[CENTERED AT TOP OF PAGE AND PRINTED IN RED INK]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED SEPTEMBER 15, 1995
[LOGO]
JANUS HIGH-YIELD FUND
100 Fillmore Street, Suite 300
Denver, CO 80206-4923
(800) 525-3713
PROSPECTUS
_____________, 1995
Janus High-Yield Fund (the "Fund") is a no-load, diversified mutual fund that
seeks to obtain high current income as its primary objective. Capital
appreciation is a secondary objective when consistent with the primary
objective. The Fund seeks to achieve these objectives by investing primarily in
high-yield fixed-income securities. The Fund is recently organized and has a
limited operating history.
THE FUND MAY INVEST ALL OF ITS ASSETS IN HIGH-YIELD CORPORATE DEBT SECURITIES,
COMMONLY KNOWN AS "JUNK BONDS." THESE SECURITIES ENTAIL GREATER RISKS, INCLUDING
A GREATER RISK OF DEFAULT, THAN HIGHER QUALITY SECURITIES. YOU SHOULD CAREFULLY
CONSIDER THE GREATER RISKS OF JUNK BONDS BEFORE INVESTING. SEE "TYPES OF
INVESTMENTS" ON PAGE 4 AND "ADDITIONAL RISK FACTORS" ON PAGE 7.
THE FUND RESERVES THE RIGHT TO INVEST MORE THAN 15% OF ITS TOTAL ASSETS IN
SECURITIES OF UNSEASONED ISSUERS AND SECURITIES WHICH MAY BE CONSIDERED
RESTRICTED SECURITIES, INCLUDING RULE 144A SECURITIES.
For complete information on how to purchase, exchange and sell shares, please
see the Shareholder's Manual beginning on page 10.
The Fund is a portfolio of Janus Investment Fund (the "Trust") which is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Fund that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Fund is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated _______________, 1995 is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Fund at the address or phone number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
[PRINTED IN RED INK, VERTICALLY ON LEFT SIDE OF PAGE]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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TABLE OF CONTENTS
Page
The Fund At A Glance
Brief Description of the Fund ............................................ 3
Expense Information
The Fund's annual operating expenses ..................................... 3
The Fund In Detail
The Fund's Investment Objectives and Policies ............................ 4
General Portfolio Policies ............................................... 6
Additional Risk Factors .................................................. 7
Performance Terms
An Explanation of Performance Terms ...................................... 9
Shareholder's Manual
Types of Account Ownership ............................................... 10
How to Open an Account ................................................... 11
How to Purchase Shares ................................................... 12
How to Exchange Shares ................................................... 13
How to Redeem Shares ..................................................... 14
Shareholder Services and Account Policies ................................ 16
JETS(R) .................................................................. 16
Transactions Through Processing Organizations ............................ 16
Tax Identification Number ................................................ 16
Share Certificates ....................................................... 16
Involuntary Redemption ................................................... 16
Telephone Transactions ................................................... 16
Making Changes to Your Acccount .......................................... 17
Statements and Reports ................................................... 17
Management of the Fund
Management & Portfolio Manager ........................................... 17
Management Expenses ...................................................... 18
Portfolio Transactions ................................................... 18
Other Service Providers .................................................. 18
Other Information ........................................................ 19
Distributions and Taxes
Distribution Options and Taxes ........................................... 20
Appendix A
Glossary of Investments and Investment Techniques ........................ 21
Appendix B
Explanation of Rating Categories ......................................... 24
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THE FUND AT A GLANCE
INVESTMENT OBJECTIVES:
The primary investment objective of the Fund is to obtain high current
income. Capital appreciation is a secondary objective when consistent with the
primary objective.
PRIMARY HOLDINGS:
The Fund is a diversified fund that pursues its objectives primarily
through investments in high-yield fixed-income securities. The Fund emphasizes
investments in high-yield corporate debt securities ("junk bonds") and may
invest all of its assets in such securities.
SHAREHOLDER'S INVESTMENT HORIZON:
The Fund is designed for long-term aggressive investors who primarily seek
high current income with some potential for capital growth, and who are willing
to accept greater price movements and credit and other risks associated with
investment in high-yield securities.
FUND ADVISER:
Janus Capital Corporation ("Janus Capital") serves as the Fund's investment
adviser. Janus Capital has been in the investment advisory business for over 25
years and currently manages over $28 billion in assets.
FUND MANAGER:
Ronald V. Speaker
FUND INCEPTION:
December 1995
EXPENSE INFORMATION
The tables and example below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. Shareholder Transaction Expenses are fees charged directly
to your individual account when you buy, sell or exchange shares. The table
below shows that you pay no such fees. Annual Fund Operating Expenses are paid
out of the Fund's assets and include fees for portfolio management, maintenance
of shareholder accounts, shareholder servicing, accounting and other services.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fees* None
Exchange Fee None
* There is an $8 service fee for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
Management Fee .48%
Other Expenses .52%
Total Fund Operating Expenses 1.00%
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EXAMPLE(1)
Assume you invest $1,000, the Fund returns 5% annually and the expense
ratio remains as listed above. This example shows the operating expenses that
you would indirectly bear as an investor in the Fund.
1 Year 3 Years
------ -------
$10 $32
(1) The fees and expenses in the table and example above are based on the
estimated fees and expenses that the Fund expects to incur in its initial fiscal
year, net of fee waivers from Janus Capital. Without such waivers, the
Management Fee, Other Expenses and Total Fund Operating Expenses are estimated
to be .75%, .52% and 1.27%, respectively.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
THE FUND IN DETAIL
This section takes a closer look at the Fund's investment objectives,
policies and the securities in which it invests. Please carefully review the
"Additional Risk Factors" section of this Prospectus for a more detailed
discussion of the risks associated with certain investment techniques and refer
to Appendix A for a description of certain of the Fund's investments (and
certain of the risks associated with those investments). You should carefully
consider your own investment goals, time horizon and risk tolerance before
investing in the Fund.
Policies that are noted as "fundamental" cannot be changed without a
shareholder vote. All other policies, including the Fund's investment
objectives, are not fundamental and may be changed by the Fund's Trustees
without a shareholder vote. You will be notified of any such changes that are
material. If there is a material change in the Fund's objectives or policies,
you should consider whether the Fund remains an appropriate investment for you.
INVESTMENT OBJECTIVES
The primary investment objective of the Fund is to obtain high current
income. Capital appreciation is a secondary objective when consistent with its
primary objective. Capital appreciation may result, for example, from an
improvement in the credit standing of an issuer whose securities are held by the
Fund or from a general lowering of interest rates, or both. The Fund pursues its
objectives by investing primarily in high-yield fixed-income securities. The
Fund will normally invest at least 65% of its total assets in those securities.
TYPES OF INVESTMENTS
The Fund may invest in a variety of income-producing securities including
corporate bonds and notes, government securities, preferred stock, debt
securities that are convertible or exchangeable into equity securities, and debt
securities that carry with them the right to acquire equity securities as
evidenced by warrants attached to or acquired with the securities. The Fund may
invest to a lesser degree in common stocks, other equity securities or debt
securities that are not currently paying interest.
The high yields sought by the Fund are expected to result primarily from
investments in longer-term, lower quality corporate bonds, commonly referred to
as "junk" bonds. The Fund considers lower quality securities to be securities
rated below investment grade by established rating agencies or unrated
securities of comparable quality. Securities rated BB or lower by Standard &
Poor's Ratings Services ("Standard & Poor's") or Ba or lower by Moody's
Investors Service, Inc. ("Moody's") are below investment grade. Lower quality
securities are often considered to be speculative and involve greater risk of
default or price changes due to changes in interest rates, economic conditions
and the issuer's creditworthiness. As a result, their market prices tend to
fluctuate more than higher quality securities of comparable maturity. Additional
risks of lower quality securities are described under "Additional Risk Factors"
on page 7.
The Fund may purchase defaulted debt securities if, in the opinion of Janus
Capital, it appears likely that the issuer may resume interest payments or other
advantageous developments appear likely in the near term. Defaulted debt
securities may be illiquid and subject to the Fund's limit on illiquid
investments.
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The Fund may invest without limit in foreign securities, including those of
corporate and government issuers. The risks of foreign securities are described
under "Additional Risk Factors" on page 7.
The Fund may also invest in mortgage- and asset-backed securities; zero
coupon, pay-in-kind and step coupon securities; securities purchased on a
when-issued, delayed delivery or forward commitment basis; and
indexed/structured securities. The Fund may use futures, options, swaps, forward
contracts and other derivatives for hedging purposes or for other purposes, such
as enhancing return. See "Additional Risk Factors" on page 7 and Appendix A.
When the Fund's portfolio manager believes that market conditions are not
favorable for profitable investing or when the portfolio manager is otherwise
unable to locate favorable investment opportunities, the Fund's investments may
be hedged to a greater degree and/or its cash or similar investments may
increase. In other words, the Fund does not always stay fully invested in stocks
and bonds. Cash and similar investments are a residual -- they represent the
assets that remain after the portfolio manager has committed available assets to
desirable investment opportunities.
Securities that the Fund may purchase as a means of receiving a return on
idle cash include commercial paper, certificates of deposit, repurchase
agreements and other instruments. The Fund may also invest in money market funds
(including money market funds managed by Janus Capital). When the Fund's
investments in cash or similar investments increase, the Fund may not
participate in the high-yield security market advances or declines to the same
extent that it would if the Fund remained more fully invested in high-yield
securities.
See Appendix A for a further description of the Fund's investments.
The following questions are designed to help you better understand an
investment in the Fund.
WHAT IS MEANT BY "CREDIT QUALITY"?
Credit quality measures the likelihood that the issuer will meet its
obligations on a bond. One of the fundamental risks associated with all
fixed-income funds is credit risk, which is the risk that an issuer will be
unable to make principal and interest payments when due. U.S. government
securities are generally considered to be the safest type of investment in terms
of credit risk. Corporate debt securities, particularly those rated below
investment grade, present the highest credit risk.
HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized rating agencies such as Standard
& Poor's and Moody's are widely accepted measures of credit risk. The lower a
bond issue is rated by an agency, the more credit risk it is considered to
represent. Lower rated bonds generally pay higher yields to compensate investors
for the associated risk. Please refer to Appendix B for a description of rating
categories.
WHAT IS A HIGH-YIELD SECURITY?
A high-yield security (also called a "junk" bond) is rated below investment
grade by major rating agencies (i.e., BB or lower by Standard & Poor's or Ba or
lower by Moody's) or 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.
WHAT RISKS DO HIGH-YIELD SECURITIES PRESENT?
High-yield securities are often considered to be speculative and involve
greater risk of default or price changes due to changes in economic and industry
conditions and the issuer's creditworthiness. Their market prices tend to
fluctuate more than higher quality securities as a result of changes in these
factors.
The default rate of lower quality debt securities is likely to be higher
when issuers have difficulty meeting projected goals or obtaining additional
financing. This could occur during economic recessions or periods of high
interest rates. In addition, there may be a smaller market for lower quality
securities than for higher quality securities, making lower quality securities
more difficult to sell promptly at an acceptable price.
The junk bond market can experience sudden and sharp price swings and thus,
investors in the Fund should be willing to tolerate significant and sudden
changes in the Fund's net asset value.
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HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
Another fundamental risk associated with any fund that invests in
fixed-income securities (e.g., a bond fund) is the risk that the value of the
securities it holds will rise or fall as interest rates change. Generally, a
fixed-income security will increase in value when interest rates fall and
decrease in value when 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.
