUITY SECTOR TEAM LEADERS

C O M M U N I C AT I O N S

Jean Barnard, CFAC O M M U N I C AT I O N S

Denny FishC O N S U M E R

Tom Roller, CFAC O N S U M E R

Greg Kuczynski, CFA

E N E R G Y + U T I L I T I E S

Kris Kelley, CFAF I N A N C I A L S

John JordanH E A LT H C A R E

Andy Acker, CFAH E A LT H C A R E

Ethan Lovell

I N D U S T R I A L S + M AT E R I A L S

David Chung, CFA

T E C H N O L O G Y

Brinton JohnsT E C H N O L O G Y

Garth Yettick, CFA

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 at 877.33JANUS (52687) or download the file from janus.com/info. Read it carefully before you invest or send money.

Past performance is no guarantee of future results.

Investing involves market risk. Investment return and value will fluctuate, and it is possible to lose money by investing.

The value of equity securities fluctuates in response to issuer, political, market and economic developments. In the short term, equity prices can fluctuate dramatically in response to these developments, which can also affect a single issuer, issuers within an industry or economic sector or geographic region, or the market as a whole.

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.

There is no assurance that the investment process will consistently lead to successful investing.

In preparing this document, Janus has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources.

Statements in this piece that reflect projections or expectations of future financial or economic performance of the markets in general are forward-looking statements. Actual results or events may differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates.

Janus makes no representation as to whether any illustration/example mentioned in this document is now or was ever held in any Janus portfolio. Illustrations are only for the limited purpose of analyzing general market or economic conditions and demonstrating the Janus research process. They are not recommendations to buy or sell a security, or an indication of holdings.

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Global Sector Views Report… · A sector-by-sector outlook from the Janus Equity Team SUMMER 2016 GLOBAL SECTOR VIEW. 2 | Global Sector View For four decades, fundamental, bottom-up