Registration No. 2-34393
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. /__/
Post-Effective Amendment No. 71 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
Amendment No. 54 /X/
(Check appropriate box or boxes.)
JANUS INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
100 Fillmore Street, Denver, Colorado 80206-4923
Address of Principal Executive Offices (Zip Code)
Registrant's Telephone No., including Area Code: 303-333-3863
David C. Tucker - 100 Fillmore Street, Denver, Colorado 80206-4923
(Name and Address of Agent for Service)
Approximate Date of Proposed Offering: February 18, 1996
It is proposed that this filing will become effective (check appropriate line):
immediately upon filing pursuant to paragraph (b) of Rule 485.
on (date) pursuant to paragraph (b) of Rule 485.
X 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
on (date) pursuant to paragraph (a)(1) of Rule 485.
75 days after filing pursuant to paragraph (a)(2) of Rule 485.
on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following line:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2(a) and filed a Rule
24f-2 Notice on November 17, 1995, for the fiscal year ended October 31, 1995,
with respect to all of its series in existence as of October 31, 1995.
<PAGE>
JANUS INVESTMENT FUND
Cross Reference Sheet
Between each Prospectus and Statement of
Additional Information and Form N-1A Item
(Cross Reference Sheets for Janus Olympus Fund and Janus
High-Yield Fund are included in previous post-effective
amendments related to those series)
FORM N-1A ITEM CAPTION IN PROSPECTUS
PART A
1. Cover Page Cover Page
2. Synopsis Cover Page; Fund(s) at a Glance (in
Combined and Venture Prospectuses
only); Expense Information
3. Condensed Financial Financial Highlights; Understanding
the Information Financial
Highlights (not included in Money
Market Funds - Institutional
Prospectus); Performance Terms (in
Combined and Venture Prospectuses
only); Performance (Money Market
Funds Prospectuses only)
4. General Description of Fund(s) at a Glance (in Combined
and Venture Registrant Prospectuses
only); The Fund(s) in Detail (in
Combined and Venture Prospectuses
only); Investment Objectives,
Policies and Techniques; General
Portfolio Policies; Additional Risk
Factors (not included in Money
Market Funds Prospectuses);
Appendix A - Glossary of Investment
Terms (Combined and Venture
Prospectuses only); Appendix B -
Explanation of Rating Categories
(Combined Prospectus only)
5. Management of the Fund Management of the Fund(s) (Combined
and Venture Prospectuses only);
Investment Adviser and
Administrator (Money Market Funds
Prospectuses only)
<PAGE>
6. Capital Stock and Other Distributions and Taxes;
Securities Shareholder's Manual; Shareholder's
Guide (Money Market Funds -
Institutional Shares Prospectus
only)
7. Purchase of Securities Being Shareholder's Manual; Shareholder's
Offered Guide (Money Market Funds -
Institutional Shares Prospectus
only)
8. Redemption or Repurchase Shareholder's Manual; Shareholder's
Guide (Money Market Funds -
Institutional Shares Prospectus
only)
9. Pending Legal Proceedings Not Applicable
<PAGE>
FORM N-1A ITEM CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
PART B
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Miscellaneous Information
History
13. Investment Objectives and Investment Policies, Restrictions
Policies and Techniques; Appendix A -
Description of Securities Ratings
(Money Market Funds Statements of
Additional Information only);
Appendix B - Description of
Municipal Securities (Money Market
Funds Statements of Additional
Information only); Appendix A
Explanation of Rating Categories
(Venture Statement of Additional
Information only)
14. Management of the Fund Investment Adviser (Combined and
Venture Statements of Additional
Information only); Investment
Adviser and Administrator (Money
Market Funds Statements of
Additional Information only);
Officers and Trustees
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory and Investment Adviser (Combined and
Other Services Venture Statements of Additional
Information only); Investment
Adviser and Administrator (Money
Market Funds Statements of
Additional Information only);
Custodian, Transfer Agent and
Certain Affiliations; Portfolio
Transactions and Brokerage;
Officers and Trustees;
Miscellaneous Information
17. Brokerage Allocation and Portfolio Transactions and
Other Practices Brokerage
18. Capital Stock and Other Purchase of Shares; Redemption of
Securities Shares; Miscellaneous Information
<PAGE>
19. Purchase, Redemption and Purchase of Shares; Redemption of
Pricing of Securities Being Shares; Shareholder Accounts
Offered
20. Tax Status Income Dividends, Capital Gains
Distributions and Tax Status
(Combined and Venture Statements of
Additional Information only);
Dividends and Tax Status (Money
Market Funds Statements of
Additional Information only)
21. Underwriters Custodian, Transfer Agent and
Certain Affiliations
22. Calculation of Performance Performance Information (Combined
Data and Venture Statements of
Additional Information only);
Performance Data (Money Market
Funds Statements of Additional
Information only)
23. Financial Statements Not Applicable
<PAGE>
CONTENTS
FUNDS AT A GLANCE
Brief description of each Fund ............................................ 1
EXPENSE INFORMATION
Each Fund's annual operating expenses ..................................... 3
Financial Highlights-a summary of financial data .......................... 4
THE FUNDS IN DETAIL
The Funds' Investment Objectives and Policies ............................. 8
General Portfolio Policies ................................................ 13
Additional Risk Factors ................................................... 14
SHAREHOLDER'S MANUAL
Types of Account Ownership ................................................ 16
How to Open an Account .................................................... 17
Minimum Investment Policies ............................................... 17
How to Purchase Shares .................................................... 17
How to Exchange Shares .................................................... 18
How to Redeem Shares ...................................................... 18
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JETS(R) ................................................................... 20
Transactions Through Processing Organizations ............................. 20
Taxpayer Identification Number ............................................ 20
Share Certificates ........................................................ 20
Involuntary Redemptions ................................................... 20
Telephone Transactions .................................................... 20
Making Changes to Your Account ............................................ 20
Statements and Reports .................................................... 20
MANAGEMENT OF THE FUNDS
Investment Adviser and Investment Personnel ............................... 21
Management Expenses ....................................................... 22
Portfolio Transactions .................................................... 22
Other Service Providers ................................................... 22
Other Information ......................................................... 23
DISTRIBUTIONS AND TAXES
Distributions ............................................................. 24
Taxes ..................................................................... 25
PERFORMANCE TERMS
An Explanation of Performance Terms ....................................... 25
APPENDIX A
Glossary of Investment Terms .............................................. 26
APPENDIX B
Explanation of Rating Categories .......................................... 29
[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4923
(800) 525-3713
February 18, 1996
A FAMILY OF NO-LOAD MUTUAL FUNDS
All Janus Funds are no-load investments. This means you may purchase and sell
shares in any of our mutual funds without incurring any sales charges. If you
enroll in our low minimum initial investment program, you can open your account
for as little as $500 and a $100 subsequent purchase per month. Otherwise, the
minimum initial investment is $2,500. For complete information on how to
purchase, exchange and sell shares, please see the Shareholder's Manual
beginning on page 16.
This Prospectus describes 12 mutual funds with a variety of investment
objectives, including growth of capital, current income and a combination of
growth and income (the "Funds"). Janus Capital Corporation ("Janus Capital")
serves as investment adviser to each Fund. Janus Capital has been in the
investment advisory business for over 25 years and currently manages more than
$30 billion in assets.
Each Fund is a series of Janus Investment Fund (the "Trust"). The Trust is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Funds that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Funds is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated February 18, 1996, is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Funds 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.
JANUS FUNDS COMBINED PROSPECTUS
<PAGE>
FUNDS AT A GLANCE
This section is designed to provide you with a brief overview of the Funds and
their investment emphasis. A more detailed discussion of the Funds' investment
objectives and policies begins on page 8 and complete information on how to
purchase, redeem and exchange shares begins on pages 17-18.
- --------------------------------------------------------------------------------
GROWTH FUNDS
JANUS FUND
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on companies with larger
market capitalizations.
Fund Inception: February 1970
Fund Manager: James P. Craig, III
JANUS TWENTY FUND
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
normally concentrating its investments in a core position of 20-30 common
stocks.
Fund Inception: April 1985
Fund Manager: Thomas F. Marsico
JANUS ENTERPRISE FUND
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on securities issued by
medium-sized companies.
Fund Inception: September 1992
Fund Manager: James P. Goff
JANUS MERCURY FUND
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
investing primarily in common stocks of companies of any size.
Fund Inception: May 1993
Fund Manager: Warren B. Lammert
JANUS WORLDWIDE FUND
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of foreign and domestic companies.
Fund Inception: May 1991
Fund Manager: Helen Young Hayes
JANUS OVERSEAS FUND
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of foreign companies.
Fund Inception: May 1994
Fund Manager: Helen Young Hayes
- --------------------------------------------------------------------------------
COMBINATION FUNDS
JANUS GROWTH AND INCOME FUND
Fund Focus: A diversified fund that seeks long-term growth of capital with a
limited emphasis on income. Although the Fund invests at least 25% of its assets
in securities selected primarily for their income potential, it emphasizes
equity securities selected for their growth potential.
Fund Inception: May 1991
Fund Manager: Thomas F. Marsico
JANUS BALANCED FUND
Fund Focus: A diversified fund that seeks long-term growth of capital, balanced
by current income. The Fund normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets in
securities selected primarily for their income potential.
Fund Inception: September 1992
Fund Manager: Blaine P. Rollins
FIXED-INCOME FUNDS
JANUS FLEXIBLE INCOME FUND
Fund Focus: A diversified fund that seeks to maximize total return from a
combination of income and capital appreciation by investing in income-producing
securities. THIS FUND MAY HAVE SUBSTANTIAL HOLDINGS OF LOWER RATED DEBT
SECURITIES OR "JUNK" BONDS.
Fund Inception: July 1987
Fund Manager: Ronald V. Speaker
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND
Fund Focus: A diversified fund that seeks a high level of income while
minimizing credit risk by investing primarily in obligations of the U.S.
government and its agencies. Its average-weighted maturity is normally greater
than three years and less than ten years.
Fund Inception: July 1991
Fund Manager: Sandy R. Rufenacht
JANUS SHORT-TERM BOND FUND
Fund Focus: A diversified fund that seeks a high level of current income while
minimizing interest rate risk by investing in shorter term fixed-income
securities. Its average-weighted maturity is normally less than three years.
Fund Inception: September 1992
Fund Manager: Sandy R. Rufenacht
JANUS FEDERAL TAX-EXEMPT FUND
Fund Focus: A diversified fund that seeks a high level of current income exempt
from federal income tax by normally investing at least 80% of its assets in
municipal obligations.
Fund Inception: May 1993
Fund Manager: Darrell W. Watters
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
1
<PAGE>
JANUS SPECTRUM
The spectrum below shows Janus Capital's assessment of the potential overall
risk of the Janus Funds relative to one another and should not be used to
compare the Funds to other mutual funds or other types of investments. The
spectrum was determined based on a number of factors such as selected historic
volatility measurements, the types of securities in which the Funds intend to
invest, the degree of diversification intended and/or permitted, and the sizes
of the Funds and, in addition, was significantly affected by the portfolio
managers' investment styles. These factors were considered as of the date of
this prospectus and will be reassessed with each new prospectus. Specific risks
of certain types of instruments in which some of the Funds may invest, including
foreign securities, junk bonds and derivative instruments such as futures
contracts and options, are described under "Additional Risk Factors" on pages
14-15. The spectrum is not indicative of the future volatility or performance of
a Fund and relative positions of Funds within the spectrum may change in the
future.
[SPECTRUM CHART]
The spectrum illustrates the potential overall risk of the Janus funds relative
to one another. The funds' risk ranges from conservative to aggressive. The
Growth Funds are illustrated as follows: Janus Fund is shown as moderate; Janus
Twenty Fund is shown as aggressive; Janus Enterprise Fund is shown as
aggressive; Janus Mercury Fund is shown as aggressive; Janus Worldwide Fund is
shown as moderate-aggressive; Janus Venture Fund, which is closed to new
investors and offered by a separate prospectus and Janus Overseas Fund are shown
as moderate-aggressive (but more aggressive than Janus Worldwide Fund); and
Janus Olympus Fund, which will not commence operations until December 29, 1995
and is offered by a separate prospectus, is shown as aggressive. The Combination
Funds are illustrated as follows: Janus Growth and Income Fund is shown as
moderate-aggressive and Janus Balanced Fund is shown as moderate. The
Fixed-Income Funds are illustrated as follows: Janus High-Yield Fund, which will
not commence operations until December 29, 1995 and is offered by a separate
prospectus, is shown as moderate-aggressive; Janus Flexible-Income Fund is shown
as conservative-moderate; Janus Federal Tax-Exempt Fund is shown as
conservative-moderate (but more conservative than Janus Flexible Income Fund);
Janus Intermediate Government Securities Fund is shown as conservative-moderate
(but more conservative than Janus Federal Tax-Exempt Fund); and Janus
Intermediate Government Securities Fund is shown as conservative-moderate (but
more conservative than Janus Federal Tax-Exempt Fund); and Janus Short-Term Bond
Fund is shown as conservative.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
2
<PAGE>
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 Funds. 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 each Fund's assets and include fees for portfolio management,
maintenance of shareholder accounts, shareholder servicing, accounting and other
services.
SHAREHOLDER TRANSACTION EXPENSES (applicable to each Fund)
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fee* None
Exchange fee** None
* There is an $8 service fee for redemptions by wire.
** You may be charged a $5 transaction fee for excessive exchanges. See "How
to Exchange Shares" on page 18.
- --------------------------------------------------------------------------------
WHY DO EXPENSES VARY ACROSS THE FUNDS? EXPENSES VARY FOR A NUMBER OF REASONS
INCLUDING DIFFERENCES IN MANAGEMENT FEES, AVERAGE SHAREHOLDER ACCOUNT SIZE, THE
FREQUENCY OF DIVIDEND PAYMENTS, AND THE EXTENT OF FOREIGN INVESTMENTS WHICH
ENTAIL GREATER TRANSACTION COSTS.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Fee Other Expenses Total Fund Operating Expenses
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund 0.65% 0.22% 0.87%
Janus Twenty Fund 0.67% 0.33% 1.00%
Janus Enterprise Fund 0.75% 0.51% 1.26%
Janus Mercury Fund 0.69% 0.45% 1.14%
Janus Worldwide Fund 0.68% 0.56% 1.24%
Janus Overseas Fund 0.85% 0.91% 1.76%
Janus Growth and Income Fund 0.74% 0.45% 1.19%
Janus Balanced Fund 0.82% 0.53% 1.35%
Janus Flexible Income Fund 0.62% 0.34% 0.96%
Janus Intermediate Government Securities Fund(2) -- 0.65% 0.65%
Janus Short-Term Bond Fund(2) 0.08% 0.58% 0.66%
Janus Federal Tax-Exempt Fund(2) -- 0.70% 0.70%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE(1)
Assume you invest $1,000, the Funds return 5% annually and each Fund's expense
ratios remain as listed above. The example below shows the operating expenses
that you would indirectly bear as an investor in the Funds.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $ 9 $ 28 $ 48 $107
Janus Twenty Fund $ 10 $ 32 $ 55 $122
Janus Enterprise Fund $ 13 $ 40 $ 69 $152
Janus Mercury Fund $ 11 $ 36 $ 62 $136
Janus Worldwide Fund $ 13 $ 39 $ 68 $150
Janus Overseas Fund $ 18 $ 55 $ 95 $207
Janus Growth and Income Fund $ 12 $ 38 $ 65 $144
Janus Balanced Fund $ 14 $ 43 $ 74 $162
Janus Flexible Income Fund $ 10 $ 31 $ 53 $118
Janus Intermediate Government Securities Fund(2) $ 7 $ 21 $ 36 $ 81
Janus Short-Term Bond Fund(2) $ 7 $ 21 $ 37 $ 82
Janus Federal Tax-Exempt Fund(2) $ 7 $ 22 $ 39 $ 87
- -------------------------------------------------------------------------------------------
</TABLE>
(1) The information in the table and example above is based on expenses before
expense offset arrangements for the fiscal period ended October 31, 1995.
When applicable, all expenses and estimates are stated net of voluntary
waivers by Janus Capital. Waivers are first applied against the management
fee and then against other expenses.
(2) Net of voluntary waivers. Without such waivers, the Management Fee, Other
Expenses and Total Fund Operating Expenses would have been 0.50%, 0.72% and
1.22%, respectively, for Janus Intermediate Government Securities Fund;
0.65%, 0.58% and 1.23% for Janus Short-Term Bond Fund; and 0.60%, 0.71% and
1.31%, respectively, for Janus Federal Tax-Exempt Fund.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
3
<PAGE>
FINANCIAL HIGHLIGHTS
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Funds' financial statements since October 1, 1990. Their report is included
in the Funds' Annual Report, which is incorporated by reference into the SAI.
The Funds' financial statements for fiscal periods prior to October 1, 1990 were
audited by other independent accountants whose reports are not included in the
Annual Report. Expense and income ratios and portfolio turnover rates have been
annualized for periods of less than one year. Total returns for periods of less
than one year are not annualized. A DETAILED EXPLANATION OF THE FINANCIAL
HIGHLIGHTS CAN BE FOUND ON PAGE 7.
<TABLE>
<CAPTION>
Janus Fund
1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 19.62 $ 20.81 $ 18.86 $ 18.27
Income from investment operations:
2. Net investment income 0.16 0.17 0.26 0.23
3. Net gains or (losses) on securities
(both realized and unrealized) 3.99 (0.03) 2.88 1.46
4. Total from investment operations 4.15 0.14 3.14 1.69
Less distributions:
5. Dividends (from net investment income) (.01) (0.39)(1) (0.29) (0.19)
6. Distributions (from capital gains) (.39) (0.94) (0.90) (0.91)
7. Total distributions (.40) (1.33) (1.19) (1.10)
8. Net asset value, end of period $ 23.37 $ 19.62 $ 20.81 $ 18.86
9. Total return 21.62% 0.75% 17.41% 9.35%
10. Net assets, end of period (in millions) $11,963 $ 9,647 $ 9,098 $ 4,989
11. Ratio of expenses to average net assets 0.87%(2) 0.91% 0.92% 0.97%
12. Ratio of net investment income to average net assets 1.25% 1.12% 1.55% 1.54%
13. Portfolio turnover rate 118% 139% 127% 153%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Fund
1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 13.25 $ 16.36 $12.11 $12.39 $14.77 $13.42
Income from investment operations:
2. Net investment income 0.25 0.25 0.22 0.60 0.19 0.42
3. Net gains or (losses) on securities
(both realized and unrealized) 5.09 (0.67) 4.59 1.05 0.30 2.20
4. Total from investment operations 5.34 (0.42) 4.81 1.65 0.49 2.62
Less distributions:
5. Dividends (from net investment income) (0.31) (0.19) (0.56) (0.32) (0.38) (0.47)
6. Distributions (from capital gains) (0.01) (2.50) -- (1.61) (2.49) (0.80)
7. Total distributions (0.32) (2.69) (0.56) (1.93) (2.87) (1.27)
8. Net asset value, end of period $ 18.27 $ 13.25 $16.36 $12.11 $12.39 $14.77
9. Total return 40.95% (3.68%) 41.67% 15.83% 4.14% 20.66%
10. Net assets, end of period (in millions) $ 2,598 $ 1,049 $ 673 $ 391 $ 387 $ 474
11. Ratio of expenses to average net assets 0.98% 1.02% 0.92% 0.98% 1.01% 1.00%
12. Ratio of net investment income to average net assets 1.77% 2.11% 1.68% 4.99% 1.55% 2.82%
13. Portfolio turnover rate 132% 307% 205% 175% 214% 254%
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</TABLE>
(1) Distribution in excess of financial statement income of $0.02.
(2) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduced the expense ratio to 0.86%.
<TABLE>
<CAPTION>
Janus Twenty Fund
1995 1994 1993 1992(1) 1992(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 24.24 $ 25.85 $ 22.75 $ 22.17 $ 18.88
Income from investment operations:
2. Net investment income .01 0.16 0.17 0.09 0.11
3. Net gains or (losses) on securities
(both realized and unrealized) 5.94 (1.07) 3.31 0.49 3.62
4. Total from investment operations 5.95 (0.91) 3.48 0.58 3.73
Less distributions:
5. Dividends (from net investment income) (.07) (0.25) (0.18) -- (0.02)
6. Distributions (from capital gains) -- (0.45) (0.20) -- (0.42)
7. Total distributions (.07) (0.70) (0.38) -- (0.44)
8. Net asset value, end of period $ 30.12 $ 24.24 $ 25.85 $ 22.75 $ 22.17
9. Total return 24.67% (3.52%) 15.39% 2.62% 19.60%
10. Net assets, end of period (in millions) $ 2,996 $ 2,743 $ 3,749 $ 2,434 $ 2,081
11. Ratio of expenses to average net assets 1.00%(3) 1.02% 1.05% 1.12% 1.01%
12. Ratio of net investment income to average net assets 0.62% 0.57% 0.87% 1.27% 1.08%
13. Portfolio turnover rate 147% 102% 99% 79% 83%
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</TABLE>
<TABLE>
<CAPTION>
Janus Twenty Fund
1991(2) 1990(2) 1989(2) 1988(2) 1987(2) 1986(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $16.01 $13.05 $9.66 $13.69 $14.27 $11.57
Income from investment operations:
2. Net investment income 0.16 0.05 0.46 0.42 0.30 0.19
3. Net gains or (losses) on securities
(both realized and unrealized) 2.90 3.35 3.73 (2.86) 0.74 3.05
4. Total from investment operations 3.06 3.40 4.19 (2.44) 1.04 3.24
Less distributions:
5. Dividends (from net investment income) (0.19) (0.02) (0.80) (0.41) (0.25) (0.23)
6. Distributions (from capital gains) -- (0.42) -- (1.18) (1.37) (0.31)
7. Total distributions (0.19) (0.44) (0.80) (1.59) (1.62) (0.54)
8. Net asset value, end of period $18.88 $16.01 $13.05 $9.66 $13.69 $14.27
9. Total return 19.43% 26.36% 45.89% (17.13%) 8.66% 29.06%
10. Net assets, end of period (in millions) $ 556 $ 175 $ 20 $ 13 $ 19 $ 10
11. Ratio of expenses to average net assets 1.07% 1.32% 1.88% 1.70% 1.79% 2.00%
12. Ratio of net investment income to average net assets 1.30% 1.28% 0.68% 3.35% 2.98% 3.55%
13. Portfolio turnover rate 163% 228% 220% 317% 202% 152%
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</TABLE>
(1) Fiscal period from June 1, 1992 to October 31, 1992.
(2) Fiscal year ended on May 31st of each year.
(3) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduced the expense ratio to 0.99%.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
4
<PAGE>
<TABLE>
<CAPTION>
Janus Janus
Enterprise Mercury
Fund Fund
1995 1994 1993 1992(1) 1995 1994 1993(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $24.43 $21.87 $17.09 $15.00 $ 14.12 $11.70 $10.00
Income from investment operations:
2. Net investment income (loss) 0.52 (0.06) 0.04 -- 0.16 0.02 (0.01)
3. Net gains or (losses) on securities
(both realized and unrealized) 3.09 3.18 4.76 2.09 3.37 2.40 1.71
4. Total from investment operations 3.61 3.12 4.80 2.09 3.53 2.42 1.70
Less distributions:
5. Dividends (from net investment income) (0.52) (0.02) (0.02) -- (0.16) -- --
6. Distributions (from capital gains) (0.38) (0.54) -- -- (0.11) -- --
7. Total distributions (0.90) (0.56) (0.02) -- (0.27) -- --
8. Net asset value, end of period $27.14 $24.43 $21.87 $17.09 $ 17.38 $14.12 $11.70
9. Total return 15.46% 14.56% 28.09% 13.93% 25.53% 20.68% 17.00%
10. Net assets, end of period (in millions) $ 459 $ 370 $ 239 $ 8 $ 1,521 $ 596 $ 113
11. Ratio of expenses to average net assets 1.26%(3) 1.25% 1.36% 2.50% 1.14%(3) 1.33% 1.75%
12. Ratio of net investment income to average
net assets 0.02% (0.32%) 0.14% (0.81%) 0.50% 0.25% (0.40%)
13. Portfolio turnover rate 194% 193% 201% 53% 201% 283% 151%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(2) Fiscal period from May 3, 1993 (inception) to October 31, 1993.
(3) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduce the expense ratio to 1.23% for
Janus Enterprise Fund and 1.12% for Janus Mercury Fund.
<TABLE>
<CAPTION>
Janus Janus
Worldwide Overseas
Fund Fund
1995 1994 1993 1992 1991(1) 1995 1994(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 27.00 $ 24.16 $18.95 $17.45 $15.00 $10.36 $10.00
Income from investment operations:
2. Net investment income (loss) 0.81 0.15 0.14 0.16 -- 0.12 (0.02)
3. Net gains or (losses) on securities
(both realized and unrealized) 1.39 3.34 5.29 1.39 2.45 1.10 0.38
4. Total from investment operations 2.20 3.49 5.43 1.55 2.45 1.22 0.36
Less distributions:
5. Dividends (from net investment income) (0.54) (0.27) (0.22) -- -- -- --
6. Distributions (from capital gains) (1.01) (0.38) -- (0.05) -- -- --
7. Total distributions (1.55) (0.65) (0.22) (0.05) -- -- --
8. Net asset value, end of period $ 27.65 $ 27.00 $24.16 $18.95 $17.45 $11.58 $10.36
9. Total return 8.89% 14.76% 28.79% 9.20% 16.00% 11.78% 3.60%
10. Net assets, end of period (in millions) $ 1,804 $ 1,587 $ 755 $ 161 $ 18 $ 111 $ 64
11. Ratio of expenses to average net assets 1.24%(3) 1.12% 1.32% 1.73% 2.50% 1.76%(3) 2.16%
12. Ratio of net investment income to average
net assets 0.99% 0.42% 0.92% 1.74% 0.02% 0.36% (0.64%)
13. Portfolio turnover rate 142% 158% 124% 147% 40% 188% 181%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 15, 1991 (inception) to October 31, 1991.
(2) Fiscal period from May 2, 1994 (inception) to October 31, 1994.
(3) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduced the expense ratio to 1.23% for
Janus Worldwide Fund and 1.73% for Janus Overseas Fund.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
5
<PAGE>
<TABLE>
<CAPTION>
Janus Growth and Income Fund
1995 1994 1993 1992 1991(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $14.69 $15.24 $12.95 $12.13 $10.00
Income from investment operations:
2. Net investment income 0.11 0.19 0.14 0.17 0.02
3. Net gains or (losses) on securities
(both realized and unrealized) 3.43 (0.31) 2.29 0.80 2.13
4. Total from investment operations 3.54 (0.12) 2.43 0.97 2.15
Less distributions:
5. Dividends (from net investment income) (0.10) (0.10) (0.14) (0.15) (0.02)
6. Distributions (from capital gains) -- (0.33) -- -- --
7. Total distributions (0.10) (0.43) (0.14) (0.15) (0.02)
8. Net asset value, end of period $18.13 $14.69 $15.24 $12.95 $12.13
9. Total return 24.20% (0.76%) 18.81% 7.98% 21.50%
10. Net assets, end of period (in millions) $ 583 $ 490 $ 519 $ 244 $ 56
11. Ratio of expenses to average net assets 1.19%(3) 1.22% 1.28% 1.52% 2.33%
12. Ratio of net investment income to average
net assets 1.11% 1.26% 1.13% 1.61% 0.76%
13. Portfolio turnover rate 195% 123% 138% 120% 14%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Balanced Fund
1995 1994 1993 1992(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $12.17 $12.23 $10.64 $10.00
Income from investment operations:
2. Net investment income 0.61 0.27 0.19 --
3. Net gains or (losses) on securities
(both realized and unrealized) 1.52 (0.09) 1.56 0.64
4. Total from investment operations 2.13 0.18 1.75 0.64
Less distributions:
5. Dividends (from net investment income) (0.58) (0.24) (0.16) --
6. Distributions (from capital gains) -- -- -- --
7. Total distributions (0.58) (0.24) (0.16) --
8. Net asset value, end of period $13.72 $12.17 $12.23 $10.64
9. Total return 18.20% 1.51% 16.54% 6.40%
10. Net assets, end of period (in millions) $ 125 $ 94 $ 73 $ 2
11. Ratio of expenses to average net assets 1.35%(3) 1.42% 1.70% 2.50%
12. Ratio of net investment income to average
net assets 2.52% 2.28% 2.15% (0.12%)
13. Portfolio turnover rate 185% 167% 131% 130%
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 15, 1991 (inception) to October 31, 1991.
(2) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(3) The Fund's expenses may be reduced through use of broker commissions and
uninvested cash balances earning interest with the Fund's custodian. The
expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduced the expense ratio to 1.17% for
Janus Growth and Income Fund and 1.32% for Janus Balanced Fund.
<TABLE>
<CAPTION>
Janus Flexible Income Fund
1995 1994 1993 1992(1) 1991(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 8.96 $10.03 $ 9.26 $ 9.09 $8.01
Income from investment operations:
2. Net investment income 0.72 0.74 0.77 0.68 0.68
3. Net gains or (losses) on securities
(both realized and unrealized) 0.59 (0.86) 0.79 0.15 1.29
4. Total from investment operations 1.31 (0.12) 1.56 0.83 1.97
Less distributions:
5. Dividends (from net investment income) (0.72) (0.72) (0.77) (0.66) (0.72)
6. Distributions (from capital gains) -- (0.23) (0.02) -- (0.17)
7. Total distributions (0.72) (0.95) (0.79) (0.66) (0.89)
8. Net asset value, end of period $ 9.55 $ 8.96 $10.03 $ 9.26 $9.09
9. Total return 15.35% (1.26%) 17.48% 9.43% 25.98%
10. Net assets, end of period (in millions) $ 580 $ 377 $ 473 $ 205 $ 72
11. Ratio of expenses to average net assets 0.96%(5) 0.93% 1.00%(4) 1.00%(4) 1.00%(4)
12. Ratio of net investment income to average
net assets 7.91% 7.75% 7.96% 8.98% 9.38%
13. Portfolio turnover rate 250% 137% 201% 210% 88%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Flexible Income Fund
1990(2) 1989(2) 1988(2) 1987(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $9.35 $9.99 $9.92 $10.00
Income from investment operations:
2. Net investment income 0.95 0.97 0.92 0.40
3. Net gains or (losses) on securities
(both realized and unrealized) (1.38) (0.56) 0.09 (0.07)
4. Total from investment operations (0.43) 0.41 1.01 0.33
Less distributions:
5. Dividends (from net investment income) (0.91) (0.97) (0.92) (.40)
6. Distributions (from capital gains) -- (0.08) (0.02) (.01)
7. Total distributions (0.91) (1.05) (0.94) (0.41)
8. Net asset value, end of period $8.01 $9.35 $9.99 $ 9.92
9. Total return (4.62%) 4.12% 10.70% 3.40%
10. Net assets, end of period (in millions) $ 14 $ 18 $ 10 $ 4
11. Ratio of expenses to average net assets 1.00%(4) 1.00%(4) 1.00%(4) 1.00%(4)
12. Ratio of net investment income to average
net assets 11.24% 10.00% 9.32% 8.52%
13. Portfolio turnover rate 96% 75% 76% 130%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992.
(2) Fiscal year ended on December 31st of each year.
(3) Fiscal period from July 2, 1987 (inception) to December 31, 1987.
(4) The ratio of expenses to average net assets was 1.01% in 1993, 1.21% in
1992 and 1.74% in 1991 before voluntary waiver of certain Fund expenses.
The ratio was 2% in prior years.
(5) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which had a de minimis effect on the expense
ratio (less than 0.01%).
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
6
<PAGE>
<TABLE>
<CAPTION>
Janus
Intermediate Government
Securities Fund
1995 1994 1993 1992(1) 1991(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $4.81 $5.16 $5.36 $5.35 $ 5.00
Income from investment operations:
2. Net investment income 0.30 0.25 0.22 0.22 0.13
3. Net gains or (losses) on securities
(both realized and unrealized) 0.17 (0.35) (0.09) 0.01 0.35
4. Total from investment operations 0.47 (0.10) 0.13 0.23 0.48
Less distributions:
5. Dividends (from net investment income) (0.30) (0.25) (0.22) (0.22) (0.13)
6. Distributions (from capital gains) -- -- (0.11) -- --
7. Total distributions (0.30) (0.25) (0.33) (0.22) (0.13)
8. Net asset value, end of period $4.98 $4.81 $5.16 $5.36 $ 5.35
9. Total return 10.19% (1.89%) 2.68% 4.48% 9.74%
10. Net assets, end of period (in millions) $ 38 $ 37 $ 65 $ 70 $ 15
11. Ratio of expenses to average net assets 0.65%(5,9) 0.65%(5) 0.91%(5,8) 1.00%(5) 1.00%(5)
12. Ratio of net investment income to average
net assets 6.24% 4.97% 4.27% 4.95% 5.93%
13. Portfolio turnover rate 252% 304% 371% 270% 0%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus
Short-Term
Bond Fund
1995 1994 1993 1992(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Net asset value, beginning of period $2.87 $3.02 $2.98 $3.00
Income from investment operations:
2. Net investment income 0.18 0.18 0.14 0.01
3. Net gains or (losses) on securities
(both realized and unrealized) (0.03) (0.15) 0.04 (0.02)
4. Total from investment operations 0.15 0.03 0.18 (0.01)
Less distributions:
5. Dividends (from net investment income) (0.18) (0.17) (0.14) (0.01)
6. Distributions (from capital gains) -- (0.01) -- --
7. Total distributions (0.18) (0.18) (0.14) (0.01)
8. Net asset value, end of period $2.84 $2.87 $3.02 $2.98
9. Total return 5.55% 1.26% 6.17% (0.19%)
10. Net assets, end of period (in millions) $ 46 $ 54 $ 76 $ 3
11. Ratio of expenses to average net assets 0.66%(6,9) 0.65%(6) 0.83%(6,8) 1.00%(6)
12. Ratio of net investment income to average
net assets 6.67% 6.08% 4.86% 3.22%
13. Portfolio turnover rate 337% 346% 372% 7%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus
Federal Tax-
Exempt Fund
1995 1994 1993(4)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Net asset value, beginning of period $6.45 $7.30 $7.00
Income from investment operations:
2. Net investment income 0.36 0.36 0.14
3. Net gains or (losses) on securities
(both realized and unrealized) 0.43 (0.83) 0.30
4. Total from investment operations 0.79 (0.47) 0.44
Less distributions:
5. Dividends (from net investment income) (0.36) (0.36) (0.14)
6. Distributions (from capital gains) -- (0.02) --
7. Total distributions (0.36) (0.38) (0.14)
8. Net asset value, end of period $6.88 $6.45 $7.30
9. Total return 12.60% (6.62%) 6.33%
10. Net assets, end of period (in millions) $ 33 $ 26 $ 27
11. Ratio of expenses to average net assets 0.70%(7,9) 0.65%(7) 0.75%(7,8)
12. Ratio of net investment income to average
net assets 5.43% 5.20% 4.58%
13. Portfolio turnover rate 164% 160% 124%
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992.