A bond fund's average-weighted maturity and its duration are measures of how the
fund will react to interest rate changes. High-yield bond prices are generally
less directly responsive to interest rate changes than investment grade issues
and may not always follow this pattern.
WHAT IS MEANT BY THE FUND'S "AVERAGE-WEIGHTED MATURITY"?
The stated maturity of a bond is the date when the issuer must repay the
bond's entire principal value to an investor, such as the Fund. A bond's term to
maturity is the number of years remaining to maturity. A bond fund does not have
a stated maturity, but it does have an average-weighted maturity. This number is
calculated by averaging the terms to maturity of bonds held by the Fund with
each maturity "weighted" according to the percentage of net assets that it
represents.
WHAT IS MEANT BY THE FUND'S "DURATION"?
A bond's duration indicates the time it will take an investor to recoup his
investment. Unlike average maturity, duration reflects both principal and
interest payments. Generally, the higher the coupon rate on a bond, the lower
its duration will be. The duration of a bond fund is calculated by averaging the
duration of bonds held by a fund with each duration "weighted" according to the
percentage of net assets that it represents. Because duration accounts for
interest payments, the Fund's duration is usually shorter than its average
maturity.
HOW DOES THE FUND MANAGE INTEREST RATE RISK?
The Fund may vary the average-weighted maturity of its portfolio to reflect
its portfolio manager's analysis of interest rate trends and other factors. The
Fund's average-weighted maturity will tend to be shorter when its portfolio
manager expects interest rates to rise and longer when its portfolio manager
expects interest rates to fall. The Fund may also use futures, options and other
derivatives to manage interest rate risk. See "Additional Risk Factors" on page
7.
GENERAL PORTFOLIO POLICIES
The Fund will follow the general policies listed below in investing its
portfolio assets. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. The Fund qualifies as a
diversified fund under the 1940 Act and is subject to the following
requirements:
o As a fundamental policy, the Fund may not own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of its total assets, the Fund
will not purchase a security of any issuer (other than cash items and U.S.
government securities, as defined in the 1940 Act) if such purchase would
cause the Fund's holdings of that issuer to amount to more than 5% of the
Fund's total assets.
o The Fund will invest no more than 25% of its assets in a single issuer.
INDUSTRY CONCENTRATION
As a fundamental policy, the Fund will not invest more than 25% of its
total assets in any particular industry. This policy does not apply to U.S.
government securities.
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PORTFOLIO TURNOVER
The Fund generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective,
anticipated changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time of the
investment decision. Changes are made in the Fund's portfolio whenever its
portfolio manager believes such changes are desirable. Portfolio turnover rates
are generally not a factor in making buy and sell decisions.
To a limited extent, the Fund may purchase securities in anticipation of
relatively short-term price gains. The Fund may also sell one security and
simultaneously purchase the same or a comparable security to take advantage of
short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. Certain tax rules may restrict the Fund's ability to engage in short-term
trading if the security has been held for less than three months.
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of quickly in the normal course of business. Some
securities cannot be sold to the U.S. public because of their terms or because
of SEC regulations. Janus Capital may determine that securities that cannot be
sold to the U.S. public but that can be sold to institutional investors (for
example, Rule 144A securities) are liquid. Janus Capital will follow guidelines
established by the Trustees of the Trust ("Trustees") in making liquidity
determinations for 144A securities and certain other securities, including
commercial paper.
BORROWING AND LENDING
The Fund may borrow money and lend securities or other assets, as follows:
o The Fund may borrow money for temporary or emergency purposes in amounts up
to 25% of its total assets.
o The Fund may mortgage or pledge securities as security for borrowings in
amounts up to 15% of its net assets.
o As a fundamental policy, the Fund may lend securities or other assets if,
as a result, no more than 25% of its total assets would be lent to other
parties.
The Fund intends to seek permission from the SEC to borrow money from or
lend money to other funds that permit such transactions and for which Janus
Capital serves as investment adviser. All such borrowing and lending will be
subject to the above limits. There is no assurance that such permission will be
granted.
JOINT ACCOUNTS
The Fund has requested exemptive relief from the SEC to permit the Fund and
other funds advised by Janus Capital to invest in certain money market
instruments through a joint account. Accordingly, the Fund may purchase such
instruments through a joint account if such relief is granted.
ADDITIONAL RISK FACTORS
HIGH-YIELD/HIGH-RISK BONDS
HIGH-YIELD/HIGH-RISK BONDS (OR "JUNK" BONDS) ARE DEBT SECURITIES RATED
BELOW INVESTMENT GRADE BY THE PRIMARY RATING AGENCIES (SUCH AS STANDARD & POOR'S
AND MOODY'S) OR UNRATED SECURITIES OF EQUIVALENT QUALITY. PLEASE REFER TO
APPENDIX B FOR A DESCRIPTION OF BOND RATING CATEGORIES. THE FUND MAY INVEST IN
BONDS OF ANY QUALITY, INCLUDING UNRATED SECURITIES.
The value of lower quality securities generally is more dependent on the
ability of the issuer to meet interest and principal payments (i.e., credit
risk) than is the case for higher quality securities. Conversely, the value of
higher quality securities may be more sensitive to interest rate movements than
lower quality
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securities. Issuers of high-yield securities may not be as strong financially as
those issuing bonds with higher credit ratings. Investments in such companies
are considered to be more speculative than higher quality investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
issuer is highly leveraged. In the event of a default, the Fund would experience
a reduction of its income and could expect a decline in the market value of the
defaulted securities.
The market for lower quality securities is generally less liquid than the
market for higher quality bonds. Adverse publicity and investor perceptions as
well as new or proposed laws may also have a greater negative impact on the
market for lower quality securities. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a market. Sovereign
debt of foreign governments is generally rated by country. Because these ratings
do not take into account individual factors relevant to each issue and may not
be updated regularly, Janus Capital may treat such securities as unrated debt.
The market prices of high-yield bonds structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically. In addition, zero coupon, pay-in-kind and delayed interest bonds
do not pay interest until maturity. However, the Fund must recognize a computed
amount of interest income and pay dividends to shareholders even though it has
received no cash. In some instances, the Fund may have to sell securities to
have sufficient cash to pay the dividends.
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the
United States, but most foreign securities are traded primarily in foreign
markets. The risks of foreign investing include:
o Currency Risk. The Fund must buy the local currency when it buys a foreign
currency denominated security and sell the local currency when it sells the
security. As long as the Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar.
When the Fund sells a foreign security, its value may be worth less in U.S.
dollars even though the security increases in value in its home country.
U.S. dollar denominated securities of foreign issuers may also be affected
by currency risk.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a
company or that the government may impose taxes or limits on the removal of
the Fund's assets from that country.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers.
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage tax and custody costs, are generally higher
than those involved in domestic transactions.
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FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The Fund may enter into futures contracts on securities, financial indices
and foreign currencies and options on such contracts ("futures contracts") and
may invest in options on securities, financial indices and foreign currencies
("options"), forward contracts and interest rate swaps and swap-related products
(collectively, "derivative instruments"). The Fund intends to use derivative
instruments primarily to hedge the value of its portfolio against potential
adverse movements in securities prices, foreign currency markets or interest
rates. To a limited extent, the Fund may also use derivative instruments for
non-hedging purposes such as increasing the Fund's income or otherwise enhancing
return. Please refer to Appendix A and the SAI for a more detailed discussion of
these instruments.
The use of derivative instruments exposes the Fund to additional investment
risks and transaction costs. Risks inherent in the use of derivative instruments
include:
o the risk that interest rates, securities prices and currency markets
will not move in the directions that the portfolio manager
anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or
currencies being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a
position when desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's
initial investment in that instrument (in some cases, the potential
loss is unlimited); and
o particularly in the case of privately negotiated instruments, the risk
that the counterparty will fail to perform its obligations, which
could leave the Fund worse off than if it had not entered into the
position.
When the Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid assets or certain portfolio
securities with its custodian to "cover" the Fund's position. Assets segregated
or set aside generally may not be disposed of so long as the Fund maintains the
positions requiring segregation or cover. Segregating assets could diminish the
Fund's return due to the opportunity losses of foregoing other potential
investments with the segregated assets.
SPECIAL SITUATIONS
The Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
See Appendix A for risks associated with certain other investments.
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used
to describe the Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Fund may measure performance in terms of yield or total
return.
Cumulative Total Return represents the actual rate of return on an
investment for a specified period. Cumulative total return is generally quoted
for more than one year (e.g., the life of the Fund). A cumulative total return
does not show interim fluctuations in the value of an investment.
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Average Annual Total Return represents the average annual percentage change
of an investment over a specified period. It is calculated by taking the
cumulative total return for the stated period and determining what constant
annual return would have produced the same cumulative return. Average annual
returns for more than one year tend to smooth out variations in the Fund's
return and are not the same as actual annual results.
Yield shows the rate of income the Fund earns on its investments as a
percentage of the Fund's share price. It is calculated by dividing a Fund's net
investment income for a 30-day period by the average number of shares entitled
to receive dividends and dividing the result by the Fund's net asset value
("NAV") per share at the end of the 30-day period. Yield does not include
changes in NAV.
Yields are calculated according to standardized SEC formulas and may not
equal the income on an investor's account. Yield is usually quoted on an
annualized basis. An annualized yield represents the amount you would earn if
you remained in a Fund for a year and that Fund continued to have the same yield
for the entire year.
THE FUND IMPOSES NO SALES OR OTHER CHARGES THAT WOULD AFFECT TOTAL RETURN
OR YIELD COMPUTATIONS. FUND PERFORMANCE FIGURES ARE BASED UPON HISTORICAL
RESULTS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS
AND NET ASSET VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of
accounts you can establish with Janus. In addition, the Shareholder's Manual
explains in detail the wide array of services and features you can establish on
your account. These services may be modified or discontinued without shareholder
approval.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this prospectus, please call one of
our Investor Service Representatives at 1-800-525-3713 Monday-Friday: 7:00
a.m.-1:00 a.m., and Saturday-Sunday: 10:00 a.m.-7:00 p.m., New York time.
MINIMUM INVESTMENTS
To open a new account $1,000
To open a new retirement account
or UGMA/UTMA account $ 250
To open a new account with an Automatic
Investment Plan $ 0*
To add to any type of account $ 50*
*There is a $50 minimum monthly investment. This minimum may be waived for
certain accounts that participate in an automatic group billing purchase program
or automatic payroll deduction program.
TYPES OF ACCOUNT OWNERSHIP
If you are investing for the first time, you will need to establish an
account. You can establish the following types of accounts by completing the New
Account Application included with this prospectus:
o Individual or Joint Ownership. Individual accounts are owned by one
person. Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA
or UTMA account, you must include the minor's Social Security number
on the application.
o Trust. An established trust can open an account. The names of each
trustee, the name of the trust and the date of the trust agreement
must be included on the application.
o Business Accounts. Corporations and partnerships may also open an
account. The application must be signed by an authorized officer of
the corporation or a general partner of the partnership.
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RETIREMENT ACCOUNTS
If you are eligible, you may set up your account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from retirement plans are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 59 1/2.
Investors Fiduciary Trust Company ("IFTC") serves as custodian for the
Retirement Plans offered by the Fund. There is an annual $12 fee per account to
maintain your retirement account. The maximum annual fee is $24 per taxpayer
identification number. You may pay the fee by check or have it automatically
deducted from your account (usually in December). In lieu of the annual fee, a
special nonrefundable Lifetime IRA(R) Fee of $100 may be paid. This fee covers
all retirement plans that are maintained under the same taxpayer identification
number as long as they are continuously maintained at Janus.
The following plans require a special application. For an application and
more details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account: An IRA allows individuals under the age
of 701/2 with earned income to contribute up to the lesser of $2,000
or 100% of compensation annually. Please refer to the Janus Funds IRA
booklet for complete information regarding IRAs.
o Simplified Employee Pension Plan ("SEP"): This plan allows small
business owners (including sole proprietors) to make tax-deductible
contributions for themselves and any eligible employee(s). A SEP
requires an IRA (a SEP-IRA) to be set up for each SEP participant.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their
employees and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or
other qualifying, tax-exempt organizations may be eligible to
participate in a Section 403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to provide
your Social Security or taxpayer identification number on the application. Make
your check payable to Janus Funds. Send all items to one of following addresses:
Regular Mail Express or Certified Mail
- ------------ -------------------------
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street, Suite 300
Denver, CO 80217-3375 Denver, CO 80206-4923
INVESTOR SERVICE CENTERS
Janus Funds offers three Investor Service Centers for those individuals who
would like to conduct their investing in person. Our representatives will be
happy to assist you at any of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
1004 Baltimore Ave., Suite 100
Kansas City, MO 64105
JANUS NO MINIMUM INITIAL INVESTMENT PROGRAM(R)
If you participate in our popular Automatic Monthly Investment Program ($50
minimum monthly payment), the Fund will waive the minimum initial investment.
The Fund reserves the right to close your account if you discontinue the program
before your account reaches the required minimum initial investment. Please see
"Involuntary Redemption" on page 16. For more detailed information on automatic
monthly investing, see "How to Purchase Shares."
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HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the next NAV
calculated after your order is received and accepted. Please note the following:
o Cash, credit cards, third party checks and credit card checks will not
be accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on a U.S. bank and made payable to Janus Funds.
o If a check does not clear your bank, the Fund reserves the right to
cancel the purchase.
o If the Fund is unable to debit your predesignated bank account on the
day of purchase, it may make additional attempts or cancel the
purchase.
o The Fund reserves the right to reject any specific purchase request.
If your purchase is cancelled, you will be responsible for any losses or
fees imposed by your bank and losses that may be incurred as a result of any
decline in the value of the cancelled purchase. The Fund (or its agents) has the
authority to redeem shares in your account(s) to cover any such losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR AN
ADDITIONAL INVESTMENT IS $50. You may add to your account at any time through
any of the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. When you call to make an
additional purchase by telephone, Janus will automatically debit your
predesignated bank account for the desired amount. To establish the telephone
purchase option on your new account, complete the "Telephone Purchase of Shares"
section on the application and attach a "voided" check or deposit slip from your
bank account. If your account is already established, call 1-800-525-3713 to
request the appropriate form. This option will become effective ten business
days after the form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account to your
Janus account. Call 1-800-525-3713 to receive wiring instructions.
AUTOMATIC INVESTMENT PROGRAMS
Automatic investing is an easy way to systematically add to your account.
Janus offers several automatic investment plans to help investors achieve their
financial goals as simply and conveniently as possible.
o Automatic Monthly Investment Program
You select the day each month that your money ($50 minimum) will be
electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic Investing"
section on the application and attach a "voided" check or deposit slip
from your bank account. If your Fund account is already established,
call 1-800-525-3713 to request the appropriate form.
o Payroll Deduction
If your employer can initiate an automatic payroll deduction, you may
have all or a portion of your
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paycheck invested directly into your Fund account. To obtain
information on establishing this option, call 1-800-525-3713.
o Systematic Exchange
With a Systematic Exchange you determine the amount of money ($50
minimum) you would like automatically exchanged from one Janus account
to another on any day of the month. For more information on how to
establish this option, call 1-800-525-3713.
QUICK ADDRESS AND TELEPHONE REFERENCE
Regular Mail Express or Certified Mail
- ------------ -------------------------
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street, Suite 300
Denver, CO 80217-3375 Denver, CO 80206-4923
Janus Investor Services 1-800-525-3713 Janus QuotelineSM 1-800-525-0024
To speak to a service representative. For automated daily quotes on fund
share prices, yields and total returns.
JETS(R) 1-800-525-6125 Janus Literature Line 1-800-525-8983
For 24-hour access to account and To request a prospectus, shareholder
fund information. reports or marketing materials.
TDD 1-800-525-0056
A telecommunications device for
our hearing and speech-impaired
shareholders.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into
any other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions for
written requests on page 14.
BY TELEPHONE
All accounts are automatically eligible for the telephone exchange option.
To exchange shares by telephone, call an investor service representative at
1-800-525-3713 during normal business hours or call the Janus Electronic
Telephone Service (JETS(R)) line at 1-800-525-6125.
BY SYSTEMATIC EXCHANGE
As noted above, a Systematic Exchange may be established for as little as
$50 a month.
Please note our exchange policies:
o Except for Systematic Exchanges, the minimum is $1,000, or the total
account value if less than $1,000.
o You may make four exchanges out of the Fund during a calendar year
(exclusive of Systematic Exchanges). There is no charge for exchanges.
o Exchanges between accounts will be accepted only if the registrations
are identical.
o If the shares you are exchanging are held in certificate form, you
must return the certificate to the Fund prior to making any exchanges.
o Be sure that you read the prospectus for the fund into which you are
exchanging.
o The Fund reserves the right to reject any exchange request and to
modify or terminate the exchange privilege at any time. For example,
the Fund may reject exchanges from accounts engaged in excessive
trading (including market timing transactions) that are detrimental to
the Fund.
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o An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable gain
or loss in a non-tax deferred account.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. If the
shares are held in certificate form, the certificate must be returned with or
before your redemption request. Your transaction will be processed at the next
NAV calculated after your order is received and accepted.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH
THE AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUND MAY DELAY THE MAILING OF THE
REDEMPTION CHECK FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR. Unless you provide alternate instructions, your proceeds will
be invested in Janus Money Market Fund during the 15 day hold period.
IN WRITING
To request a redemption in writing, please follow the instructions for
written requests noted on page 14.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing.
This option enables you to redeem up to $100,000 daily from your account by
simply calling 1-800-525-3713 by 4:00 p.m. New York time.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
SWPs allow you to redeem a specific dollar amount from your account on a
regular basis. For more information on SWPs or to request the appropriate form,
please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o By Check
Redemption proceeds will be sent to the shareholder(s) of record at
the address of record within seven days after receipt of a valid
redemption request.
o Electronic Transfer
If you have established this option, your redemption proceeds will be
electronically transferred to your predesignated bank account on the
second business day after receipt of your redemption request. To
establish this option, call 1-800-525-3713. There is no fee for this
option.
o By Wire
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on
the next business day after receipt of your redemption request. There
is no limitation on redemptions by wire; however, there is an $8 fee
for each wire and your bank may charge an additional fee to receive
the wire. If you would like to establish this option on an existing
account, please call 1-800-525-3713 to request the appropriate form.
Wire redemptions are not available for retirement accounts.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your request
should be sent to one of the addresses listed on page 11 and must include the
following information:
o the name of the Fund
o the account number
o the amount of money or number of shares being redeemed
o the name(s) on the account
o the signature(s) of all registered account owners
o your daytime telephone number
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o SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
o Individual, Joint Tenants, Tenants in Common: Written instructions
must be signed by each shareholder, exactly as the names appear in the
account registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in
his/her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed
by an authorized individual in his/her capacity as it appears on the
account registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified
copy of the corporate resolution authorizing the signer to act must
accompany the request.
o Trust: Written instructions must be signed by the trustee(s). If the
name(s) of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days must
also be submitted.
o IRA: Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you must
state that you elect not to have such withholding apply. In addition,
your instructions must state whether the distribution is normal (after
age 591/2) or premature (before age 591/2) and, if premature, whether
any exceptions such as death or disability apply with regard to the
10% additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. The Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by 4:00
p.m. New York time. NAV per share is calculated by dividing the total value of
the Fund's securities, and other assets, less liabilities, by the total number
of shares outstanding. Securities are valued at market value or, if a market
quotation is not readily available, at their fair value determined in good faith
under procedures established by and under the supervision of the Trustees.
Short-term instruments maturing within 60 days are valued at amortized cost,
which approximates market value. See the SAI for more detailed information.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable:
o The redemption exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been changed
within 10 days of the redemption request.
o You would like the check mailed to an address other than the address
of record.
THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. FOR
MORE INFORMATION PERTAINING TO SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, brokers-dealers and member
firms of a national securities exchange. Call your financial institution to see
if they have the ability to guarantee a signature. A signature guarantee may not
be provided by a notary public.
If you live outside the United States, a foreign bank properly authorized
to do business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
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SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(a) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder money market fund checks or to exchange your shares.
JETS can be accessed by calling 1-800-525-6125. Calls on JETS are limited to
seven minutes.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other qualified plans (a "Processing
Organization"). Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent investments than the
Fund. A Processing Organization may also impose other charges or restrictions
different from those applicable to shareholders who invest in the Fund directly.
The Processing Organization, rather than its customers, may be the shareholder
of record of your shares. The Fund is not responsible for the failure of any
Processing Organization to carry out its obligations to its customers. Certain
Processing Organizations may receive compensation from Janus Capital or its
affiliates and certain Processing Organizations may receive compensation from
the Fund for shareholder recordkeeping and similar services.
TAX IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked to certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you are subject to the 31% backup withholding or you did not certify
your taxpayer identification, the IRS requires the Fund to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Fund for
any penalty that the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate form
because account transactions such as exchanges and redemptions cannot be
completed until the certificate has been returned to the Fund. The Fund will
issue share certificates upon written request only. Share certificates will not
be issued until the shares have been held for at least 15 days. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTION
If your account balance falls below the $1,000 minimum as a result of a
redemption or exchange or if you discontinue the Automatic Monthly Investment
Program before your account balance reaches the required minimum, you will be
given a 60-day notice to reestablish the minimum balance or activate an
Automatic Investment Program. If this requirement is not met, your account may
be closed and the proceeds sent to you.
The Fund reserves the right to close an account if the shareholder is
deemed to engage in activities which are illegal or otherwise detrimental to the
Fund.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Fund and its agents
will not be responsible for any losses resulting from unauthorized transactions
when procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Fund by telephone during periods of
unusual market activity. If you are unable to reach a representative by
telephone, please consider sending written instructions, stopping by a Service
Center, or in the case of exchanges, calling the JETS line.
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TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily suspend
telephone transactions or other shareholder services upon reasonable notice.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or send a
written request signed by all account owners. Include the name of the Fund, the
account number(s), the name(s) on the account and both the old and new
addresses. Certain options may be suspended for 10 days following an address
change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a
new account. In some cases, legal documentation may be required. For more
information call 1-800-525-3713.
STATEMENTS AND REPORTS
The Fund will send you a confirmation statement after every transaction
that affects your account balance or your account registration. If you are
enrolled in our Automatic Monthly Investment Program and invest on a monthly
basis, you will receive quarterly confirmations. Information regarding the tax
status of income dividends and capital gains distributions will be mailed to
shareholders on or before January 31st of each year. Account tax information
will also be sent to the IRS.
Financial reports for the Fund, which includes a list of the Fund's
portfolio holdings, will be mailed semiannually to all shareholders. To reduce
expenses, only one copy of most financial reports will be mailed to all accounts
in the same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
MANAGEMENT OF THE FUND
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible
for major decisions relating to the Fund's investment objective and policies.