(2) Fiscal period from July 26, 1991 (inception) to December 31, 1991.
(3) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(4) Fiscal period from May 3, 1993 (inception) to October 31, 1993.
(5) The ratio of expenses to average net assets was 1.22% in 1995, 1.15% in
1994, 1.09% in 1993, 1.32% in 1992 and 1.39% in 1991 before voluntary
waiver of certain Fund expenses.
(6) The ratio of expenses to average net assets was 1.23% in 1995, 1.15% in
1994, 1.40% in 1993 and 2.50% in 1992 before voluntary waiver of certain
Fund expenses.
(7) The ratio of expenses to average net assets was 1.31% in 1995, 1.41% in
1994 and 1.60% in 1993 before voluntary waiver of certain Fund expenses.
(8) The ratio of expenses to average net assets reflects the Fund's previous
expense limit of 1.00%. This limit was reduced to .65% as of August 1,
1993.
(9) Expense ratios for the fiscal year ended October 31, 1995, do not reflect
expense reductions from interest earned on invested cash balances held with
the Funds' custodian, which reduced the expense ratio of each Fund to
0.65%.
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights tables. The tables contain important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Funds' Annual
Report contains additional information about each Fund's performance, including
a comparison to an appropriate securities index. For a copy of the Annual
Report, call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of a Fund. It is computed
by adding the value of all of a Fund's investments and other assets, subtracting
any liabilities and dividing the result by the number of shares outstanding. The
difference between line 1 and line 8 in the Financial Highlights tables
represents the change in value of a Fund's shares over the fiscal period, but
not its total return.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that a Fund paid from net investment
income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities a Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that a Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purposes of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. A FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLES.
Ratio of expenses to average net assets is the total of a Fund's operating
expenses divided by its average net assets for the stated period.
Ratio of net investment income to average net assets is a Fund's net investment
income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of a Fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of a Fund's portfolio securities.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
7
<PAGE>
THE FUNDS IN DETAIL
To help you decide which Fund is appropriate for you, this section takes a
closer look at the Funds' investment objectives, policies and the securities in
which they invest. Please carefully review the "Additional Risk Factors" section
of this Prospectus for a more detailed discussion of the risks associated with
certain investment techniques, as well as the risk spectrum on page 2. Appendix
A contains a more detailed description of investment terms used throughout this
Prospectus. You should carefully consider your own investment goals, time
horizon and risk tolerance before investing in a Fund.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including each Fund's investment objective, are not
fundamental and may be changed by the Funds' Trustees without a shareholder
vote. You will be notified of any such changes that are material. If there is a
material change in a Fund's objective or policies, you should consider whether
that Fund remains an appropriate investment for you.
- --------------------------------------------------------------------------------
A SHAREHOLDER'S INVESTMENT HORIZON IS THE AMOUNT OF TIME YOU SHOULD PLAN TO HOLD
YOUR INVESTMENT IN A FUND TO MAXIMIZE THE POTENTIAL FOR REALIZING THE FUND'S
OBJECTIVE.
- --------------------------------------------------------------------------------
THE JANUS GROWTH FUNDS ARE DESIGNED FOR LONG-TERM INVESTORS WHO SEEK GROWTH OF
CAPITAL ONLY AND WHO CAN TOLERATE THE GREATER RISKS ASSOCIATED WITH COMMON STOCK
INVESTMENTS.
GROWTH FUNDS
Investment Objective: ................................ Growth of Capital
Primary Holdings: .................................... Common Stocks
Shareholder's Investment Horizon: .................... Long-Term
JANUS FUND
The investment objective of this Fund is long-term growth of capital in a manner
consistent with the preservation of capital. It is a diversified fund that
pursues its objective by investing in common stocks of companies of any size.
Janus Fund was first offered to the public in 1970 and has the largest asset
base of the Funds. This Fund generally invests in larger, more established
issuers.
JANUS TWENTY FUND
The investment objective of this Fund is long-term growth of capital. It is a
nondiversified fund that pursues its objective by normally concentrating its
investments in a core position of 20-30 common stocks.
JANUS ENTERPRISE FUND
The investment objective of this Fund is long-term growth of capital. It is a
nondiversified fund that pursues its investment objective by normally investing
at least 50% of its equity assets in securities issued by medium-sized
companies. Medium-sized companies are those whose market capitalizations fall
within the range of companies in the S&P MidCap 400 Index (the "MidCap Index").
Companies whose capitalization falls outside this range after the Fund's initial
purchase continue to be considered medium-sized companies for the purpose of
this policy. As of December 31, 1995, the MidCap Index included companies with
capitalizations between approximately ____________. The range of the MidCap
Index is expected to change on a regular basis. Subject to the above policy, the
Fund may also invest in smaller or larger issuers.
JANUS MERCURY FUND
The investment objective of this Fund is long-term growth of capital. It is a
nondiversified fund that pursues its objective by investing in common stocks of
issuers of any size, which may include larger well-established issuers and/or
smaller emerging growth companies.
JANUS WORLDWIDE FUND
The investment objective of this Fund is long-term growth of capital in a manner
consistent with the preservation of capital. It is a diversified fund that
pursues its objective primarily through investments in common stocks of foreign
and domestic issuers. The Fund has the flexibility to invest on a worldwide
basis in companies and organizations of any size, regardless of country of
organization or place of principal business activity. Janus Worldwide Fund
normally invests in issuers from at least five different countries, including
the United States. The Fund may at times invest in fewer than five countries or
even a single country.
JANUS OVERSEAS FUND
The investment objective of this Fund is long-term growth of capital. It is a
diversified fund that pursues its objective primarily through investments in
common stocks of issuers located outside the United States. The Fund has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The Fund normally invests at least 65% of its total assets in
securities of issuers from at least five different countries, excluding the
United States. Although the Fund intends to invest substantially all of its
assets in issuers located outside the United States, it may at times invest in
U.S. issuers and it may at times invest all of its assets in fewer than five
countries or even a single country.
TYPES OF INVESTMENTS
Each of the Growth Funds invests primarily in common stocks of foreign and
domestic companies. However, the percentage of each Fund's assets invested in
common stocks will vary and each Fund may at times hold substantial positions in
cash equivalents or interest bearing securities. See "General Portfolio
Policies" on page 13. Each Fund may invest to a lesser degree in other types of
securities including preferred stock, warrants, convertible securities and debt
securities when its portfolio manager perceives an
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
8
<PAGE>
opportunity for capital growth from such securities or to receive a return on
idle cash. Debt and other income-producing securities that the Funds may
purchase include those described with respect to Janus Flexible Income Fund on
pages 11-12, except that the Growth Funds' investments in high-yield/high-risk
bonds will not exceed 35% of net assets and investments in mortgage- and
asset-backed securities will not exceed 25% of assets.
Although Janus Worldwide Fund and Janus Overseas Fund are committed to foreign
investing, all of the Growth Funds may invest without limit in foreign equity
and debt securities. The Funds may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the United States.
Other ways of investing in foreign securities include depositary receipts or
shares, and passive foreign investment companies. Each of the Growth Funds may
use futures, options and other derivatives for hedging purposes or as a means of
enhancing return. See "Additional Risk Factors" on pages 14-15 for a discussion
of the risks associated with foreign investing and derivatives.
Some securities that the Funds purchase may be issued on a when-issued, delayed
delivery or forward commitment basis.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS GROWTH FUNDS.
HOW ARE COMMON STOCKS SELECTED?
Each of the Growth Funds 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. Portfolio managers
generally take a "bottom up" approach to building their portfolios. In other
words, they seek to identify individual companies with earnings growth potential
that may not be recognized by the market at large. Although themes may emerge in
any Fund, securities are generally 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 a
Growth Fund's investments will be incidental to its objective.
- --------------------------------------------------------------------------------
ARE THE SAME CRITERIA USED TO SELECT FOREIGN STOCKS?
Generally, yes. Portfolio managers seek companies with earnings growth
potential, regardless of country of organization or place of principal business
activity. Foreign securities are generally 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 pages 14-15.
- --------------------------------------------------------------------------------
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 pages 14-15.
- --------------------------------------------------------------------------------
WHAT IS MEANT BY "MARKET CAPITALIZATION"?
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. As noted
previously, market capitalization is an important investment criteria for Janus
Enterprise Fund. Although the other Growth Funds offered by this Prospectus do
not emphasize companies of any particular size, Funds with a larger asset base
(e.g., Janus Fund) are more likely to invest in larger, more established
issuers. Janus Venture Fund, which is closed to new investors and is not offered
by this Prospectus, emphasizes small-sized companies (companies with market
capitalizations of less than $1 billion or annual gross revenues of less than
$500 million).
- --------------------------------------------------------------------------------
HOW DOES A DIVERSIFIED FUND DIFFER FROM A NONDIVERSIFIED FUND?
Diversification is a means of reducing risk by investing a Fund's assets in a
broad range of stocks or other securities. A "nondiversified" fund has the
ability to take larger positions in a smaller number of issuers. 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. Janus Twenty Fund, Janus Enterprise Fund and
Janus Mercury Fund are nondiversified funds. See the risk spectrum on page 2 and
"General Portfolio Policies" on page 13.
- --------------------------------------------------------------------------------
HOW DO THE GROWTH FUNDS TRY TO REDUCE RISK?
Diversification of a Fund's assets reduces the effect of any single holding on
its overall portfolio value. A Fund may also use futures, options and other
derivative instruments to protect its portfolio from movements in securities
prices and interest rates. The Funds may 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
pages 14-15. In addition, to the extent that a Fund holds a larger cash
position, it may not participate in market declines to the same extent as if the
Fund remained more fully invested in common stocks.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
9
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THE JANUS COMBINATION FUNDS ARE DESIGNED FOR INVESTORS WHO PRIMARILY SEEK GROWTH
OF CAPITAL WITH A DEGREE OF EMPHASIS ON INCOME. THESE FUNDS ARE NOT DESIGNED FOR
INVESTORS WHO DESIRE A CONSISTENT LEVEL OF INCOME.
COMBINATION FUNDS
Investment Objective: ............... Growth of Capital; Some Emphasis on Income
Primary Holdings: ................ Common Stocks and Income-Producing Securities
Shareholder's Investment Horizon: .................................... Long-Term
JANUS GROWTH AND INCOME FUND
The investment objective of this Fund is long-term capital growth and current
income. It is a diversified fund that, under normal circumstances, pursues its
objective by investing up to 75% of its assets in equity securities selected
primarily for their growth potential and at least 25% of its assets in
securities selected primarily for their income potential. The Fund normally
emphasizes the growth component. However, in unusual circumstances, this Fund
may reduce the growth component of its portfolio to 25% of its assets.
JANUS BALANCED FUND
The investment objective of this Fund is long-term capital growth, consistent
with preservation of capital and balanced by current income. It is a diversified
fund that, under normal circumstances, pursues its objective by investing 40-60%
of its assets in securities selected primarily for their growth potential and
40-60% of its assets in securities selected primarily for their income
potential. This Fund normally invests at least 25% of its assets in fixed-income
senior securities, which include debt securities and preferred stocks.
TYPES OF INVESTMENTS
The Combination Funds may invest in the types of investments previously
described under "Growth Funds" on pages 8-9. The Funds may also invest in the
types of income-producing securities described on pages 11-12 for Janus Flexible
Income Fund except that their investments in junk bonds will not exceed 35% of
net assets and investments in mortgage- and asset-backed securities will not
exceed 25% of assets.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS COMBINATION FUNDS.
HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENT OF A
COMBINATION FUND'S PORTFOLIO?
The Combination Funds may invest in a combination of common stocks, preferred
stocks, convertible securities, debt securities and other fixed-income
securities. A Combination Fund may shift assets between the growth and income
components of its portfolio based on its portfolio manager's analysis of
relevant market, financial and economic conditions. If a portfolio manager
believes that growth securities will provide better returns than the yields then
available or expected on income-producing securities, then that Fund will place
a greater emphasis on the growth component.
WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF THE COMBINATION FUNDS?
The growth component of the Combination Funds is expected to consist primarily
of common stocks. The selection criteria for common stocks are described on page
9. Because income is a part of the investment objective of the Combination
Funds, a portfolio manager may consider dividend-paying characteristics to a
greater degree in selecting equity securities for these Funds. The Combination
Funds may also find opportunities for capital growth from debt securities
because of anticipated changes in interest rates, credit standing, currency
relationships or other factors.
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WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF THE COMBINATION FUNDS?
The income component of each Combination Fund may consist of all types of
income-producing securities, including common stocks selected primarily for
their dividend payments, preferred stocks, convertible securities and all types
of debt securities. Income-producing securities are used to produce a more
consistent total return than a portfolio manager may attain through investing
solely in growth stocks. However, the Combination Funds are not designed to
produce a consistent level of income.
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HOW DO THE COMBINATION FUNDS DIFFER FROM EACH OTHER?
Janus Growth and Income Fund places a greater emphasis on the growth objective.
Because it generally invests more heavily in growth stocks than Janus Balanced
Fund, its share price can be expected to fluctuate more. Janus Growth and Income
Fund has historically derived a greater portion of its income from
dividend-paying common stocks, while Janus Balanced Fund invests to a greater
degree in debt securities and preferred stock.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
10
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THE JANUS FIXED-INCOME FUNDS ARE DESIGNED FOR THOSE INVESTORS WHO PRIMARILY SEEK
CURRENT INCOME.
FIXED-INCOME FUNDS
Investment Objective:
Janus Flexible Income Fund .................................... Total Return
Others ................................................................ Income
Primary Holdings: ................................ Income-Producing Securities
Shareholder's Investment Horizon:
Janus Short-Term Bond Fund ..................... Short- to Intermediate-Term
Others ............................................ Intermediate- to Long-Term
JANUS FLEXIBLE INCOME FUND
The investment objective of this Fund is to obtain maximum total return,
consistent with preservation of capital. This Fund pursues its objective
primarily through investments in income-producing securities. Total return is
expected to result from a combination of current income and capital
appreciation, although income will normally be the dominant component of total
return. As a fundamental policy, this Fund will invest at least 80% of its
assets in income-producing securities.
Janus Flexible Income Fund may invest in a wide variety of income-producing
securities including corporate bonds and notes, government securities, preferred
stock, income-producing common stocks, 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
dividends or interest. The Fund may purchase securities of any maturity and
quality and the average maturity and quality of its portfolio may vary
substantially.
Janus Flexible Income Fund may invest without limit in foreign securities,
including those of corporate and government issuers. The Fund may invest without
limit in high-yield/high-risk bonds and may have substantial holdings of such
securities. The risks of foreign securities and high-yield bonds are described
under "Additional Risk Factors" on pages 14-15.
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND
The investment objective of this Fund is to seek as high a level of current
income as is consistent with preservation of capital. This Fund pursues its
objective by investing primarily in obligations of the U.S. government and its
agencies and instrumentalities. Because of this emphasis, capital appreciation
is not a significant investment consideration. This Fund may invest up to 20% of
its net assets in commercial paper of U.S. issuers rated in the highest category
by a nationally recognized statistical rating agency. Under normal
circumstances, it is expected that this Fund's dollar-weighted average portfolio
maturity will be greater than three years and less than ten years.
JANUS SHORT-TERM BOND FUND
The investment objective of this Fund is to seek as high a level of current
income as is consistent with preservation of capital. This Fund pursues its
objective by investing primarily in short- and intermediate-term fixed-income
securities. Under normal circumstances, it is expected that this Fund's
dollar-weighted average portfolio maturity will not exceed three years .
Janus Short-Term Bond Fund will normally invest at least 65% of its assets in
debt securities. Subject to this policy and subject to its maturity limits, the
Fund may invest in the types of securities previously described under Janus
Flexible Income Fund except that its investments in high-yield/high-risk bonds
will not exceed 35% of net assets.
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JANUS FEDERAL TAX-EXEMPT FUND IS DESIGNED FOR INVESTORS WHO SEEK A HIGHER
AFTER-TAX YIELD THAN COMPARABLE INVESTING IN TAXABLE SECURITIES.
JANUS FEDERAL TAX-EXEMPT FUND
The investment objective of this Fund is to seek as high a level of current
income exempt from federal income tax as is consistent with preservation of
capital. This Fund pursues its objective by investing primarily in municipal
obligations of any maturity whose interest is exempt from federal income tax.
Because of this emphasis, capital appreciation is not a significant investment
consideration. However, to the extent that capital gains are realized, they are
subject to federal income tax. As a fundamental policy, this Fund will normally
invest at least 80% of its net assets in securities whose interest is exempt
from federal income tax, including the federal alternative minimum tax.
Municipal securities in which the Fund may invest include general obligation
bonds, revenue bonds, industrial development bonds, municipal lease obligations,
certificates of participation (not to exceed 10% of assets), inverse floaters
(not to exceed 5% of assets), instruments with demand features, tender option
bonds and standby commitments.
At times, this Fund may invest more than 25% of its assets in tax-exempt
securities that are related in such a way that an economic, business, or
political development or change affecting one security could similarly affect
the other securities; for example, securities whose issuers are located in the
same state, or securities whose interest is derived from revenues of similar
type projects. The Fund may invest more than 25% of its assets in industrial
development bonds.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
11
<PAGE>
TYPES OF INVESTMENTS
Subject to the specific investment policies of each Fund discussed above, the
Fixed-Income Funds may also invest in mortgage- and asset-backed securities
(unlimited for Janus Flexible Income Fund and up to 25% of assets for the others
Funds); zero coupon bonds (up to 10% of assets for each Fund);
high-yield/high-risk bonds (up to 35% of net assets for Janus Short-Term Bond
Fund and Janus Federal Tax-Exempt Fund; unlimited for Janus Flexible Income
Fund); securities purchased on a when-issued, delayed delivery or forward
commitment basis; and indexed/structured securities. In addition, each Fund may
use futures, options and other derivatives for hedging purposes or for other
purposes, such as enhancing return. See "Additional Risk Factors" on pages
14-15. When its portfolio manager is unable to locate investment opportunities
with favorable risk/reward characteristics, the cash position of any Fund may
increase and the Fund may have substantial holdings of cash or cash equivalent
short-term obligations. See "General Portfolio Policies" on page 13.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS FIXED-INCOME FUNDS.
HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
A 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 may
react to interest rate changes.
WHAT IS MEANT BY A 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 a 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 a Fund with each
maturity "weighted" according to the percentage of net assets that it
represents.
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WHAT IS MEANT BY A 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, a Fund's duration is usually shorter than its average
maturity.
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HOW DO THE FIXED-INCOME FUNDS MANAGE INTEREST RATE RISK?
Each Fixed-Income Fund may vary the average-weighted maturity of its portfolio
to reflect its portfolio manager's analysis of interest rate trends and other
factors. A 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 Funds may also use futures, options
and other derivatives to manage interest rate risk. See "Additional Risk
Factors" on pages 14-15.
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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. Municipal obligations generally rank between U.S. government securities
and corporate debt securities in terms of credit safety. Corporate debt
securities, particularly those rated below investment grade, present the highest
credit risk.
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HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized statistical rating agencies such as
Standard & Poor's Ratings Services ("Standard & Poor's") and Moody's Investors
Service, Inc. ("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.
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WHAT ARE THE TAX ADVANTAGES OF INVESTING IN JANUS FEDERAL TAX-EXEMPT FUND?
Most regular income dividends you receive from Janus Federal Tax-Exempt Fund
generally will not be subject to federal income tax. Additionally, your state
may not tax the portion of this Fund's income derived from obligations issued by
your state (if any). Capital gains distributed by this Fund are taxable to you.
See "Distributions" and "Taxes" on pages 24-25. The higher your income tax level
is, the more you will benefit from tax exempt investing.
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HOW DO THE FIXED-INCOME FUNDS DIFFER FROM EACH OTHER?
The chart on page 13 shows that the Fixed-Income Funds differ substantially in
terms of the type, credit quality and average maturity of the securities in
which they invest.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
12
<PAGE>
Primary Interest Rate
Investment Type Credit Risk Risk
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Janus Flexible Income Fund Corporate Bonds High High
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Janus Intermediate U.S. Government
Gov't Securities Fund Securities Low Moderate
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Janus Short-Term Bond Fund Corporate Bonds Moderate Low
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Janus Federal Municipal
Tax-Exempt Fund Securities Moderate High
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GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all of the
Funds. The percentage limitations included in these policies and elsewhere in
this Prospectus apply at the time of purchase of the security. For example, if a
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.
CASH POSITION
When a 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, a Fund's investments may be
hedged to a greater degree and/or its cash or similar investments may increase.
In other words, the Funds do not always stay fully invested in stocks and bonds.
Cash or similar investments are a residual - they represent the assets that
remain after a portfolio manager has committed available assets to desirable
investment opportunities. Partly because the portfolio managers act
independently of each other, the cash positions of the Funds may vary
significantly. Larger hedged positions and/or larger cash positions may serve as
a means of preserving capital in unfavorable market conditions.
Securities that the Funds may invest in as means of receiving a return on idle
cash include high-grade commercial paper, certificates of deposit, repurchase
agreements or other short-term debt obligations. The Funds may also invest in
money market funds (including funds managed by Janus Capital). Janus Federal
Tax-Exempt Fund may invest in such securities even though they may be federally
taxable. When a Fund's investments in cash or similar investments increase, a
Fund may not participate in stock or bond market advances or declines to the
same extent that it would if the Fund remained more fully invested in stocks or
bonds.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. All of the Funds (except
Janus Twenty Fund, Janus Enterprise Fund and Janus Mercury Fund) qualify as
diversified funds under the 1940 Act. The Funds are subject to the following
diversification requirements:
o As a fundamental policy, no Fund may own more than 10% of the outstanding
voting shares of any issuer.
o As a fundamental policy, with respect to 50% of the total assets of Janus
Twenty Fund, Janus Enterprise Fund and Janus Mercury Fund and 75% of the
total assets of the other Funds, no Fund will 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 a Fund's holdings of that issuer
to amount to more than 5% of that Fund's total assets.
o No Fund will invest more than 25% of its assets in a single issuer.
INDUSTRY CONCENTRATION
As a fundamental policy, no Fund will invest more than 25% of its total assets
in any particular industry. This policy does not apply to U.S. government
securities and municipal obligations issued by governments or their subdivisions
because the issuers of those securities are not considered a part of any
industry.
PORTFOLIO TURNOVER
Each 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, 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 initial investment
decision. Changes are made in a 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, a Fund may purchase securities in anticipation of
relatively short-term price gains. A Fund may also sell one security and
simultaneously purchase the same or 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 Funds' ability to engage in short-term
trading if a security has been held for less than three months.
ILLIQUID INVESTMENTS
Each 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
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
13
<PAGE>
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 Rule
144A securities and certain other securities, including privately placed
commercial paper and municipal lease obligations.
BORROWING AND LENDING
Each Fund may borrow money and lend securities or other assets, as follows:
o Each Fund may borrow money for temporary or emergency purposes in amounts
up to 25% of its total assets.
o Each Fund may mortgage or pledge securities as security for borrowings in
amounts up to 15% of its net assets.
o As a fundamental policy, each 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.
Each Fund intends to seek permission from the SEC to borrow money from or lend
money to each other and 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 percentage limits. There is no assurance that such
permission will be granted.
ADDITIONAL RISK FACTORS
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 many foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. A Fund may 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 a Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar.
When a 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
a 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.
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.
Smaller or newer companies may lack depth of management, they may be unable to
generate funds necessary for growth or potential development, 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 or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the markets for
securities of larger or more established issuers, and may be subject to wider
price fluctuations. Investments in such companies tend to be more volatile and
somewhat more speculative.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Each 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 Funds intend to use most derivative
instruments primarily to hedge the value of their portfolios against potential
adverse movements in securities prices, foreign
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
14
<PAGE>
currency markets or interest rates. To a limited extent, the Funds may also use
derivative instruments for non-hedging purposes such as seeking to increase a
Fund's income or otherwise seeking to enhance return. Please refer to Appendix A
to this Prospectus and the SAI for a more detailed discussion of these
instruments.
The use of derivative instruments exposes the Funds 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 direction that a 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 a 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 a
Fund worse off than if it had not entered into the position.
Although the Funds believe the use of derivative instruments will benefit the
Funds, a Fund's performance could be worse than if the Fund had not used such
instruments if a portfolio manager's judgement proves incorrect.
When a 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).
Please refer to Appendix B for a description of bond rating categories. The
Funds expect that holdings of lower rated securities, if any, will consist
primarily of bonds rated in the highest two tiers of non-investment grade
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
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, a 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 rated 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 as rated securities.
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 Funds must recognize a computed amount of
interest income and pay dividends to shareholders even though it has received no
cash. In some instances, the Funds may have to sell securities to have
sufficient cash to pay the dividends.
SPECIAL SITUATIONS
Each Fund (except Janus Intermediate Government Securities Fund) may invest in
"special situations" from time to time. A special situation arises when, in the
opinion of a 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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
15
<PAGE>
SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also 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 our 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.
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MINIMUM INVESTMENTS*
To open a new account ............................................. $2,500
To open a new retirement or UGMA/UTMA account ..................... $ 500
To open a new account with an Automatic Investment Program ........ $ 500**
To add to any type of an account .................................. $ 100
*The Fund reserves the right to change the amount of these minimums from time to
time or to waive them in whole or in part for certain types of accounts.
**There is a $100 minimum subsequent investment.
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TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds 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.
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 a retirement plan 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 serves as custodian for the retirement plans
offered by the Funds. 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).
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 age 70 1/2
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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
16
<PAGE>
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 the following addresses:
Regular Mail
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
MINIMUM INVESTMENT POLICIES
ACCOUNTS ESTABLISHED AFTER FEBRUARY 15, 1996
Any account opened after February 15, 1996, must meet minimum investment
requirements described at page 16.
ACCOUNTS ESTABLISHED ON OR BEFORE FEBRUARY 15, 1996
o The minimum investment requirement remains at $1,000 ($250 for retirement
accounts and UGMA/UTMA accounts) for these accounts only.
o There is no minimum initial investment requirement for Automatic Monthly
Investment Program participants that continue to make subsequent automatic
investments of at least $50.
o Subsequent investments (other than automatic monthly investments) must meet
the $100 minimum.
ALL ACCOUNTS
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 annual maintenance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
above or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. It is expected that
accounts will be valued and the $10 fee assessed on the second Friday of
September of each year. You will receive notice before we charge the $10 fee or
close your account so that you may increase your account balance to the required
minimum.
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 U.S. banks and made payable to Janus Funds.
o If a check does not clear your bank, the Funds reserve the right to cancel
the purchase.
o If the Funds are unable to debit your predesignated bank account on the day
of purchase, they may make additional attempts or cancel the purchase.
o The Funds reserve 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 Funds (or their agents) have the
authority to redeem shares in your account(s) to cover any 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 $100. 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 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
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will be
electronically transferred from your bank account
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
17
<PAGE>
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 BY SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money ($100 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
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
Janus Investor Services 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and Fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
Janus QuotelineSM 1-800-525-0024
For automated daily quotes on Fund share prices, yields and total returns.
Janus Literature Line 1-800-525-8983
To request a prospectus, shareholder reports or marketing materials.
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 19.
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, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must mee the $100 subsequent investment
requirement.
o You may make four exchanges out of each Fund during a calendar year
(exclusive of Systematic Exchanges) free of charge. The Funds reserve the
right to have a $5 transaction fee automatically deducted from your account
for each additional exchange.
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 your Fund prior to making any exchanges.
o Be sure that you read the prospectus for the Fund into which you are
exchanging.
o The Funds reserve the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Funds may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are detrimental to the Funds.
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.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests on page 19.
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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
18
<PAGE>
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.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUNDS MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS 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 - Investor Shares during the 15 day hold
period.
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 17 and must include the following
information:
o the name of the Fund(s)
o the account number(s)
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
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 in 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
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 59
1/2) or premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to the 10%
additional tax on early distributions.
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 FUNDS RESERVE 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, 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.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. A 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 the
close of the regular trading session of the NYSE. NAV per share is calculated by
dividing the total value of a 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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
19
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) 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
Funds. The Processing Organization may also impose other charges or restrictions
different from those applicable to shareholders who invest in the Funds
directly. The Processing Organization, rather than its customers, may be the
shareholder of record of your shares. The Funds are 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 Funds 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 Funds 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 Funds 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 Funds. The Funds 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 and will not be issued for
accounts that do not meet the minimum investment requirements. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise detrimental to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and their 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 Funds 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 Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services.
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 your Fund(s), 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 Funds 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 confirmation statements unless monthly statements are
requested. Fixed-Income Fund Investors will receive quarterly confirmations of
dividends. 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 Funds, which include a list of the Funds' portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such 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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
20
<PAGE>
MANAGEMENT OF THE FUNDS
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923, is the
investment adviser to each of the Funds and is responsible for the day-to-day
management of the investment portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to Janus Fund at its inception
in 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 each
Fund's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Funds, and may be reimbursed by the
Funds 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 Funds and pays the salaries, fees and expenses of all Fund officers and
those Trustees who are affiliated with Janus Capital.
INVESTMENT PERSONNEL
James P. Craig, III is Chief Investment Officer, and Executive Vice President
and portfolio manager of Janus Fund, which he has managed since 1986. Mr. Craig
previously managed Janus Venture Fund from its inception to December 1993 and
Janus Balanced Fund from December 1993 through December 1995. He holds a
Bachelor of Arts in Business from the University of Alabama and a Master of Arts
in Finance from the Wharton School of the University of Pennsylvania.
- --------------------------------------------------------------------------------
James P. Goff is Executive Vice President and portfolio manager of Janus
Enterprise Fund. Mr. Goff joined Janus Capital in 1988 and has managed this Fund
since its inception and has co-managed Janus Venture Fund since December 1993.
He holds a Bachelor of Arts in Economics from Yale University and is a Chartered
Financial Analyst.
- --------------------------------------------------------------------------------
Helen Young Hayes is Executive Vice President and portfolio manager of Janus
Worldwide Fund and Janus Overseas Fund. Ms. Hayes joined Janus Capital in 1987
and has managed or co-managed Janus Worldwide Fund and Janus Overseas Fund since
their inceptions. She holds a Bachelor of Arts in Economics from Yale University
and is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Warren B. Lammert is Executive Vice President and portfolio manager of Janus
Mercury Fund. Mr. Lammert joined Janus Capital in 1987 and has managed Janus
Mercury Fund since its inception and Janus Balanced Fund from its inception to
December 1993. He has also co-managed Janus Venture Fund since December 1993. He
holds a Bachelor of Arts in Economics from Yale University and a Master of
Science in Economic History from the London School of Economics and is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Thomas F. Marsico is Executive Vice President and portfolio manager of Janus
Growth and Income Fund and Janus Twenty Fund. Mr. Marsico has managed Janus
Growth and Income Fund since its inception and Janus Twenty Fund since March
1988. He holds a Bachelor of Arts in Biology from the University of Colorado and
Master of Business Administration in Finance from the University of Denver.
- --------------------------------------------------------------------------------
Blaine P. Rollins is Executive Vice President and portfolio manager of Janus
Balanced Fund, which he has managed since January 1996. Mr. Rollins joined Janus
Capital in 1990 and has gained experience as a trader and research analyst prior
to assuming management responsibility for Janus Balanced Fund. He holds a
Bachelor of Science in Finance from the University of Colorado and is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Sandy R. Rufenacht is Executive Vice President and portfolio manager of Janus
Intermediate Government Securities Fund and Janus Short-Term Bond Fund. Mr.
Rufenacht joined Janus Capital in 1990 and gained experience as a trader and
research analyst before assuming management of these funds in January 1996. He
holds a Bachelor of Arts in Business from the University of Northern Colorado.
- --------------------------------------------------------------------------------
Scott W. Schoelzel is Executive Vice President and portfolio manager of Janus
Olympus Fund.+ Mr. Schoelzel joined Janus Capital in 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.
- --------------------------------------------------------------------------------
Ronald V. Speaker is Executive Vice President and portfolio manager of Janus
Flexible Income Fund, which he has managed since December 1991. Mr. Speaker
joined Janus Capital in 1986 and also manages Janus High-Yield Fund.+ He
previously managed Janus Intermediate Government Securities Fund, Janus
Short-Term Bond Fund and Janus Federal Tax-Exempt Fund from their inceptions
through December 1995. He holds a Bachelor of Arts in Finance from the
University of Colorado and is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Darrell W. Watters is Executive Vice President and portfolio manager of Janus
Federal Tax-Exempt Fund, which he has managed since January 1996. Mr. Watters
joined Janus Capital in 1993 as a municipal bond trader. He holds a Bachelor of
Arts in Economics from Colorado State University.
- --------------------------------------------------------------------------------
+ Janus Olympus Fund and Janus High-Yield Fund commenced operations on
December 29, 1995, and are offered by separate prospectuses.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
21
<PAGE>
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
Each Fund pays Janus Capital a management fee which is accrued daily and paid
monthly. The advisory agreement with each Fund spells out the management fee and
other expenses that the Funds must pay. Each of the Funds is subject to the
following management fee schedule (expressed as an annual rate):
<TABLE>
<CAPTION>
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Funds and Combination Funds First $ 30 Million 1.00 None+
Next $270 Million .75
Next $200 Million .70
Over $500 Million .65
- ---------------------------------------------------------------------------------------------------
Janus Flexible Income Fund First $300 Million .65 1.00*
Over $300 Million .55
- ---------------------------------------------------------------------------------------------------
Janus Short-Term Bond Fund First $300 Million .65 .65*
Over $300 Million .55
- ---------------------------------------------------------------------------------------------------
Janus Intermediate Government
Securities Fund First $300 Million .50 .65*
Over $300 Million .40
- ---------------------------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund First $300 Million .60 .65*
Over $300 Million .55
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Janus Capital will waive certain fees and expenses to the extent that total
expenses exceed the stated limits. You will be notified of any changes in
these limits.