The Trustees delegate the day-to-day management of the Fund to the officers of
the Trust and meet at least quarterly to review the Fund's investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore, Suite 300, Denver, Colorado 80206-4923, is the
investment adviser to the Fund and is responsible for the day-to-day management
of its investment portfolio and other business affairs.
Janus Capital has served as investment adviser to certain series of the
Trust since 1970 and currently serves as investment adviser to all of the Janus
funds, as well as adviser or subadviser to other mutual funds and individual,
corporate, charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of
the outstanding voting stock of Janus Capital, most of which it acquired in
1984. KCSI is a publicly traded holding company whose primary subsidiaries are
engaged in transportation, information processing and financial services. Thomas
H. Bailey, President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with KCSI, selects a
majority of Janus Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning
the Fund's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Fund, and may be reimbursed by the
Fund for its costs in providing those services. In addition, Janus Capital
employees serve as officers of the Trust and Janus Capital provides office space
for the Fund and pays the salaries, fees and expenses of all Fund officers and
those Trustees who are affiliated with Janus Capital.
PORTFOLIO MANAGER
Ronald V. Speaker is the Executive Vice President and portfolio manager of
the Fund, which he has managed since inception. Mr. Speaker joined Janus Capital
in 1986 and has managed each of Janus
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Intermediate Government Securities Fund, Janus Short-Term Bond Fund and Janus
Federal Tax-Exempt Fund since their inceptions and has managed Janus Flexible
Income Fund since December 1991. He holds a Bachelor of Arts in Finance from the
University of Colorado and is a Chartered Financial Analyst.
PERSONAL INVESTING
Janus Capital permits investment and other personnel to purchase and sell
securities for their own accounts, subject to Janus Capital's policy governing
personal investing. Janus Capital's policy requires investment and other
personnel to conduct their personal investment activities in a manner that Janus
Capital believes is not detrimental to the Fund or Janus Capital's other
advisory clients. See the SAI for more detailed information.
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
The Fund pays Janus Capital a management fee equal, on an annual basis, to
.75% of the first $300 million of average daily net assets and .65% of average
daily net assets in excess of $300 million. The fee is accrued daily and paid
monthly. The advisory agreement with the Fund spells out the management fee and
other expenses that the Fund must pay. Janus Capital will waive certain fees and
expenses to the extent that the Fund's total expenses exceed 1.00% in any fiscal
year. This waiver will be continued until at least October 31, 1996.
The actual management fee paid by the Fund may be higher than the
management fee paid by most other mutual funds. The Fund incurs expenses not
assumed by Janus Capital, including transfer agent and subcustodian 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.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of the Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for the Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for the Fund i) to the Fund or ii) to other
persons on behalf of the Fund for services provided to the Fund for which it
would be obligated to pay. Janus Capital may also consider sales of shares of
the Fund as a factor in the selection of broker-dealers. The Fund's Trustees
have authorized Janus Capital to place portfolio transactions on an agency basis
with a broker-dealer affiliated with Janus Capital. When transactions for the
Fund are effected with that broker-dealer, the commissions payable by the Fund
are credited against certain Fund operating expenses. The SAI further explains
the selection of broker-dealers.
OTHER SERVICE PROVIDERS
The following parties provide the Fund with administrative and other
services.
Domestic Custodian
Investors Fiduciary Trust Company
127 W. 10th Street
Kansas City, Missouri 64106
Foreign Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217
Distributor
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206
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Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital. Investors Fiduciary Trust Company is a
wholly-owned subsidiary of State Street Bank and Trust Company.
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
The Trust consists of 19 separate series, including the Fund. The Trust
currently offers the other 18 series of the Trust pursuant to separate
prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However,
special meetings may be called specifically for the Fund or for the Trust as a
whole for purposes such as electing or removing Trustees, terminating or
reorganizing the Trust, changing fundamental policies, or for any other purpose
requiring a shareholder vote under the 1940 Act. Separate votes are taken by the
Fund only if a matter affects or requires the vote of just the Fund or the
Fund's interest in the matter differs from the interest of other portfolios of
the Trust. As a shareholder, you are entitled to one vote for each share that
you own.
SIZE OF THE FUND
The Fund has no present plans to limit its size. However, the Fund may
discontinue sales of its shares if management believes that continued sales may
adversely affect the Fund's ability to achieve its investment objective. If
sales of the Fund are discontinued, it is expected that existing shareholders of
the Fund would be permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions, absent highly unusual circumstances.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve the Fund's investment objective
by investing all of the Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to the Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the Fund. The shareholders of the Trust of record on April 30, 1992,
and the initial shareholder(s) of all series of the Trust created after April
30, 1992, have voted to vest authority to use this investment structure in the
sole discretion of the Trustees. No further approval of the shareholders of the
Fund is required. You will receive at least 30 days' prior notice of any such
investment. Such investment would be made only if the Trustees determine it to
be in the best interests of the Fund and its shareholders. In making that
determination the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although the Fund believes that the Trustees will not approve an
arrangement that is likely to result in higher costs, no assurance is given that
costs will be materially reduced if this option is implemented.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
THE INTERNAL REVENUE CODE REQUIRES THE FUND TO DISTRIBUTE NET INCOME AND
ANY NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. THE FUND'S INCOME FROM
DIVIDENDS AND INTEREST AND ANY NET REALIZED SHORT-TERM CAPITAL GAINS ARE PAID TO
SHAREHOLDERS AS DIVIDENDS. NET REALIZED LONG-TERM GAINS ARE PAID TO SHAREHOLDERS
AS CAPITAL GAINS DISTRIBUTIONS. DIVIDENDS ARE DECLARED DAILY AND PAID AS OF THE
LAST BUSINESS DAY OF EACH MONTH. IF A MONTH BEGINS ON A SATURDAY, SUNDAY OR
HOLIDAY, DIVIDENDS FOR THOSE DAYS ARE PAID AT THE END OF THE PRECEDING MONTH.
CAPITAL GAINS DISTRIBUTIONS (IF ANY) ARE DECLARED AND PAID IN DECEMBER. NOTICES
OF DIVIDENDS ARE MAILED AS OF EACH CALENDAR QUARTER END.
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HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of the
distribution of the Fund, regardless of how long the shares have been held.
Dividends and capital gains awaiting distribution are included in the Fund's
daily NAV. The share price of the Fund drops by the amount of the distribution,
net of any subsequent market fluctuations. As an example, assume that on
December 31, the Fund declared a dividend in the amount of $0.25 per share. If
the Fund's share price was $10.00 on December 30, the Fund's share price on
December 31 would be $9.75, barring market fluctuations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before the distribution, you will
pay the full price for the shares and receive a portion of the purchase price
back as a taxable distribution. This is referred to as "buying a dividend." In
the above example, if you bought shares on December 30, you would have paid
$10.00 per share. On December 31, the Fund would pay you $0.25 per share as a
dividend and your shares would now be worth $9.75 per share. Unless your account
is set up as a tax-deferred account, dividends paid to you would be included in
your gross income for tax purposes, even though you may not have participated in
the increase in NAV of the Fund, whether or not you reinvested the dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want
to receive your distributions. You may change your distribution option at any
time by writing or calling 1-800-525-3713. The Fund offers the following
options:
1. Reinvestment Option. You may reinvest your income dividends and
capital gains distributions to purchase additional shares. This option
is assigned automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest and Cash Option. You may receive either your income dividends
or capital gains distributions in cash and reinvest the other to
purchase additional shares.
4. Redirect Option. You may direct your dividends or capital gains to
purchase shares of another Janus fund.
TAXES
As with any investment, you should consider the tax consequences of
investing in the Fund. The following discussion does not apply to tax-deferred
retirement accounts, nor is it a complete analysis of the federal tax
implications of investing in the Fund. You may wish to consult your own tax
adviser. Additionally, state or local taxes may apply to your investment,
depending upon your residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions by the Fund are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of the Fund. In certain states, a portion of the dividends and
distributions (depending on the source of the Fund's income) may be exempt from
state and local taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on or before
January 31st of each year.
TAXATION OF THE FUND
Dividends, interest and some capital gains received by the Fund on foreign
securities may be subject to tax withholding or other foreign taxes. Any foreign
taxes paid by the Fund will be treated as an expense to the Fund or passed
through to shareholders as a foreign tax credit, depending on particular facts
and circumstances. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes.
The Fund does not expect to pay any federal income or excise taxes because
it intends to meet certain requirements of the Internal Revenue Code. It is
important that the Fund meets these requirements so that any earnings on your
investment will not be taxed twice.
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APPENDIX A
GLOSSARY OF INVESTMENTS AND INVESTMENT TECHNIQUES
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fund may invest. The Fund may
invest in these instruments to the extent permitted by its investment objectives
and policies. The Fund is not limited by this discussion and may invest in any
other type of instrument permitted by the policies discussed elsewhere in this
Prospectus. Please refer to the SAI for a more detailed discussion of these
instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Certificates of Participation ("COPs") are certificates representing an
interest in a pool of securities. Holders are entitled to a proportionate
interest in the underlying securities.
Commercial paper is a short-term debt obligation with a maturity ranging
from 1 to 270 days issued by banks, corporations and other borrowers to
investors seeking to invest idle cash. The Fund may purchase commercial paper
issued under Section 4(2) of the Securities Act of 1933. Janus Capital may
determine that such securities are liquid under guidelines established by the
Trustees.
Common stock represents a share of ownership in a company, and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed but are declared at the discretion of the issuer's
board of directors.
Convertible securities are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American Depositary
Receipts), foreign banks (Global or European Depositary Receipts) and
broker-dealers (depositary shares).
Fixed-income securities are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate and
municipal obligations that pay a specified rate of interest or coupons for a
specified period of time and preferred stock, which pays fixed dividends. Coupon
and dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk bonds are securities that are rated below investment
grade by the primary rating agencies (BB or lower by Standard & Poor's and Ba or
lower by Moody's). Other terms commonly used to describe such securities include
"lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Mortgage- and asset-backed securities are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which means
that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, the portfolio manager
may have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Passive foreign investment companies ("PFICs") are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes dividends,
interest, royalties, rents and annuities. Income tax regulations may require the
Fund to recognize income associated with the PFIC prior to the actual receipt of
any such income.
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights.
21
<PAGE>
Repurchase agreements involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, the Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used to provide cash to satisfy unusually heavy redemption
requests or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors. Janus Capital may determine that such
securities are liquid pursuant to procedures adopted by the Trustees.
Standby commitments are obligations purchased by the Fund from a dealer
that give the Fund the option to sell a security to the dealer at a specified
price.
Tender option bonds are generally long-term securities that have been
coupled with an option to tender the securities to a bank, broker-dealer or
other financial institution at periodic intervals and receive the face value of
the bond. This type of security is commonly used as a means of enhancing the
security's liquidity.
U.S. government securities include direct obligations of the U.S.
government that are supported by its full faith and credit. Treasury bills have
initial maturities of less than one year, Treasury notes have initial maturities
of one to ten years and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. government securities also
include indirect obligations of the U.S. government that are issued by federal
agencies and government sponsored entities. Unlike Treasury securities, agency
securities generally are not backed by the full faith and credit of the U.S.
government. Some agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the discretionary authority of
the U.S. government to purchase the agency's obligations and others are
supported only by the credit of the sponsoring agency.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate (the "underlying index"). Certain variable rate
securities (including certain mortgage-backed securities) pay interest at a rate
that varies inversely to prevailing short-term interest rates (sometimes
referred to as inverse floaters). For example, upon reset the interest rate
payable on a security may go down when the underlying index has risen. Certain
inverse floaters may have an interest rate reset mechanism that multiplies the
effects of changes in the underlying index. Such mechanism may increase the
volatility of the security's market value.
Warrants are securities, typically issued with preferred stocks or bonds,
that give the holder the right to buy a proportionate amount of common stock at
a specified price, usually at a price that is higher than the market price at
the time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve
the purchase of a security with payment and delivery at some time in the future
- - i.e., beyond normal settlement. The Fund does not earn interest on such
securities until settlement and bears the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay interest at regular
intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. Strips are debt securities that are stripped of their
interest (usually by a financial intermediary) after the securities are issued.
The market value of these securities generally fluctuates more in response to
changes in interest rates than interest-paying securities of comparable
maturity.
22
<PAGE>
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of non-dollar denominated securities or to reduce the impact of
currency appreciation on purchases of non-dollar denominated securities. It may
also enter into forward contracts to purchase or sell securities or other
financial indices.
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument at a specified price on a specified date. The
Fund may buy and sell futures contracts on foreign currencies, securities and
financial indices including interest rates or an index of U.S. government,
foreign government, equity or fixed-income securities. The Fund may also buy
options on futures contracts. An option on a futures contract gives the buyer
the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term
debt securities whose value at maturity or interest rate is linked to
currencies, interest rates, equity securities, indices, commodity prices or
other financial indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the reference index or
instrument appreciates). Indexed/structured securities may have return
characteristics similar to direct investments in the underlying instruments and
may be more volatile than the underlying instruments. The Fund bears the market
risk of an investment in the underlying instruments, as well as the credit risk
of the issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Inverse floaters are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument.
Options are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. The Fund may purchase and write put and call options on
securities, securities indices and foreign currencies.
23
<PAGE>
APPENDIX B
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of the major
credit ratings agencies. Credit ratings evaluate only the safety of principal
and interest payments, not the market value risk of lower quality securities.
Credit rating agencies may fail to change credit ratings to reflect subsequent
events on a timely basis. Although the adviser considers security ratings when
making investment decisions, it also performs its own investment analysis and
does not rely solely on the ratings assigned by credit agencies.
STANDARD & POOR'S RATINGS SERVICES
Bond Rating Explanation
- --------------------------------------------------------------------------------
Investment Grade
- ----------------
AAA Highest rating; extremely strong capacity to pay
principal and interest.
AA High quality; very strong capacity to pay
principal and interest.
A Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects
of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
- --------------------------------------------------------------------------------
Non-Investment Grade
- --------------------
BB, B,
CCC, CC, C Predominantly speculative with respect to the
issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of
speculation. Quality and protective
characteristics outweighed by large uncertainties
or major risk exposure to adverse conditions.
D In default.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC.
Investment Grade
- ----------------
Aaa Highest quality, smallest degree of investment
risk.
Aa High quality; together with Aaa bonds, they
compose the high-grade bond group.
A Upper-medium grade obligations; many favorable
investment attributes.
Baa Medium-grade obligations; neither highly protected
nor poorly secured. Interest and principal appear
adequate for the present but certain protective
elements may be lacking or may be unreliable over
any great length of time.
- --------------------------------------------------------------------------------
Non-Investment Grade
- --------------------
Ba More uncertain, with speculative elements.
Protection of interest and principal payments not
well safeguarded during good and bad times.
B Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other
contract terms over time.
Caa Poor standing, may be in default; elements of
danger with respect to principal or interest
payments.
Ca Speculative in a high degree; could be in default
or have other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever
attaining investment standing.
- -------------------------------------------------------------------------------
24
<PAGE>
[CENTERED AT TOP OF PAGE AND PRINTED IN RED INK]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED SEPTEMBER 15, 1995
[LOGO]
JANUS OLYMPUS FUND
100 Fillmore Street, Suite 300
Denver, CO 80206-4923
(800) 525-3713
PROSPECTUS
_____________, 1995
Janus Olympus Fund (the "Fund") is a no-load, nondiversified mutual fund
that seeks long-term growth of capital. The Fund pursues its objective by
investing primarily in common stocks of issuers of any size, which may include
larger well-established issuers and/or smaller emerging growth companies. The
Fund is recently organized and has a limited operating history.
For complete information on how to purchase, exchange and sell shares,
please see the Shareholder's Manual beginning on page 9.
The Fund is a portfolio of Janus Investment Fund (the "Trust") which is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Fund that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Fund is contained in a Statement of
Additional Information ("SAI") filed with the SEC. The SAI dated
_________________, 1995, is incorporated by reference into this Prospectus. For
a copy of the SAI, write or call the Fund at the address or phone number listed
above.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY
STATE OR OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE OR OTHER JURISDICTION.
[PRINTED IN RED INK, VERTICALLY ON LEFT SIDE OF PAGE]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
1
<PAGE>
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
The Fund At A Glance
Brief Description of the Fund ............................................ 3
Expense Information
The Fund's annual operating expenses ..................................... 3
The Fund In Detail
The Fund's Investment Objective and Policies ............................. 4
General Portfolio Policies ............................................... 5
Additional Risk Factors .................................................. 7
Performance Terms
An Explanation of Performance Terms ...................................... 9
Shareholder's Manual
Types of Account Ownership ............................................... 9
How to Open an Account ................................................... 10
How to Purchase Shares ................................................... 11
How to Exchange Shares ................................................... 12
How to Redeem Shares ..................................................... 13
Shareholder Services and Account Policies ................................ 15
JETS(R) .................................................................. 15
Transactions Through Processing Organizations ............................ 15
Tax Identification Number ................................................ 15
Share Certificates ....................................................... 15
Involuntary Redemption ................................................... 15
Telephone Transactions ................................................... 16
Making Changes to Your Acccount .......................................... 16
Statements and Reports ................................................... 16
Management of the Fund
Management & Portfolio Manager ........................................... 16
Management Expenses ...................................................... 17
Portfolio Transactions ................................................... 17
Other Service Providers .................................................. 18
Other Information ........................................................ 18
Distributions and Taxes
Distribution Options and Taxes ........................................... 19
Appendix A
Glossary of Investments and Investment Techniques ........................ 21
2
<PAGE>
THE FUND AT A GLANCE
INVESTMENT OBJECTIVE:
The investment objective of the Fund is long-term growth of capital.
PRIMARY HOLDINGS:
The Fund is a nondiversified fund that pursues its investment objective by
investing primarily in common stocks of companies of any size.
SHAREHOLDER'S INVESTMENT HORIZON:
The Fund is designed for long-term investors who seek growth of capital and
who can tolerate the greater risks associated with investments in foreign and
domestic common stocks. The Fund is not designed as a short-term trading vehicle
and should not be relied upon for short-term financial needs.
FUND ADVISER:
Janus Capital Corporation ("Janus Capital") serves as the Fund's investment
adviser. Janus Capital has been in the investment advisory business for over 25
years and currently manages over $28 billion in assets.
FUND MANAGER:
Scott W. Schoelzel
FUND INCEPTION:
December 1995
EXPENSE INFORMATION
The tables and example below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. Shareholder Transaction Expenses are fees charged directly
to your individual account when you buy, sell or exchange shares. The table
below shows that you pay no such fees. Annual Fund Operating Expenses are paid
out of the Fund's assets and include fees for portfolio management, maintenance
of shareholder accounts, shareholder servicing, accounting and other services.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fees* None
Exchange Fee None
* There is an $8 service fee for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
Management Fee .82%
Other Expenses .40%
Total Fund Operating Expenses 1.22%
3
<PAGE>
EXAMPLE(1)
Assume you invest $1,000, the Fund returns 5% annually and the expense
ratio remains as listed above. This example shows the operating expenses that
you would indirectly bear as an investor in the Fund.
1 Year 3 Years
------ -------
Assume you invest $1,000, the Fund returns $12 $39
5% annually and the expense ratio remains as
listed above. This example shows the operating
expenses that you would indirectly bear as an
investor in the Fund.
(1) The fees and expenses in the table and example above are based on the
estimated fees and expenses that the Fund expects to incur in its initial fiscal
year.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
THE FUND IN DETAIL
This section takes a closer look at the Fund's investment objective,
policies and the securities in which it invests. Please carefully review the
"Additional Risk Factors" section of this Prospectus for a more detailed
discussion of the risks associated with certain investment techniques and refer
to Appendix A for a description of certain of the Fund's investments (and
certain of the risks associated with those investments). You should carefully
consider your own investment goals, time horizon and risk tolerance before
investing in the Fund.
Policies that are noted as "fundamental" cannot be changed without a
shareholder vote. All other policies, including the Fund's investment objective,
are not fundamental and may be changed by the Fund's Trustees without a
shareholder vote. You will be notified of any such changes that are material. If
there is a material change in the Fund's objective or policies, you should
consider whether the Fund remains an appropriate investment for you.
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. It is
a nondiversified fund that pursues its objective by investing primarily in
common stocks of issuers of any size, which may include larger well-established
issuers and/or smaller emerging growth companies.
TYPES OF INVESTMENTS
The Fund invests substantially all of its assets in common stocks selected
for their growth potential. The Fund may invest to a lesser degree in other
types of securities, including preferred stock, warrants, convertible securities
and debt securities. Debt securities that the Fund may purchase include
corporate bonds and debentures (not to exceed 35% of net assets in
high-yield/high-risk bonds); government securities; mortgage- and asset-backed
securities (not to exceed 25% of assets); zero-coupon bonds (not to exceed 10%
of assets); indexed/structured notes; high-grade commercial paper; certificates
of deposit; and repurchase agreements. Such securities may offer growth
potential because of anticipated changes in interest rates, credit standing,
currency relationships or other factors. The Fund may also invest in short-term
debt securities and money market funds (including money market funds managed by
Janus Capital) as a means of receiving a return on idle cash.
When the Fund's portfolio manager believes that market conditions are not
favorable for profitable investing or when the portfolio manager is otherwise
unable to locate favorable investment opportunities, the Fund's investments may
be hedged to a greater degree and/or its cash or similar investments may
increase. In other words, the Fund does not always stay fully invested in stocks
and bonds. Cash or similar investments are a residual -- they represent the
assets that remain after the portfolio manager has committed available assets to
desirable investment opportunities. When the Fund's cash position increases, it
may not participate in stock market advances or declines to the extent that it
would if it remained more fully invested in common stocks.
4
<PAGE>
The Fund may invest without limit in foreign equity and debt securities.
The Fund may use options, futures and other types of derivatives for hedging
purposes or as a means of enhancing return. See "Additional Risk Factors" on
page 7. The Fund may purchase securities on a when-issued, delayed delivery or
forward commitment basis.
The following questions are designed to help you better understand an
investment in the fund.
HOW ARE COMMON STOCKS SELECTED?
The Fund invests substantially all of its assets in common stocks to the
extent its portfolio manager believes that the relevant market environment
favors profitable investing in those securities. The portfolio manager takes a
"bottom up" approach to building the portfolio. In other words, the manager
seeks to identify individual companies with earnings growth potential that may
not be recognized by the market at large. Although themes may emerge in the
Fund, securities are selected without regard to any defined industry sector or
other similarly defined selection procedure. Realization of income is not a
significant investment consideration. Any income realized on the Fund's
investments will be incidental to its primary objective.
ARE THE SAME CRITERIA USED TO SELECT FOREIGN STOCKS?
Generally, yes. The portfolio manager seeks companies with earnings growth
potential, regardless of country of organization or place of principal business
activity. Foreign securities are selected on a stock-by-stock basis without
regard to any defined allocation among countries or geographic regions. However,
certain factors such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships, and
prospects for economic growth among countries, regions or geographic areas may
warrant greater consideration in selecting foreign stocks. See "Additional Risk
Factors" on page 7.