+ Janus Capital will waive certain fees and expenses to the extent that total
expenses exceed the regulatory limits imposed by state securities
regulators.
Differences in the actual management fees incurred by the Funds are due
primarily to variances in the asset size of the Funds. As asset size increases,
the annual rate of the management fee rate declines in accordance with the above
schedules. In addition, each Fund incurs expenses not assumed by Janus Capital,
including transfer agent and custodian fees and expenses, legal and auditing
fees, printing and mailing costs of sending reports and other information to
existing shareholders, and independent Trustees' fees and expenses. The Annual
Fund Operating Expenses table on page 3 lists the management fees and total
operating expenses of each Fund for the most recent fiscal year.
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 Funds or Janus Capital's other
advisory clients. See the SAI for more detailed information.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each 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 a 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 a 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 a Fund as a
factor in the selection of brokerdealers. The Funds' Trustees have authorized
Janus Capital to place portfolio transactions on an agency basis with a
broker-dealer affiliated with Janus Capital. When transactions for a 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 Funds with administrative and other services.
Domestic Custodian
Investors Fiduciary Trust Company
127 W. 10th Street
Kansas City, Missouri 64105
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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
22
<PAGE>
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.
As of the date of this Prospectus, the Trust offers 18 separate series, three of
which currently offer two classes of shares. Janus Fund became a series of the
Trust on June 16, 1986. Janus Flexible Income Fund and Janus Intermediate
Government Securities Fund became series of the Trust on August 7, 1992. All
other Funds have been series of the Trust since their inceptions. This
Prospectus describes twelve series of the Trust; the other series are offered by
separate prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific 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 each Fund only
if a matter affects or requires the vote of only that Fund or that 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 FUNDS
The Funds have no present plans to limit their size. However, any 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 a Fund are discontinued, it is expected that existing shareholders of
that 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 any Fund's investment objective by
investing all of that Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to that Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the existing Fund. The Trust's shareholders of record on April 30,
1992, and the initial shareholder(s) of all Funds 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 Funds
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 a 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 management of the Funds believe 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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
23
<PAGE>
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
THE INTERNAL REVENUE CODE REQUIRES EACH FUND TO DISTRIBUTE NET INCOME AND ANY
NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. A 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.
- --------------------------------------------------------------------------------
DISTRIBUTION SCHEDULE
<TABLE>
<CAPTION>
Dividends Capital Gains
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Funds Declared and paid in December Declared and paid in December
- ---------------------------------------------------------------------------------------------------------
Combination Funds Declared and paid in March, June, Declared and paid in December
September and December
- ---------------------------------------------------------------------------------------------------------
Fixed-Income Funds* Declared daily and paid as of the last Declared and paid in December
business day of each month
- ---------------------------------------------------------------------------------------------------------
</TABLE>
*While distributions for these Funds are paid monthly, the income dividends for
these Funds are declared daily, Saturdays, Sundays and holidays included, and
are generally 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. An investor will begin accruing income dividends the day
after the purchase is effective. If shares are redeemed, the investor will
receive all dividends accrued through the day of the redemption.
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of a distribution
of a Fund, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in each Fund's daily NAV. The
share price of a Fund drops by the amount of the distribution, net of any
subsequent market fluctuations. As an example, assume that on December 31, Janus
Fund declared a dividend in the amount of $0.25 per share. If Janus 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 a 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 Funds offer the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital
gains distributions in 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 in additional
shares.
4. Redirect Option. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Funds reserve the right to reinvest undeliverable and uncashed dividend and
distribution checks that remain outstanding for six months in shares of the
applicable Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
24
<PAGE>
TAXES
As with any investment, you should consider the tax consequences of investing in
the Funds. 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 Funds. You may wish to consult your own tax adviser.
Additionally, state or local taxes may apply to your investment, depending upon
the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Janus Federal Tax-Exempt Fund anticipates that substantially all of its income
dividends will be exempt from federal income tax, although it may occasionally
earn income on taxable investments and dividends attributable to that income
would be taxable. In addition, interest from certain private activity bonds is a
preference item for purposes of the alternative minimum tax, and to the extent
the Fund earns such income shareholders subject to the alternative minimum tax
must include that income as a preference item. Distributions from capital gains,
if any, are subject to federal tax. The Fund will advise shareholders of the
percentage of dividends, if any, subject to any federal tax.
Dividends and distributions for all of the other Funds are subject to federal
income tax, regardless of whether the distribution is made in cash or reinvested
in additional shares of a Fund. In certain states, a portion of the dividends
and distributions (depending on the sources of a 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 FUNDS
Dividends, interest and some capital gains received by a Fund on foreign
securities may be subject to tax withholding or other foreign taxes. Any foreign
taxes paid by a Fund will be treated as an expense to the particular 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 Funds do not expect to pay any federal income or excise taxes because they
intend to meet certain requirements of the Internal Revenue Code. It is
important that the Funds meet these requirements so that any earnings on your
investment will not be taxed twice.
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used to
describe a 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 Growth and Combination Funds generally measure performance
in terms of total return, while the Fixed-Income Funds generally use yield.
Cumulative total return represents the actual rate of return on an investment
for a specified period. The Financial Highlights tables beginning on page 4 show
total return for a single fiscal 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 a Fund's return and are not the
same as actual annual results.
Yield shows the rate of income a 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 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.
Tax-Equivalent yield or total return (for Janus Federal Tax-Exempt Fund) shows
the before-tax yield or total return that an investor would have to earn to
equal the Fund's tax-free yield or total return. It is calculated by dividing a
Fund's tax-free yield by the result of one minus a stated federal tax rate.
THE FUNDS IMPOSE 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.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
25
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Funds may invest. The Funds may
invest in these instruments to the extent permitted by their investment
objectives and policies. The Funds are 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.
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. Municipal lease obligations are often sold in the form of
COPs. See "Municipal lease obligations" below.
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 Funds 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."
Industrial development bonds are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a private
issuer and may involve greater credit risk. See "Municipal securities" below.
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, a 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.
Municipal lease obligations are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not normally
associated with general obligation bonds and other revenue bonds. For example,
their interest may become taxable if the lease is assigned and the holders may
incur losses if the issuer does not appropriate funds for the lease payments on
an annual basis, which may result in termination of the lease and possible
default.
Municipal securities are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the full
faith and credit (i.e., the borrowing and taxing power) of a municipality or a
revenue obligation paid out of the revenues of a designated project, facility or
revenue source.
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 Funds to
recognize income associated with a 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 a 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, a Fund will bear the
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
26
<PAGE>
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 a 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 may be used to provide cash to satisfy unusually high 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 a 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 are 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 floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
Warrants are securities, typically issued with preferred stock 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 Funds do not earn interest on such
securities until settlement and bear 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 regular 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 Funds 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. They
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 Funds 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 Funds 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
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
27
<PAGE>
return characteristics similar to direct investments in the underlying
instruments and may be more volatile than the underlying instruments. A 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 or index. 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 change in the underlying index.
Such mechanism may increase the volatility of the security's market value.
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 Funds may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
28
<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, Predominantly speculative with respect to the issuer's capacity
CCC, CC, C 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.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless the
portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended October 31, 1995, the percentage of securities
holdings for Janus Flexible Income Fund by rating category based upon a weighted
monthly average was:
BONDS - S&P RATING JANUS FLEXIBLE INCOME FUND
AAA 17%
AA 0%
A 15%
BBB 27%
BB 13%
B 23%
CCC 1%
CC 0%
C 0%
Preferred Stock 1%
Cash and Options 3%
--------------------------------------------------------
TOTAL 100%
--------------------------------------------------------
No other Fund held 5% or more of its assets in bonds rated below investment
grade for the fiscal period ended October 31, 1995.
JANUS FUNDS COMBINED PROSPECTUS FEBRUARY 18, 1996
29
<PAGE>
CONTENTS
THE FUND AT A GLANCE
Brief description of the Fund ............................................. 1
EXPENSE INFORMATION
The Fund's annual operating expenses ...................................... 1
Financial Highlights - a summary of financial data ........................ 2
THE FUND IN DETAIL
The Fund's Investment Objective ........................................... 3
Types of Investments ...................................................... 3
General Portfolio Policies ................................................ 4
Additional Risk Factors ................................................... 5
PERFORMANCE TERMS
An Explanation of Performance Terms ....................................... 6
SHAREHOLDER'S MANUAL
Types of Account Ownership ................................................ 7
How to Open an Account .................................................... 8
Minimum Investment Policies ............................................... 8
How to Purchase Shares .................................................... 8
How to Exchange Shares .................................................... 9
How to Redeem Shares ...................................................... 9
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JETS(R) ................................................................... 11
Transactions Through Processing Organizations ............................. 11
Taxpayer Identification Number ............................................ 11
Share Certificates ........................................................ 11
Involuntary Redemptions ................................................... 11
Telephone Transactions .................................................... 11
Making Changes to Your Account ............................................ 11
Statements and Reports .................................................... 11
MANAGEMENT OF THE FUND
Investment Adviser and Portfolio Managers ................................. 12
Management Expenses ....................................................... 12
Portfolio Transactions .................................................... 13
Other Service Providers ................................................... 13
Other Information ......................................................... 13
DISTRIBUTIONS AND TAXES
Distributions ............................................................. 14
Taxes ..................................................................... 14
APPENDIX A
Glossary of Investment Terms .............................................. 15
[LOGO]
JANUS VENTURE FUND
100 Fillmore Street
Denver, CO 80206-4923
1-800-525-3713
February 18, 1996
Janus Venture Fund (the "Fund") is a no-load, diversified mutual fund that seeks
capital appreciation. The Fund normally invests at least 50% of its equity
assets in securities of small-sized issuers.
THE FUND HAS DISCONTINUED PUBLIC SALES OF ITS SHARES TO NEW INVESTORS, BUT
SHAREHOLDERS WHO MAINTAIN OPEN FUND ACCOUNTS ARE STILL ABLE TO MAKE INVESTMENTS
IN THE FUND AND REINVEST ANY DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. CURRENT
SHAREHOLDERS MAY ALSO OPEN ADDITIONAL FUND ACCOUNTS UNDER CERTAIN CONDITIONS. IF
A FUND ACCOUNT IS CLOSED, HOWEVER, ADDITIONAL INVESTMENTS IN THE FUND MAY NOT BE
POSSIBLE. For complete information on how to purchase, exchange and sell shares,
please see the Shareholder's Manual beginning on page 7. The Fund may resume
sale of its shares to new investors in the future, although it has no current
intention to do so.
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 com-pany. 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 February 18, 1996, 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.
<PAGE>
THE FUND AT A GLANCE
INVESTMENT OBJECTIVE:
The Fund seeks capital appreciation.
PRIMARY HOLDINGS:
A diversified fund that invests primarily in common stocks with an emphasis on
securities of small-sized issuers.
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 more than $30 billion in assets.
FUND MANAGERS:
James P. Goff
Warren B. Lammert
FUND INCEPTION:
April 30, 1985
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.
** You may be charged a $5 transaction fee for excessive exchanges. See "How to
Exchange Shares" on page 9.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fee 0.68%
Other Expenses 0.24%
Total Fund Operating Expenses 0.92%
- --------------------------------------------------------------------------------
EXAMPLE(1)
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Assume you invest $1,000, the Fund
returns 5% annually and its expense
ratio remains as listed above. This example
shows the operating expenses that
you would indirectly bear as an
investor in the Fund. $9 $29 $51 $113
- --------------------------------------------------------------------------------
(1) The information in the table and example above is based on expenses before
expense offset arrangements for the fiscal period ended October 31, 1995.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
1
<PAGE>
FINANCIAL HIGHLIGHTS
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Fund's financial statements since October 1, 1990. Their report is included
in the Fund's Annual Report, which is incorporated by reference into the SAI.
The Fund's financial statements for fiscal periods prior to October 1, 1990 were
audited by other independent accountants whose reports are not included in the
Annual Report. Expense and income ratios and portfolio turnover rates have been
annualized for periods of less than one year. Total returns for periods of less
than one year are not annualized.
<TABLE>
<CAPTION>
1995 1994 1993 1992(1) 1992(2) 1991(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $ 52.86 $ 53.25 $ 47.74 $ 45.96 $ 45.05 $37.90
Income from investment operations:
2. Net investment income 0.05 0.11 0.66 0.17 0.36 0.44
3. Net gains or (losses) on securities
(both realized and unrealized) 9.49 4.40 6.72 1.61 4.23 7.71
4. Total from investment operations 9.54 4.51 7.38 1.78 4.59 8.15
Less distributions:
5. Dividends (from net investment income) (0.03) (0.53) (1.16) -- (0.25) (0.11)
6. Distributions (from capital gains) (2.84) (4.37) (0.71) -- (3.43) (0.89)
7. Total distributions (2.87) (4.90) (1.87) -- (3.68) (1.00)
8. Net asset value, end of period $ 59.53 $ 52.86 $ 53.25 $ 47.74 $ 45.96 $45.05
9. Total return 19.24% 9.23% 15.76% 3.87% 9.90% 22.28%
10. Net assets, end of period (in millions) $ 1,753 $ 1,550 $ 1,837 $ 1,545 $ 1,510 $ 893
11. Ratio of expenses to average net assets 0.92%(3) 0.96% 0.97% 1.07% 1.00% 1.04%
12. Ratio of net investment income
to average net assets 0.29% 0.27% 1.29% 1.32% 1.20% 2.10%
13. Portfolio turnover rate 113% 114% 139% 124% 166% 167%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1990(2) 1989(2) 1988(2) 1987(2) 1986(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $36.97 $28.11 $34.63 $30.78 $24.17
Income from investment operations:
2. Net investment income 0.28 0.33 1.50 0.12 0.11
3. Net gains or (losses) on securities
(both realized and unrealized) 3.44 10.05 (3.70) 6.25 7.88
4. Total from investment operations 3.72 10.38 (2.20) 6.37 7.99
Less distributions:
5. Dividends (from net investment income) (0.44) (1.52) (0.15) (0.19) (0.18)
6. Distributions (from capital gains) (2.35) -- (4.17) (2.33) (1.20)
7. Total distributions (2.79) (1.52) (4.32) (2.52) (1.38)
8. Net asset value, end of period $37.90 $36.97 $28.11 $34.63 $30.78
9. Total return 10.46% 38.73% (4.56%) 22.76% 35.26%
10. Net assets, end of period (in millions) $ 256 $ 58 $ 34 $ 46 $ 31
11. Ratio of expenses to average net assets 1.16% 1.28% 1.41% 1.44% 1.90%
12. Ratio of net investment income
to average net assets 1.24% 1.10% 5.11% 0.40% 1.47%
13. Portfolio turnover rate 184% 219% 299% 250% 248%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from August 1, 1992 to October 31, 1992.
(2) The Fund's prior fiscal year ended on July 31st of each year.
(3) The Fund's expenses may be reduced through the use of broker commissions
and uninvested cash balances earning interest with the Fund's custodian.
The expense ratio for the fiscal period ended October 31, 1995, does not
reflect expense reductions, which reduced the ratio of expenses to average
net assets to 0.91%.
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights table. The table contains important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Fund's Annual
Report contains additional information about the Fund's performance, including a
comparison to an appropriate securities index. For a copy of the Annual Report,
call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of the Fund. It is
computed by adding the value of all of the Fund's investments and other assets,
subtracting any liabilities and dividing the result by the number of shares
outstanding. The difference between line 1 and line 8 in the Financial
Highlights table represents the change in value of the Fund's shares over the
fiscal period, but not its total return.
Net investment income is the per share amount of dividends and interest income
earned on securities held by the Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that the Fund paid from net
investment income.
Net gain or (loss) on securities is the per share increase or decrease in value
of the securities the Fund holds. A gain (or loss) is realized when securities
are sold. A gain (or loss) is unrealized when securities increase or decrease in
value but are not sold. Distributions (from capital gains) is the per share
amount that the Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purpose of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. THE FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLE.
Ratio of expenses to average net assets is the total of the Fund's operating
expenses divided by its average net assets for the stated period.
Ratio of net investment income to average net assets is the Fund's net
investment income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of the Fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of the Fund's portfolio securities.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
2
<PAGE>
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 more detailed description of investment terms used throughout this Prospectus.
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 capital appreciation. The Fund pursues
its objective by normally investing at least 50% of its equity assets in
securities issued by small-sized issuers. Small-sized issuers are those who have
market capitalizations of less than $1 billion or annual gross revenues of less
than $500 million. Companies whose capitalization or revenues fall outside these
ranges after the Fund's initial purchase continue to be considered small-sized
for the purposes of this policy. Subject to the above policy, the Fund may also
invest in larger issuers.
TYPES OF INVESTMENTS
The Fund invests substantially all of its assets in common stocks with an
emphasis on securities of small-sized issuers. The Fund may also invest in
larger companies with strong growth potential or relatively well-known and large
companies with potential for capital appreciation. The Fund may invest to a
lesser degree in other types of securities including preferred stocks, 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); 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,
including money market funds managed by Janus Capital, as a means of receiving a
return on idle cash.
When the Fund's portfolio managers believe that market conditions are not
favorable for profitable investing or when the portfolio managers are 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 managers have committed available assets
to desirable investment opportunities. When the Fund's cash position increases,
it might not participate in stock market advances or declines to the extent that
it would if it remained more fully invested in common stocks.
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 returns. See "Additional Risk Factors" on
page 5. 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 emphasizes investments in common stocks to the extent its portfolio
managers believe that the relevant market environment favors profitable
investing in those securities. The portfolio managers generally take a "bottom
up" approach to building the portfolio. In other words, they seek 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
generally 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 objective.
- --------------------------------------------------------------------------------
ARE THE SAME CRITERIA USED TO SELECT FOREIGN STOCKS?
Generally, yes. The portfolio managers seek companies with earnings growth
potential, regardless of country of organization or place of principal business
activity. Foreign securities are generally 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 5.
- --------------------------------------------------------------------------------
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, such as those in which the Fund
invests, 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 5.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
3
<PAGE>
WHAT IS MEANT BY "MARKET CAPITALIZATION"?
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. As noted
previously, market capitalization and annual gross revenues are important
investment criteria for the Fund.
- --------------------------------------------------------------------------------
HOW DOES THE FUND TRY TO REDUCE RISK?
Diversification of the Fund's assets reduces the effect of any single holding on
its overall portfolio value. The Fund may also use futures, options and other
derivative instruments to protect its portfolio from movements in securities
prices and interest rates. The Fund may 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 5. 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
In investing its portfolio assets, the Fund will follow the general policies
listed below. The percentage limitations included in these policies and
elsewhere in this Prospectus apply only 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.
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, 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 managers believe
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 Rule 144A securities and certain other securities, including
privately placed 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
4
<PAGE>
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 managers, 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 may 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.
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 most 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 seeking to increase the Fund's income or otherwise
seeking to enhance return. Please refer to Appendix A to this Prospectus 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:
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
5
<PAGE>
o the risk that interest rates, securities prices and currency markets will
not move in the direction that the portfolio managers anticipate;
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.
Although the Fund believes the use of derivative instruments will benefit the
Fund, the Fund's performance could be worse than if the Fund had not used such
instruments if the portfolio manager's judgement proves incorrect.
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 Ratings
Services ("Standard & Poor's") and Moody's Investors Service, Inc. ("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 non-investment
grade securities.
The value of lower quality 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 quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. In addition, companies issuing high-yield securities may be
more vulnerable to real or perceived economic changes, political changes or
other developments adverse to the company and lower quality securities may have
less liquid markets than higher quality 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.
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. The Financial Highlights table shows total return for a
single fiscal 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
6
<PAGE>
SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also 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.
- --------------------------------------------------------------------------------
Although the Fund has discontinued public sales of its shares to new investors,
shareholders who maintain open accounts will be able to continue to purchase
shares and reinvest any dividends and capital gains distributions in additional
shares. In addition, the Fund will continue to accept new accounts which are
opened under taxpayer identification numbers that are identical to those for
existing Fund accounts.
Once a Fund account is closed, it may not be reopened. An account may be
considered closed and subject to redemption by the Fund in the circumstances
discussed under "Minimum Investment Policies" on page 8.
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.
TYPES OF ACCOUNT OWNERSHIP
As discussed above, the Fund will accept new accounts opened under taxpayer
identification numbers identical to those on current Fund accounts. 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.
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 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).
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
70 1/2 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.
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MINIMUM INVESTMENTS*
To open a new account $2,500
To open a new retirement or UGMA/UTMA account $ 500
To open a new account with an Automatic Investment Program $ 500**
To add to any type of an account $ 100
* The Fund reserves the right to change the amount of these minimums from
time to time or to waive them in whole or in part for certain types of
accounts.
** There is a $100 minimum subsequent investment.
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JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
7
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HOW TO OPEN YOUR JANUS ACCOUNT
If you are a current Fund shareholder and want to open another Fund 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
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
MINIMUM INVESTMENT POLICIES
ACCOUNTS ESTABLISHED AFTER FEBRUARY 15, 1996
Any account opened after February 15, 1996, must meet the minimum investment
requirements described at page 7.
ACCOUNTS ESTABLISHED ON OR BEFORE FEBRUARY 15, 1996
o The minimum investment requirement remains at $1,000 ($250 for retirement
accounts and UGMA/UTMA accounts) for these accounts only.
o There is no minimum initial investment requirement for Automatic Monthly
Investment Program participants that continue to make subsequent automatic
investments of at least $50.
o Subsequent investments (other than automatic monthly investments) must meet
the $100 minimum.
ALL ACCOUNTS
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 annual maintenance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
above or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. It is expected that
accounts will be valued and the $10 fee assessed on the second Friday of
September of each year. You will receive notice before we charge the $10 fee or
close your account so that you may increase your account balance to the required
minimum.
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 $100. 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 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
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
8
<PAGE>
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 BY SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money ($100 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.
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 10.
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, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of the Fund during a calendar year
(exclusive of Systematic Exchanges) free of charge. The Fund reserves the
right to have a $5 transaction fee automatically deducted from your account
for each additional exchange.
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.
QUICK ADDRESS AND TELEPHONE REFERENCE
Regular Mail
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
Janus Investor Services 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
Janus QuotelineSM 1-800-525-0024
For automated daily quotes on fund share prices, yields and total returns.
Janus Literature Line 1-800-525-8983
To request a prospectus, shareholder reports or marketing materials.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. REMEMBER
THAT THE FUND IS CLOSED TO NEW INVESTORS AND IF A TOTAL REDEMPTION IS MADE
ADDITIONAL INVESTMENTS IN YOUR FUND ACCOUNT MIGHT NOT BE POSSIBLE.
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.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests noted on page 10.
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 Fund 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
9
<PAGE>
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.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUND MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS 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 - Investor Shares during the 15 day hold
period.
WRITTEN INSTRUCTIONS
To redeem all or part of your shares in writing, your request should be sent to
one of the addresses listed on page 8 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 registration
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 59 1/2) or premature (before age 59 1/2) 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 the
close of the regular trading session. 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, 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
10
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) 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 customer, 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 your 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 and will not be issued for
accounts that do not meet the minimum investment requirements. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTIONS
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.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily suspend telephone
transactions or other shareholder services.
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 confirmation statements unless monthly statements are
requested. 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 include 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 accounts with the same
record address. Upon request, such 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
11
<PAGE>
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, 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.
INVESTMENT PERSONNEL
James P. Goff is Executive Vice President and a co-manager of the Fund. Mr. Goff
joined Janus Capital in 1988. He has managed Janus Enterprise Fund since its
inception in September 1992 and has co-managed Janus Venture Fund since December
1993. He holds a Bachelor of Arts in Economics from Yale University and is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Warren B. Lammert is Executive Vice President and a co-manager of the Fund. Mr.
Lammert joined Janus Capital in 1987. He has managed Janus Mercury Fund since
its inception in May 1993 and Janus Balanced Fund from its inception in
September 1992 to December 1993, and has co-managed Janus Venture Fund since
December 1993. He holds a Bachelor of Arts in Economics from Yale University and
a Master of Science in Economic History from the London School of Economics 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 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 Annual Rate
Assets of Fund 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 for the fiscal year ended October 31,
1995 was 0.68% of the value of the Fund's average daily net assets. The Fund
incurs expenses not assumed by Janus Capital, including transfer agent and
custodian fees and expenses, legal and auditing fees, printing and mailing costs
of sending reports and other information to existing shareholders, and
independent Trustees' fees and expenses. Janus Capital will reduce its advisory
fee to the extent that Fund expenses exceed the statutory limits imposed by
state securities regulators.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
12
<PAGE>
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 64105
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.
As of the date of this Prospectus, the Trust offers 18 separate series three of
which currently offer two classes of shares. The Fund became a series of the
Trust on August 7, 1992. It was previously known as Janus Venture Fund, Inc., a
Maryland corporation. All references in this Prospectus to the Fund prior to the
above date are to its predecessor entities and all references after such date
are to the series of the Trust.
The Trust currently offers the other 17 series by other 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 that 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 discontinued sales of its shares because its management believes
that a substantial increase in size may adversely affect the Fund's ability to
achieve its investment objective by reducing its flexibility in making
investments and in effecting portfolio changes. Although sales to new investors
have been discontinued, existing shareholders are permitted to continue to
purchase shares and to reinvest any dividends or capital gains distributions.
See the Shareholder's Manual beginning on page 7.
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 Fund's shareholders of record on April 30, 1992, and the
initial shareholder(s) of all series of the Trust created after April 30, 1992,
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 management of 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
13
<PAGE>
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 THE 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 in 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 in additional
shares.
4. Redirect Option. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Fund reserves the right to reinvest undeliverable and uncashed dividend and
distribution checks that remain outstanding for six months in shares of the Fund
at the NAV next computed after the check is cancelled. Subsequent distributions
may also be reinvested.
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 meet these requirements so that any earnings on your
investment will not be taxed twice.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
14
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
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
stocks 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 managers 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 a 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 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.
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
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
15
<PAGE>
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 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.
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
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 instrument and may be more
volatile than the underlying instrument. The Fund bears the market risk of an
investment in the underlying instrument, 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.
JANUS VENTURE FUND PROSPECTUS FEBRUARY 18, 1996
16
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
FEE TABLE ................................................................. 1
FINANCIAL HIGHLIGHTS ...................................................... 2
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES ............................ 3
INVESTMENT ADVISER AND ADMINISTRATOR ...................................... 6
DISTRIBUTIONS AND TAXES ................................................... 7
PERFORMANCE ............................................................... 8
MISCELLANEOUS INFORMATION ................................................. 8
SHAREHOLDER'S MANUAL
Types of Account Ownership ................................................ 9
How to Open an Account .................................................... 10
Minimum Investment Policies ............................................... 10
How to Purchase Shares .................................................... 10
How to Exchange Shares .................................................... 11
How to Redeem Shares ...................................................... 11
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
Check Writing Privilege ................................................... 13
JETS(R) ................................................................... 13
Transactions Through Processing Organizations ............................. 13
Taxpayer Identification Number ............................................ 13
Share Certificates ........................................................ 13
Involuntary Redemptions ................................................... 13
Telephone Transactions .................................................... 13
Making Changes to Your Account ............................................ 13
Statements and Reports .................................................... 13
[LOGO]
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
INVESTOR SHARES
100 Fillmore Street
Denver, CO 80206-4923
1-800-525-3713
February 18, 1996
Janus Money Market Fund, Janus Government Money Market Fund and Janus Tax-Exempt
Money Market Fund (individually a "Fund" and collectively the "Funds") are
designed for investors who seek maximum current income consistent with stability
of capital. This prospectus offers a separate class of shares of each Fund
(collectively, the "Shares") to the general public. Each Fund is a separate
series of Janus Investment Fund (the "Trust"), an open-end management investment
company. Each Fund invests exclusively in high quality money market instruments.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.
The Funds are no-load funds. They sell and redeem the Shares at net asset value
without any sales charges, commissions or redemption fees. There are no Rule
12b-1 plans or deferred sales charges. There is a low minimum initial investment
if shareholders choose the automatic monthly investing option described at page
10. The minimum initial investment is $2,500 ($500 for IRAs, most other
retirement plans and Uniform Gifts/Transfers to Minors accounts) and the minimum
subsequent investment is $100. An exchange program among other Janus funds is
also available. For complete details on how to purchase, redeem and exchange
Shares, please see the Shareholder's Manual beginning at page 9.
This prospectus contains information about the Shares that prospective investors
should consider before investing and should be read carefully and retained for
future reference. Additional information about the Shares is contained in the
Statement of Additional Information ("SAI") dated February 18, 1996, which is
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. The SAI is available upon request and without
charge by writing or calling the Funds at the address or telephone number shown
above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON 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.
<PAGE>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES (Applicable to each Fund)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees* None
Exchange Fee None
* An $8 service fee may be charged for redemptions by wire.
ANNUAL OPERATING EXPENSES*
(Expressed as a percentage of average net assets)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Management Fee Other Expenses Total Operating Expenses
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund-Investor Shares 0.10% 0.50% 0.60%
Janus Government Money Market Fund-Investor Shares 0.10% 0.50% 0.60%
Janus Tax-Exempt Money Market Fund-Investor Shares 0.10% 0.50% 0.60%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE*
You would indirectly pay the following expenses on a $1,000 investment, assuming
expense ratios remain as listed above and assuming a 5% annual return, with or
without redemption at the end of each period:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund-Investor Shares $6 $19 $33 $75
Janus Government Money Market Fund-Investor Shares $6 $19 $33 $75
Janus Tax-Exempt Money Market Fund-Investor Shares $6 $19 $33 $75
- ------------------------------------------------------------------------------------------
</TABLE>
*The information in the table and example above is based on expenses for the
fiscal period ended October 31, 1995, net of fee waivers from the investment
adviser. Without such waivers, the Management Fee, Other Expenses and Total
Operating Expenses would have been 0.20%, 0.50% and 0.70%, respectively. See
"Investment Adviser and Administrator" for a more detailed discussion of the
fees.
THE EXPENSES IN THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED AMOUNT.
The purpose of the preceding table and example is to assist the investor in
understanding the various costs and expenses that an investor in each Fund will
bear directly or indirectly. These expenses are described in greater detail
under "Investment Adviser and Administrator."
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
1
<PAGE>
FINANCIAL HIGHLIGHTS
The information below is for the period from February 15, 1995 (inception) to
October 31, 1995. The accounting firm of Price Waterhouse LLP has audited the
Funds' financial statements and their report is included in the Funds' Annual
Report, which is incorporated by reference into the SAI. Expense and income
ratios have been annualized while total returns have not been annualized.
<TABLE>
<CAPTION>
Janus Janus Janus
Money Market Government Money Market Tax-Exempt Money Market
Investor Shares Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
2. Net investment income .04 .04 .02
3. Net gains or (losses) on securities
(both realized and unrealized) -- -- --
4. Total from investment operations .04 .04 .02
Less distributions:
5. Dividends (from net investment income) (.04) (.04) (.02)
6. Distributions (from capital gains) -- -- --
7. Total distributions (.04) (.04) (.02)
8. Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
9. Total return 3.95% 3.90% 2.40%
10. Net assets, end of period (in thousands) $ 643,219 $ 119,307 $ 67,479
11. Ratio of expenses to average net assets 0.60%(1) 0.60%(1) 0.60%(1)
12. Ratio of net investment income
to average net assets 5.56% 5.40% 3.38%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)The ratio of expenses to average net assets was 0.70% before voluntary
reduction of fees.
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights table. The table contains important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Funds' Annual
Report contains additional information about each Fund's performance. For a copy
of the Annual Report, call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of a Fund. It is computed
by adding the value of all of a Fund's investments and other assets, subtracting
any liabilities and dividing the result by the number of shares outstanding.
The Shares' NAV is expected to be $1.00.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that a Fund paid from net investment
income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities a Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that a Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. For the purposes of calculating total
return, it is assumed that dividends and distributions are reinvested at the NAV
on the day of the distribution. A FUND'S TOTAL RETURN CANNOT BE COMPUTED
DIRECTLY FROM THE FINANCIAL HIGHLIGHTS TABLES.
Ratio of expenses to average net assets is the total of a Fund's operating
expenses divided by its average net assets for the stated period.
Ratio of net investment income to average net assets is a Fund's net investment
income divided by its average net assets for the stated period.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
2
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES
Unless otherwise stated, the investment objectives and policies set forth in
this Prospectus are not fundamental and may be changed by the Trustees of the
Trust (the "Trustees") without shareholder approval. Shareholders will be
notified of material changes in investment objectives or policies. If there is a
change in the investment objective or policies of any Fund, shareholders should
consider whether that Fund remains an appropriate investment in light of their
then current financial position and needs. The Funds are subject to additional
investment policies and restrictions described in the SAI, some of which are
fundamental and may not be changed without shareholder approval.
INVESTMENT OBJECTIVES
The investment objective of each of Janus Money Market Fund and Janus Government
Money Market Fund is to seek maximum current income to the extent consistent
with stability of capital. The investment objective of Janus Tax-Exempt Money
Market Fund is to seek maximum current income that is exempt from federal income
taxes to the extent consistent with stability of capital. There can be no
assurance that a Fund will achieve its investment objective or that the Shares
will be able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Funds will invest only in eligible high quality, short-term money market
instruments that present minimal credit risks, as determined by Janus Capital
Corporation, the Funds' investment adviser ("Janus Capital"), pursuant to
procedures adopted by the Trustees. Each Fund may invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act") and will maintain a dollar-weighted average portfolio maturity
of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Fund will not invest more than 5%
of its total assets in the securities of any one issuer. A guarantor is not
considered an issuer for the purpose of this limit provided that the value of
all securities held by a Fund that are issued or guaranteed by that institution
does not exceed 10% of the Fund's total assets. In the case of Janus Tax-Exempt
Money Market Fund, up to 25% of its assets may be invested without regard to the
foregoing limitations. To ensure adequate liquidity, no Fund may invest more
than 10% of its net assets in illiquid investments, including repurchase
agreements maturing in more than seven days and certain time deposits that are
subject to early withdrawal penalties and mature in more than seven days.
Because the Funds are typically used as a cash management vehicle, they intend
to maintain a high degree of liquidity. Janus Capital determines and monitors
the liquidity of portfolio securities under the supervision of the Trustees.
RATINGS.