WHAT IS THE MAIN RISK OF INVESTING IN A COMMON STOCK FUND?
The fundamental risk associated with any common stock fund is the risk that
the value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative. See "Additional Risk Factors" on page 7.
HOW DOES A DIVERSIFIED FUND DIFFER FROM A NONDIVERSIFIED FUND?
A "nondiversified" fund, such as the Fund, has the ability to take larger
positions in a smaller number of issuers than a "diversified" fund. Because the
appreciation or depreciation of a single stock may have a greater impact on the
NAV of a nondiversified fund, its share price can be expected to fluctuate more
than a comparable diversified fund.
HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options and other derivative instruments to
protect the portfolio from movements in securities prices and interest rates.
The Fund may also use a variety of currency hedging techniques, including
forward currency contracts, to manage exchange rate risk when investing directly
in foreign markets. See "Additional Risk Factors" on page 7. In addition, to the
extent that the Fund holds a larger cash position, it may not participate in
market declines to the same extent as if it had remained more fully invested in
common stocks.
GENERAL PORTFOLIO POLICIES
The Fund will follow the general policies listed below in investing its
portfolio assets. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
5
<PAGE>
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. The Fund qualifies as a
nondiversified fund under the 1940 Act and is subject to the following
requirements:
o As a fundamental policy, the Fund may not own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 50% of its total assets, the
Fund will not purchase a security of any issuer (other than cash items
and U.S. government securities, as defined in the 1940 Act) if such
purchase would cause the Fund's holdings of that issuer to amount to
more than 5% of the Fund's total assets.
o The Fund will invest no more than 25% of its assets in a single
issuer.
o The Fund reserves the right to become a diversified company by
limiting the investments in which more than 5% of its total assets are
invested.
INDUSTRY CONCENTRATION
As a fundamental policy, the Fund will not invest more than 25% of its
total assets in any particular industry. This policy does not apply to U.S.
government securities.
PORTFOLIO TURNOVER
The Fund generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective,
anticipated changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time of the
investment decision. Changes are made in the Fund's portfolio whenever its
portfolio manager believes such changes are desirable. Portfolio turnover rates
are generally not a factor in making buy and sell decisions.
To a limited extent, the Fund may purchase securities in anticipation of
relatively short-term price gains. The Fund may also sell one security and
simultaneously purchase the same or a comparable security to take advantage of
short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. Certain tax rules may restrict the Fund's ability to engage in short-term
trading if the security has been held for less than three months.
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of quickly in the normal course of business. Some
securities cannot be sold to the U.S. public because of their terms or because
of SEC regulations. Janus Capital may determine that securities that cannot be
sold to the U.S. public but that can be sold to institutional investors (for
example, Rule 144A securities) are liquid. Janus Capital will follow guidelines
established by the Trustees of the Trust ("Trustees") in making liquidity
determinations for 144A Securities and certain other securities, including
commercial paper.
BORROWING AND LENDING
The Fund may borrow money and lend securities or other assets, as follows:
o The Fund may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets.
o The Fund may mortgage or pledge securities as security for borrowings
in amounts up to 15% of its net assets.
o As a fundamental policy, the Fund may lend securities or other assets
if, as a result, no more than 25% of its total assets would be lent to
other parties.
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The Fund intends to seek permission from the SEC to borrow money from or
lend money to other funds that permit such transactions and for which Janus
Capital serves as investment adviser. All such borrowing and lending will be
subject to the above limits. There is no assurance that such permission will be
granted.
JOINT ACCOUNTS
The Fund has requested exemptive relief from the SEC to permit the Fund and
other funds advised by Janus Capital to invest in certain money market
instruments through a joint account. Accordingly, the Fund may purchase such
instruments through a joint account if such relief is granted.
ADDITIONAL RISK FACTORS
INVESTMENTS IN SMALLER COMPANIES
SMALLER OR NEWER COMPANIES MAY SUFFER MORE SIGNIFICANT LOSSES AS WELL AS
REALIZE MORE SUBSTANTIAL GROWTH THAN LARGER OR MORE ESTABLISHED ISSUERS.
The Fund may invest in companies that have relatively small revenues, have
a small share of the market for their products or services, or have limited
geographic or product markets. Small companies may lack depth of management,
they may be unable to generate internally funds necessary for growth or
potential development or to generate such funds through external financing on
favorable terms, or they may be developing or marketing new products or services
for which markets are not yet established and may never become established. In
addition, such companies may be insignificant factors in their industries and
may become subject to intense competition from larger companies. Securities of
small companies held by the Fund may have limited trading markets that may be
subject to wide price fluctuations. Investments in such companies tend to be
more volatile and somewhat more speculative.
SPECIAL SITUATIONS
The Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the
United States, but most foreign securities are traded primarily in foreign
markets. The risks of foreign investing include:
o Currency Risk. The Fund must buy the local currency when it buys a
foreign currency denominated security and sell the local currency when
it sells the security. As long as the Fund holds a foreign security,
its value will be affected by the value of the local currency relative
to the U.S. dollar. When the Fund sells a foreign security, its value
may be worth less in U.S. dollars even though the security increases
in value in its home country. U.S. dollar denominated securities of
foreign issuers may also be affected by currency risk.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in
underdeveloped or developing countries which may have relatively
unstable governments and economies based on only a few industries. In
some countries, there is the risk that the government may take over
the assets or operations of a company or that the government may
impose taxes or limits on the removal of the Fund's assets from that
country.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information
about foreign issuers than domestic issuers.
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o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment
for securities before delivery and delays may be encountered in
settling securities transactions. In some foreign markets, there may
not be protection against failure by other parties to complete
transactions. There may be limited legal recourse against an issuer in
the event of a default on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
The Fund may enter into futures contracts on securities, financial indices
and foreign currencies and options on such contracts ("futures contracts") and
may invest in options on securities, financial indices and foreign currencies
("options"), forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Fund intends to use derivative
instruments primarily to hedge the value of its portfolio against potential
adverse movements in securities prices, foreign currency markets or interest
rates. To a limited extent, the Fund may also use derivative instruments for
non-hedging purposes such as increasing the Fund's income or otherwise enhancing
return. Please refer to Appendix A and the SAI for a more detailed discussion of
these instruments.
The use of derivative instruments exposes the Fund to additional investment
risks and transaction costs. Risks inherent in the use of derivative instruments
include:
o the risk that interest rates, securities prices and currency markets
will not move in the directions that the portfolio manager
anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or
currencies being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a
position when desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's
initial investment in that instrument (in some cases, the potential
loss is unlimited); and
o particularly in the case of privately negotiated instruments, the risk
that the counterparty will fail to perform its obligations, which
could leave the Fund worse off than if it had not entered into the
position.
When the Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid assets or certain portfolio
securities with its custodian to "cover" the Fund's position. Assets segregated
or set aside generally may not be disposed of so long as the Fund maintains the
positions requiring segregation or cover. Segregating assets could diminish the
Fund's return due to the opportunity losses of foregoing other potential
investments with the segregated assets.
HIGH-YIELD/HIGH-RISK BONDS
High-yield/high-risk bonds (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies (Standard & Poor's and
Moody's). The Fund expects that its holdings of lower rated securities, if any,
will consist primarily of bonds rated in the highest two tiers of noninvestment
grade securities.
The value of lower rated securities generally is more dependent on the
ability of the company to meet interest and principal payments (i.e., credit
risk) than is the case for higher rated securities. Conversely, the value of
higher rated securities may be more sensitive to interest rate movements than
lower rated securities. In addition, companies issuing high-yield securities are
more vulnerable to real or perceived economic changes, political changes and
other developments adverse to the company, and lower rated
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securities may have less liquid markets than higher rated securities.
Investments in companies issuing high-yield securities are considered to be more
speculative than higher quality investments.
Please refer to the SAI for a description of bond rating categories,
including the treatment of unrated securities and securities that have received
different ratings from different agencies.
See Appendix A for risks associated with certain other investments.
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used
to describe the Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Fund generally measures performance in terms of total
return.
Cumulative Total Return represents the actual rate of return on an
investment for a specified period. Cumulative total return is generally quoted
for more than one year (e.g., the life of the Fund). A cumulative total return
does not show interim fluctuations in the value of an investment.
Average Annual Total Return represents the average annual percentage change
of an investment over a specified period. It is calculated by taking the
cumulative total return for the stated period and determining what constant
annual return would have produced the same cumulative return. Average annual
returns for more than one year tend to smooth out variations in the Fund's
return and are not the same as actual annual results.
THE FUND IMPOSES NO SALES OR OTHER CHARGES THAT WOULD AFFECT TOTAL RETURN
COMPUTATIONS. FUND PERFORMANCE FIGURES ARE BASED UPON HISTORICAL RESULTS AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET ASSET
VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of
accounts you can establish with Janus. In addition, the Shareholder's Manual
explains in detail the wide array of services and features you can establish on
your account. These services may be modified or discontinued without shareholder
approval.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this prospectus, please call one of
our Investor Service Representatives at 1-800-525-3713 Monday-Friday: 7:00
a.m.-1:00 a.m., and Saturday-Sunday: 10:00 a.m.-7:00 p.m., New York time.
MINIMUM INVESTMENTS:
To open a new account $1,000
To open a new retirement account
or UGMA/UTMA account $ 250
To open a new account with an Automatic
Investment Program $ 0*
To add to any type of account $ 50*
*There is a $50 minimum monthly investment. This minimum may be waived for
certain accounts that participate in an automatic group billing purchase program
or automatic payroll deduction program.
TYPES OF ACCOUNT OWNERSHIP
If you are investing for the first time, you will need to establish an
account. You can establish the following types of accounts by completing the New
Account Application included with this prospectus.
o Individual or Joint Ownership. Individual accounts are owned by one
person. Joint accounts have two or more owners.
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o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA
or UTMA account, you must include the minor's Social Security number
on the application.
o Trust. An established trust can open a Fund account. The names of each
trustee, the name of the trust and the date of the trust agreement
must be included on the application.
o Business Accounts. Corporations and partnerships may also open a Fund
account. The application must be signed by an authorized officer of
the corporation or a general partner of the partnership.
RETIREMENT ACCOUNTS
If you are eligible, you may set up an account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from retirement plans are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 591/2.
Investors Fiduciary Trust Company ("IFTC") serves as custodian for the
Retirement Plans offered by the Fund. There is an annual $12 fee per account to
maintain your retirement account. The maximum annual fee is $24 per taxpayer
identification number. You may pay the fee by check or have it automatically
deducted from your account (usually in December). In lieu of the annual fee, a
special nonrefundable Lifetime IRA(R) Fee of $100 may be paid. This fee covers
all retirement plans that are maintained under the same taxpayer identification
number as long as they are continuously maintained at Janus.