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Fund,
except Janus Tax-Exempt Money Market Fund, will invest at least 95% of its total
assets in securities in the highest rating category (as determined pursuant to
Rule 2a-7). Descriptions of the rating categories of Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., and certain other NRSROs are
contained in the SAI as is a further description of the Funds' investment
policies.
Although each Fund only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in a Fund's
portfolio are paid in full at maturity. All money market instruments, including
U.S. Government Securities, can change in value as a result of changes in
interest rates, the issuer's actual or perceived creditworthiness or the
issuer's ability to meet its obligations.
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund pursues its objective by investing primarily in high
quality commercial paper and obligations of financial institutions. The Fund may
also invest in U.S. Government Securities (as defined below) and municipal
securities, although the Fund expects to invest in such securities to a lesser
degree.
DEBT SECURITIES.
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates', current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by the guarantee of a
third party or solely by the unsecured promise of the issuer to make payments
when due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption therefrom. Pursuant to Section 4(2) of the 1933 Act or
Rule 144A adopted under the 1933 Act, however, some of these securities are
eligible for resale to institutional investors, and accordingly, Janus Capital
may determine that a liquid market exists for such a security pursuant to
guidelines adopted by the Trustees.
OBLIGATIONS OF FINANCIAL INSTITUTIONS.
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations) having total
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
3
<PAGE>
assets in excess of one billion dollars and U.S. branches of foreign banks
having total assets in excess of ten billion dollars. The Fund may also invest
in Eurodollar and Yankee bank obligations as discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Fixed time deposits, which
are payable at a stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Fund but may be subject to early
withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
EURODOLLAR OR YANKEE OBLIGATIONS.
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. GOVERNMENT SECURITIES.
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
MUNICIPAL SECURITIES.
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. GOVERNMENT SECURITIES.
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of the value of its net assets in securities whose interest is federally
taxable. Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (See "Taxable Investments").
MUNICIPAL SECURITIES.
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial and
commercial facilities. The Fund may also invest in high quality participation
interests in municipal securities. A more detailed description of various types
of municipal securities is contained in Appendix B in the SAI.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
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a security is backed only by the assets and revenues of the issuing entity, that
entity will be deemed to be the sole issuer of the security. Similarly, in the
case of an industrial development bond backed only by the assets and revenues of
the non-governmental issuer, the non-governmental issuer will be deemed to be
the sole issuer of the bond.
At times, the Fund may invest more than 25% of the value of its total assets in
tax-exempt securities that are related in such a way that an economic, business,
or political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists, that as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
MUNICIPAL LEASES.
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
TAXABLE INVESTMENTS.
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
PARTICIPATION INTERESTS.
The Funds may invest in participation interests in any type of security in which
the Funds may invest. A participation interest gives a Fund an undivided
interest in the underlying securities in the proportion that the Fund's
participation interest bears to the total principal amount of the underlying
securities. Participation interests usually carry a demand feature, as described
below, backed by a letter of credit or guarantee of the institution that issued
the interests permitting the holder to tender them back to the institution.
DEMAND FEATURES.
The Funds may invest in securities that are subject to puts and stand-by
commitments ("demand features"). Demand features give the Fund the right to
resell securities at specified periods prior to their maturity dates to the
seller or to some third party at an agreed-upon price or yield. Securities with
demand features may involve certain expenses and risks, including the inability
of the issuer of the instrument to pay for the securities at the time the
instrument is exercised, non-marketability of the instrument and differences
between the maturity of the underlying security and the maturity of the
instrument. Securities may cost more with demand features than without them.
Demand features can serve three purposes: to shorten the maturity of a variable
or floating rate security, to enhance the instrument's credit quality and to
provide a source of liquidity. Demand features are often issued by third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Funds' investments may be dependent in part
on the credit quality of the banks supporting the Funds' investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. Brokerage firms and insurance companies also provide
certain liquidity and credit support.
VARIABLE AND FLOATING RATE SECURITIES.
The securities in which the Funds invest may have variable or floating rates of
interest. 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. Securities with ultimate maturities of greater
than 397 days may be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which comply with certain
requirements and certain variable rate U.S. Government Securities may be
purchased. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's or guarantor's creditworthiness. The rate of
interest on securities purchased
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
5
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by a Fund may be tied to short-term Treasury or other government securities or
indices on securities that are permissible investments of the Funds, as well as
other money market rates of interest. The Funds will not purchase securities
whose values are tied to interest rates or indexes that are not appropriate for
the duration and volatility standards of a money market fund.
MORTGAGE- AND ASSET-BACKED SECURITIES.
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
REPURCHASE AGREEMENTS.
Each Fund may seek additional income by entering into collateralized repurchase
agreements. Repurchase agreements are transactions in which a Fund purchases
securities and simultaneously commits to resell those securities to the seller
at an agreed-upon price on an agreed-upon future date. The resale price reflects
a market rate of interest that is not related to the coupon rate or maturity of
the purchased securities. If the seller of the securities underlying a
repurchase agreement fails to pay the agreed resale price on the agreed delivery
date, a Fund may incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so.
REVERSE REPURCHASE AGREEMENTS.
Each Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which a Fund sells a security and simultaneously
commits to repurchase that security from the buyer at an agreed upon price on an
agreed upon future date. This technique will be used only for temporary or
emergency purposes, such as meeting redemption requests or to earn additional
income on portfolio securities.
DELAYED DELIVERY SECURITIES.
Each Fund may purchase securities on a when-issued or delayed delivery basis.
Securities so purchased are subject to market price fluctuation from the time of
purchase but no interest on the securities accrues to a Fund until delivery and
payment for the securities take place. Accordingly, the value of the securities
on the delivery date may be more or less than the purchase price. Forward
commitments will be entered into only when a Fund has the intention of taking
possession of the securities, but a Fund may sell the securities before the
settlement date if deemed advisable.
BORROWING AND LENDING.
Each Fund may borrow money for temporary or emergency purposes in amounts up to
25% of its total assets. A Fund may not mortgage or pledge securities except to
secure permitted borrowings. As a fundamental policy, a Fund will not lend
securities or other assets if, as a result, more than 25% of its total assets
would be lent to other parties; however, the Funds do not currently intend to
engage in securities lending. Each Fund intends to seek permission from the SEC
to borrow money from or lend money to other funds that permit such transactions
and are advised by Janus Capital. There is no assurance that such permission
will be granted.
INVESTMENT ADVISER AND ADMINISTRATOR
INVESTMENT ADVISER
Each Fund has a separate Investment Advisory Agreement with Janus Capital
Corporation, 100 Fillmore Street, Denver, Colorado 80206-4923. Janus Capital has
served as investment adviser to Janus Fund 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., a publicly traded holding
company whose primary subsidiaries are engaged in transportation, information
processing and financial services ("KCSI"), owns approximately 83% of the
outstanding voting stock of Janus Capital. Thomas H. Bailey, the 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.
Pursuant to the Investment Advisory Agreements, Janus Capital furnishes
continuous advice and recommendations concerning each Fund's investments. Each
of the Funds has agreed to compensate Janus Capital for its advisory services by
the monthly payment of a fee at the annual rate of 0.20% of the value of the
average daily net assets of each Fund. Until at least the period ending June 16,
1996, however, Janus Capital has agreed to waive a portion of its fee and
accordingly, the advisory fee of each Fund will be calculated at the annual rate
of 0.10% of the value of each Fund's average daily net assets.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
6
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ADMINISTRATOR
Each of the Funds has also entered into an Administration Agreement with Janus
Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Funds, pays the costs of printing
reports and prospectuses for existing shareholders, provides office space for
the Funds and pays the salaries, fees and expenses of all Fund officers and of
those Trustees who are affiliated with Janus Capital. Administrative services
provided by Janus Capital under the Agreements include custody and transfer
agency services. Janus Capital is paid a fee, calculated daily and paid monthly,
at the annual rate of 0.50% of the value of the average daily net assets of each
Fund attributable to Shares for services rendered pursuant to the Administration
Agreements.
Each Fund pays all of its expenses not assumed by Janus Capital, including
auditing fees and independent Trustees' fees and expenses.
PORTFOLIO TRANSACTIONS
Purchase and sales of securities on behalf of each Fund are executed by brokers
and dealers selected by Janus Capital. Broker-dealers are selected on the basis
of their ability to obtain best price and execution for the Funds' 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 a 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. The Funds' Trustees have also authorized the Funds to place
portfolio transactions on an agency basis with a broker-dealer that is
affiliated with Janus Capital. Agency trades, if any, that are placed with such
affiliated party serve to reduce certain expenses of the Funds. The SAI further
explains the selection of broker-dealers.
PERSONAL INVESTING
Janus Capital permits investment 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 Funds and Janus Capital's other advisory
clients. See the SAI for more detailed information.
DISTRIBUTIONS AND TAXES
Dividends representing substantially all of the net investment income and any
net realized gains on sales of securities are declared daily, Saturdays, Sundays
and holidays included, and distributed on the last business day of each month.
If a month begins on a Saturday, Sunday or holiday, dividends for those days are
declared at the end of the preceding month and on the first business day of a
month. Distributions will be reinvested in Shares of a Fund or paid in cash at
the election of the shareholder. If no election is made, all distributions will
be reinvested in additional Shares of a Fund.
Shares purchased by wire on a day on which the Funds calculate their net asset
value will receive that day's dividend if the purchase is effected prior to 3:00
p.m. (New York time) for the Janus Money Market and Janus Government Money
Market Funds and 12:00 p.m. (New York time) for Janus Tax-Exempt Money Market
Fund. Otherwise, such Shares begin to accrue dividends on the following business
day. Orders for purchase accompanied by a check or other negotiable bank draft
will be accepted and effected as of 4:00 p.m. (New York time) on the day of
receipt and such Shares will begin to accrue dividends on the first business day
following receipt of the order.
Redemption orders effected on any particular day will generally receive
dividends declared through the day of redemption. However, redemptions made by
wire which are received prior to 3:00 p.m. (New York time) for the Janus Money
Market and Janus Government Money Market Funds and 12:00 p.m. (New York time)
for Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that
day. Proceeds of such a redemption will normally be sent to the predesignated
account on that day, and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. (12:00 p.m. for
Janus Tax-Exempt Money Market Fund) will be processed on that day and receive
that day's dividend, but will not be wired until the following business day.
The Funds reserve the right to require purchase and redemption requests and
payments prior to these times on days when the bond market closes before 4:00
p.m.
The Funds reserve the right to reinvest undeliverable and uncashed dividend and
distribution checks that remain outstanding for six months in shares of the
applicable Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market Fund)
are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full information regarding the tax
status of income dividends and any capital gains distributions will be mailed to
shareholders for tax purposes on or before January 31st of each year. Because
the Funds are money market funds, they do not anticipate making any capital
gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially all income
dividends it pays will be exempt from federal income tax. However, dividends
attributable to interest on taxable investments, together with distributions
from any net realized capital gains, are taxable. In addition, interest on
certain private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent that the Fund
earns such income, shareholders who are subject to the alternative minimum tax
must include such income as a preference item. The Fund
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
7
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will advise shareholders of the percentage of dividends, if any, subject to the
alternative minimum tax.
Dividends and capital gains distributions may also be subject to state and local
taxes. In certain states some portion of dividends and distributions (depending
on the sources of the Fund's net income) of Janus Tax-Exempt Money Market Fund
may be exempt from state and local taxes. Shareholders should consult their own
tax advisor regarding exemption from any applicable state and local tax, as well
as the tax treatment of any dividends or distributions from the Shares.
The Funds intend to comply with provisions of the Internal Revenue Code
applicable to investment companies, and thus it is not expected that any of the
Funds will be required to pay any federal income or excise taxes. The SAI
further explains the Funds' tax status.
PERFORMANCE
The Shares may measure performance in several ways, including "yield,"
"effective yield," and "tax equivalent yield" (for Janus Tax-Exempt Money Market
Fund only). Yield is a way of showing the rate of income the Shares earn on
investments as a percentage of the Share price. Yield represents the income,
less expenses generated by an investment, in the Shares over a seven-day period
expressed as an annual percentage rate. Effective yield is similar in that it is
calculated over the same time frame, but instead the net investment income is
compounded and then annualized. Due to the compounding effect, the effective
yield will normally be higher than the yield.
Shares of Janus Tax-Exempt Money Market Fund may also quote tax-equivalent
yield, which shows the taxable yield an investor would have to earn before taxes
to equal such Shares' tax-free yield. A tax-equivalent yield is calculated by
dividing such Shares' tax-exempt yield by the result of one minus a stated
federal tax rate. Only that portion of the Fund's income that is tax-exempt is
adjusted in this calculation.
Performance figures are based upon historical results and are not intended to
indicate future performance.
From time to time in advertisements or sales material, the Funds may discuss the
Shares' performance ratings or other information as published by recognized
statistical or rating services, such as Lipper Analytical Services, Inc.,
IBC/Donoghue's Money Fund Report, Morningstar or by publications of general
interest, such as Forbes or Money. In addition, the Funds may compare the
Shares' yield to those of certain U.S. Treasury obligations or other money
market instruments.
MISCELLANEOUS INFORMATION
ORGANIZATION
Each Fund is an open-end management investment company registered under the 1940
Act as a series of the Trust, which was created on February 11, 1986. Each Fund
currently offers two classes of shares by separate prospectuses. The Shares
offered by this Prospectus are available to the general public, while
Institutional Shares of each Fund are available only to investors meeting the
minimum investment requirement of $250,000. Because the expenses of each class
may differ, the performance of each class is expected to differ. If you would
like additional information, please call 1-800-525-3713.
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
VOTING RIGHTS
The Trust is not required to hold annual shareholder meetings. However, special
meetings may be called for a specific class of shares, a specific 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 voting
on matters when required by the 1940 Act. Separate votes are taken by a separate
Fund (or a separate class of shares) only if a matter affects or requires the
vote of just that Fund (or those shares). Shareholders are entitled to cast one
vote for each Share they own.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri 64141-6226,
is the custodian of the Funds' assets. The custodian holds each Fund's assets in
safekeeping and collects and remits the income thereon subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, provides transfer agency
and shareholder services for the Funds.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street, Denver,
Colorado 80206-4923, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Shares.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
8
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SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also 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 our 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.
TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds 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.
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
from current income taxes. A contribution to these plans may also be tax
deductible. Distributions from a retirement plan 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 serves as custodian for the retirement plans
offered by the Funds. 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).
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 age 70 1/2
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.
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MINIMUM INVESTMENTS*
To open a new account ......................................... $2,500
To open a new retirement or UGMA/UTMA account ................. $ 500
To open a new account with
an Automatic Investment Program ............................. $ 500**
To add to any type of an account .............................. $ 100
* The Funds reserve the right to change the amount of these minimums from
time to time or to waive them in whole or in part for certain types of
accounts.
** There is a $100 minimum subsequent investment.
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JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
9
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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 the following addresses:
Regular Mail
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
MINIMUM INVESTMENT POLICIES
ACCOUNTS ESTABLISHED AFTER FEBRUARY 15, 1996
Any account opened after February 15, 1996, must meet minimum investment
requirements described at page 9.
ACCOUNTS ESTABLISHED ON OR BEFORE FEBRUARY 15, 1996
o The minimum initial investment requirement remains at $1,000 ($250 for
retirement accounts and UGMA/UTMA accounts) for these accounts only.
o There is no minimum investment requirement for Automatic Monthly Investment
Program participants that continue to make subsequent automatic investments
of at least $50.
o Subsequent investments (other than automatic monthly investments) must meet
the $100 minimum.
ALL ACCOUNTS
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 annual maintenance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
above or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. It is expected that
accounts will be valued and the $10 fee assessed on the second Friday of
September of each year. You will receive notice before we charge the $10 fee or
close your account so that you may increase your account balance to the required
minimum.
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 U.S. banks and made payable to Janus Funds.
o If a check does not clear your bank, the Funds reserve the right to cancel
the purchase.
o If the Funds are unable to debit your predesignated bank account on the day
of purchase, they may make additional attempts or cancel the purchase.
o The Funds reserve 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 Funds (or their agents) have the
authority to redeem shares in your account(s) to cover any 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 $100. 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 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
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 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.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
10
<PAGE>
o BY SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money ($100 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.
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 12.
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, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of each non-money market fund during a
calendar year (exclusive of Systematic Exchanges) free of charge. You may
be charged a transaction fee for exchanges in excess of this limit. There
is currently no limit on exchanges out of the Shares described in this
prospectus.
o Exchanges between accounts will be accepted only if the registrations are
identical.
o If the shares in non-money market funds you are exchanging are held in
certificate form, you must return the certificate to your fund prior to
making any exchanges.
o Be sure that you read the prospectus for the Fund into which you are
exchanging.
o The Funds reserve the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Funds may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are detrimental to the Funds.
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. Because the Funds seek to maintain a stable net
asset value per Share, it is not anticipated that a sale of Shares will
produce a taxable gain or loss.
QUICK ADDRESS AND TELEPHONE REFERENCE
Regular Mail
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
Express or Certified Mail
Janus Funds
100 Fillmore Street
Denver, CO 80206-4923
Janus Investor Services 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and
fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
Janus QuotelineSM 1-800-525-0024
For automated daily quotes on Fund share prices, yields and total returns.
Janus Literature Line 1-800-525-8983
To request a prospectus, shareholder reports or marketing materials.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. Your
transaction will be processed at the next NAV calculated after your order is
received and accepted.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests on page 12.
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.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
11
<PAGE>
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.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUNDS MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR.
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(s)
o the account number(s)
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
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 in 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
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 59
1/2) or premature (before age 59 1/2) 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. A 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 the
close of the regular trading session of the NYSE. The Funds reserve the right to
require purchase requests and payments prior to this time on days when the bond
market closes before the NYSE. NAV per share is calculated by dividing the total
value of a Fund's securities and other assets, less liabilities, by the total
number of shares outstanding. Portfolio securities are valued at their amortized
cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity (or such other date as
permitted by Rule 2a-7) of any discount or premium. If fluctuating interest
rates cause the market value of a Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Trustees will
consider whether any action, such as adjusting the Share's NAV to reflect
current market conditions, should be initiated to prevent any material dilutive
effect on shareholders.
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 FUNDS RESERVE 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, 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.
JANUS MONEY MARKET FUNDS - INVESTOR SHARES PROSPECTUS FEBRUARY 18, 1996
12
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
CHECK WRITING PRIVILEGE
Check writing privileges are available for all three Funds. Checkbooks will be
issued to shareholders who have completed a Signature Draft Card, which is sent
in the new account welcome package or by calling 1-800-525-3713. (There is no
checkwriting privilege for retirement accounts.) Your checkbook will be mailed
approximately 10 days after the check writing privilege is requested. Checks may
be written for any amount over but not less than $250 per check. Purchases made
by check or the Automatic Monthly Investment program may not be redeemed by a
redemption check until the 15-day hold period has passed. All checks written on
the account must be signed by all account holders unless otherwise specified on
the original application or the subsequent Signature Draft Card. The Funds
reserve the right to terminate or modify the check writing privilege at any
time.
JANUS ELECTRONIC TELEPHONE SERVICE ("JETS")(R)
JETS(R), our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) telephone to obtain information on your account balance, to
confirm your last transaction or the last dividend posted to your account, to
order duplicate account or tax statements, to reorder checks or to exchange your
Shares. JETS(R) can be accessed by calling 1-800-525-6125. Calls on JETS(R) 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
Funds. The Processing Organization may also impose other charges or restrictions
different from those applicable to shareholders who invest in the Funds
directly. The Processing Organization, rather than its customers, may be the
shareholder of record of your shares. The Funds are 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 Funds 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 Funds 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 Funds for
any penalty that the IRS may impose.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to maintain the
general liquidity that is representative of a money market fund and to help
facilitate transactions in shareholder accounts.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise detrimental to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and their 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 Funds 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 Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services.
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 your Fund(s), 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 Funds 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 on dividends. Generally, a statement with
tax information 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 Funds, which include a list of the Funds' portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such 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.
<PAGE>
CONTENTS
FEE TABLE ................................................................. 2
FINANCIAL HIGHLIGHTS ...................................................... 3
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES ............................ 4
INVESTMENT ADVISER AND ADMINISTRATOR ...................................... 7
DISTRIBUTIONS AND TAXES ................................................... 8
PERFORMANCE ............................................................... 9
MISCELLANEOUS INFORMATION ................................................. 9
SHAREHOLDER'S GUIDE
How to Open an Account .................................................... 10
Purchasing Shares ......................................................... 10
How to Exchange Shares .................................................... 11
How to Redeem Shares ...................................................... 11
Special Shareholder Services
and Other Information ................................................... 11
[LOGO]
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
Institutional Shares
100 Fillmore Street
Denver, CO 80206-4923
(800) 29JANUS
February 18, 1996
Janus Money Market Fund, Janus Government Money Market Fund, and Janus
Tax-Exempt Money Market Fund (individually, a "Fund" and, collectively, the
"Funds") are designed for investors who seek maximum current income consistent
with stability of capital. This prospectus offers a separate class of shares of
each Fund (collectively, the "Shares") exclusively to institutional and
individual clients meeting minimum investment requirements. Each Fund is a
separate series of Janus Investment Fund (the "Trust"), an open-end management
investment company.
Each Fund invests exclusively in high quality money market instruments. AN
INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
The Shares are offered only to investors meeting the minimum investment
requirements. The Shares are offered with no sales charges, commissions,
redemption fees, Rule 12b-1 fees or deferred sales charges. The minimum initial
investment is $250,000. There is no minimum amount required for subsequent
investments. However, accounts falling below the minimum will be exchanged to
the Investor Shares. For complete details on how to purchase, redeem and
exchange Shares, please see the Shareholder's Guide beginning at page 10.
This prospectus contains information about the Shares that prospective investors
should consider before investing and should be read carefully and retained for
future reference. Additional information about the Shares is contained in the
Statement of Additional Information ("SAI") dated February 18, 1996, which is
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. The SAI is available upon request and without
charge by writing or calling the Funds at the address or telephone number shown
above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON 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.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
1
<PAGE>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES (Applicable to each Fund)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
ANNUAL OPERATING EXPENSES*
(Expressed as a percentage of average net assets)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Management Fee Other Expenses Total Operating Expenses
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund - Institutional Shares 0.10% 0.05% 0.15%
Janus Government Money Market Fund - Institutional Shares 0.10% 0.05% 0.15%
Janus Tax-Exempt Money Market Fund - Institutional Shares 0.10% 0.05% 0.15%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE*
You would indirectly pay the following expenses on a $1,000 investment, assuming
expense ratios remain as listed above and assuming a 5% annual return, with or
without redemption at the end of each period:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund - Institutional Shares $2 $5 $8 $19
Janus Government Money Market Fund - Institutional Shares $2 $5 $8 $19
Janus Tax-Exempt Money Market Fund - Institutional Shares $2 $5 $8 $19
- -----------------------------------------------------------------------------------------------
</TABLE>
*The information in the table and example above is based on expenses for the
fiscal period ended October 31, 1995, net of fee waivers from the investment
adviser. Without such waivers, the Management Fee, Other Expenses and Total
Operating Expenses would have been 0.20%, 0.15% and 0.35%, respectively. See
"Investment Adviser and Administrator" for a more detailed discussion of the
fees.
THE EXPENSES IN THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED AMOUNT.
The purpose of the preceding table and example is to assist the investor in
understanding the various costs and expenses that an investor in each Fund will
bear directly or indirectly. These expenses are described in greater detail
under "Investment Adviser and Administrator."
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
2
<PAGE>
FINANCIAL HIGHLIGHTS
The information below is for the period from April 14, 1995 (inception) to
October 31, 1995. The accounting firm of Price Waterhouse LLP has audited the
Funds' financial statements and their report is included in the Funds' Annual
Report, which is incorporated by reference into the SAI. Expense and income
ratios have been annualized while total returns have not been annualized.
<TABLE>
<CAPTION>
Janus Janus Janus
Money Market Government Money Market Tax-Exempt Money Market
Institutional Shares Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
2. Net investment income .03 .03 .02
3. Net gains or (losses) on securities
(both realized and unrealized) -- -- --
4. Total from investment operations .03 .03 .02
Less distributions:
5. Dividends (from net investment income) (.03) (.03) (.02)
6. Distributions (from capital gains) -- -- --
7. Total distributions (.03) (.03) (.02)
8. Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
9. Total return 3.25% 3.20% 2.09%
10. Net assets, end of period (in thousands) $ 304,952 $ 44,164 $ 11,192
11. Ratio of expenses to average net assets 0.15% 0.15% 0.15%
12. Ratio of net investment income
to average net assets 5.86% 5.75% 3.82%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
3
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES
Unless otherwise stated, the investment objectives and policies set forth in
this Prospectus are not fundamental and may be changed by the Trustees of the
Trust (the "Trustees") without shareholder approval. Shareholders will be
notified of material changes in investment objectives or policies. If there is a
change in the investment objective or policies of any Fund, shareholders should
consider whether that Fund remains an appropriate investment in light of their
then current financial position and needs. The Funds are subject to additional
investment policies and restrictions described in the SAI, some of which are
fundamental and may not be changed without shareholder approval.
INVESTMENT OBJECTIVES
The investment objective of Janus Money Market Fund and Janus Government Money
Market Fund is to seek maximum current income to the extent consistent with
stability of capital. The investment objective of Janus Tax-Exempt Money Market
Fund is to seek maximum current income that is exempt from federal income taxes
to the extent consistent with stability of capital. There can be no assurance
that a Fund will achieve its investment objective or that the Shares will be
able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Funds will invest only in eligible high quality, short-term money market
instruments that present minimal credit risks, as determined by Janus Capital
Corporation, the Funds' investment adviser ("Janus Capital"), pursuant to
procedures adopted by the Trustees. Each Fund may invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act")) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Fund will not invest more than 5%
of its total assets in the securities of any one issuer. A guarantor is not
considered an issuer for the purpose of this limit, provided that the value of
all securities held by a Fund that are issued or guaranteed by that institution
does not exceed 10% of the Fund's total assets. In the case of Janus Tax-Exempt
Money Market Fund, up to 25% of its assets may be invested without regard to the
foregoing limitations. To ensure adequate liquidity, no Fund may invest more
than 10% of its net assets in illiquid investments, including repurchase
agreements maturing in more than seven days and certain time deposits that are
subject to early withdrawal penalties and mature in more than seven days.
Because the Funds are typically used as a cash management vehicle, they intend
to maintain a high degree of liquidity. Janus Capital determines and monitors
the liquidity of portfolio securities under the supervision of the Trustees.
RATINGS.
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Fund,
except Janus Tax-Exempt Money Market Fund, will invest at least 95% of its total
assets in securities in the highest rating category (as determined pursuant to
Rule 2a-7). Descriptions of the rating categories of Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., and certain other NRSROs are
contained in the SAI, as is a further description of the Funds' investment
policies.
Although each Fund only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in its portfolio
are paid in full at maturity. All money market instruments, including U.S.
Government Securities, can change in value as a result of changes in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations.
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund pursues its objective by investing primarily in high
quality commercial paper and obligations of financial institutions. The Fund may
also invest in U.S. Government Securities (as defined below) and municipal
securities, although the Fund expects to invest in such securities to a lesser
degree.
DEBT SECURITIES.
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates', current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by the guarantee of a
third party or solely by the unsecured promise of the issuer to make payments
when due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption therefrom. Pursuant to Section 4(2) of the 1933 Act or
Rule 144A adopted under the 1933 Act, however, some of these securities are
eligible for resale to institutional investors, and accordingly, Janus Capital
may determine that a liquid market exists for such a security pursuant to
guidelines adopted by the Trustees.
OBLIGATIONS OF FINANCIAL INSTITUTIONS.
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations) having total assets in excess of one billion dollars and
U.S. branches of foreign banks having total assets in excess of ten billion
dollars. The Fund may also invest in Eurodollar and Yankee bank obligations as
discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
4
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a given period. Bankers' acceptances are negotiable obligations of a bank to pay
a draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period. Fixed time
deposits, which are payable at a stated maturity date and bear a fixed rate of
interest, generally may be withdrawn on demand by the Fund but may be subject to
early withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
EURODOLLAR OR YANKEE OBLIGATIONS.
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. GOVERNMENT SECURITIES.
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
MUNICIPAL SECURITIES.
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. GOVERNMENT SECURITIES.
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of the value of its net assets in securities whose interest is federally
taxable. Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (see "Taxable Investments").
MUNICIPAL SECURITIES.
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial and
commercial facilities. The Fund may also invest in high quality participation
interests in municipal securities. A more detailed description of various types
of municipal securities is contained in Appendix B in the SAI.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and a security is backed only by the assets and revenues of the
issuing entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development bond backed only
by the assets and revenues of the non-governmental
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
5
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issuer, the non-governmental issuer will be deemed to be the sole issuer of the
bond.
At times, the Fund may invest more than 25% of the value of its total assets in
tax-exempt securities that are related in such a way that an economic, business,
or political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists that, as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
MUNICIPAL LEASES.
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
TAXABLE INVESTMENTS.
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
PARTICIPATION INTERESTS.
The Funds may invest in participation interests in any type of security in which
the Funds may invest. A participation interest gives a Fund an undivided
interest in the underlying securities in the proportion that the Fund's
participation interest bears to the total principal amount of the underlying
securities. Participation interests usually carry a demand feature, as described
below, backed by a letter of credit or guarantee of the institution that issued
the interests permitting the holder to tender them back to the institution.
DEMAND FEATURES.
The Funds may invest in securities that are subject to puts and stand-by
commitments ("demand features"). Demand features give the Fund the right to
resell securities at specified periods prior to their maturity dates to the
seller or to some third party at an agreed-upon price or yield. Securities with
demand features may involve certain expenses and risks, including the inability
of the issuer of the instrument to pay for the securities at the time the
instrument is exercised, non-marketability of the instrument and differences
between the maturity of the underlying security and the maturity of the
instrument. Securities may cost more with demand features than without them.
Demand features can serve three purposes: to shorten the maturity of a variable
or floating rate security, to enhance the instrument's credit quality and to
provide a source of liquidity. Demand features are often issued by third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Funds' investments may be dependent in part
on the credit quality of the banks supporting the Funds' investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. Brokerage firms and insurance companies also provide
certain liquidity and credit support.
VARIABLE AND FLOATING RATE SECURITIES.
The securities in which the Funds invest may have variable or floating rates of
interest. 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. Securities with ultimate maturities of greater
than 397 days may be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which comply with certain
requirements and certain variable rate U.S. Government Securities may be
purchased. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's or guarantor's creditworthiness. The rate of
interest on securities purchased by a Fund may be tied to short-term Treasury or
other government securities or indices on securities that are permissible
investments of the Funds, as well as other money market rates of interest. The
Funds will not purchase securities whose values are tied to interest rates or
indices that are not appropriate for
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
6
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the duration and volatility standards of a money market fund.
MORTGAGE- AND ASSET-BACKED SECURITIES.
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
REPURCHASE AGREEMENTS.
Each Fund may seek additional income by entering into collateralized repurchase
agreements. Repurchase agreements are transactions in which a Fund purchases
securities and simultaneously commits to resell those securities to the seller
at an agreed-upon price on an agreed-upon future date. The resale price reflects
a market rate of interest that is not related to the coupon rate or maturity of
the purchased securities. If the seller of the securities underlying a
repurchase agreement fails to pay the agreed resale price on the agreed delivery
date, a Fund may incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so.
REVERSE REPURCHASE AGREEMENTS.
Each Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which a Fund sells a security and simultaneously
commits to repurchase that security from the buyer at an agreed upon price on an
agreed upon future date. This technique will be used only for temporary or
emergency purposes, such as meeting redemption requests, or to earn additional
income on portfolio securities.
DELAYED DELIVERY SECURITIES.
Each Fund may purchase securities on a when-issued or delayed delivery basis.
Securities so purchased are subject to market price fluctuation from the time of
purchase but no interest on the securities accrues to a Fund until delivery and
payment for the securities take place. Accordingly, the value of the securities
on the delivery date may be more or less than the purchase price. Forward
commitments will be entered into only when a Fund has the intention of taking
possession of the securities, but a Fund may sell the securities before the
settlement date if deemed advisable.
BORROWING AND LENDING.
Each Fund may borrow money for temporary or emergency purposes in amounts up to
25% of its total assets. A Fund may not mortgage or pledge securities except to
secure permitted borrowings. As a fundamental policy, a Fund will not lend
securities or other assets if, as a result, more than 25% of its total assets
would be lent to other parties; however, the Funds do not currently intend to
engage in securities lending. Each Fund intends to seek permission from the SEC
to borrow money from or lend money to other funds that permit such transactions
and are advised by Janus Capital. There is no assurance that such permission
will be granted.
INVESTMENT ADVISER AND ADMINISTRATOR
INVESTMENT ADVISER
Each Fund has a separate Investment Advisory Agreement with Janus Capital, 100
Fillmore Street, Denver, Colorado 80206-4923. Janus Capital has served as
investment adviser to Janus Fund 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., a publicly traded holding company whose
primary subsidiaries are engaged in transportation, information processing and
financial services ("KCSI"), owns approximately 83% of the outstanding voting
stock of Janus Capital. Thomas H. Bailey, the 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.
Pursuant to the Investment Advisory Agreements, Janus Capital furnishes
continuous advice and recommendations concerning each Fund's investments. Each
of the Funds has agreed to compensate Janus Capital for its advisory services by
the monthly payment of a fee at the annual rate of 0.20% of the value of the
average daily net assets of each Fund. Until at least the period ending June 16,
1996, however, Janus Capital has agreed to waive a portion of its fee and
accordingly, the advisory fee of each Fund will be calculated at the annual rate
of 0.10% of the value of each Fund's average daily net assets.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
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ADMINISTRATOR
Each of the Funds has also entered into an Administration Agreement with Janus
Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Funds, pays the costs of printing
reports and prospectuses for existing shareholders, provides office space for
the Funds and pays the salaries, fees and expenses of all Fund officers and of
those Trustees who are affiliated with Janus Capital. Administrative services
provided by Janus Capital under the Administration Agreements include custody
and transfer agency services. Janus Capital is paid a fee, calculated daily and
paid monthly, at the annual rate of 0.15% of the value of the average daily net
assets of each Fund attributable to Shares for services rendered pursuant to the
Administration Agreements. At least for the period ending June 16, 1996,
however, Janus Capital has agreed to waive a portion of its fee and accordingly,
the administration fee paid by the Shares will be calculated at the annual rate
of 0.05% of the value of each Fund's average daily net assets attributable to
the Shares.
Each Fund pays all of its expenses not assumed by Janus Capital, including
auditing fees and independent Trustees' fees and expenses.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by brokers
and dealers selected by Janus Capital. Broker-dealers are selected on the basis
of their ability to obtain best price and execution for the Funds' 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 a 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. The Funds' Trustees have also authorized the Funds to place
portfolio transactions on an agency basis with a broker-dealer that is
affiliated with Janus Capital. Agency trades, if any, that are placed with such
affiliated party serve to reduce certain expenses of the Funds. The SAI further
explains the selection of broker-dealers.
PERSONAL INVESTING
Janus Capital permits investment 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 Funds and Janus Capital's other advisory
clients. See the SAI for more detailed information.
DISTRIBUTIONS AND TAXES
Dividends representing substantially all of the net investment income and any
net realized gains on sales of securities are declared daily, Saturdays, Sundays
and holidays included, and distributed on the last business day of each month.
If a month begins on a Saturday, Sunday or holiday, dividends for those days are
declared at the end of the preceding month and on the first business day of a
month. Distributions will be reinvested in Shares of a Fund or wired to a
predesignated bank account at the election of the shareholder. If no election is
made, all distributions will be reinvested in additional Shares of a Fund.
Shares purchased by wire on a day on which the Funds calculate their net asset
value will receive that day's dividend if the purchase is effected prior to 3:00
p.m. (New York time) for the Janus Money Market and Janus Government Money
Market Funds and 12:00 p.m. (New York time) for the Janus Tax-Exempt Money
Market Fund. Otherwise, such Shares begin to accrue dividends on the first
business day following receipt of the order.
Redemption orders effected on any particular day will generally receive
dividends declared through the day of redemption. However, redemptions made by
wire which are received prior to 3:00 p.m. (New York time) for the Janus Money
Market and Janus Government Money Market Funds and 12:00 p.m. (New York time)
for Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that
day. Proceeds of such a redemption will normally be sent to the predesignated
account on that day and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. (12:00 p.m. for
Janus Tax-Exempt Money Market Fund) will be processed on that day and receive
that day's dividend, but will not be wired until the following business day.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market Fund)
are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full information regarding the tax
status of income dividends and any capital gains distributions will be mailed to
shareholders for tax purposes on or before January 31st of each year. Because
the Funds are money market funds, they do not anticipate making any capital
gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially all income
dividends it pays will be exempt from federal income tax. However, dividends
attributable to interest on taxable investments, together with distributions
from any net realized capital gains, are taxable. In addition, interest on
certain private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent that the Fund
earns such income, shareholders who are subject to the alternative minimum tax
must include such income as a preference item. The Fund will advise shareholders
of the percentage of dividends, if any, subject to the alternative minimum tax.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
8
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Dividends and capital gains distributions may also be subject to state and local
taxes. In certain states some portion of dividends and distributions (depending
on the sources of the Fund's net income) of Janus Tax-Exempt Money Market Fund
may be exempt from state and local taxes. Shareholders should consult their own
tax advisor regarding exemption from any applicable state and local tax, as well
as the tax treatment of any dividends or distributions from the Shares.
The Funds intend to comply with provisions of the Internal Revenue Code
applicable to investment companies, and thus it is not expected that any of the
Funds will be required to pay any federal income or excise taxes. The SAI
further explains the Funds' tax status.
PERFORMANCE
The Shares may measure performance in several ways, including "yield,"
"effective yield," and "tax equivalent yield" (for Janus Tax-Exempt Money Market
Fund only). Yield is a way of showing the rate of income the Shares earn on
investments as a percentage of the Share price. Yield represents the income,
less expenses generated by an investment, in the Shares over a seven-day period
expressed as an annual percentage rate. Effective yield is similar in that it is
calculated over the same time frame, but instead the net investment income is
compounded and then annualized. Due to the compounding effect, the effective
yield will normally be higher than the yield.
Shares of Janus Tax-Exempt Money Market Fund may also quote tax-equivalent
yield, which shows the taxable yield an investor would have to earn before taxes
to equal such Shares' tax-free yield. A tax-equivalent yield is calculated by
dividing such Shares' tax-exempt yield by the result of one minus a stated
federal tax rate. Only that portion of the Fund's income that is tax-exempt is
adjusted in this calculation.
Performance figures are based upon historical results and are not intended to
indicate future performance.
From time to time in advertisements or sales material, the Funds may discuss the
Shares' performance ratings or other information as published by recognized
statistical or rating services, such as Lipper Analytical Services, Inc.,
IBC/Donoghue's Money Fund Report, Morningstar or by publications of general
interest, such as Forbes or Money. In addition, the Funds may compare the
Shares' yield to those of certain U.S. Treasury obligations or other money
market instruments.
MISCELLANEOUS INFORMATION
ORGANIZATION
Each Fund is an open-end management investment company registered under the 1940
Act as a series of the Trust, which was created on February 11, 1986. Each Fund
currently offers two classes of shares by separate prospectuses. The Shares
offered by this Prospectus are available only to institutional clients,
including corporations, foundations and trusts, and individuals meeting certain
initial investment requirements, while Investor Shares of each Fund are
available to the general public. Because the expenses of each class may differ,
the performance of each class is expected to differ. If you would like
additional information, please call Janus Extended Services at 1-800-29JANUS.
SIGNIFICANT SHAREHOLDERS
As of December 1, 1995, the following individuals and/or corporations owned more
than 25% of the Shares of the following Funds: Western Digital Corporation owned
35.23% of Janus Government Money Market Fund - Institutional Shares and Thomas
F. Marsico and The Gap, Inc. owned 41.66% and 58.34%, respectively, of Janus
Tax-Exempt Money Market Fund - Institutional Shares. Thus, these shareholders
may have power to control any vote of the Shares of the Fund.
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
VOTING RIGHTS
The Trust is not required to hold annual shareholder meetings. However, special
meetings may be called for a specific class of shares, a specific 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 voting
on matters when required by the 1940 Act. Separate votes are taken by a separate
Fund (or a separate class of shares) only if a matter affects or requires the
vote of just that Fund (or those shares). Shareholders are entitled to cast one
vote for each Share they own.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri 64141-6226,
is the custodian of the Funds' assets. The custodian holds each Fund's assets in
safekeeping and collects and remits the income thereon subject to the
instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado 80217-3375, a
wholly-owned subsidiary of Janus Capital, provides transfer agency and
shareholder services for the Funds.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado 80206-4923, a
wholly-owned subsidiary of Janus Capital, is a distributor of the Shares.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
9
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SHAREHOLDER'S GUIDE
HOW TO OPEN AN ACCOUNT
ESTABLISHING YOUR ACCOUNT
The Application enclosed with this Prospectus describes the options available to
you as an institutional shareholder of the Funds. After reviewing the
Application carefully, complete, sign and forward it to:
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4923
Attn: Extended Services Attn: Extended Services
Do not include any purchase money with the Application. All purchases of Shares
should be effected by wire transfer. See "Purchasing Shares." The Funds reserve
the right to suspend the offering of the Shares for a period of time and to
reject any specific purchase request.
You may set up your account for Investment Retirement Plan rollovers (in excess
of $250,000) under a tax-sheltered retirement plan. A retirement plan allows you
to shelter your investment income from current income taxes. A contribution to
these plans may also be tax deductible. Distributions from a retirement plan 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 serves as custodian for the retirement plans
offered by the Funds. 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).
Please refer to the Janus Funds IRA booklet for complete information regarding
IRAs. You will need a special application to be enrolled in the plan. For an
application and more details, call 1-800-525-3713.
TAXPAYER IDENTIFICATION NUMBERS
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 Funds 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 Funds for
any penalty that the IRS may impose.
DISTRIBUTION OPTIONS
Shareholders have the option of having their dividends and distributions
automatically reinvested in Shares of a Fund or wired to a predesignated bank
account. If no election is made, all dividends and distributions will be
reinvested in additional Shares.
PURCHASING SHARES
You must establish a Fund account and receive an account number before making
purchases by wire. Requests to purchase Janus Money Market Fund and Janus
Government Money Market Fund received before 3:00 p.m. (New York time) will
receive dividends declared on the purchase date. Requests to purchase Janus
Tax-Exempt Money Market Fund must be received before 12:00 p.m. (New York time)
in order to receive the dividend declared on the day of purchase. In addition,
the Funds' transfer agent must receive payment in federal funds by 4:00 p.m.
(New York time). The Funds reserve the right to require purchase requests and
payments prior to these times on days when the bond market closes before 4:00
p.m. (New York time). Purchase orders received after these times will receive
the dividend declared the following day.
WIRE INSTRUCTIONS:
Request your bank to transmit immediately available funds by wire for purchase
of Shares to the Funds' custodian bank as follows:
United Missouri Bank, N.A., Kansas City, Missouri
ABA # 101000695
BNF = Janus Money Market Funds Account # 9870610000
For credit to: Name of Shareholder:
Shareholder Account No.:
Name of Fund(s):
Complete information regarding your account must be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Please contact the Janus Extended Services Team at 1-800-29JANUS when you intend
to make a wire purchase.
The Funds do not charge any fees for transactions by wire in Shares of the
Funds.
Once you have established a Fund account, you may purchase Shares for such
account or open additional accounts with other Funds at any time. The Funds
reserve the right to suspend the offering of Shares for a period of time and to
reject any specific purchase request. If you have any questions, please call
1-800-29JANUS.
MINIMUM INVESTMENT
The minimum initial investment in the Shares is $250,000. The Funds may, in
their discretion, waive this minimum under certain circumstances but, in such
event, the minimum must be reached within 90 days of opening the account.
Shareholders who do not maintain the $250,000 minimum will be exchanged into
Investor Shares.
NET ASSET VALUE
The net asset value ("NAV") of the Shares is determined at the close of the
regular trading session of the New York Stock Exchange (normally 4:00 p.m., New
York time) each day that the Exchange is open. NAV per share is determined by
dividing the total value of the securities and other assets, less liabilities,
by the total number of Shares outstanding. Portfolio securities are valued at
their amortized
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
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cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity (or such other date as
permitted by Rule 2a-7) of any discount or premium. If fluctuating interest
rates cause the market value of a portfolio to deviate more than 1/2 of 1% from
the value determined on the basis of amortized cost, the Trustees will consider
whether any action, such as adjusting the Share's NAV to reflect current market
conditions, should be initiated to prevent any material dilutive effect on
shareholders.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to maintain the
general liquidity that is representative of a money market fund and to help
facilitate transactions in shareholder accounts.
HOW TO EXCHANGE SHARES
The Janus funds include several funds with a variety of investment objectives.
You may exchange your Shares for shares of any other Janus fund that is
available to the public and registered in your state of residence. There are
certain procedures which should be followed to effect the transfer of the entire
or partial balance in your Shares to one of the other Janus funds. The Funds
reserve the right to reject any exchange request and to modify or terminate the
exchange privilege at any time. For example, the Funds may reject exchanges from
accounts engaged in excessive trading (including market timing transactions)
that are detrimental to the Funds. If you would like more information regarding
this option, please call the Janus Extended Services Team at 1-800-29JANUS.
HOW TO REDEEM SHARES
PARTIAL OR COMPLETE REDEMPTIONS
You may redeem all or a portion of your Shares on any business day that the New
York Stock Exchange is open. Your Shares will be redeemed at the NAV next
calculated after your Fund has received your redemption request in good order
and meeting all the requirements of this Prospectus. Proceeds of such redemption
generally will be wired to your predesignated bank account as of the day of
redemption unless that day is a bank holiday, in which case, redemption proceeds
will be wired on the next bank business day.
IN WRITING
To redeem all or part of your Shares in writing, send a letter of instruction to
the following address:
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4923
Attn: Extended Services Attn: Extended Services
The letter should be on company letterhead (in the case of institutional
clients) and should specify the name of the Fund, the number of Shares or
dollars being redeemed, the account number, appropriate wiring instructions, the
name(s) on the account, your name and your daytime telephone number. The letter
must be signed by an authorized person whose signature is on file with the Fund.
For IRA shareholders, 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 59 1/2) or
premature (before age 59 1/2) and, if premature, whether any exceptions such as
death or disability apply with regard to the 10% additional tax on early
distributions.
BY TELEPHONE
Shares may be redeemed by telephone. If a request for a redemption is received
by 3:00 p.m. (New York time) for Janus Money Market Fund and Janus Government
Money Market Fund and by 12:00 p.m. (New York time) for Janus Tax-Exempt Money
Market Fund, Shares will be redeemed and the redemption amount wired in federal
funds to the shareholder's predesignated bank account that day. After 3:00 p.m.
(12:00 p.m. for Janus Tax-Exempt Money Market Fund), a redemption request will
be processed at that day's NAV and will include that day's dividends, but
generally will not be wired until the next business day. The Funds reserve the
right to require redemption requests prior to these times on days when the bond
market closes before 4:00 p.m. (New York time). There is no fee for redemptions
by wire.
BY A FUND
Your account may be terminated by your Fund if, due to the transfer or
redemption of Shares, the value of the remaining Shares in your account falls
below the minimum investment required to open a new account, or if you engage in
illegal or other conduct detrimental to the Funds. In the case of insufficient
account size, your Fund will notify you that you have 60 days to increase your
account to the minimum required before redeeming your account.
SPECIAL SHAREHOLDER SERVICES AND OTHER INFORMATION
PORTFOLIO INFORMATION
You may call 1-800-29JANUS by TouchTone(TM) telephone for access to certain
information regarding your account, including current yield and dividend rate
information, Monday through Friday from 7:00 a.m. to 10:00 p.m. (New York time).
TELEPHONE INSTRUCTIONS
You may initiate many transactions by telephone. The Funds and their agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
ACCOUNT ADDRESS AND NAME CHANGES
To change the address on your account, you may call 1-800-29JANUS or send a
written request signed by all registered owners of your account. Please include
the name of the Fund(s), the account number(s),
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
11
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the name(s) on the account and both the old and new addresses. Within the first
10 days of an address change, redemptions by institutional clients are
permissible only if the redemption proceeds are wired to a pre-designated bank
account or you provide the Funds with appropriate corporate resolutions changing
wire instructions. Please call 1-800-29JANUS for additional information.
To change the name on an account, the Shares must be transferred to a new
account. Such a change generally requires written instructions with the
guaranteed signatures of all registered owners, as well as an Application and
supporting legal documentation, if applicable. Please call 1-800-29JANUS for
additional information.
STATEMENTS AND REPORTS
Each shareholder will receive daily confirmations of purchases and redemptions
made in the Funds. On the last day of each month, the shareholder will receive a
statement reporting all purchases and redemptions made during that month, and
dividends paid during the month.
Twice each year you will receive the financial statements of the Funds,
including a statement listing portfolio securities. To reduce expenses, only one
copy of most reports (such as the Funds' Annual Report) may be mailed to all
accounts with the same tax identification number. Please call 1-800-29JANUS if
you need additional reports sent each time.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may temporarily suspend telephone transactions and
other shareholder services described in this Prospectus upon reasonable notice
or to the extent that any circumstance reasonably beyond the control of the
Funds or their agents materially hampers the provision of such services.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS FEBRUARY 18, 1996
12
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[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4923
(800) 525-3713
STATEMENT OF ADDITIONAL INFORMATION
February 18, 1996
GROWTH FUNDS FIXED-INCOME FUNDS
Janus Fund Janus Flexible Income Fund
Janus Twenty Fund Janus Intermediate Government Securities Fund
Janus Enterprise Fund Janus Short-Term Bond Fund
Janus Mercury Fund Janus Federal Tax-Exempt Fund
Janus Worldwide Fund
Janus Overseas Fund
COMBINATION FUNDS
Janus Growth and Income Fund
Janus Balanced Fund
This Statement of Additional Information ("SAI") pertains to the funds
listed above, each of which is a separate series of Janus Investment Fund, a
Massachusetts business trust (the "Trust"). Each of these series of the Trust
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies (individually, a "Fund" and
collectively, the "Funds"). Each Fund is managed separately by Janus Capital
Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus of each Fund dated February 18, 1996, which is incorporated by
reference into this SAI and may be obtained from the Trust at the above phone
number or address. This SAI contains additional and more detailed information
about the Funds' operations and activities than the Prospectus.
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JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies, Restrictions and Techniques .......................... 3
Investment Objectives ................................................... 3
Portfolio Policies ...................................................... 4
Investment Restrictions Applicable to All Funds ......................... 4
Investment Policies Applicable to Certain Funds ......................... 6
Types of Securities and Investment Techniques ........................... 7
Illiquid Investments ................................................. 7
Zero Coupon, Pay-In-Kind and Step Coupon Securities .................. 7
Pass-Through Securities .............................................. 8
Depositary Receipts .................................................. 8
Municipal Obligations ................................................ 9
Other Income-Producing Securities .................................... 9
Repurchase and Reverse Repurchase Agreements ......................... 9
High-Yield/High-Risk Bonds ........................................... 10
Futures, Options and Other Derivative Instruments .................... 10
Investment Adviser ........................................................ 17
Custodian, Transfer Agent and Certain Affiliations ........................ 19
Portfolio Transactions and Brokerage ...................................... 20
Officers and Trustees ..................................................... 22
Purchase of Shares ........................................................ 25
Net Asset Value Determination ........................................... 25
Reinvestment of Dividends and Distributions ............................. 26
Redemption of Shares ...................................................... 26
Shareholder Accounts ...................................................... 26
Telephone Transactions .................................................. 26
Systematic Withdrawals .................................................. 26
Retirement Plans .......................................................... 27
Income Dividends, Capital Gains Distributions and Tax Status .............. 27
Principal Shareholders .................................................... 28
Miscellaneous Information ................................................. 28
Shares of the Trust ..................................................... 29
Voting Rights ........................................................... 29
Independent Accountants ................................................. 29
Registration Statement .................................................. 29
Performance Information ................................................... 30
Financial Statements ...................................................... 31
- --------------------------------------------------------------------------------
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INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
Each Fund's investment objective is discussed in the Prospectus and
summarized below. There is no assurance that the Funds will achieve their
respective objectives. The investment objectives of the Funds are not
fundamental and may be changed by the Trustees without shareholder approval.
INVESTMENT OBJECTIVES
Janus Fund is a diversified fund that seeks long-term growth of capital in
a manner consistent with the preservation of capital by investing primarily in
common stocks of issuers of any size. Generally, this Fund emphasizes issuers
with larger market capitalizations.
Janus Twenty Fund is a nondiversified fund that seeks long-term growth of
capital. Under normal conditions, this Fund concentrates its investments in a
core position of 20-30 common stocks.
Janus Enterprise Fund is a nondiversified fund that seeks long-term growth
of capital by investing primarily in common stocks. The Fund intends to normally
invest at least 50% of its equity assets in securities issued by medium-sized
companies (as defined in the Prospectus).
Janus Mercury Fund is a nondiversified fund that seeks long-term growth of
capital by investing in a large number of common stocks of issuers of any size,
including larger, well-established companies and smaller, emerging growth
companies.
Janus Worldwide Fund is a diversified fund that seeks long-term growth of
capital in a manner consistent with the preservation of capital by investing in
common stocks of foreign and domestic issuers of any size. Janus Worldwide Fund
normally invests in issuers from at least five different countries including the
United States.
Janus Overseas Fund is a diversified fund that seeks long-term growth of
capital by investing primarily in common stocks of foreign issuers of any size.
The Fund normally invests at least 65% of its total assets in issuers from at
least five different countries excluding the United States.
Janus Growth and Income Fund is a diversified fund that seeks both
long-term capital growth and current income. Janus Growth and Income Fund places
a stronger emphasis on the growth objective and normally invests up to 75% of
its assets in common stocks selected primarily for their growth potential and at
least 25% of its assets in securities selected for their income potential. In
unusual circumstances, the Fund may reduce the growth component of its portfolio
to 25% of its assets.
Janus Balanced Fund is a diversified fund that seeks long-term capital
growth, consistent with preservation of capital and balanced by current income.
Janus Balanced Fund normally invests 40-60% of its assets in securities selected
primarily for growth potential and 40-60% of its assets in securities selected
for their income potential.
Janus Flexible Income Fund is a diversified fund that seeks to maximize
total return consistent with preservation of capital. Total return is expected
to result from a combination of current income and capital appreciation,
although income will normally be the dominant component of total return. Janus
Flexible Income Fund invests in all types of income-producing securities. This
Fund may have substantial holdings of debt securities rated below investment
grade.
Janus Intermediate Government Securities Fund is a diversified fund that
seeks as high a level of current income as is consistent with the preservation
of capital by investing primarily in obligations of the U.S. government, its
agencies and instrumentalities. It will normally maintain an average weighted
maturity of greater than three years and less than ten years.
Janus Short-Term Bond Fund is a diversified fund that seeks as high a level
of current income as is consistent with the preservation of capital by investing
primarily in short- and intermediate-term fixed-income securities. It will
normally maintain an average weighted maturity not to exceed three years.
Janus Federal Tax-Exempt Fund is a diversified fund that seeks as high a
level of current income exempt from federal income tax as is consistent with
preservation of capital. It will normally invest at least 80% of its net assets
in securities whose income is not subject to federal income tax.
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<PAGE>
PORTFOLIO POLICIES
The Prospectus discusses the types of securities in which the Funds will
invest, portfolio policies of the Funds and the investment techniques of the
Funds. The Prospectus includes a discussion of portfolio turnover policies.
Portfolio turnover is calculated by dividing total purchases or sales, whichever
is less, by the average monthly value of a Fund's portfolio securities. The
following table summarizes the portfolio turnover rates for the fiscal periods
indicated. The information below is for fiscal years ended October 31.
Fund Name 1995 1994
- --------------------------------------------------------------------------------
Janus Fund 118% 139%
Janus Twenty Fund 147% 102%
Janus Enterprise Fund 194% 193%
Janus Mercury Fund 201% 283%
Janus Worldwide Fund 142% 158%
Janus Overseas Fund 188% 181%(1)
Janus Growth and Income Fund 195% 123%
Janus Balanced Fund 185% 167%
Janus Flexible Income Fund 250% 137%
Janus Intermediate Government Securities Fund 252% 304%
Janus Short-Term Bond Fund 337% 346%
Janus Federal Tax-Exempt Fund 164% 160%
- --------------------------------------------------------------------------------
(1) May 2, 1994 (inception) to October 31, 1994; annualized for periods of less
than one year.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, the Funds are subject to certain
fundamental policies and restrictions that may not be changed without
shareholder approval. Shareholder approval means approval by the lesser of (i)
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund if a matter affects just that Fund), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities of the Trust (or a particular Fund) are present or
represented by proxy. As fundamental policies, the Funds may not:
(1) Own more than 10% of the outstanding voting securities of any one
issuer and, as to fifty percent (50%) of the value of the total assets for Janus
Twenty Fund, Janus Enterprise Fund and Janus Mercury Fund and as to seventy-five
percent (75%) of the value of the total assets of the other Funds, purchase the
securities of any one issuer (except cash items and "government securities" as
defined under the Investment Company Act of 1940, as amended (the "1940 Act")),
if immediately after and as a result of such purchase, the value of the holdings
of a Fund in the securities of such issuer exceeds 5% of the value of such
Fund's total assets. With respect to the other 50% of the value of their total
assets, Janus Twenty Fund, Janus Enterprise Fund and Janus Mercury Fund may
invest in the securities of as few as two issuers.
(2) Invest more than 25% of the value of their respective assets in any
particular industry (other than U.S. government securities); provided, however,
that for Janus Federal Tax-Exempt Fund this limitation does not apply to
municipal obligations. For the purposes of this limitation only, industrial
development bonds issued by nongovernmental users shall not be deemed to be
municipal obligations. Industrial development bonds shall be classified
according to the industry of the entity that has the ultimate responsibility for
the payment of principal and interest on the obligation.
(3) Invest directly in real estate or interests in real estate; however,
the Funds may own debt or equity securities issued by companies engaged in those
businesses.
(4) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the Funds from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more than 25%
of a Fund's total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or repurchase
agreements).
(6) Act as an underwriter of securities issued by others, except to the
extent that a Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of such Fund.
4
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As a fundamental policy, each Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as such Fund.
The Trustees have adopted additional investment restrictions for the Funds.
These restrictions are operating policies of the Funds and may be changed by the
Trustees without shareholder approval. The additional investment restrictions
adopted by the Trustees to date include the following:
(a) A Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets. Included within that
amount, but not to exceed 2% of the value of a Fund's net assets, may be
warrants that are not listed on the New York or American Stock Exchange.
Warrants acquired by a Fund in units or attached to securities shall be deemed
to be without value for the purpose of monitoring this policy.
(b) A Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions will exceed 5% of the fair market value of a Fund's
net assets, after taking into account unrealized profits and unrealized losses
on any such contracts it has entered into; and (ii) enter into any futures
contracts if the aggregate amount of such Fund's commitments under outstanding
futures contracts positions would exceed the market value of its total assets.
(c) The Funds do not currently intend to sell securities short, unless they
own or have the right to obtain securities equivalent in kind and amount to the
securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(d) The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary for
the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward
contracts shall not be deemed to constitute purchasing securities on margin.
(e) The Funds do not currently intend to (i) purchase securities of other
investment companies, except in the open market where no commission except the
ordinary broker's commission is paid, or (ii) purchase or retain securities
issued by other open-end investment companies. Limitations (i) and (ii) do not
apply to money market funds or to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger. If a Fund invests in a money market fund, Janus Capital will reduce its
advisory fee by the amount of any investment advisory and administrative
services fees paid to the investment manager of the money market fund.
(f) A Fund may not mortgage or pledge any securities owned or held by such
Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection
with such contracts.
(g) The Funds do not intend to purchase securities of any issuer (other
than U.S. government agencies and instrumentalities or instruments guaranteed by
an entity with a record of more than three years' continuous operation,
including that of predecessors) with a record of less than three years'
continuous operation (including that of predecessors) if such purchase would
cause the cost of a Fund's investments in all such issuers to exceed 5% of that
Fund's total assets taken at market value at the time of such purchase.
(h) The Funds do not currently intend to invest directly in oil, gas, or
other mineral development or exploration programs or leases; however, the Funds
may own debt or equity securities of companies engaged in those businesses.
(i) The Funds may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of their
respective total assets (including the amount borrowed) less liabilities (other
than borrowings). If borrowings exceed 25% of the value of a Fund's total assets
by reason of a decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, deposits of assets
to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
(j) The Funds do not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of their respective
net assets would be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The Trustees, or the Funds' investment
5
<PAGE>
adviser acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"),
or any successor to such rule, Section 4(2) commercial paper and municipal lease
obligations. Accordingly, such securities may not be subject to the foregoing
limitation.
(k) The Funds may not invest in companies for the purpose of exercising
control of management.
For the purposes of these investment restrictions, the identification of
the issuer of a municipal obligation depends on the terms and conditions of the
security. When assets and revenues of a political subdivision are separate from
those of the government that created the subdivision and the security is backed
only by the assets and revenues of the subdivision, the subdivision is deemed to
be the sole issuer. Similarly, in the case of an industrial development bond, if
the bond is backed only by assets and revenues of a nongovernmental user, then
the nongovernmental user would be deemed to be the sole issuer. If, however, in
either case, the creating government or some other entity guarantees the
security, the guarantee would be considered a separate security that would be
treated as an issue of the guaranteeing entity.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P., provided that financial service companies will be classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry). To the extent that Bloomberg L.P. classifications are so broad that
the primary economic characteristics in a single class are materially different,
the Funds may further classify issuers in accordance with industry
classifications as published by the Securities and Exchange Commission ("SEC").
INVESTMENT POLICIES APPLICABLE TO CERTAIN FUNDS
Janus Balanced Fund. As an operational policy, at least 25% of the assets
of Janus Balanced Fund normally will be invested in fixed-income senior
securities, which include debt securities and preferred stock.
Janus Flexible Income Fund. As a fundamental policy, this Fund may not
purchase a non-income-producing security if, after such purchase, less than 80%
of the Fund's total assets would be invested in income-producing securities.
Income-producing securities include securities that make periodic interest
payments as well as those that make interest payments on a deferred basis or pay
interest only at maturity (e.g., Treasury bills or zero coupon bonds).
The Fund will purchase defaulted securities only when its portfolio manager
believes, based upon his analysis of the financial condition, results of
operations and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an unusual
opportunity for capital appreciation. Notwithstanding the portfolio manager's
belief as to the resumption of income, however, the purchase of any security on
which payment of interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
A. Financial and Market Risks. Investments in securities that are in
default involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. Issuers of defaulted securities may
have substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain information about the
condition of such issuers. The market prices of such securities also are subject
to abrupt and erratic movements and above average price volatility, and the
spread between the bid and asked prices of such securities may be greater than
normally expected.
B. Disposition of Portfolio Securities. Although Janus Flexible Income Fund
generally will purchase securities for which its portfolio manager expects an
active market to be maintained, defaulted securities may be less actively traded
than other securities and it may be difficult to dispose of substantial holdings
of such securities at prevailing market prices. Janus Flexible Income Fund will
limit its holdings of any such securities to amounts that its portfolio manager
believes could be readily sold, and its holdings of such securities would, in
any event, be limited so as not to limit the Fund's ability to readily dispose
of its securities to meet redemptions.
C. Other. Defaulted securities require active monitoring and may, at times,
require participation in bankruptcy or receivership proceedings on behalf of the
Fund.
Janus Intermediate Government Securities Fund. As an operational policy,
this Fund will not invest in any debt security that, at the time of purchase,
causes the portfolio of the Fund's debt securities to have a dollar-weighted
average, then remaining term to maturity of less than three years or more than
10 years. The portfolio manager will consider the estimated prepayment date of
mortgage-backed securities in computing the portfolio's
6
<PAGE>
maturity. The Fund may not invest more than 20% of its net assets in commercial
paper. All commercial paper shall be rated in the highest rating category of a
Nationally Recognized Statistical Rating Organization ("NRSRO") at the time of
purchase.
Janus Short-Term Bond Fund. As an operational policy, this Fund will not
invest in any debt security that, at the time of purchase, causes its portfolio
of debt securities to have a dollar-weighted average, then remaining term to
maturity of three years or more. The portfolio manager will consider the
estimated prepayment date of mortgage-backed securities in computing the
portfolio's maturity.
Janus Federal Tax-Exempt Fund. As a fundamental policy, this Fund will
normally invest at least 80% of its net assets in securities whose income is not
subject to federal income taxes, including the alternative minimum tax.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees of the Funds
have authorized Janus Capital to make liquidity determinations with respect to
its securities, including Rule 144A Securities, commercial paper and municipal
lease obligations. Under the guidelines established by the Trustees, Janus
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; 2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by an NRSRO. With respect to municipal
lease obligations, Janus Capital will also consider factors unique to municipal
lease obligations including the general creditworthiness of the municipality,
the importance of the property covered by the lease obligation and the
likelihood that the marketability of the obligation will be maintained
throughout the time the obligation is held by a Fund.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
Each Fund may invest up to 10% of its assets in zero coupon, pay-in-kind
and step coupon securities. Zero coupon bonds are issued and traded at a
discount from their face value. They do not entitle the holder to any periodic
payment of interest prior to maturity. Step coupon bonds trade at a discount
from their face value and pay coupon interest. The coupon rate is low for an
initial period and then increases to a higher coupon rate thereafter. The
discount from the face amount or par value depends on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. Pay-in-kind bonds normally give the
issuer an option to pay cash at a coupon payment date or give the holder of the
security a similar bond with the same coupon rate and a face value equal to the
amount of the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), a Fund must distribute
its investment company taxable income, including the original issue discount
accrued on zero coupon or step coupon bonds. Because a Fund will not receive
cash payments on a current basis in respect of accrued original-issue discount
on zero coupon bonds or step coupon bonds during the period before interest
payments begin, in some years that Fund may have to distribute cash obtained
from other sources in order to satisfy the distribution requirements under the
Code. A Fund might obtain such cash from selling other portfolio holdings which
might cause that Fund to incur capital gains or losses on the sale.
Additionally, these actions are likely to reduce the assets to which Fund
expenses could be allocated and to reduce the rate of return for that Fund. In
some circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might otherwise
make it undesirable for a Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
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PASS-THROUGH SECURITIES
The Funds may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests.
A pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Funds. The most common type of
pass-through securities are mortgage-backed securities. Government National
Mortgage Association ("GNMA") Certificates are mortgage-backed securities that
evidence an undivided interest in a pool of mortgage loans. GNMA Certificates
differ from bonds in that principal is paid back monthly by the borrowers over
the term of the loan rather than returned in a lump sum at maturity. A Fund will
generally purchase "modified pass-through" GNMA Certificates, which entitle the
holder to receive a share of all interest and principal payments paid and owned
on the mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of
whether or not the mortgagor actually makes the payment. GNMA Certificates are
backed as to the timely payment of principal and interest by the full faith and
credit of the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest but it is not guaranteed by the full faith and credit of
the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Funds), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. A portfolio manager will consider
estimated prepayment rates in calculating the average weighted maturity of a
Fund. A borrower is more likely to prepay a mortgage that bears a relatively
high rate of interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by a Fund might be converted to
cash and that Fund will be forced to accept lower interest rates when that cash
is used to purchase additional securities in the mortgage-backed securities
sector or in other investment sectors. Additionally, prepayments during such
periods will limit a Fund's ability to participate in as large a market gain as
may be experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and interest
and principal payments ultimately depend upon payment of the underlying loans by
individuals. Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales agreements
that may be created when a municipality enters into an installment purchase
contract or lease with a vendor. Such securities may be secured by the assets
purchased or leased by the municipality; however, if the municipality stops
making payments, there generally will be no recourse against the vendor. The
market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
DEPOSITARY RECEIPTS
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underying securities issued by a foreign issuer.
ADRs, in registered form, are designed for use in U.S. securities markets.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR facility, whereas
foreign issuers typically bear certain costs in a sponsored ADR. The bank or
trust company
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depositary of an unsponsored ADR may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through
voting rights. The Funds may also invest in European Depositary Receipts
("EDRs"), receipts issued by a European financial institution evidencing an
arrangement similar to that of ADRs, and in other similar instruments
representing securities of foreign companies. EDRs, in bearer form, are designed
for use in European securities markets.