The following plans require a special application. For an application and
more details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account ("IRA"): An IRA allows individuals under
the age of 701/2 with earned income to contribute up to the lesser of
$2,000 or 100% of compensation annually. Please refer to the Janus
Funds IRA booklet for complete information regarding IRAs.
o Simplified Employee Pension Plan ("SEP"): This plan allows small
business owners (including sole proprietors) to make tax deductible
contributions for themselves and any eligible employee(s). A SEP
requires an IRA (a SEP-IRA) to be set up for each SEP participant.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their
employees and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or
other qualifying, tax-exempt organizations may be eligible to
participate in a Section 403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to provide
your Social Security or taxpayer identification number on the application. Make
your check payable to Janus Funds. Send all items to one of following addresses:
Regular Mail Express or Certified Mail
- ------------ -------------------------
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street, Suite 300
Denver, CO 80217-3375 Denver, CO 80206-4923
INVESTOR SERVICE CENTERS
Janus Funds offers three Investor Service Centers for those individuals who
would like to conduct their investing in person. Our representatives will be
happy to assist you at any of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
1004 Baltimore Ave., Suite 100
Kansas City, MO 64105
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JANUS NO MINIMUM INITIAL INVESTMENT PROGRAM(R)
If you participate in our popular Automatic Monthly Investment Program ($50
minimum monthly payment), the Fund will waive the minimum initial investment.
The Fund reserves the right to close your account if you discontinue the program
before your account reaches the required minimum initial investment. Please see
"Involuntary Redemption" on page 15. For more detailed information on automatic
monthly investing, see "How to Purchase Shares."
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the next net
asset value ("NAV") calculated after your order is received and accepted. Please
note the following:
o Cash, credit cards, third party checks and credit card checks will not
be accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on a U.S. bank and made payable to Janus Funds.
o If a check does not clear your bank, the Fund reserves the right to
cancel the purchase.
o If the Fund is unable to debit your predesignated bank account on the
day of purchase, it may make additional attempts or cancel the
purchase.
o The Fund reserves the right to reject any specific purchase request.
If your purchase is cancelled, you will be responsible for any losses or
fees imposed by your bank and losses that may be incurred as a result of any
decline in the value of the cancelled purchase. The Fund (or its agents) has the
authority to redeem shares in your account(s) to cover any such losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR AN
ADDITIONAL INVESTMENT IS $50. You may add to your account at any time through
any of the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. When you call to make an
additional purchase by telephone, Janus will automatically debit your
predesignated bank account for the desired amount. To establish the telephone
purchase option on your new account, complete the "Telephone Purchase of Shares"
section on the application and attach a "voided" check or deposit slip from your
bank account. If your account is already established, call 1-800-525-3713 to
request the appropriate form. This option will become effective ten days after
the form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account to your
Janus account. Call 1-800-525-3713 to receive wiring instructions.
AUTOMATIC INVESTMENT PROGRAMS
Automatic investing is an easy way to systematically add to your account.
Janus offers several automatic investment programs to help investors achieve
their financial goals as simply and conveniently as possible.
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o Automatic Monthly Investment Program
You select the day each month that your money ($50 minimum) will be
electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic Investing"
section on the application and attach a "voided" check or deposit slip
from your bank account. If your Fund account is already established,
call 1-800-525-3713 to request the appropriate form.
o Payroll Deduction
If your employer can initiate an automatic payroll deduction, you may
have all or a portion of your paycheck invested directly into your
Fund account. To obtain information on establishing this option, call
1-800-525-3713.
o Systematic Exchange
With a Systematic Exchange you determine the amount of money ($50
minimum) you would like automatically exchanged from one Janus account
to another on any day of the month. For more information on how to
establish this option, call 1-800-525-3713.
QUICK ADDRESS AND TELEPHONE REFERENCE
Regular Mail Express or Certified Mail
- ------------ -------------------------
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street, Suite 300
Denver, CO 80217-3375 Denver, CO 80206-4923
Janus Investor Services 1-800-525-3713 Janus QuotelineSM 1-800-525-0024
To speak to a service representative. For automated daily quotes on fund
share prices, yields and total
returns.
JETS(R) 1-800-525-6125 Janus Literature Line 1-800-525-8983
For 24-hour access to account and To request a prospectus, shareholder
fund information. reports or marketing materials.
TDD 1-800-525-0056
A telecommunications device for our
hearing and speech-impaired shareholders.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into
any other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions for
written requests noted on page 14.
BY TELEPHONE
All accounts are automatically eligible for the telephone exchange option.
To exchange shares by telephone, call an investor service representative at
1-800-525-3713 during normal business hours or call the Janus Electronic
Telephone Service (JETS(R)) line at 1-800-525-6125.
BY SYSTEMATIC EXCHANGE
As noted above, a Systematic Exchange may be established for as little as
$50 a month.
Please note our exchange policies:
o Except for Systematic Exchanges, the exchange minimum is $1,000, or
the total account value if less than $1,000.
o You may make four exchanges out of the Fund during a calendar year
(exclusive of Systematic Exchanges). There is no charge for exchanges.
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o Exchanges between accounts will be accepted only if the registrations
are identical.
o If the shares you are exchanging are held in certificate form, you
must return the certificate to the Fund prior to making any exchanges.
o Be sure to read the prospectus for the fund into which you are
exchanging.
o The Fund reserves the right to reject any exchange request and to
modify or terminate the exchange privilege at any time. For example,
the Fund may reject exchanges from accounts engaged in excessive
trading (including market timing transactions) that are detrimental to
the Fund.
o An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable gain
or loss in a non-tax deferred account.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. If the
shares are held in certificate form, the certificate must be returned with or
before your redemption request. Your transaction will be processed at the next
NAV calculated after your order is received and accepted.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH
THE AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUND MAY DELAY THE MAILING OF THE
REDEMPTION CHECK FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR. Unless you provide alternate instructions, your proceeds will
be invested in Janus Money Market Fund during the 15 day hold period.
IN WRITING
To request a redemption in writing, please follow the instructions for
written requests noted on page 14.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing.
This option enables you to redeem up to $100,000 daily from your account by
simply calling 1-800-525-3713 by 4:00 p.m. New York time.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
SWPs allow you to redeem a specific dollar amount from your account on a
regular basis. For more information on SWPs or to request the appropriate form,
please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o By Check
Redemption proceeds will be sent to the shareholder(s) of record at
the address of record within seven days after receipt of a valid
redemption request.
o Electronic Transfer
If you have established this option, your redemption proceeds will be
electronically transferred to your predesignated bank account on the
second business day after receipt of your redemption request. To
establish this option, call 1-800-525-3713. There is no fee for this
option.
o By Wire
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on
the next business day after receipt of your redemption request. There
is no limitation on redemptions by wire; however, there is an $8 fee
for each wire and your bank may charge an additional fee to receive
the wire. If you would like to establish this option on an existing
account, please call 1-800-525-3713 to request the appropriate form.
Wire redemptions are not available for retirement accounts.
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WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your request
should be sent to one of the addresses listed on page 10 and must include the
following information:
o the name of the Fund
o the account number
o the amount of money or number of shares being redeemed
o the name(s) on the account
o the signature(s) of all registered account owners
o your daytime telephone number
o Signature Requirements Based on Account Type
o Individual, Joint Tenants, Tenants in Common: Written instructions
must be signed by each shareholder, exactly as the names appear in the
account registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in
his/her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed
by an authorized individual in his/her capacity as it appears on the
account registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified
copy of the corporate resolution authorizing the signer to act, must
accompany the request.
o Trust: Written instructions must be signed by the trustee(s). If the
name(s) of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days must
also be submitted.
o IRA: Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you must
state that you elect not to have such withholding apply. In addition,
your instructions must state whether the distribution is normal (after
age 591/2) or premature (before age 591/2) and, if premature, whether
any exceptions such as death or disability apply with regard to the
10% additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. The Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by 4:00
p.m. New York time. NAV per share is calculated by dividing the total value of
the Fund's securities and other assets, less liabilities, by the total number of
shares outstanding. Securities are valued at market value or, if a market
quotation is not readily available, at their fair value determined in good faith
under procedures established by and under the supervision of the Trustees.
Short-term instruments maturing within 60 days are valued at amortized cost,
which approximates market value. See the SAI for more detailed information.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable:
o The redemption exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address that has been changed
within 10 days of the redemption request.
o You would like the check mailed to an address other than the address
of record.
THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. FOR
MORE INFORMATION PERTAINING TO SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
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<PAGE>
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers and member
firms of a national securities exchange. Call your financial institution to see
if they have the ability to guarantee a signature. A signature guarantee may not
be provided by a notary public.
If you live outside the United States, a foreign bank properly authorized
to do business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(a) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder money market fund checks or to exchange your shares.
JETS can be accessed by calling 1-800-525-6125. Calls on JETS are limited to
seven minutes.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other qualified plans (a "Processing
Organization"). Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent investments than the
Fund. The Processing Organization may also impose other charges or restrictions
different from those applicable to shareholders who invest in the Fund directly.
The Processing Organization, rather than its customers, may be the shareholder
of record of your shares. The Fund is not responsible for the failure of any
Processing Organization to carry out its obligations to its customers. Certain
Processing Organizations may receive compensation from Janus Capital or its
affiliates and certain Processing Organizations may receive compensation from
the Fund for shareholder recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked to certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you are subject to the 31% backup withholding or you did not certify
your taxpayer identification, the IRS requires the Fund to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Fund for
any penalty that the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate form
because account transactions such as exchanges and redemptions cannot be
completed until the certificate has been returned to the Fund. The Fund will
issue share certificates upon written request only. Share certificates will not
be issued until the shares have been held for at least 15 days. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTION
If your account balance falls below the $1,000 minimum as a result of a
redemption or exchange or if you discontinue the Automatic Monthly Investment
Program before your account balance reaches the required minimum, you will be
given a 60-day notice to reestablish the minimum balance or activate an
Automatic Monthly Investment Program. If this requirement is not met, your
account may be closed and the proceeds sent to you.
The Fund reserves the right to close an account if the shareholder is
deemed to engage in activities which are illegal or otherwise detrimental to the
Fund.
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TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Fund and its agents
will not be responsible for any losses resulting from unauthorized transactions
when procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Fund by telephone during periods of
unusual market activity. If you are unable to reach a representative by
telephone, please consider sending written instructions, stopping by a Service
Center, or in the case of exchanges, calling the JETS line.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services upon reasonable notice.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or send a
written request signed by all account owners. Include the name of the Fund, the
account number(s), the name(s) on the account and both the old and new
addresses. Certain options may be suspended for 10 days following an address
change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a
new account. In some cases, legal documentation may be required. For more
information call 1-800-525-3713.
STATEMENTS AND REPORTS
The Fund will send you a confirmation statement after every transaction
that affects your account balance or your account registration. If you are
enrolled in our Automatic Monthly Investment Program and invest on a monthly
basis, you will have the option of requesting confirmation statements on a
monthly or quarterly basis. Statements will be mailed quarterly unless you
instruct the Fund otherwise. Information regarding the tax status of income
dividends and capital gains distributions will be mailed to shareholders on or
before January 31st of each year. Account tax information will also be sent to
the IRS.
Financial reports for the Fund, which includes a list of the Fund's
portfolio holdings, will be mailed semiannually to all shareholders. To reduce
expenses, only one copy of most financial reports will be mailed to all accounts
in the same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
MANAGEMENT OF THE FUND
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible
for major decisions relating to the Fund's investment objective and policies.
The Trustees delegate the day-to-day management of the Fund to the officers of
the Trust and meet at least quarterly to review the Fund's investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Suite 300, Denver, Colorado 80206-4923,
is the investment adviser to the Fund and is responsible for the day-to-day
management of its investment portfolio and other business affairs.
Janus Capital has served as investment adviser to certain series of the
Trust since 1970 and currently serves as investment adviser to all of the Janus
funds, as well as adviser or subadviser to other mutual funds and individual,
corporate, charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of
the outstanding voting stock of Janus Capital, most of which it acquired in
1984. KCSI is a publicly traded holding company
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whose primary subsidiaries are engaged in transportation, information processing
and financial services. Thomas H. Bailey, President and Chairman of the Board of
Janus Capital, owns approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning
the Fund's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Fund, and may be reimbursed by the
Fund for its costs in providing those services. In addition, Janus Capital
employees serve as officers of the Trust and Janus Capital provides office space
for the Fund and pays the salaries, fees and expenses of all Fund officers and
those Trustees who are affiliated with Janus Capital.