MUNICIPAL OBLIGATIONS
The Funds may invest in municipal obligations issued by states, territories
and possessions of the United States and the District of Columbia. Janus Federal
Tax-Exempt Fund may, at times, invest more than 25% of the value of its assets
in industrial development bonds, a type of revenue bond which, although issued
by a public authority, may be backed only by the credit and security of a
private issuer, thus presenting a greater credit risk.
The value of municipal obligations can be affected by changes in their
actual or perceived credit quality. The credit quality of municipal obligations
can be affected by among other things, the financial condition of the issuer or
guarantor, the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the revenue bond project or general borrowing purpose,
political or economic developments in the region where the security is issued,
and the liquidity of the security. Because municipal securities are generally
traded over-the-counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The liquidity of
some municipal obligations may be enhanced by demand features, which would
enable a Fund to demand payment on short notice from the issuer or a financial
intermediary.
OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Funds may purchase
include, but are not limited to, the following types of securities:
Variable and floating rate obligations. These types of securities are
relatively long-term instruments that often carry demand features permitting the
holder to demand payment of principal at any time or at specified intervals
prior to maturity.
Standby commitments. These instruments, which are similar to a put, give a
Fund the option to obligate a broker, dealer or bank to repurchase a security
held by that Fund at a specified price.
Tender option bonds. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker, dealer
or bank) to grant the holders of such securities the option to tender the
securities to the institution at periodic intervals.
Inverse floaters. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. The
Funds will not invest more than 5% of their respective assets in inverse
floaters.
The Funds will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of their portfolios.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon incremental amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or "collateral." A Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause a
Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, a Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days will be subject to the 15% limit on illiquid investments. While
it is not possible to eliminate all risks from these transactions, it is the
policy of the Funds to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Janus Capital.
A Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities, or to earn additional
income on portfolio securities, such as Treasury bills or notes. In a reverse
repurchase agreement, a Fund sells
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a portfolio security to another party, such as a bank or broker-dealer, in
return for cash and agrees to repurchase the instrument at a particular price
and time. While a reverse repurchase agreement is outstanding, a Fund will
maintain cash and appropriate liquid assets in a segregated custodial account to
cover its obligation under the agreement. The Funds will enter into reverse
repurchase agreements only with parties that Janus Capital deems creditworthy.
HIGH-YIELD/HIGH-RISK BONDS
Each of the Funds (except Janus Flexible Income Fund) may invest up to 35%
of their net assets in corporate debt securities that are rated below investment
grade (securities rated BB or lower by Standard & Poor's Ratings Services
("Standard & Poor's") or Ba or lower by Moody's Investors Services, Inc.
("Moody's")). Janus Flexible Income Fund may invest without limit in such
securities. Lower rated bonds involve a higher degree of credit risk, which is
the risk that the issuer will not make interest or principal payments when due.
In the event of an unanticipated default, a Fund would experience a reduction in
its income, and could expect a decline in the market value of the securities so
affected.
Each Fund may also invest in unrated debt securities of foreign and
domestic issuers. Unrated debt, while not necessarily of lower quality than
rated securities, may not have as broad a market. Because of the size and
perceived demand of the issue, among other factors, certain municipalities may
not incur the costs of obtaining a rating. A Fund's portfolio manager will
analyze the creditworthiness of the issuer, as well as any financial institution
or other party responsible for payments on the security, in determining whether
to purchase unrated municipal bonds. Unrated debt securities will be included in
the 35% limit of each Fund unless its portfolio manager deems such securities to
be the equivalent of investment grade securities.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Futures Contracts. The Funds may enter into contracts for the purchase or
sale for future delivery of fixed-income securities, foreign currencies or
contracts based on financial indices, including indices of U.S. government
securities, foreign government securities, equity or fixed-income securities.
U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures commission
merchant ("FCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain high-grade liquid assets by the Funds' custodian for the benefit of the
FCM. Initial margin payments are similar to good faith deposits or performance
bonds. Unlike margin extended by a securities broker, initial margin payments do
not constitute purchasing securities on margin for purposes of the Fund's
investment limitations. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments for the
benefit of the FCM to settle the change in value on a daily basis. The party
that has a gain may be entitled to receive all or a portion of this amount. In
the event of the bankruptcy of the FCM that holds margin on behalf of a Fund,
that Fund may be entitled to return of margin owed to such Fund only in
proportion to the amount received by the FCM's other customers. Janus Capital
will attempt to minimize the risk by careful monitoring of the creditworthiness
of the FCMs with which the Funds do business and by depositing margin payments
in a segregated account with the Funds' custodian.
The Funds intend to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the CFTC
and the National Futures Association, which regulate trading in the futures
markets. The Funds will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. To the extent
that the Funds hold positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of a Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
Although a Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to that Fund immediately upon closing out the futures position, while
settle-ment of securities transactions could take several days. However, because
a Fund's cash that may otherwise be invested would be held uninvested or
invested in high-grade liquid assets so long as the futures position remains
open, such Fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
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A Fund's primary purpose in entering into futures contracts is to protect
that Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, that Fund could enter into a futures contract
to purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against that Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent a Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
such Fund's obligations with respect to the futures contracts will consist of
high-grade liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by that Fund with respect to the futures contracts.
Conversely, if a Fund holds stocks and seeks to protect itself from a decrease
in stock prices, the Fund might sell stock index futures contracts, thereby
hoping to offset the potential decline in the value of its portfolio securities
by a corresponding increase in the value of the futures contract position. A
Fund could protect against a decline in stock prices by selling portfolio
securities and investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without having to sell
portfolio securities.
If a Fund owns Treasury bonds and the portfolio manager expects interest
rates to increase, that Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as that Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the value of the Treasury bonds would decline, but the value of
that Fund's interest rate futures contract will increase, thereby keeping the
net asset value of that Fund from declining as much as it may have otherwise.
If, on the other hand, a portfolio manager expects interest rates to decline,
that Fund may take a long position in interest rate futures contracts in
anticipation of later closing out the futures position and purchasing the bonds.
Although a Fund can accomplish similar results by buying securities with long
maturities and selling securities with short maturities, given the greater
liquidity of the futures market than the cash market, it may be possible to
accomplish the same result more easily and more quickly by using futures
contracts as an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by a portfolio manager
still may not result in a successful use of futures.
Futures contracts entail risks. Although the Funds believe that use of such
contracts will benefit the Funds, a Fund's overall performance could be worse
than if such Fund had not entered into futures contracts if the portfolio
manager's investment judgement proves incorrect. For example, if a Fund has
hedged against the effects of a possible decrease in prices of securities held
in its portfolio and prices increase instead, that Fund will lose part or all of
the benefit of the increased value of these securities because of offsetting
losses in its futures positions. In addition, if a Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
Fund will not match exactly such Fund's current or potential investments. A Fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests -
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities - which involves a risk that the
futures position will not correlate precisely with the performance of such
Fund's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions also may
result from differing levels of demand in the futures
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markets and the securities markets, from structural differences in how futures
and securities are traded, and from imposition of daily price fluctuation limits
for futures contracts. A Fund may buy or sell futures contracts with a greater
or lesser value than the securities it wishes to hedge or is considering
purchasing in order to attempt to compensate for differences in historical
volatility between the futures contract and the securities, although this may
not be successful in all cases. If price changes in a Fund's futures positions
are poorly correlated with its other investments, its futures positions may fail
to produce desired gains or result in losses that are not offset by the gains in
that Fund's other investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, a Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such Fund's access to other assets held to cover its futures positions
also could be impaired.
Options on Futures Contracts. The Funds may buy and write put and call
options on futures contracts. An option on a future gives a Fund the right (but
not the obligation) to buy or sell a futures contract at a specified price on or
before a specified date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures' price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in that Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, a Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which that Fund is
considering buying. If a call or put option a Fund has written is exercised,
such Fund will incur a loss which will be reduced by the amount of the premium
it received. Depending on the degree of correlation between the change in the
value of its portfolio securities and changes in the value of the futures
positions, a Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Contracts. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Funds may enter
into forward contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial instruments. Forward
contracts generally are traded in an interbank market conducted directly between
traders (usually large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
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The following discussion summarizes the Funds' principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). A Fund may
enter into forward currency contracts with stated contract values of up to the
value of that Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). A Fund will exchange foreign currencies for
U.S. dollars and for other foreign currencies in the normal course of business
and may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge"). A
Fund also may hedge some or all of its investments denominated in a foreign
currency against a decline in the value of that currency relative to the U.S.
dollar by entering into forward currency contracts to sell an amount of that
currency (or a proxy currency whose performance is expected to replicate or
exceed the performance of that currency relative to the U.S. dollar)
approximating the value of some or all of its portfolio securities denominated
in that currency ("position hedge") or by participating in options or futures
contracts with respect to the currency. A Fund also may enter into a forward
currency contract with respect to a currency where the Fund is considering the
purchase or sale of investments denominated in that currency but has not yet
selected the specific investments ("anticipatory hedge"). In any of these
circumstances a Fund may, alternatively, enter into a forward currency contract
to purchase or sell one foreign currency for a second currency that is expected
to perform more favorably relative to the U.S. dollar if the portfolio manager
believes there is a reasonable degree of correlation between movements in the
two currencies ("cross-hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on a Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting a Fund's currency exposure from one foreign
currency to another removes that Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
such Fund if its portfolio manager's projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may result in
poorer overall performance for a Fund than if it had not entered into such
contracts.
The Funds will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in the currency underlying the forward
contract or the currency being hedged. To the extent that a Fund is not able to
cover its forward currency positions with underlying portfolio securities, the
Funds' custodian will segregate cash or high-grade liquid assets having a value
equal to the aggregate amount of such Fund's commitments under forward contracts
entered into with respect to position hedges, cross-hedges and anticipatory
hedges. If the value of the securities used to cover a position or the value of
segregated assets declines, a Fund will find alternative cover or segregate
additional cash or high-grade liquid assets on a daily basis so that the value
of the covered and segregated assets will be equal to the amount of such Fund's
commitments with respect to such contracts. As an alternative to segregating
assets, a Fund may buy call options permitting such Fund to buy the amount of
foreign currency being hedged by a forward sale contract or a Fund may buy put
options permitting it to sell the amount of foreign currency subject to a
forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contacts. In such event,
the Funds' ability to utilize forward contracts may be restricted. In addition,
a Fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge Fund
assets.
Options on Foreign Currencies. The Funds may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Fund may buy put options on
the foreign currency. If the value of the currency declines, such Fund will have
the right to sell such currency for a fixed amount in U.S. dollars, thereby
offsetting, in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects of
the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to a Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, a Fund could sustain losses on transactions in foreign
currency options that would require such Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
13
<PAGE>
The Funds may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, a Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, a Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow that Fund to hedge the increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and a Fund would be required to
buy or sell the underlying currency at a loss which may not be offset by the
amount of the premium. Through the writing of options on foreign currencies, a
Fund also may lose all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
The Funds may write covered call options on foreign currencies. A call
option written on a foreign currency by a Fund is "covered" if that Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currencies held in its portfolio. A
call option is also covered if a Fund has a call on the same foreign currency in
the same principal amount as the call written if the exercise price of the call
held (i) is equal to or less than the exercise price of the call written or (ii)
is greater than the exercise price of the call written, if the difference is
maintained by such Fund in cash or high-grade liquid assets in a segregated
account with the Funds' custodian.
The Funds also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
a Fund owns or has the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which are entered into
for cross-hedging purposes are not covered. However, in such circumstances, a
Fund will collateralize the option by segregating cash or high-grade liquid
assets in an amount not less than the value of the underlying foreign currency
in U.S. dollars marked-to-market daily.
Options on Securities. In an effort to increase current income and to
reduce fluctuations in net asset value, the Funds may write covered put and call
options and buy put and call options on securities that are traded on United
States and foreign securities exchanges and over-the-counter. The Funds may
write and buy options on the same types of securities that the Funds may
purchase directly.
A put option written by a Fund is "covered" if that Fund (i) segregates
cash not available for investment or high-grade liquid assets with a value equal
to the exercise price of the put with the Funds' custodian or (ii) holds a put
on the same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by a Fund is "covered" if that Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Funds'
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if a Fund holds a call on
the same security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the exercise price
of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by that Fund in cash and high-grade
liquid assets in a segregated account with its custodian.
The Funds also may write call options that are not covered for
cross-hedging purposes. A Fund collateralizes its obligation under a written
call option for cross-hedging purposes by segregating cash or high-grade liquid
assets in an amount not less than the market value of the underlying security,
marked-to-market daily. A Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its portfolio manager believes
that writing the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be
14
<PAGE>
offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit a Fund to write another put
option to the extent that the exercise price thereof is secured by deposited
high-grade liquid assets. Effecting a closing transaction also will permit a
Fund to use the cash or proceeds from the concurrent sale of any securities
subject to the option for other investments. If a Fund desires to sell a
particular security from its portfolio on which it has written a call option,
such Fund will effect a closing transaction prior to or concurrent with the sale
of the security.
A Fund will realize a profit from a closing transaction if the price of the
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option. A Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received from writing
the option or the price received from a sale transaction is less than the
premium paid to buy the option. Because increases in the market of a call option
generally will reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by a Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
A Fund may write options in connection with buy-and-write transactions. In
other words, a Fund may buy a security and then write a call option against that
security. The exercise price of such call will depend upon the expected price
movement of the underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current value of the underlying security at the time the option is written.
Buy-and-write transactions using in-the-money call options may be used when it
is expected that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write transactions using
at-the-money call options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately during the option
period. Buy-and-write transactions using out-of-the-money call options may be
used when it is expected that the premiums received from writing the call option
plus the appreciation in the market price of the underlying security up to the
exercise price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the difference between that
Fund's purchase price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines, the amount of
such decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option
15
<PAGE>
will expire worthless and a Fund's gain will be limited to the premium received.
If the market price of the underlying security declines or otherwise is below
the exercise price, a Fund may elect to close the position or take delivery of
the security at the exercise price and that Fund's return will be the premium
received from the put options minus the amount by which the market price of the
security is below the exercise price.
A Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, a Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
A Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that Fund.
Eurodollar Instruments. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. A Fund might use Eurodollar futures contracts and options thereon to
hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
Swaps and Swap-Related Products. A Fund may enter into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with a Fund receiving or paying, as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or high-grade liquid assets
having an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a Fund enters
into an interest rate swap on other than a net basis, it would maintain a
segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. Janus Capital
will monitor the creditworthiness of all counterparties on an ongoing basis. If
there is a default by the other party to such a transaction, a Fund will have
contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Janus Capital has determined that, as
a result, the swap market has become relatively liquid. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will segregate cash or high-grade
liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by a Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets by a Fund or its counterparty
to collateralize obligations under the swap. Under the documentation currently
used in those markets, the risk of loss with respect to interest rate swaps is
limited to the net amount of the payments that a Fund is contractually obligated
to make. If the other party to an interest rate swap that is not collateralized
defaults, a Fund would risk the loss of the net amount of the payments that it
contractually is entitled to receive. A Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregation requirement described
above.
Additional Risks of Options on Foreign Currencies, Forward Contracts and
Foreign Instruments. Unlike transactions entered into by the Funds in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost.
16
<PAGE>
Moreover, an option writer and a buyer or seller of futures or forward contracts
could lose amounts substantially in excess of any premium received or initial
margin or collateral posted due to the potential additional margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting a Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
INVESTMENT ADVISER
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments, provide office space for
the Funds, pay the salaries, fees and expenses of all Fund officers and of those
Trustees who are affiliated with Janus Capital, and pay all expenses of
promoting the sale of Fund shares other than the cost of complying with
applicable laws relating to the offer or sale of shares of the Funds. Janus
Capital also may make payments to selected broker-dealer firms or institutions
which perform recordkeeping or other services with respect to shareholder
accounts. The minimum aggregate size required for eligibility for such payments,
and the factors in selecting the broker-dealer firms and institutions to which
they will be made, are determined from time to time by Janus Capital. Janus
Capital is also authorized to perform the management and administrative services
necessary for the operation of the Funds.
The Funds pay custodian and transfer agent fees and expenses, brokerage
commissions and dealer spreads and other expenses in connection with the
execution of portfolio transactions, legal and accounting expenses, interest and
taxes, registration fees, expenses of shareholders' meetings and reports to
shareholders, fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Funds' Prospectuses and
Statements of Additional Information to current shareholders, and other costs of
complying with applicable laws regulating the sale of Fund shares. Pursuant to
the Advisory Agreements, Janus Capital furnishes certain other services,
including net asset value determination and fund accounting, recordkeeping, and
blue sky registration and monitoring services, for which the Funds may reimburse
Janus Capital for its costs.
Janus Fund, Janus Twenty Fund, Janus Enterprise Fund, Janus Mercury Fund,
Janus Worldwide Fund, Janus Overseas Fund, Janus Growth and Income Fund and
Janus Balanced Fund have each agreed to compensate Janus Capital for its
services by the monthly payment of a fee at the annual rate of 1% of the first
$30 million of the average daily net assets of each Fund, .75% of the next $270
million of the average daily net assets of each Fund, .70% of the next $200
million of the average daily net assets of each Fund and .65% of the average
daily net assets of each Fund in excess of $500 million. Janus Capital has
agreed to waive the advisory fee payable by any of these
17
<PAGE>
eight Funds by an amount equal to the amount, if any, that such Fund's normal
operating expenses chargeable to its income account in any fiscal year,
including the investment advisory fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses, exceed the most restrictive
limitation imposed by any state. The Funds believe that the most restrictive
limitation applicable to each Fund is 2.50% of the first $30 million of average
daily net assets, plus 2.00% of the next $70 million of average daily net
assets, plus 1.50% of the balance of the average daily net assets of each Fund
for a fiscal year.
Janus Flexible Income Fund and Janus Short-Term Bond Fund have each agreed
to compensate Janus Capital for its services by the monthly payment of a fee at
the annual rate of .65% of the first $300 million of the average daily net
assets of the Fund, plus .55% of the average daily net assets of the Fund in
excess of $300 million. Janus Intermediate Government Securities Fund has agreed
to compensate Janus Capital for its services by the monthly payment of a fee at
the annual rate of .50% of the average daily net assets of the Fund less than
$300 million and .40% of the average daily net assets of the Fund in excess of
$300 million. Janus Federal Tax-Exempt Fund has agreed to compensate Janus
Capital for its services by the monthly payment of a fee at the annual rate of
.60% of the first $300 million of average daily net assets of the Fund and .55%
of the average daily net assets in excess of $300 million. Janus Capital has
agreed to waive the advisory fee payable by any of these Funds in an amount
equal to the amount, if any, that such Fund's normal operating expenses
chargeable to its income account in any fiscal year, including the investment
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1% of the average daily net assets for a fiscal
year for Janus Flexible Income Fund and .65% of the average daily net assets for
a fiscal year for Janus Short-Term Bond Fund, Janus Intermediate Government Fund
and Janus Federal Tax-Exempt Fund.
The following table summarizes the advisory fees paid by the Funds and any
advisory fee waivers for the last three fiscal periods of each Fund. The
information below is for fiscal years ended October 31.
<TABLE>
<CAPTION>
1995 1994 1993
------------------------- ------------------------- -----------------------------------
Fund Name Advisory Fees Waiver Advisory Fees Waiver Advisory Fees Waiver
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund $69,101,695 -- $61,177,249 -- $48,158,163 --
Janus Twenty Fund $18,127,825 -- $20,307,767 -- $23,522,228 --
Janus Enterprise Fund $ 3,078,635 -- $ 2,094,593 -- $ 1,485,387 --
Janus Mercury Fund $ 7,719,633 -- $ 1,992,568 -- $ 286,632(1) --
Janus Worldwide Fund $11,013,534 -- $ 8,562,262 -- $ 2,852,353 --
Janus Overseas Fund $ 657,146 -- $ 169,279(2) -- N/A N/A
Janus Growth and Income Fund $ 3,703,827 -- $ 3,720,739 -- $ 3,052,429 --
Janus Balanced Fund $ 879,437 -- $ 722,711 -- $ 388,807 --
Janus Flexible Income Fund $ 2,775,005 -- $ 2,659,291 -- $ 2,131,966 $ 41,156
Janus Intermediate Government
Securities Fund $ 179,812(3) $179,812 $ 233,103 $233,103(3) $ 339,858 $118,739
Janus Short-Term Bond Fund $ 307,992 $268,791 $ 387,295 $300,929 $ 239,160 $209,485
Janus Federal Tax-Exempt Fund $ 175,910(3) $175,910 $ 170,306 $170,306(3) $ 47,982(1)(3) $ 47,982(1)(3)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) May 3, 1993 (inception) to October 31, 1993.
(2) May 2, 1994 (inception) to October 31, 1994.
(3) Fee waiver by Janus Capital exceeded the advisory fee.
The current Advisory Agreements for Janus Growth and Income Fund and Janus
Worldwide Fund became effective on May 15, 1991; the current Advisory Agreements
for Janus Fund, Janus Twenty Fund, Janus Flexible Income Fund and Janus
Intermediate Government Securities Fund became effective on August 7, 1992; the
current Advisory Agreements for Janus Enterprise Fund, Janus Balanced Fund and
Janus Short-Term Bond Fund became effective on August 27, 1992; the current
Advisory Agreements for Janus Mercury Fund and Janus Federal Tax-Exempt Fund
became effective on April 20, 1993; and the current Advisory Agreement for Janus
Overseas Fund became effective on February 10, 1994. Each Advisory Agreement
will continue in effect until June 16, 1996, and thereafter from year to year so
long as such continuance is approved annually by a majority of the Funds'
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the outstanding voting shares or the
Trustees of the Funds. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval by vote of a majority of the Trustees of
the affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by
18
<PAGE>
Janus Capital or its affiliates. If, however, a number of accounts managed by
Janus Capital are contemporaneously engaged in the purchase or sale of the same
security, the orders may be aggregated and/or the transactions may be averaged
as to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to an exemptive
order granted by the SEC, the Fund and other funds advised by Janus Capital may
also transfer daily uninvested cash balances into one or more joint trading
accounts. Assets in the joint trading accounts are invested in money market
instruments and the proceeds are allocated to the participating funds on a pro
rata basis.
Each account managed by Janus Capital has its own investment objective and
policies and is managed accordingly by a particular portfolio manager or team of
portfolio managers. As a result, from time to time two or more different managed
accounts may pursue divergent investment strategies with respect to investments
or categories of investments.
As indicated in the Prospectus, Janus Capital permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a Janus Capital policy regarding personal investing by directors, officers
and employees of Janus Capital and the Funds. The policy requires investment
personnel and officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not otherwise exempt
under the policy. Requests for trading authority will be denied when, among
other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
then known to be under consideration for or to have been effected on behalf of
any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the 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.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
Investors Fiduciary Trust Company ("IFTC"), 127 W. 10th Street, Kansas
City, Missouri 64105, is the custodian of the securities and cash of the Funds
maintained in the United States. IFTC is a wholly-owned subsidiary of State
Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
Massachusetts 02101. State Street and the foreign subcustodians selected by it
and approved by the Trustees, have custody of the assets of the Funds held
outside the U.S. and cash incidental thereto. State Street may also have custody
of certain domestic and foreign securities held in connection with repurchase
agreements. The custodians and subcustodians hold the Funds' assets in
safekeeping and collect and remit the income thereon, subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
For transfer agency and other services, Janus Service receives a fee calculated
at an annual rate of $16 per Fund shareholder account. In addition, the Funds
pay DST Systems, Inc. ("DST"), a subsidiary of KCSI, license fees for the use of
DST's shareholder accounting and portfolio and fund accounting systems, and
postage and forms costs of a DST affiliate incurred in mailing Fund shareholder
transaction confirmations.
The Funds paid the following fees to Janus Service and DST, net of credits,
for the year ended October 31, 1995:
<TABLE>
<CAPTION>
Fund Name Fees to Janus Service Fees and Expenses to DST
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Fund $12,564,931 $ 4,286,877
Janus Twenty Fund $ 5,930,229 $ 1,949,824
Janus Enterprise Fund $ 1,019,823 $ 391,449
Janus Mercury Fund $ 2,143,715 $ 920,911
Janus Worldwide Fund $ 3,051,931 $ 1,096,097
Janus Overseas Fund $ 320,733 $ 156,680
Janus Growth and Income Fund $ 1,300,855 $ 559,834
Janus Balanced Fund $ 281,200 $ 143,038
Janus Flexible Income Fund $ 493,296 $ 491,638
Janus Intermediate Government Securities Fund $ 84,444 $ 90,949
Janus Short-Term Bond Fund $ 84,583 $ 107,686
Janus Federal Tax-Exempt Fund $ 61,895 $ 74,508
- ---------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
The Trustees have authorized the Funds to use another affiliate of DST as
introducing broker for certain Fund portfolio transactions as a means to reduce
Fund expenses through a credit against the charges of DST and its affiliates
with regard to commissions earned by such affiliate. See "Portfolio Transactions
and Brokerage." DST charges shown above are net of such credits.
During the fiscal period ended October 31, 1995, IFTC served as the Funds'
transfer agent and Janus Service served as subtransfer agent. Prior to January
1995, IFTC may have been deemed an affiliate of the Funds through a degree of
common ownership. IFTC is no longer affiliated with the Funds. As of January 1,
1996, Janus Service became the direct transfer agent of the Funds and IFTC no
longer serves as transfer agent.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. The Funds may trade foreign
securities in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on foreign stock
exchanges, brokers' commissions are frequently fixed and are often higher than
in the United States, where commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to a fund or to a third
party service provider to the fund to pay fund expenses; and research products
or services provided. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer with whom
it has negotiated a commission that is in excess of the commission another
broker or dealer would have charged for effecting that transaction if Janus
Capital determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research provided by such broker
or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of Janus Capital. Research may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist Janus Capital in carrying out its responsibilities.
Research received from brokers or dealers is supplemental to Janus Capital's own
research efforts. Most brokers and dealers used by Janus Capital provide
research and other services described above.
20
<PAGE>
For the year ended October 31, 1995, the total brokerage commissions paid
by the Funds to brokers and dealers in transactions identified for execution
primarily on the basis of research and other services provided to the Funds are
summarized below:
<TABLE>
<CAPTION>
Fund Name Commissions Transactions % of Total Transactions
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund $7,947,369 $5,943,036,032 31.49%
Janus Twenty Fund $3,002,918 $2,569,495,725 40.37%
Janus Enterprise Fund $ 441,621 $ 219,728,408 14.74%
Janus Mercury Fund $1,632,044 $1,076,951,435 32.11%
Janus Worldwide Fund $ 502,866 $ 240,562,721 5.79%
Janus Overseas Fund $ 15,732 $ 5,827,686 3.02%
Janus Growth and Income Fund $ 637,116 $ 507,553,002 40.09%
Janus Balanced Fund $ 70,634 $ 40,493,032 20.31%
Janus Flexible Income Fund(1) $ 1,877 $ 713,021 3.98%
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Most of the securities transactions for this Fund involved dealers acting
as principal.
Note:Funds that are not included in the table did not pay any commissions
related to research for the fiscal year ended October 31, 1995.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers regarding the
placement of securities transactions because of the research services they
provide. It does, however, have an internal procedure for allocating
transactions in a manner consistent with its execution policy to brokers that it
has identified as providing superior executions and research, research-related
products or services which benefit its advisory clients, including the Funds.
Research products and services incidental to effecting securities transactions
furnished by brokers or dealers may be used in servicing any or all of Janus
Capital's clients and such research may not necessarily be used by Janus Capital
in connection with the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a 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.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
The Funds' Trustees have authorized Janus Capital to place transactions
with DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of
DST. Janus Capital may do so if it reasonably believes that the quality of the
transaction and the associated commission are fair and reasonable and if,
overall, the associated transaction costs, net of any credits described above
under "Custodian, Transfer Agent and Certain Affiliations," are lower than those
that would otherwise be incurred.
The following table lists the total amount of brokerage commissions paid by
each Fund for the fiscal periods ending on October 31st of each year:
Fund Name 1995 1994 1993
- --------------------------------------------------------------------------------
Janus Fund $26,219,202 $18,108,124 $15,241,221
Janus Twenty Fund $ 7,647,982 $ 5,747,164 $ 4,925,668
Janus Enterprise Fund $ 2,084,312 $ 1,249,083 $ 1,084,075
Janus Mercury Fund $ 5,712,916 $ 1,221,654 $ 209,097(1)
Janus Worldwide Fund $ 7,493,192 $ 1,125,206 $ 857,147
Janus Overseas Fund $ 568,384 $ 27,846(2) N/A
Janus Growth and Income Fund $ 1,498,178 $ 1,013,550 $ 859,490
Janus Balanced Fund $ 305,855 $ 198,976 $ 139,261
Janus Flexible Income Fund $ 35,138 $ 31,399 $ 26,297
Janus Short-Term Bond Fund $ 6,548 -- --
- --------------------------------------------------------------------------------
(1) May 3, 1993 (inception) to October 31, 1993.
(2) May 2, 1994 (inception) to October 31, 1994.
Note:Funds that are not included in the table did not pay brokerage commissions
because securities transactions for such Funds involved dealers acting as
principals.
21
<PAGE>
Included in such brokerage commissions are the following amounts paid to
DSTS, which served to reduce each Fund's out-of-pocket expenses as follows:
<TABLE>
<CAPTION>
Commission
Paid through DSTS
for the Period Ended Reduction % of Total % of Total
Fund Name October 31, 1995* of Expenses* Commissions+ Transactions+
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $1,125,368 $844,026 4.29% 3.81%
Janus Twenty Fund $ 378,575 $283,931 4.95% 4.52%
Janus Enterprise Fund $ 96,932 $ 72,699 4.65% 3.61%
Janus Mercury Fund $ 171,777 $128,833 3.01% 2.65%
Janus Worldwide Fund $ 164,193 $123,145 2.19% 1.84%
Janus Overseas Fund $ 2,783 $ 2,087 0.49% 0.45%
Janus Growth and Income Fund $ 98,373 $ 73,780 6.57% 6.87%
Janus Balanced Fund $ 9,143 $ 6,857 2.99% 13.45%
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Commission Paid Commission Paid
through DSTS for through DSTS for Reduction
the Period Ended Reduction the Period Ended of Expenses
Fund Name October 31, 1994* of Expenses* October 31, 1993* for that Period*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $1,067,073 $800,305 $1,349,929 $1,012,447
Janus Twenty Fund $ 510,874 $383,156 $ 298,824 $ 224,118
Janus Enterprise Fund $ 116,527 $ 87,395 $ 25,476 $ 19,107
Janus Mercury Fund $ 30,019 $ 22,514 $ 4,518(1) $ 3,389
Janus Worldwide Fund $ 57,164 $ 42,873 $ 60,095 $ 45,071
Janus Overseas Fund $ 1,800(2) $ 1,350(2) N/A N/A
Janus Growth and Income Fund $ 15,604 $ 11,703 $ 28,996 $ 21,747
Janus Balanced Fund $ 18,725 $ 14,043 $ 1,139 $ 854
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* The difference between commissions paid to DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
+ Differences in the percentage of total commissions versus the percentage of
total transactions is due, in part, to variations among share prices and
number of shares traded, while average price per share commission rates
were substantially the same.
(1) May 3, 1993 (inception) to October 31, 1993.
(2) May 2, 1994 (inception) to October 31, 1994.
Note:Funds that did not execute trades with DSTS during the periods ended
October 31, 1995, October 31, 1994 and October 31, 1993, are not included
in the table.
As of October 31, 1995, certain Funds owned securities of their regular
broker-dealers (or parents), as shown below:
Value of
Fund Name Name of Broker-Dealer Securities Owned
- --------------------------------------------------------------------------------
Janus Fund First Chicago $ 45,136,875
Janus Fund Merrill Lynch and Co., Inc. $ 53,929,350
Janus Fund Morgan Stanley Co. $ 40,518,075
Janus Twenty Fund Merrill Lynch and Co., Inc. $135,436,650
Janus Mercury Fund Merrill Lynch and Co., Inc. $ 11,030,625
Janus Worldwide Fund HSBC Holdings PLC $ 14,639,493
Janus Overseas Fund HSBC Holdings PLC $ 1,391,188
Janus Growth and Income Fund Merrill Lynch and Co., Inc. $ 17,038,500
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years. In August 1992, Janus Venture Fund, Inc. and Janus Twenty Fund, Inc.
(both separate Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of the Janus Flexible Income Fund and
Janus Intermediate Government Securities Fund series) were reorganized into
separate series of the Trust. In general, all references to Trust offices in
this section include comparable offices with the respective predecessor funds,
unless a Trust office was filled subsequent to the reorganization.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4923
Trustee, Chairman and President of Janus Aspen Series. Chairman and
President of Janus Capital. Chairman and Director of IDEX Management, Inc.,
Largo, Florida (50% subsidiary of Janus Capital and investment adviser to a
group of mutual funds) ("IDEX").
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
22
<PAGE>
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund series of the Trust.
Thomas F. Marsico* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Twenty Fund and
Janus Growth and Income Fund series of the Trust. Vice President of Janus
Capital.
James P. Goff* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Enterprise Fund and
Janus Venture Fund series of the Trust. Executive Vice President of Janus
Aspen Series. Vice President of Janus Capital. Formerly, securities analyst
at Janus Capital (1988 to 1992).
Warren B. Lammert* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Venture Fund and
Janus Mercury Fund series of the Trust. Vice President of Janus Capital.
Formerly, securities analyst at Janus Capital (1990 to 1992). Formerly,
Executive Vice President of Janus Balanced Fund.
Ronald V. Speaker* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Flexible Income
Fund and Janus High-Yield Fund series of the Trust. Formerly, Portfolio
Manager of Janus Intermediate Government Securities Fund, Janus Short-Term
Bond Fund and Janus Federal Tax-Exempt Fund series of the Trust. Executive
Vice President of Janus Aspen Series. Vice President of Janus Capital.
Formerly, securities analyst and research associate at Janus Capital (1986
to 1992).
Helen Young Hayes* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Worldwide Fund and
Janus Overseas Fund series of the Trust. Executive Vice President of Janus
Aspen Series. Vice President of Janus Capital. Formerly securities analyst
at Janus Capital (1987 to 1993).
Blaine P. Rollins* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Balanced Fund
series of the Trust. Executive Vice President of Janus Aspen Series.
Formerly, fixed-income trader and equity securities analyst at Janus
Capital (1990-1995).
Sandy R. Rufenacht* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Intermediate
Government Securities Fund and Janus Short-Term Bond Fund series of the
Trust. Executive Vice President of Janus Aspen Series. Formerly, senior
accountant, fixed-income trader and fixed-income research analyst
(1990-1995).
Scott W. Schoelzel* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Olympus Fund series
of the Trust. Vice President of Janus Capital. From 1991 to 1993, a
Portfolio Manager with Founders Asset Management, Denver, Colorado. Prior
to 1991, a general partner of Ivy Lane Investments, Denver, Colorado (a
real estate investment partnership).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
23
<PAGE>
Darrell W. Watters* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Federal Tax-Exempt
Fund series of the Trust. Executive Vice President of Janus Aspen Series.
Formerly, municipal bond trader and research analyst at Janus Capital
(1993-1995).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4923
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4923
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance and Chief Financial Officer of Janus Service, Janus
Distributors and Janus Capital. Director of IDEX and Janus Distributors.
Director, Treasurer and Vice President of Finance of Janus Capital
International Ltd. Formerly (1979 to 1992), with the accounting firm of
Price Waterhouse LLP, Denver, Colorado, and Kansas City, Missouri.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4923
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital. Formerly (1990-1991), with The Boston
Company Advisors, Inc., Boston, Massachusetts (mutual fund administration
services).
Kelley Abbott Howes
100 Fillmore Street
Denver, CO 80206-4923
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc.
John W. Shepardson# - Trustee
910 16th Street, Suite 222
Denver, CO 80202
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments) since 1987.
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
24
<PAGE>
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Agreement and Declaration of Trust
("Declaration of Trust"), Massachusetts law or the 1940 Act.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement from the Funds or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1995 ended December 31, 1995**
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* -- $
James P. Craig, III, Trustee*+ -- $
John W. Shepardson, Trustee $41,003 $
William D. Stewart, Trustee $37,018 $
Gary O. Loo, Trustee $37,019 $
Dennis B. Mullen, Trustee $41,528 $
Martin H. Waldinger, Trustee $44,233 $
- ---------------------------------------------------------------------------------------------------
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by
Janus Capital and not the Funds.
** As of December 31, 1995, Janus Funds consisted of two registered investment
companies comprised of a total of 26 funds.
+ Mr. Craig became a Trustee as of June 30, 1995.
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares of the Funds are sold at the net asset value per share as
determined at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") next occurring after a purchase order is received and
accepted by a Fund. The Shareholder's Manual Section of the Prospectus contains
detailed information about the purchase of shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund shares is
determined once each day on which the NYSE is open, at the close of its regular
trading session (normally 4:00 p.m., New York time, Monday through Friday). The
NAV of Fund shares is not determined on days the NYSE is closed (generally, New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas). The per share NAV of each Fund is determined
by dividing the total value of a Fund's securities and other assets, less
liabilities, by the total number of shares outstanding. In determining NAV,
securities listed on an Exchange, the NASDAQ National Market and foreign markets
are valued at the closing prices on such markets, or if such price is lacking
for the trading period immediately preceding the time of determination, such
securities are valued at their current bid price. Municipal securities held by
the Funds are traded primarily in the over-the-counter market. Valuations of
such securities are furnished by one or more pricing services employed by the
Funds and are based upon a computerized matrix system or appraisals obtained by
a pricing service, in each case in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers. Other
securities that are traded on the over-the-counter market are valued at their
closing bid prices. Foreign securities and currencies are converted to U.S.
dollars using the exchange rate in effect at the close of the NYSE. Each Fund
will determine the market value of individual securities held by it, by using
prices provided by one or more professional pricing services which may provide
market prices to other funds, or, as needed, by obtaining market quotations from
independent broker-dealers. Short-term securities maturing within 60 days are
valued on the amortized cost basis. Securities for which quotations are not
readily available, and other assets, are valued at fair values determined in
good faith under procedures established by and under the supervision of the
Trustees.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
25
<PAGE>
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in Japanese markets on certain Saturdays
and in various foreign markets on days which are not business days in New York
and on which a Fund's NAV is not calculated. A Fund calculates its NAV per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of the NYSE once on each day on which the NYSE is open. Such
calculation may not take place contemporaneously with the determination of the
prices of the foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on a Fund's shares are reinvested automatically in additional shares of
that Fund at the NAV determined on the first business day following the record
date. Checks for cash dividends and distributions and confirmations of
reinvestments are usually mailed to shareholders within ten days after the
record date. Any election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account Application
form or by phone) will apply to dividends and distributions the record dates of
which fall on or after the date that a Fund receives such notice. Investors
receiving cash distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of shares are set forth in the Shareholder's
Manual section of the Prospectus. Shares normally will be redeemed for cash,
although each Fund retains the right to redeem its shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the NAV of
that Fund during any 90-day period for any one shareholder. Should redemptions
by any shareholder exceed such limitation, a Fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "Purchase
of Shares - Net Asset Value Determination" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Funds to redeem its shares may be suspended, or
the date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends, (2) the SEC permits such suspension and so orders, or (3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectus. Applications for
specific types of accounts may be obtained by calling the Funds at
1-800-525-3713 or writing to the Funds at P.O. Box 173375, Denver, Colorado
80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number of
transactions by telephone. The Funds, their transfer agent and their distributor
disclaim responsibility for the authenticity of instructions received by
telephone. Such entities will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
among others, requiring personal identification prior to acting upon telephone
instructions, providing written confirmation of the transactions and tape
recording telephone conversations.
SYSTEMATIC WITHDRAWALS
As stated in the Shareholder's Manual section of the Prospectus, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic withdrawal program. The payments
will be made from the proceeds of periodic redemptions of shares in the account
at the NAV. Depending on the size or frequency of the disbursements requested,
and the fluctuation in value of a Fund's portfolio, redemptions for the purpose
of making such disbursements may reduce or even exhaust the shareholder's
account. Either an investor or their Fund, by written notice to the other, may
terminate the investor's systematic withdrawal program without penalty at any
time.
26
<PAGE>
Information about requirements to establish a systematic withdrawal program
may be obtained by writing or calling the Funds at the address or phone number
shown above.
RETIREMENT PLANS
The Funds offer several different types of tax-deferred retirement plans
that an investor may establish to invest in Fund shares, depending on rules
prescribed by the Code. The Individual Retirement Account ("IRA") may be used by
most individuals who have taxable compensation. Simplified Employee Pension
Plans ("SEPs") and Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including corporations,
partnerships and sole proprietors, for the benefit of business owners and their
employees. In addition, the Funds offer a Section 403(b)(7) Plan for employees
of educational organizations and other qualifying tax-exempt organizations.
Investors should consult their tax advisor or legal counsel before selecting a
retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans and Section
403(b)(7) Plans are subject to specific contribution limitations. Generally,
such contributions may be invested at the direction of the participant. The
investment is then held by IFTC as custodian. Each participant's account is
charged an annual fee of $12. There is a maximum annual fee of $24 per taxpayer
identification number.
Distributions from retirement plans are generally subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
59 1/2. Several exceptions to the general rule may apply. However, shareholders
must start withdrawing retirement plan assets no later than April 1 of the year
after they reach age 70 1/2. Several methods exist to determine the amount of
the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Funds at 1-800-525-3713 or write to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an
IRA, SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until
the appropriate forms to establish any such plan have been completed.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
It is a policy of the Funds to make distributions of substantially all of
their respective investment income and any net realized capital gains. Janus
Fund, Janus Twenty Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus
Worldwide Fund and Janus Overseas Fund declare and make annual distributions of
income (if any), Janus Growth and Income Fund and Janus Balanced Fund declare
and make quarterly distributions of income and Janus Flexible Income Fund, Janus
Intermediate Government Securities, Janus Short-Term Bond Fund and Janus Federal
Tax-Exempt Fund declare dividends daily and make monthly distributions of
income. If a month begins on a Saturday, Sunday or holiday, dividends for daily
dividend funds for those days are declared at the end of the preceding month.
Janus Federal Tax-Exempt Fund will use the "average annual method" to determine
the designated percentage of each distribution that is tax-exempt. Under this
method, the percentage of income designated as tax-exempt is based on the
percentage of tax-exempt income earned for each annual period, and may be
substantially different from the Fund's income that was tax-exempt during any
monthly period. Any capital gains realized during each fiscal year ended October
31, as defined by the Code, are normally declared and payable to shareholders in
December. The Funds intend to qualify as regulated investment companies by
satisfying certain requirements prescribed by Subchapter M of the Code.
The Funds may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS.In order to
avoid taxes and interest that must be paid by the Funds if these instruments are
profitable, the Funds may make various elections permitted by the tax laws.
However, these elections could require that the Funds recognize taxable income,
which in turn must be distributed, before the securities are sold and before
cash is received to pay the distributions.
Some foreign securities purchased by the Funds may be subject to foreign
taxes which could reduce the yield on such securities. The amount of such
foreign taxes is expected to be insignificant. Accordingly, the Funds do not
intend to make the election permitted under section 853 of the Code to pass
through such taxes to shareholders as a foreign tax credit. As a result, any
foreign taxes paid or accrued will represent an expense to each Fund which will
reduce its investment company taxable income as this would increase the taxable
income reported to shareholders and require shareholders to take the credit on
their tax returns, complicating the preparation of such returns.
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<PAGE>
PRINCIPAL SHAREHOLDERS
As of December 1, 1995, the officers and Trustees of the Funds as a group
owned less than 1% of the outstanding shares of each of the Funds. In addition,
as of December 1, 1995, Charles Schwab & Co. Inc. ("Schwab"), 101 Montgomery
Street, San Francisco, CA 94104-4122, owned of record 5% or more of the
outstanding shares of the Funds, as shown below.
Fund Name Held by Schwab
----------------------------------------------------------------
Janus Fund 13.96%
Janus Twenty Fund 6.88%
Janus Enterprise Fund 14.32%
Janus Mercury Fund 22.61%
Janus Worldwide Fund 23.41%
Janus Overseas Fund 19.90%
Janus Growth and Income Fund 6.45%
Janus Balanced Fund 20.01%
Janus Flexible Income Fund 33.87%
Janus Intermediate Government Securities Fund 11.74%
Janus Short-Term Bond Fund 10.27%
Janus Federal Tax-Exempt Fund 7.50%
----------------------------------------------------------------
According to information provided by Schwab, this ownership is by nominee
only and does not represent beneficial ownership of such shares, because they
have no investment discretion or voting power with respect to such shares.
However, the following individuals beneficially owned more than 5% of the
outstanding shares of Janus Intermediate Government Securities Fund through
Schwab accounts: G. Penfield Jennings, 1960 Bayshore Boulevard, Dunedin, FL
34698, owned 5.04% and Lillian Winston Hollander, 10 West 66th Street, Apt. 24D,
New York, NY 19923, owned 5.62%. The following individuals beneficially owned
more than 5% of the outstanding shares of Janus Federal Tax-Exempt Fund through
Schwab accounts: M.R. Godwin and Christine K. Godwin, 567 Stonyridge, Heber
Spring, AZ 72543, owned 6.27%. To the knowledge of the Funds, no other person
owned more than 5% of the outstanding shares of any Fund as of the above date.
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts business trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
offers 18 separate series, 6 of which are offered by other prospectuses. On June
16, 1986, the Trust assumed all the assets and liabilities of its predecessor
corporation, Janus Fund, Inc., which was incorporated under the laws of Maryland
on September 18, 1968. All references in this SAI to Janus Fund and all
financial and other information about Janus Fund prior to June 16, 1986, are to
the former Janus Fund, Inc.; all references after June 16, 1986 are to the Janus
Fund series of the Trust.
On August 7, 1992, in a tax-free reorganization, the Trust assumed all the
assets and liabilities of i) the Janus Flexible Income Fund and Janus
Intermediate Government Securities Fund series of Janus Income Series, a
separate Massachusetts business trust created on May 28, 1986; and Janus Twenty
Fund, Inc., a Maryland corporation originally incorporated as Janus Value Fund
in 1984. Shareholders received shares of the series of the Trust equal both in
number and net asset value to their shares of the respective predecessor entity.
In connection with the reorganization, Janus Flexible Income Fund and Janus
Intermediate Government Securities Fund changed their fiscal year ends from
December 31 to October 31. All references in this SAI to the Funds, and all
financial and other information about the Funds prior to August 7, 1992, are to
the respective predecessor entities; all references after August 7, 1992, are to
the respective series of the Trust.
Janus Worldwide Fund and Janus Growth and Income Fund were added to the
Trust as separate series on April 29, 1991. Janus Enterprise Fund, Janus
Balanced Fund and Janus Short-Term Bond Fund were added to the Trust as separate
series on August 27, 1992. Janus Mercury Fund and Janus Federal Tax-Exempt Fund
were added to the Trust as separate series on April 20, 1993. Janus Overseas
Fund was added to the Trust as a separate series on April 14, 1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Funds and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Funds or the
Trustees. The Declaration of Trust also provides for indemnification from the
28
<PAGE>
assets of the Funds for all losses and expenses of any Fund shareholder held
liable for the obligations of their Fund. Thus, the risk of a shareholder
incurring a financial loss on account of its liability as a shareholder of one
of the Funds is limited to circumstances in which their Fund would be unable to
meet its obligations. The possibility that these circumstances would occur is
remote. The Trustees intend to conduct the operations of the Funds to avoid, to
the extent possible, liability of shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
Shares of each Fund may be transferred by endorsement or stock power as is
customary, but a Fund is not bound to recognize any transfer until it is
recorded on its books.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992, with the exception of Mr. Craig who was appointed by the Trustees as
of June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, resignation,
bankruptcy, incapacity or removal. Vacancies will be filled by a majority of the
remaining Trustees, subject to the 1940 Act. Therefore, no annual or regular
meetings of shareholders normally will be held, unless otherwise required by the
Declaration of Trust or the 1940 Act. Subject to the foregoing, shareholders
have the power to vote to elect or remove Trustees, to terminate or reorganize
their Fund, to amend the Declaration of Trust, to bring certain derivative
actions and on any other matters on which a shareholder vote is required by the
1940 Act, the Declaration of Trust, the Trust's Bylaws or the Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series of the
Trust will vote separately only with respect to those matters that affect only
that series or if a portfolio's interest in the matter differs from the
interests of other portfolios of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
securities to which this SAI relates. If further information is desired with
respect to the Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
29
<PAGE>
PERFORMANCE INFORMATION
The Prospectus contains a brief description of how performance is
calculated.
Quotations of average annual total return for a Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in such Fund over periods of 1, 5, and 10 years (up to the life of
the Fund). These are the annual total rates of return that would equate the
initial amount invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula: P(1 + T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual total return, n =
the number of years and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an annual
basis, and assume that all dividends and distributions are reinvested when paid.
The average annual total return of each Fund, computed as of October 31, 1995,
is shown in the table below:
<TABLE>
<CAPTION>
Date Number Average Annual Total Return
Available of Months One Five Ten Life of
Fund Name for Sale in Lifetime Year Years Years Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund 2/5/70 309 21.62% 17.27% 15.98% 16.51%
Janus Twenty Fund 5/2/85 126 24.67% 19.54% 15.63% 15.49%
Janus Enterprise Fund 9/1/92 38 15.46% N/A N/A 23.08%
Janus Mercury Fund 5/3/93 30 25.53% N/A N/A 25.73%
Janus Worldwide Fund 5/15/91 53.5 8.89% N/A N/A 17.32%
Janus Overseas Fund 5/2/94 18 11.78% N/A N/A 10.27%
Janus Growth and Income Fund 5/15/91 53.5 24.20% N/A N/A 15.78%
Janus Balanced Fund 9/1/92 38 18.26% N/A N/A 13.38%
Janus Flexible Income Fund 7/2/87 100 15.35% 13.98% N/A 9.29%
Janus Intermediate Government Securities Fund 7/26/91 51 10.19% N/A N/A 5.84%
Janus Short-Term Bond Fund 9/1/92 38 5.55% N/A N/A 4.01%
Janus Federal Tax-Exempt Fund 5/3/93 30 12.60% N/A N/A 4.56%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Quotations of a Fund's yield are based on the investment income per share
earned during a particular 30-day period (including dividends, if any, and
interest), less expenses accrued during the period ("net investment income"),
and are computed by dividing net investment income by the net asset value per
share on the last day of the period, according to the following formula:
YIELD = 2 [(a-b + 1)6 - 1]
cd
where a = dividend and interest income
b = expenses accrued for the period
c = average daily number of shares outstanding during the period
that were entitled to receive dividends
d = maximum net asset value per share on the last day of the period
The tax-equivalent yield used for Janus Federal Tax-Exempt Fund is the rate
that an investor would have to earn from a fully taxable investment after taxes
to equal the Fund's tax-free yield. Tax-equivalent yields are calculated by
dividing a Fund's yield by the result of one minus a stated federal or combined
federal and state tax rate. If only a portion of a Funds' yield is tax-exempt,
only that portion is adjusted in the calculation. Janus Federal Tax-Exempt Fund
may invest a portion of its assets in obligations that are subject to federal
income tax. When the Fund invests in these obligations, its tax-equivalent yield
will be lower.
The yield for the 30-day period ending October 31, 1995, for the
Fixed-Income Funds is shown below:
Janus Flexible Income Fund 7.39%
Janus Intermediate Government Securities Fund 5.37%
Janus Short-Term Bond Fund 5.81%
Janus Federal Tax-Exempt Fund 5.18%
30
<PAGE>
From time to time in advertisements or sales material, the Funds may
discuss their performance ratings or other information as published by
recognized mutual fund statistical rating services, including, but not limited
to, Lipper Analytical Services, Inc., Ibbotson Associates, Micropal or
Morningstar or by publications of general interest such as Forbes or Money. The
Funds may also compare their performance to that of other selected mutual funds,
mutual fund averages or recognized stock market indicators, including, but not
limited to, the Standard & Poor's 500 Composite Stock Price Index, the Standard
& Poor's Midcap Index, the Dow Jones Industrial Average, the Lehman Brothers
Government/Corporate Bond Index, the Lehman Brothers Government/Corporate 1-3
Year Bond Index, the Lehman Brothers Long Government/Corporate Bond Index, the
Lehman Brothers Intermediate Government Bond Index, the Lehman Brothers
Municipal Bond Index, the Russell 2000 Index and the NASDAQ composite. In
addition, the Funds may compare their total return or yield to the yield on U.S.
Treasury obligations and to the percentage change in the Consumer Price Index.
Janus Worldwide Fund and Janus Overseas Fund may also compare their performance
to the record of global market indicators, such as the Morgan Stanley
International World Index or Morgan Stanley Capital International Europe,
Australia, Far East Index (EAFE Index). Such performance ratings or comparisons
may be made with funds that may have different investment restrictions,
objectives, policies or techniques than the Funds and such other funds or market
indicators may be comprised of securities that differ significantly from the
Funds' investments.
FINANCIAL STATEMENTS
The following audited financial statements for the period ended October 31,
1995 are hereby incorporated into this SAI by reference to the Funds' Annual
Report dated October 31, 1995. A copy of such report accompanies this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedules of Investments as of October 31, 1995
Statements of Operations for the periods ended October 31, 1995
Statements of Assets and Liabilities as of October 31, 1995
Statements of Changes in Net Assets for the periods ended October 31, 1995
and 1994
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
31
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32
<PAGE>
[LOGO]
JANUS VENTURE FUND
100 Fillmore Street
Denver, CO 80206-4923
(800) 525-3713
STATEMENT OF ADDITIONAL INFORMATION
February 18, 1996
Janus Venture Fund (the "Fund") is a no-load mutual fund that seeks capital
appreciation. The Fund normally invests at least 50% of its equity assets in
securities issued by small-sized issuers. Small-sized issuers are those who have
market capitalizations of less than $1 billion or annual gross revenues of less
than $500 million. Subject to this policy, the Fund may also invest in larger
issuers. Depending upon its portfolio managers' opinion or prevailing market,
financial and economic conditions, the Fund may at times hold substantial
positions in cash or interest-bearing securities.
The Fund is a separate series of Janus Investment Fund, a Massachusetts
business trust (the "Trust"). Each series of the Trust represents shares of
beneficial interest in a separate portfolio of securities and other assets with
its own objective and policies. The Fund is managed by Janus Capital Corporation
("Janus Capital").
THE FUND HAS DISCONTINUED PUBLIC SALES OF ITS SHARES TO NEW INVESTORS.
HOWEVER, SHAREHOLDERS WHO MAINTAIN OPEN FUND ACCOUNTS ARE PERMITTED TO CONTINUE
TO PURCHASE SHARES OF THE FUND AND TO REINVEST ANY DIVIDENDS AND/OR CAPITAL
GAINS DISTRIBUTIONS IN SHARES OF THE FUND. ONCE A SHAREHOLDER'S FUND ACCOUNT IS
CLOSED, IT MAY NOT BE POSSIBLE FOR THAT SHAREHOLDER TO PURCHASE ADDITIONAL FUND
SHARES. See the "Shareholder's Manual" section of the Prospectus for more
details. The Fund may resume sales of its shares at some future date, although
it has no present intention of doing so.
This Statement of Additional Information ("SAI") is not a Prospectus and
should be read in conjunction with the Fund's Prospectus dated February 18,
1996, which is incorporated by reference into this SAI and may be obtained from
the Trust at the above phone number or address. This SAI contains additional and
more detailed information about the Fund's operations and activities than the
Prospectus.
1
<PAGE>
JANUS VENTURE FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies, Restrictions and Techniques .......................... 3
Investment Objective .................................................... 3
Portfolio Policies ...................................................... 3
Investment Restrictions ................................................. 3
Types of Securities and Investment Techniques ........................... 5
Illiquid Securities .................................................. 5
Zero Coupon, Pay-In-Kind and Step Coupon Securities .................. 5
Pass-Through Securities .............................................. 5
Depositary Receipts .................................................. 6
Municipal Obligations ................................................ 6
Other Income-Producing Securities .................................... 7
High-Yield/High-Risk Bonds ........................................... 7
Repurchase and Reverse Repurchase Agreements ......................... 7
Futures, Options and Other Derivative Instruments .................... 8
Investment Adviser ........................................................ 15
Custodian, Transfer Agent and Certain Affiliations ........................ 16
Portfolio Transactions and Brokerage ...................................... 17
Officers and Trustees ..................................................... 19
Purchase of Shares ........................................................ 21
Net Asset Value Determination ........................................... 21
Reinvestment of Dividends and Distributions ............................. 22
Redemption of Shares ...................................................... 22
Shareholder Accounts ...................................................... 22
Telephone Transactions .................................................. 22
Systematic Withdrawals .................................................. 22
Retirement Plans .......................................................... 23
Income Dividends, Capital Gains Distributions and Tax Status .............. 23
Principal Shareholders .................................................... 23
Miscellaneous Information ................................................. 24
Shares of the Trust ..................................................... 24
Voting Rights ........................................................... 24
Independent Accountants ................................................. 24
Registration Statement .................................................. 24
Performance Information ................................................... 25
Financial Statements ...................................................... 25
Appendix A ................................................................ 26
Explanation of Rating Categories .......................................... 26
- --------------------------------------------------------------------------------
2
<PAGE>
INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
INVESTMENT OBJECTIVE
As stated in the Prospectus, the Fund's investment objective is capital
appreciation. Realization of income is not a significant investment
consideration and any income realized on the Fund's investments therefore will
be incidental to the Fund's objective. There can be no assurance that the Fund
will, in fact, achieve its objective. The investment objective of the Fund is
not fundamental and may be changed by the Trustees without shareholder approval.
PORTFOLIO POLICIES
The Prospectus discusses the types of securities in which the Fund will
invest, portfolio policies of the Fund and the investment techniques of the
Fund. The Prospectus includes a discussion of portfolio turnover policies. The
Fund's portfolio turnover rates (total purchases or sales, whichever is less,
compared to average monthly value of portfolio securities) for the fiscal years
ended October 31, 1995 and October 31, 1994, were 113% and 114%, respectively.
INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the Fund is subject to certain fundamental
policies and restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or the Fund if a matter affects just
the Fund), or (ii) 67% or more of the voting securities present at a meeting if
the holders of more than 50% of the outstanding voting securities of the Trust
(or the Fund) are present or represented by proxy. As fundamental policies, the
Fund may not:
(1) Own more than 10% of the outstanding voting securities of any one
issuer and, as to seventy-five percent (75%) of the value of its total assets,
purchase the securities of any one issuer (except cash items and "government
securities" as defined under the Investment Company Act of 1940, as amended (the
"1940 Act")), if immediately after and as a result of such purchase, the value
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
value of the Fund's total assets.
(2) Invest more than 25% of the value of its assets in any particular
industry (other than U.S. government securities).
(3) Invest directly in real estate or interests in real estate; however,
the Fund may own debt or equity securities issued by companies engaged in those
businesses.
(4) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the Fund from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or repurchase
agreements).
(6) Act as an underwriter of securities issued by others, except to the
extent that the Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
As a fundamental policy, the Fund may, notwithstanding any other investment
policy or limitation (whether or not fundamental), invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies and
limitations as the Fund.
The Trustees have adopted additional investment restrictions for the Fund.
These restrictions are operating policies of the Fund and may be changed by the
Trustees without shareholder approval. The additional investment restrictions
adopted by the Trustees to date include the following:
(a) The Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets. Included within that
amount, but not to exceed 2% of the value of the Fund's net assets, may be
warrants that are not listed on the New York or American Stock Exchange.
Warrants acquired by the Fund in units or attached to securities shall be deemed
to be without value for the purpose of monitoring this policy.
(b) The Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in futures
contracts and related options that
3
<PAGE>
do not fall within the definition of bona fide hedging transactions will exceed
5% of the fair market value of the Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into; and (ii) enter into any futures contracts if the aggregate amount of the
Fund's commitments under outstanding futures contracts positions would exceed
the market value of its total assets.
(c) The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to the
securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(d) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments and other deposits
in connection with transactions in futures, options, swaps and forward contracts
shall not be deemed to constitute purchasing securities on margin.
(e) The Fund does not currently intend to (i) purchase securities of other
investment companies, except in the open market where no commission except the
ordinary broker's commission is paid, or (ii) purchase or retain securities
issued by other open-end investment companies. Limitations (i) and (ii) do not
apply to money market funds or to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger. If the Fund invests in a money market fund, Janus Capital will reduce
its advisory fee by the amount of any investment advisory and administrative
services fees paid to the investment manager of the money market fund.
(f) The Fund may not mortgage or pledge any securities owned or held by the
Fund in amounts that exceed, in the aggregate, 15% of the Fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection
with such contracts.
(g) The Fund does not intend to purchase securities of any issuer (other
than U.S. government agencies and instrumentalities or instruments guaranteed by
an entity with a record of more than three years' continuous operation,
including that of predecessors) with a record of less than three years'
continuous operation (including that of predecessors) if such purchase would
cause the cost of the Fund's investments in all such issuers to exceed 5% of the
Fund's total assets taken at market value at the time of such purchase.
(h) The Fund does not currently intend to invest directly in oil, gas, or
other mineral development or exploration programs or leases; however, the Fund
may own debt or equity securities of companies engaged in those businesses.
(i) The Fund may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of its
total assets (including the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 25% of the value of the Fund's total assets by
reason of a decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, deposits of assets
to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
(j) The Fund does not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net assets
would be invested in repurchase agreements not entitling the holder to payment
of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a
readily available market. The Trustees, or the Fund's investment adviser acting
pursuant to authority delegated by the Trustees, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to
such rule, Section 4(2) commercial paper and municipal lease obligations.
Accordingly, such securities may not be subject to the foregoing limitation.
(k) The Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Fund's restriction on investing in a particular
industry, the Fund will rely primarily on industry classifications as published
by Bloomberg L.P., provided that financial service companies will be classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry). To the extent that Bloomberg L.P. classifications are so broad that
the primary economic characteristics in a single class are materially different,
the Fund may further classify issuers in accordance with industry
classifications as published by the Securities and Exchange Commission ("SEC").
4
<PAGE>
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees of the Fund
have authorized Janus Capital to make liquidity determinations with respect to
its securities, including Rule 144A Securities, commercial paper and municipal
lease obligations. Under the guidelines established by the Trustees, Janus
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; 2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by a Nationally Recognized Statistical
Rating Organization.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
The Fund may invest up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities. Zero coupon bonds are issued and traded at a discount
from their face value. They do not entitle the holder to any periodic payment of
interest prior to maturity. Step coupon bonds trade at a discount from their
face value and pay coupon interest. The coupon rate is low for an initial period
and then increases to a higher coupon rate thereafter. The discount from the
face amount or par value depends on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer. Pay-in-kind bonds normally give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), the Fund must
distribute its investment company taxable income, including the original issue
discount accrued on zero coupon or step coupon bonds. Because the Fund will not
receive cash payments on a current basis in respect of accrued original-issue
discount on zero coupon bonds or step coupon bonds during the period before
interest payments begin, in some years the Fund may have to distribute cash
obtained from other sources in order to satisfy the distribution requirements
under the Code. The Fund might obtain such cash from selling other portfolio
holdings which might cause the Fund to incur capital gains or losses on the
sale. Additionally, these actions are likely to reduce the assets to which Fund
expenses could be allocated and to reduce the rate of return for the Fund. In
some circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might otherwise
make it undesirable for the Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
PASS-THROUGH SECURITIES
The Fund may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests.
A pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Fund. The most common type of
pass-through securities are mortgage-backed securities. Government National
Mortgage Association ("GNMA") Certificates are mortgage-backed securities that
evidence an undivided interest in a pool of mortgage loans. GNMA Certificates
differ from bonds in that principal is paid back monthly by the borrowers over
the term of the loan rather than returned in a lump sum at maturity. The Fund
will generally purchase "modified pass-through" GNMA Certificates, which entitle
the holder to receive a share of all interest and principal payments paid and
owned on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether or not the mortgagor actually makes the payment. GNMA
Certificates are backed as to the timely payment of principal and interest by
the full faith and credit of the U.S. government.
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The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest but it is not guaranteed by the full faith and credit of
the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Fund), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. The Fund's portfolio managers will
consider estimated prepayment rates in calculating the average weighted maturity
of the Fund. A borrower is more likely to prepay a mortgage that bears a
relatively high rate of interest. This means that in times of declining interest
rates, higher yielding mortgage-backed securities held by the Fund might be
converted to cash and the Fund will be forced to accept lower interest rates
when that cash is used to purchase additional securities in the mortgage-backed
securities sector or in other investment sectors. Additionally, prepayments
during such periods will limit the Fund's ability to participate in as large a
market gain as may be experienced with a comparable security not subject to
prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and interest
and principal payments ultimately depend upon payment of the underlying loans by
individuals. Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales agreements
that may be created when a municipality enters into an installment purchase
contract or lease with a vendor. Such securities may be secured by the assets
purchased or leased by the municipality; however, if the municipality stops
making payments, there generally will be no recourse against the vendor. The
market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
DEPOSITARY RECEIPTS
The Fund may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underying securities issued by a foreign issuer.
ADRs, in registered form, are designed for use in U.S. securities markets.
Unsponsored ADRs may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR facility, whereas
foreign issuers typically bear certain costs in a sponsored ADR. The bank or
trust company depositary of an unsponsored ADR may be under no obligation to
distribute shareholder communications received from the foreign issuer or to
pass through voting rights. The Fund may also invest in European Depositary
Receipts ("EDRs"), receipts issued by a European financial institution
evidencing an arrangement similar to that of ADRs, and in other similar
instruments representing securities of foreign companies. EDRs, in bearer form,
are designed for use in European securities markets.
MUNICIPAL OBLIGATIONS
The Fund may invest in municipal obligations issued by states, territories
and possessions of the United States and the District of Columbia. The value of
municipal obligations can be affected by changes in their actual or perceived
credit quality. The credit quality of municipal obligations can be affected by,
among other things, the financial condition of the issuer or guarantor, the
issuer's future borrowing plans and sources of revenue, the economic feasibility
of the revenue bond project or general borrowing purpose, political or economic
developments in the region where the security is issued, and the liquidity of
the security. Because municipal securities are generally traded
over-the-counter, the liquidity of a particular issue often depends on the
willingness of dealers to make a market in the security. The liquidity of some
municipal obligations may be enhanced by demand features, which would enable the
Fund to demand payment on short notice from the issuer or a financial
intermediary.
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OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Fund may purchase
include, but are not limited to, the following types of securities:
Variable and floating rate obligations. These types of securities have
variable or floating rates of interest and, under certain limited circumstances,
may have varying principal amounts. Variable and floating rate 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"). See also "Inverse Floaters."
Standby commitments. These instruments, which are similar to a put, give
the Fund the option to obligate a broker, dealer or bank to repurchase a
security held by the Fund at a specified price.
Tender option bonds. Tender option bonds are generally long-term securities
that are coupled with the 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.
Inverse floaters. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. Certain
inverse floaters may have an interest rate reset mechanism that multiplies the
effects of change in the underlying index. Such mechanism may increase the
volatility of the security's market value. 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. The Fund will not
invest more than 5% of its assets in inverse floaters.
The Fund will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of its portfolio.
HIGH-YIELD/HIGH-RISK BONDS
The Fund may invest up to 35% of its net assets in corporate debt
securities that are rated below investment grade (securities rated BB or lower
by Standard & Poor's Ratings Services ("Standard & Poor's") or Ba or lower by
Moody's Investors Services, Inc. ("Moody's")). Lower rated bonds involve a
higher degree of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an unanticipated
default, the Fund would experience a reduction in its income, and could expect a
decline in the market value of the securities so affected.
The Fund may also invest in unrated debt securities of foreign and domestic
issuers. 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. Because of
the size and perceived demand of the issue, among other factors, certain
municipalities may not incur the costs of obtaining a rating. The Fund's
portfolio managers will analyze the creditworthiness of the issuer, as well as
any financial institution or other party responsible for payments on the
security, in determining whether to purchase unrated municipal bonds. Unrated
debt securities will be included in the 35% limit unless the portfolio managers
deem such securities to be the equivalent of investment grade securities.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, the Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon incremental amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or "collateral." The Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause
the Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, the Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days will be subject to the 15% limit on illiquid investments. While
it is possible to eliminate all risks from these transactions, it is the policy
of the Fund to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Janus Capital.