PORTFOLIO MANAGER
Scott W. Schoelzel is the Executive Vice President and portfolio manager of
the Fund, which he has managed since inception. Mr. Schoelzel is Vice President
of Janus Capital, where he has been employed since January 1994. From 1991 to
1993, Mr. Schoelzel was a portfolio manager with Founders Asset Management,
Denver, Colorado. Prior to 1991, he was a general partner of Ivy Lane
Investments, Denver, Colorado (a real estate investment partnership). He holds a
Bachelor of Arts in Business from Colorado College.
PERSONAL INVESTING
Janus Capital permits investment and other personnel to purchase and sell
securities for their own accounts, subject to Janus Capital's policy governing
personal investing. Janus Capital's policy requires investment and other
personnel to conduct their personal investment activities in a manner that Janus
Capital believes is not detrimental to the Fund or Janus Capital's other
advisory clients. See the SAI for more detailed information.
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
The Fund pays Janus Capital a management fee which is accrued daily and
paid monthly. The advisory agreement with the Fund spells out the management fee
and other expenses that the Fund must pay. The Fund's management fee schedule
(expressed as an annual rate) is set out in the chart below.
Average Daily Net Assets of Fund Annual Rate Percentage(%)
- -------------------------------- -------------------------
First $30 Million 1.00%
Next $270 Million .75%
Next $200 Million .70%
Over $500 Million .65%
The actual management fee paid by the Fund may be higher than the
management fee paid by most other mutual funds. The Fund incurs expenses not
assumed by Janus Capital, including transfer agent and subcustodian 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. Janus Capital will reduce its management fee to the extent that
Fund expenses exceed statutory limits imposed by state securities regulators.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of the Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for the Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for the Fund i) to the Fund or ii) to other
persons on behalf of the Fund for services provided to the Fund for which it
would be obligated to pay. Janus Capital may also consider sales of shares of
the Fund as a factor in the selection of broker-dealers. The Fund's Trustees
have authorized Janus Capital to place portfolio transactions on an agency basis
with a broker-dealer affiliated with Janus Capital. When transactions for the
Fund are effected with that broker-dealer, the commissions payable by the Fund
are credited against certain Fund operating expenses. The SAI further explains
the selection of broker-dealers.
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OTHER SERVICE PROVIDERS
The following parties provide the Fund with administrative and other
services.
Domestic Custodian
Investors Fiduciary Trust Company
127 W. 10th Street
Kansas City, Missouri 64106
Foreign Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217
Distributor
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206
Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital. Investors Fiduciary Trust Company is a
wholly-owned subsidiary of State Street Bank and Trust Company.
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
The Trust consists of 19 separate series, including the Fund. The Trust
currently offers the other 18 series of the Trust pursuant to separate
prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However,
special meetings may be called specifically for the Fund or for the Trust as a
whole for purposes such as electing or removing Trustees, terminating or
reorganizing the Trust, changing fundamental policies, or for any other purpose
requiring a shareholder vote under the 1940 Act. Separate votes are taken by the
Fund only if a matter affects or requires the vote of just the Fund or the
Fund's interest in the matter differs from the interest of other portfolios of
the Trust. As a shareholder, you are entitled to one vote for each share that
you own.
SIZE OF THE FUND
The Fund has no present plans to limit its size. However, the Fund may
discontinue sales of its shares if management believes that continued sales may
adversely affect the Fund's ability to achieve its investment objective. If
sales of the Fund are discontinued, it is expected that existing shareholders of
the Fund would be permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions, absent highly unusual circumstances.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve the Fund's investment objective
by investing all of the Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to the Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the Fund. The shareholders of the Trust of record on April 30, 1992,
and the initial shareholder(s) of all series of the
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Trust created after April 30, 1992, have voted to vest authority to use this
investment structure in the sole discretion of the Trustees. No further approval
of the shareholders of the Fund is required. You will receive at least 30 days'
prior notice of any such investment. Such investment would be made only if the
Trustees determine it to be in the best interests of the Fund and its
shareholders. In making that determination the Trustees will consider, among
other things, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies. Although the Fund believes that the
Trustees will not approve an arrangement that is likely to result in higher
costs, no assurance is given that costs will be materially reduced if this
option is implemented.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
THE INTERNAL REVENUE CODE REQUIRES THE FUND TO DISTRIBUTE NET INCOME AND
ANY NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. THE FUND'S INCOME FROM
DIVIDENDS AND INTEREST AND ANY NET REALIZED SHORT-TERM CAPITAL GAINS ARE PAID TO
SHAREHOLDERS AS DIVIDENDS. NET REALIZED LONG-TERM GAINS ARE PAID TO SHAREHOLDERS
AS CAPITAL GAINS DISTRIBUTIONS. DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS ARE
DECLARED AND PAID IN DECEMBER.
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of the
distribution of the Fund, regardless of how long the shares have been held.
Dividends and capital gains awaiting distribution are included in the Fund's
daily NAV. The share price of the Fund drops by the amount of the distribution,
net of any subsequent market fluctuations. As an example, assume that on
December 31, the Fund declared a dividend in the amount of $0.25 per share. If
the Fund's share price was $10.00 on December 30, the Fund's share price on
December 31 would be $9.75, barring market fluctuations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before the distribution, you will
pay the full price for the shares and receive a portion of the purchase price
back as a taxable distribution. This is referred to as "buying a dividend." In
the above example, if you bought shares on December 30, you would have paid
$10.00 per share. On December 31, the Fund would pay you $0.25 per share as a
dividend and your shares would now be worth $9.75 per share. Unless your account
is set up as a tax-deferred account, dividends paid to you would be included in
your gross income for tax purposes, even though you may not have participated in
the increase in NAV of the Fund, whether or not you reinvested the dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want
to receive your distributions. You may change your distribution option at any
time by writing or calling 1-800- 525-3713. The Fund offers the following
options:
1. Reinvestment Option. You may reinvest your income dividends and
capital gains distributions to purchase additional shares. This option
is assigned automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest and Cash Option. You may receive either your income dividends
or capital gains distributions in cash and reinvest the other to
purchase additional shares.
4. Redirect Option. You may direct your dividends or capital gains into
another Janus fund.
TAXES
As with any investment, you should consider the tax consequences of
investing in the Fund. The following discussion does not apply to tax-deferred
retirement accounts, nor is it a complete analysis of the federal tax
implications of investing in the Fund. You may wish to consult your own tax
adviser. Additionally, state or local taxes may apply to your investment,
depending upon your residence.
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TAXES ON DISTRIBUTIONS
Dividends and distributions by the Fund are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of the Fund. In certain states, a portion of the dividends and
distributions (depending on the source of the Fund's income) may be exempt from
state and local taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on or before
January 31st of each year.
TAXATION OF THE FUND
Dividends, interest and some capital gains received by the Fund on foreign
securities may be subject to tax withholding or other foreign taxes. Any foreign
taxes paid by the Fund will be treated as an expense to the Fund or passed
through to shareholders as a foreign tax credit, depending on particular facts
and circumstances. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes.
The Fund does not expect to pay any federal income or excise taxes because
it intends to meet certain requirements of the Internal Revenue Code. It is
important that the Fund meet these requirements so that any earnings on your
investment will not be taxed twice.
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APPENDIX A
GLOSSARY OF INVESTMENTS AND INVESTMENT TECHNIQUES
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fund may invest. The Fund may
invest in these instruments to the extent permitted by its investment objective
and policies. The Fund is not limited by this discussion and may invest in any
other type of instruments permitted by the policies discussed elsewhere in this
Prospectus. Please refer to the SAI for a more detailed discussion of these
instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Commercial paper is a short-term debt obligation with a maturity ranging
from 1 to 270 days issued by banks, corporations and other borrowers to
investors seeking to invest idle cash. The Fund may purchase commercial paper
issued under Section 4(2) of the Securities Act of 1933. Janus Capital may
determine that such securities are liquid under guidelines established by the
Trustees.
Common stock represents a share of ownership in a company, and usually
carries voting rights and earns dividends. Unlike preferred stock, dividends on
common stock are not fixed but are declared at the discretion of the issuer's
board of directors.
Convertible securities are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American Depositary
Receipts), foreign banks (Global or European Depositary Receipts) and
broker-dealers (depositary shares).
Fixed-income securities are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate and
municipal obligations that pay a specified rate of interest or coupons for a
specified period of time and preferred stock, which pays fixed dividends. Coupon
and dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk bonds are securities that are rated below investment
grade by the primary rating agencies (BB or lower by Standard & Poor's and Ba or
lower by Moody's). Other terms commonly used to describe such securities include
"lower rated bonds," "non-investment grade bonds" and "junk bonds."
Mortgage- and asset-backed securities are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which means
that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, the portfolio manager
may have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Passive foreign investment companies ("PFICs") are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes dividends,
interest, royalties, rents and annuities. Income tax regulations may require the
Fund to recognize income associated with the PFIC prior to the actual receipt of
any such income.
Preferred stock is a class of stock that generally pays dividends at a
specified rate and has preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights.
Repurchase agreements involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These
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securities involve the risk that the seller will fail to repurchase the
security, as agreed. In that case, the Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and incur
costs in liquidating the security.
Reverse repurchase agreements involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used to provide cash to satisfy unusually heavy redemption
requests or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors. Janus Capital may determine that such
securities are liquid pursuant to procedures adopted by the Trustees.
Standby commitments are obligations purchased by the Fund from a dealer
that give the Fund the option to sell a security to the dealer at specified
price.
U.S. government securities include direct obligations of the U.S.
government that are supported by its full faith and credit. Treasury bills have
initial maturities of less than one year, Treasury notes have initial maturities
of one to ten years and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. government securities also
include indirect obligations of the U.S. government that are issued by federal
agencies and government sponsored entities. Unlike Treasury securities, agency
securities generally are not backed by the full faith and credit of the U.S.
government. Some agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the discretionary authority of
the U.S. government to purchase the agency's obligations and others are
supported only by the credit of the sponsoring agency.
Warrants are securities, typically issued with preferred stocks or bonds,
that give the holder the right to buy a proportionate amount of common stock at
a specified price, usually at a price that is higher than the market price at
the time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve
the purchase of a security with payment and delivery at some time in the future
- - i.e., beyond normal settlement. The Fund does not earn interest on such
securities until settlement and bears the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities are typically sold in this
manner.
Zero coupon bonds are debt securities that do not pay interest at regular
intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. Strips are debt securities that are stripped of their
interest (usually by a financial intermediary) after the securities are issued.
The market value of these securities generally fluctuates more in response to
changes in interest rates than interest-paying securities of comparable
maturity.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of non-dollar denominated securities or to reduce the impact of
currency appreciation on purchases of non-dollar denominated securities. It may
also enter into forward contracts to purchase or sell securities or other
financial indices.
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Fund may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Fund may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term
debt securities whose value at maturity or interest rate is linked to
currencies, interest rates, equity securities, indices, commodity prices or
other financial indicators. Such securities may be positively or negatively
indexed (i.e., their
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value may increase or decrease if the reference index or instrument
appreciates). Indexed/structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Options are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. The Fund may purchase and write put and call options on
securities, securities indices and foreign currencies.
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