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The Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities. In a reverse repurchase
agreement, the Fund sells a portfolio security to another party, such as a bank
or broker-dealer, in return for cash and agrees to repurchase the instrument at
a particular price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The
Fund will enter into reverse repurchase agreements only with parties that Janus
Capital deems creditworthy.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Futures Contracts. The Fund may enter into contracts for the purchase or
sale for future delivery of fixed-income securities, foreign currencies or
contracts based on financial indices, including indices of U.S. government
securities, foreign government securities, equity or fixed-income securities.
U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures commission
merchant ("FCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain high-grade liquid assets by the Fund's custodian for the benefit of the
FCM. Initial margin payments are similar to good faith deposits or performance
bonds. Unlike margin extended by a securities broker, initial margin payments do
not constitute purchasing securities on margin for purposes of the Fund's
investment limitations. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments for the
benefit of the FCM to settle the change in value on a daily basis. The party
that has a gain may be entitled to receive all or a portion of this amount. In
the event of the bankruptcy of the FCM that holds margin on behalf of the Fund,
the Fund may be entitled to a return of margin owed to the Fund only in
proportion to the amount received by the FCM's other customers. Janus Capital
will attempt to minimize the risk by careful monitoring of the creditworthiness
of the FCMs with which the Fund does business and by depositing margin payments
in a segregated account with the Fund's custodian.
The Fund intends to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the CFTC
and the National Futures Association, which regulate trading in the futures
markets. The Fund will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. To the extent
that the Fund holds positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of the Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
Although the Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to the Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days. However, because
the Fund's cash that may otherwise be invested would be held uninvested or
invested in high-grade liquid assets so long as the futures position remains
open, the Fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
The Fund's primary purpose in entering into futures contracts is to protect
the Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, the Fund could enter into a futures contract to
purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against the Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent the Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
the Fund's obligations with respect to the futures contracts will consist of
high-grade liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by the Fund with respect to the futures contracts.
Conversely, if the Fund holds stocks and seeks to protect itself from a decrease
in stock prices, the Fund might sell stock index futures contracts, thereby
hoping to offset the potential decline in the value of its portfolio securities
by a corresponding increase in the value of the futures contract position. The
Fund could protect against a decline in stock prices by selling portfolio
securities and investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without having to sell
portfolio securities.
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If the Fund owns Treasury bonds and the portfolio managers expect interest
rates to increase, the Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as the Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the value of the Treasury bonds would decline, but the value of the
Fund's interest rate futures contract will increase, thereby keeping the net
asset value of the Fund from declining as much as it may have otherwise. If, on
the other hand, the portfolio managers expect interest rates to decline, the
Fund may take a long position in interest rate futures contracts in anticipation
of later closing out the futures position and purchasing bonds. Although the
Fund can accomplish similar results by buying securities with long maturities
and selling securities with short maturities, given the greater liquidity of the
futures market than the cash market, it may be possible to accomplish the same
result more easily and more quickly by using futures contracts as an investment
tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by the portfolio
managers still may not result in a successful use of futures.
Futures contracts entail risks. Although the Fund believes that use of such
contracts will benefit the Fund, the Fund's overall performance could be worse
than if the Fund had not entered into futures contracts if the portfolio
managers' investment judgement proves incorrect. For example, if the Fund has
hedged against the effects of a possible decrease in prices of securities held
in its portfolio and prices increase instead, the Fund will lose part or all of
the benefit of the increased value of these securities because of offsetting
losses in its futures positions. In addition, if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to the Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to
the Fund will not match exactly the Fund's current or potential investments. The
Fund may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests -
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities which involves a risk that the
futures position will not correlate precisely with the performance of the Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with the
Fund's investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between the Fund's investments and its futures positions also may
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. The
Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in the Fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for the Fund to enter
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into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, the Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, the Fund's access to other assets held to cover its futures positions
also could be impaired.
Options on Futures Contracts. The Fund may buy and write put and call
options on futures contracts. An option on a future gives the Fund the right
(but not the obligation) to buy or sell a futures contract at a specified price
on or before a specified date. The purchase of a call option on a futures
contract is similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option compared to either
the price of the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less risky than
ownership of the futures contract or the underlying instrument. As with the
purchase of futures contracts, when the Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
future's price at the expiration of the option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, the Fund will retain the full amount of the option premium which provides
a partial hedge against any increase in the price of securities which the Fund
is considering buying. If a call or put option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between the change
in the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk the Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Contracts. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Fund may enter into
forward contracts to purchase and sell government securities, equity or income
securities, foreign currencies or other financial instruments. Forward contracts
generally are traded in an interbank market conducted directly between traders
(usually large commercial banks) and their customers. Unlike futures contracts,
which are standardized contracts, forward contracts can be specifically drawn to
meet the needs of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Fund's principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). The Fund may
enter into forward currency contracts with stated contract values of up to the
value of the Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). The Fund will exchange foreign currencies
for U.S. dollars and for other foreign currencies in the normal course of
business and may buy and sell currencies through forward currency contracts in
order to fix a price for securities it has agreed to buy or sell ("transaction
hedge"). The Fund also may hedge some or all of its investments denominated in a
foreign currency against a decline in the value of that currency relative to the
U.S. dollar by entering into forward currency contracts to sell an amount of
that currency (or a proxy currency whose performance is expected to replicate or
exceed the performance of that currency relative to the U.S. dollar)
approximating the value of some or all of its portfolio securities denominated
in that currency ("position hedge") or by participating in options or futures
contracts with respect to the currency. The Fund also may enter into a forward
currency contract with respect to a currency where the Fund is considering the
purchase or sale of investments denominated in that currency but has not yet
selected the specific investments ("anticipatory hedge"). In any of these
circumstances the Fund may, alternatively, enter into a forward currency
contract to purchase or sell one foreign currency for a second currency that is
expected to perform more favorably relative to the U.S. dollar if the portfolio
managers believe there is a reasonable degree of correlation between movements
in the two currencies ("cross-hedge").
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These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on the Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting the Fund's currency exposure from one foreign
currency to another removes the Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
the Fund if its portfolio managers' projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may result in
poorer overall performance for the Fund than if it had not entered into such
contracts.
The Fund will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in the currency underlying the forward
contract or the currency being hedged. To the extent that the Fund is not able
to cover its forward currency positions with underlying portfolio securities,
the Fund's custodian will segregate cash or high-grade liquid assets having a
value equal to the aggregate amount of the Fund's commitments under forward
contracts entered into with respect to position hedges, cross-hedges and
anticipatory hedges. If the value of the securities used to cover a position or
the value of segregated assets declines, the Fund will find alternative cover or
segregate additional cash or high-grade liquid assets on a daily basis so that
the value of the covered and segregated assets will be equal to the amount of
the Fund's commitments with respect to such contracts. As an alternative to
segregating assets, the Fund may buy call options permitting the Fund to buy the
amount of foreign currency being hedged by a forward sale contract or the Fund
may buy put options permitting it to sell the amount of foreign currency subject
to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contacts. In such event,
the Fund's ability to utilize forward contracts may be restricted. In addition,
the Fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge Fund
assets.
Options on Foreign Currencies. The Fund may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the Fund may buy put options
on the foreign currency. If the value of the currency declines, the Fund will
have the right to sell such currency for a fixed amount in U.S. dollars, thereby
offsetting, in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects of
the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to the Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, the Fund could sustain losses on transactions in foreign
currency options that would require the Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
The Fund may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, the Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, the Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge the increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and the Fund would be required
to buy or sell the underlying currency at a loss which may not be offset by the
amount of the premium. Through the writing of options on foreign currencies, the
Fund also may lose all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
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The Fund may write covered call options on foreign currencies. A call
option written on a foreign currency by the Fund is "covered" if the Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currencies held in its portfolio. A
call option is also covered if the Fund has a call on the same foreign currency
in the same principal amount as the call written if the exercise price of the
call held (i) is equal to or less than the exercise price of the call written or
(ii) is greater than the exercise price of the call written, if the difference
is maintained by the Fund in cash or high-grade liquid assets in a segregated
account with the Fund's custodian.
The Fund also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
the Fund owns or has the right to acquire and which is denominated in the
currency underlying the option. Call options on foreign currencies which are
entered into for cross-hedging purposes are not covered. However, in such
circumstances, the Fund will collateralize the option by segregating cash or
high-grade liquid assets in an amount not less than the value of the underlying
foreign currency in U.S. dollars marked-to-market daily.
Options on Securities. In an effort to increase current income and to
reduce fluctuations in net asset value, the Fund may write covered put and call
options and buy put and call options on securities that are traded on United
States and foreign securities exchanges and over-the-counter. The Fund may write
and buy options on the same types of securities that the Fund may purchase
directly.
A put option written by the Fund is "covered" if the Fund (i) segregates
cash not available for investment or high-grade liquid assets with a value equal
to the exercise price of the put with the Fund's custodian or (ii) holds a put
on the same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by the Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if the Fund holds a call
on the same security and in the same principal amount as the call written and
the exercise price of the call held (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash and high-grade
liquid assets in a segregated account with its custodian.
The Fund also may write call options that are not covered for cross-hedging
purposes. The Fund collateralizes its obligation under a written call option for
cross-hedging purposes by segregating cash or high-grade liquid assets in an
amount not less than the market value of the underlying security,
marked-to-market daily. The Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its portfolio managers believe
that writing the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit the Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
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<PAGE>
written put option, such transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by deposited
high-grade liquid assets. Effecting a closing transaction also will permit the
Fund to use the cash or proceeds from the concurrent sale of any securities
subject to the option for other investments. If the Fund desires to sell a
particular security from its portfolio on which it has written a call option,
the Fund will effect a closing transaction prior to or concurrent with the sale
of the security.
The Fund will realize a profit from a closing transaction if the price of
the purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option. The Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market of a call
option generally will reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If the
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
The Fund may write options in connection with buy-and-write transactions.
In other words, the Fund may buy a security and then write a call option against
that security. The exercise price of such call will depend upon the expected
price movement of the underlying security. The exercise price of a call option
may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using at-the-money call options may be used when it
is expected that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the premiums
received from writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. If the call options
are exercised in such transactions, the Fund's maximum gain will be the premium
received by it for writing the option, adjusted upwards or downwards by the
difference between the Fund's purchase price of the security and the exercise
price. If the options are not exercised and the price of the underlying security
declines, the amount of such decline will be offset by the amount of premium
received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put options minus the amount by which the market price
of the security is below the exercise price.
The Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, the Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
The Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by the Fund
upon exercise of the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to the Fund.
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<PAGE>
Eurodollar Instruments. The Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. The Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
Swaps and Swap-Related Products. The Fund may enter into interest rate
swaps, caps and floors on either an asset-based or liability-based basis,
depending upon whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis (i.e., the two payment
streams are netted out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments). The net amount of the excess, if any,
of the Fund's obligations over its entitlement with respect to each interest
rate swap will be calculated on a daily basis and an amount of cash or
high-grade liquid assets having an aggregate net asset value at least equal to
the accrued excess will be maintained in a segregated account by the Fund's
custodian. If the Fund enters into an interest rate swap on other than a net
basis, it would maintain a segregated account in the full amount accrued on a
daily basis of its obligations with respect to the swap. The Fund will not enter
into any interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is rated in
one of the three highest rating categories of at least one nationally recognized
statistical rating organization at the time of entering into such transaction.
Janus Capital will monitor the creditworthiness of all counterparties on an
ongoing basis. If there is a default by the other party to such a transaction,
the Fund will have contractual remedies pursuant to the agreements related to
the transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Janus Capital has determined that, as
a result, the swap market has become relatively liquid. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent the
Fund sells (i.e., writes) caps and floors, it will segregate cash or high-grade
liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by the Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with respect to
interest rate swaps is limited to the net amount of the payments that the Fund
is contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to receive. The Fund
may buy and sell (i.e., write) caps and floors without limitation, subject to
the segregation requirement described above.
Additional Risks of Options on Foreign Currencies, Forward Contracts and
Foreign Instruments. Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, an option writer and a buyer or
seller of futures or forward contracts could lose amounts substantially in
excess of any premium received or initial margin or collateral posted due to the
potential additional margin and collateral requirements associated with such
positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting the Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining
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<PAGE>
of options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on the OCC
or its clearing member, impose special procedures on exercise and settlement,
such as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in the
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
INVESTMENT ADVISER
As stated in the Prospectus, the Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. The
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Fund's investments, provide office space for
the Fund, pay the salaries, fees and expenses of all Fund officers and of those
Trustees who are affiliated with Janus Capital, and pay all expenses of
promoting the sale of Fund shares other than the cost of complying with
applicable laws relating to the offer or sale of shares of the Fund. Janus
Capital also may make payments to selected broker-dealer firms or institutions
which perform recordkeeping or other services with respect to shareholder
accounts. The minimum aggregate size required for eligibility for such payments,
and the factors in selecting the broker-dealer firms and institutions to which
they will be made, are determined from time to time by Janus Capital. Janus
Capital is also authorized to perform the management and administrative services
necessary for the operation of the Fund.
The Fund pays custodian and transfer agent fees and expenses, brokerage
commissions and dealer spreads and other expenses in connection with the
execution of portfolio transactions, legal and accounting expenses, interest and
taxes, registration fees, expenses of shareholders' meetings and reports to
shareholders, fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Fund's Prospectus and
Statement of Additional Information to current shareholders, and other costs of
complying with applicable laws regulating the sale of Fund shares. Pursuant to
the Advisory Agreement, Janus Capital furnishes certain other services,
including net asset value determination and Fund accounting, recordkeeping, and
blue sky registration and monitoring services, for which the Fund may reimburse
Janus Capital for its costs.
The Fund has agreed to compensate Janus Capital for its services by the
monthly payment of a fee at the annual rate of 1% of the first $30 million of
the Fund's average daily net assets, 0.75% of the next $270 million of the
Fund's average daily net assets, 0.70% of the next $200 million of the Fund's
average daily net assets, and 0.65% of the average daily net assets of the Fund
in excess of $500 million. However, Janus Capital has agreed to waive its fee by
an amount equal to the amount, if any, that the Fund's normal operating expenses
chargeable to its income account in any fiscal year, including the investment
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed the most restrictive limitation imposed by any
state. The Fund believes that the most restrictive limitation applicable to the
Fund is 2.50% of the first $30 million of average daily net assets, plus 2.00%
of the next $70 million of average daily net assets, plus 1.50% of the balance
of the average daily net assets of the Fund for a fiscal year.
For the fiscal year ended October 31, 1995, the investment advisory fee was
$10,947,796. For the fiscal years ended October 31, 1994, and October 31, 1993,
the Fund incurred investment advisory fees of $10,631,388 and $12,126,462,
respectively. Janus Capital did not waive any portion of its fee in any of these
years.
The current Advisory Agreement became effective on August 7, 1992, and it
will continue in effect until June 16, 1996, and thereafter from year to year so
long as such continuance is approved annually by a majority of the Fund's
Trustees who are not parties to the Advisory Agreement or interested persons of
any such party, and by either a majority of the outstanding voting shares or the
Trustees of the Fund. The Advisory Agreement i) may be terminated without the
payment of any penalty by the Fund or Janus Capital on 60 days' written notice;
ii) terminates automati-cally in the event of its assignment; and iii)
generally, may not be amended without the approval by vote of a majority
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<PAGE>
of the Trustees of the Fund, including the Trustees who are not interested
persons of the Fund or Janus Capital and, to the extent required by the 1940
Act, the vote of a majority of the outstanding voting securities of the Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Fund, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Fund and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating Funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
policies and is managed accordingly by a particular portfolio manager or team of
portfolio managers. As a result, from time to time two or more different managed
accounts may pursue divergent investment strategies with respect to investments
or categories of investments.
As indicated in the Prospectus, Janus Capital permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a Janus Capital policy regarding personal investing by directors, officers
and employees of Janus Capital and the Fund. The policy requires investment
personnel and officers of Janus Capital, inside directors of Janus Capital and
the Fund and other designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not otherwise exempt
under the policy. Requests for trading authority will be denied when, among
other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
known to be under consideration for or to have been effected on behalf of any
client account, including the Fund.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Fund to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the 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.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
Investors Fiduciary Trust Company ("IFTC"), 127 W. 10th Street, Kansas
City, Missouri 64105, is the custodian of the securities and cash of the Fund
maintained in the United States. IFTC is a wholly-owned subsidiary of State
Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
Massachusetts 02101. State Street and the foreign subcustodians selected by it
and approved by the Trustees, have custody of the assets of the Fund held
outside the U.S. and cash incidental thereto. State Street may also have custody
of certain domestic and foreign securities held in connection with repurchase
agreements. The custodians and subcustodians hold the Fund's assets in
safekeeping and collect and remit the income thereon, subject to the
instructions of the Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Fund's
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Fund.
For transfer agency and other services, Janus Service receives a fee calculated
at an annual rate of $16 per Fund shareholder account. In addition, the Fund
pays DST Systems, Inc. ("DST"), a subsidiary of KCSI, license fees for the use
of DST's shareholder accounting and portfolio and fund accounting systems, and
postage and forms costs of a DST affiliate incurred in mailing Fund shareholder
transaction confirmations.
During the fiscal year ended October 31, 1995, the Fund paid the following
fees to Janus Service and DST, net of credits: $2,401,140 to Janus Service and
$791,940 (including out-of-pocket expenses) to DST.
The Trustees have authorized the Fund to use another affiliate of DST as
introducing broker for certain Fund portfolio transactions as a means to reduce
Fund expenses through a credit against the charges of DST and its affiliates
with regard to commissions earned by such affiliate. See "Portfolio Transactions
and Brokerage." DST charges shown above are net of such credits.
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During the fiscal period ended October 31, 1995, IFTC served as the Fund's
transfer agent and Janus Service serviced as subtransfer agent. Prior to January
1995, IFTC may have been deemed an affiliate of the Fund through a degree of
common ownership. IFTC is no longer affiliated with the Fund. As of January 1,
1996, Janus Service became the direct transfer agent of the Fund and IFTC no
longer serves as transfer agent.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Fund. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Fund in connection with the sale of its shares in all states
in which the shares are registered and in which Janus Distributors is qualified
as a broker-dealer. Under the Distribution Agreement, Janus Distributors
continuously offers the Fund's shares and accepts orders at net asset value. No
sales charges are paid by investors. Promotional expenses in connection with
offers and sales of shares are paid by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Fund and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. The Fund may trade foreign
securities in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on foreign stock
exchanges, brokers' commissions are frequently fixed and are often higher than
in the United States, where commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to the Fund or to a third
party service provider to the Fund to pay Fund expenses; and research products
or services provided. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer with whom
it has negotiated a commission that is in excess of the commission another
broker or dealer would have charged for effecting that transaction if Janus
Capital determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research provided by such broker
or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of Janus Capital. Research may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist Janus Capital in carrying out its responsibilities.
Most brokers and dealers used by Janus Capital provide research and other
services described above. For the year ended October 31, 1995, the Fund paid
$1,154,069 of its total brokerage commissions to brokers and dealers in
transactions identified for execution primarily on the basis of research and
other services provided to the Fund on transactions of $489,319,622, which
represents 27.33% of all transactions. Research received from brokers or dealers
is supplemental to Janus Capital's own research efforts.
Janus Capital may use research products and services in servicing other
accounts in addition to the Fund. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers regarding the
placement of securities transactions because of the research services they
provide. It does, however, have an internal procedure for allocating
17
<PAGE>
transactions in a manner consistent with its execution policy to brokers that it
has identified as providing superior executions and research, research-related
products or services which benefit its advisory clients, including the Fund.
Research products and services incidental to effecting securities transactions
furnished by brokers or dealers may be used in servicing any or all of Janus
Capital's clients and such research may not necessarily be used by Janus Capital
in connection with the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute Fund portfolio
transactions. 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. In placing portfolio business with such broker-dealers, Janus Capital will
seek the best execution of each transaction.
When the Fund purchases or sells a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
The Fund's Trustees have authorized Janus Capital to place transactions
with DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of
DST. Janus Capital may do so if it reasonably believes that the quality of the
transaction and the associated commission are fair and reasonable and if,
overall, the associated transaction costs, net of any credits described above
under "Custodian, Transfer Agent and Certain Affiliations," are lower than those
that would otherwise be incurred.
The total amount of brokerage commissions paid by the Fund during the
fiscal year ended October 31, 1995, was $3,920,258. For the fiscal years ended
October 31, 1994, and October 31, 1993, the Fund paid brokerage commissions of
$3,243,457 and $3,850,849, respectively. Included in the brokerage commissions
paid for the fiscal year ended October 31, 1995, was $143,719 paid through DSTS
which served to reduce by $107,789 certain out-of-pocket expenses paid by the
Fund. Included in brokerage commissions paid for the fiscal year ended October
31, 1994 and October 31, 1993, was $116,255 and $50,346 and, respectively, paid
through DSTS which served to reduce by $87,191 and $37,760, respectively,
certain out-of-pocket expenses. Brokerage commissions paid through DSTS for the
1995 fiscal year represented 3.67% of the Fund's aggregate brokerage commissions
for such fiscal year, while 4.38% of the aggregate dollar amount of the Fund's
portfolio transactions involving a commission payment were executed through
DSTS. The difference between commissions paid to DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker. Differences in
the percentage of total commissions versus the percentage of total transactions
is due, in part, to variations among share prices and number of shares traded,
while average price per share commission rates were substantially the same.
18
<PAGE>
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years. In August 1992, Janus Venture Fund, Inc. and Janus Twenty Fund, Inc.
(both separate Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of the Janus Flexible Income Fund and
Janus Intermediate Government Securities Fund series) were reorganized into
separate series of the Trust. In general, all references to Trust offices in
this section include comparable offices with the respective predecessor funds,
unless a Trust office was filled subsequent to the reorganization.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4923
Trustee, Chairman and President of Janus Aspen Series. Chairman and
President of Janus Capital. Chairman and Director of IDEX Management, Inc.,
Largo, Florida (50% subsidiary of Janus Capital and investment adviser to a
group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund series of the Trust.
James P. Goff* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Enterprise Fund and
Janus Venture Fund series of the Trust. Executive Vice President of Janus
Aspen Series. Vice President of Janus Capital. Formerly, securities analyst
at Janus Capital (1988 to 1992).
Warren B. Lammert* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President and Portfolio Manager of Janus Venture Fund and
Janus Mercury Fund series of the Trust. Vice President of Janus Capital.
Formerly, securities analyst at Janus Capital (1990 to 1992). Formerly,
Executive Vice President of Janus Balanced Fund.
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4923
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4923
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance and Chief Financial Officer of Janus Service, Janus
Distributors and Janus Capital. Director of IDEX and Janus Distributors.
Director, Treasurer and Vice President of Finance of Janus Capital
International Ltd. Formerly (1979 to 1992), with the accounting firm of
Price Waterhouse LLP, Denver, Colorado, and Kansas City, Missouri.
Glenn P. O'Flaherty - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4923
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital. Formerly (1990-1991), with The Boston
Company Advisors, Inc., Boston, Massachusetts (mutual fund administration
services).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
19
<PAGE>
Kelley Abbot Howes - Secretary
100 Fillmore Street
Denver, CO 80206-4923
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc.
John W. Shepardson# - Trustee
910 16th Street, Suite 222
Denver, CO 80202
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments) since 1987.
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to the Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Fund by its officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Agreement and Declaration of Trust
("Declaration of Trust"), Massachusetts law or the 1940 Act.
- --------------------------------------------------------------------------------
# Member of the Executive Committee.
20
<PAGE>
The following table shows the aggregate compensation paid to each Trustee
by the Fund described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement from the Fund or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
from the Fund for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31,1995 ended December 31, 1995**
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman -- $
James P. Craig, III, Trustee*+ -- $
John W. Shepardson, Trustee $3,732 $
William D. Stewart, Trustee $3,376 $
Gary O. Loo, Trustee $3,376 $
Dennis B. Mullen, Trustee $3,786 $
Martin H. Waldinger, Trustee $4,034 $
- --------------------------------------------------------------------------------------------------------
</TABLE>
* An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
** As of December 31, 1995, Janus Funds consisted of two registered investment
companies comprised of a total of 26 funds.
+ Mr. Craig became a Trustee as of June 30, 1995.
PURCHASE OF SHARES
The Fund has discontinued public sales of its shares to new investors. Only
shareholders who maintain open accounts are permitted to continue to make
investments in the Fund and to reinvest any dividends and capital gains
distributions. Once a Fund account is closed, additional investments in the Fund
may not be possible. The Prospectus contains detailed information about the
purchase of shares. Additional information may be obtained directly from the
Fund by writing to the Fund at P.O. Box 173375, Denver, Colorado 80217-3375.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund shares is
determined once each day on which the New York Stock Exchange ("NYSE") is open,
at the close of its regular trading session (normally 4:00 p.m., New York time,
Monday through Friday). The NAV of Fund shares is not determined on days the
NYSE is closed (generally, New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas). The per
share NAV of the Fund is determined by dividing the total value of the Fund's
securities and other assets, less liabilities, by the total number of shares
outstanding. In determining NAV, securities listed on an Exchange, the NASDAQ
National Market and foreign markets are valued at the closing prices on such
markets, or if such price is lacking for the trading period immediately
preceding the time of determination, such securities are valued at their current
bid price. Municipal securities held by the Fund are traded primarily in the
over-the-counter market. Valuations of such securities are furnished by one or
more pricing services employed by the Fund and are based upon a computerized
matrix system or appraisals obtained by a pricing service, in each case in
reliance upon information concerning market transactions and quotations from
recognized municipal securities dealers. Other securities that are traded on the
over-the-counter market are valued at their closing bid prices. Foreign
securities and currencies are converted to U.S. dollars using the exchange rate
in effect at the close of the NYSE. The Fund will determine the market value of
individual securities held by it, by using prices provided by one or more
professional pricing services which may provide market prices to other funds,
or, as needed, by obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on the amortized cost
basis. Securities for which quotations are not readily available, and other
assets, are valued at fair values determined in good faith under procedures
established by and under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in Japanese markets on certain Saturdays
and in various foreign markets on days which are not business days in New York
and on which the Fund's NAV is not calculated. The Fund calculates its NAV per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of the NYSE once on each day on which the NYSE is open. Such
calculation may not take place contemporaneously with the determination of the
prices of the foreign portfolio securities used in such calculation.
21
<PAGE>
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on the Fund's shares are reinvested automatically in additional shares
of the Fund at the NAV determined on the first business day following the record
date. Checks for cash dividends and distributions and confirmations of
reinvestments are usually mailed to shareholders within ten days after the
record date. Any election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account Application
form or by phone) will apply to dividends and distributions the record dates of
which fall on or after the date that the Fund receives such notice. Investors
receiving cash distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of shares are set forth in the Shareholder's
Manual section of the Prospectus. Shares normally will be redeemed for cash,
although the Fund retains the right to redeem its shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Fund is governed by Rule 18f-1 under the 1940 Act, which requires the Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the NAV of
the Fund during any 90-day period for any one shareholder. Should redemptions by
any shareholder exceed such limitation, the Fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "Purchase
of Shares - Net Asset Value Determination" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Fund to redeem its shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends, (2) the SEC permits such suspension and so orders, or (3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectus. Applications for
specific types of accounts may be obtained by calling the Fund at 1-800-525-3713
or writing to the Fund at P.O. Box 173375, Denver, Colorado 80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number of
transactions by telephone. The Fund, its transfer agent and its distributor
disclaim responsibility for the authenticity of instructions received by
telephone. Such entities will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
among others, requiring personal identification prior to acting upon telephone
instructions, providing written confirmation of the transactions and tape
recording telephone conversations.
SYSTEMATIC WITHDRAWALS
As stated in the Shareholder's Manual section of the Prospectus, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic withdrawal program. The payments
will be made from the proceeds of periodic redemptions of shares in the account
at the NAV. Depending on the size or frequency of the disbursements requested,
and the fluctuation in value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even exhaust the
shareholder's account. Either an investor or the Fund, by written notice to the
other, may terminate the investor's systematic withdrawal program without
penalty at any time.
Information about requirements to establish a systematic withdrawal program
may be obtained by writing or calling the Fund at the address or phone number
shown above.
22
<PAGE>
RETIREMENT PLANS
The Fund offers several different types of tax-deferred retirement plans
that an investor may establish to invest in Fund shares, depending on rules
prescribed by the Code. The Individual Retirement Account ("IRA") may be used by
most individuals who have taxable compensation. Simplified Employee Pension
Plans ("SEPs") and Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including corporations,
partnerships and sole proprietors, for the benefit of business owners and their
employees. In addition, the Fund offers a Section 403(b)(7) Plan for employees
of educational organizations and other qualifying tax-exempt organizations.
Investors should consult their tax advisor or legal counsel before selecting a
retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans and Section
403(b)(7) Plans are subject to specific contribution limitations. Generally,
such contributions may be invested at the direction of the participant. The
investment is then held by IFTC as custodian. Each participant's account is
charged an annual fee of $12. There is a maximum annual fee of $24 per taxpayer
identification number.
Distributions from retirement plans are generally subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
59 1/2. Several exceptions to the general rule may apply. However, shareholders
must start withdrawing retirement plan assets no later than April 1 of the year
after they reach age 70 1/2. Several methods exist to determine the amount of
the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Fund at 1-800-525-3713 or write to the
Fund at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an IRA,
SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until the
appropriate forms to establish any such plan have been completed.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
It is a policy of the Fund to make distributions of substantially all of
its investment income and any net realized capital gains. Any capital gains
realized during each fiscal year of the Fund ended October 31, as defined by the
Code, are normally declared and payable to shareholders in December. The Fund
intends to qualify as a regulated investment company by satisfying certain
requirements prescribed by Subchapter M of the Code.
The Fund may purchase securities of certain foreign corporations considered
to be passive foreign investment companies by the IRS. In order to avoid taxes
and interest that must be paid by the Fund, if these instruments are profitable,
the Fund may make various elections permitted by the tax laws. However, these
elections could require that the Fund recognize taxable income, which in turn
must be distributed.
Some foreign securities purchased by the Fund may be subject to foreign
taxes which could reduce the yield on such securities. The amount of such
foreign taxes is expected to be insignificant. Accordingly, the Fund does not
intend to make the election permitted under section 853 of the Code to pass
through such taxes to shareholders as a foreign tax credit. As a result, any
foreign taxes paid or accrued will represent an expense to the Fund which will
reduce its investment company taxable income as this would increase the taxable
income reported to shareholders and require shareholders to take the credit on
their tax returns, complicating the preparation of such returns.
PRINCIPAL SHAREHOLDERS
As of December 1, 1995, the officers and Trustees of the Fund as a group
owned less than 1% of the outstanding shares of the Fund. In addition, as of
December 1, 1995, Charles Schwab & Co. Inc. ("Schwab"), 101 Montgomery Street,
San Francisco, CA 94104-4122, owned of record 8.74% of the Fund's outstanding
shares. According to information provided by Schwab, this ownership is by
nominee only and does not represent beneficial ownership of such shares, because
they have no investment discretion or voting power with respect to such shares.
To the knowledge of the Fund, no other person owned more than 5% of the
outstanding shares of the Fund as of the above date.
23
<PAGE>
MISCELLANEOUS INFORMATION
The Fund was originally organized in 1984 as a Maryland corporation. On
August 7, 1992, the Fund was reorganized from a Maryland corporation into Janus
Venture Fund, a separate series of the Trust. Pursuant to this reorganization,
the Trust assumed all the assets and liabilities of Janus Venture Fund, Inc.,
and shareholders received shares of Janus Venture Fund series of the Trust equal
both in number and net asset value to their shares of Janus Venture Fund, Inc.
All references in this SAI to the Fund and all financial and other information
about the Fund prior to August 7, 1992 are to the former Janus Venture Fund,
Inc.; all references after August 7, 1992, are to the Janus Venture Fund series
of the Trust. As the result of the reorganization, the fiscal year end of the
Fund changed from July 31 to October 31. As of the date of this SAI, the Trust
consists of 17 other series, which are offered by separate prospectuses.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Fund, the
Fund must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Fund could, under certain
circumstances, be held liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of this disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust also provides for indemnification from the assets of
the Fund for all losses and expenses of any Fund shareholder held liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring a financial
loss on account of its liability as a shareholder of the Fund is limited to
circumstances in which the Fund would be unable to meet its obligations. The
possibility that these circumstances would occur is remote. The Trustees intend
to conduct the operations of the Fund to avoid, to the extent possible,
liability of shareholders for liabilities of the Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of the Fund are fully paid and nonassessable when issued. All
shares of the Fund participate equally in dividends and other distributions by
the Fund, and in residual assets of the Fund in the event of liquidation. Shares
of the Fund have no preemptive, conversion or subscription rights. Shares of the
Fund may be transferred by endorsement or stock power as is customary, but the
Fund is not bound to recognize any transfer until it is recorded on its books.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992, with the exception of Mr. Craig who was appointed by the Trustees as
of June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, resignation,
bankruptcy, incapacity or removal. Vacancies will be filled by a majority of the
remaining Trustees, subject to the 1940 Act. Therefore, no annual or regular
meetings of shareholders normally will be held, unless otherwise required by the
Declaration of Trust or the 1940 Act. Subject to the foregoing, shareholders
have the power to vote to elect or remove Trustees, to terminate or reorganize
the Fund, to amend the Declaration of Trust, to bring certain derivative actions
and on any other matters on which a shareholder vote is required by the 1940
Act, the Declaration of Trust, the Trust's Bylaws or the Trustees.
Each share of the Fund and of each other series of the Trust has one vote
(and fractional votes for fractional shares). Shares of all series of the Trust
have noncumulative voting rights, which means that the holders of more than 50%
of the shares of all series of the Trust voting for the election of Trustees can
elect 100% of the Trustees if they choose to do so and, in such event, the
holders of the remaining shares will not be able to elect any Trustees. The Fund
and each other series of the Trust will vote separately only with respect to
those matters that affect only that series or if a portfolio's interest in a
matter differs from the interests of other portfolios of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Fund, audit the Fund's annual financial
statements and prepare its tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
securities to which this SAI relates. If further information is desired with
respect to the Fund or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
24
<PAGE>
PERFORMANCE INFORMATION
The Prospectus contains a brief description of how performance is
calculated.
Quotations of average annual total return for the Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the Fund over periods of 1, 5, and 10 years (up to the life of the
Fund). These are the annual total rates of return that would equate the initial
amount invested to the ending redeemable value. These rates of return are
calculated pursuant to the following formula: P(1 + T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual total return, n =
the number of years and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an annual
basis, and assume that all dividends and distributions are reinvested when paid.
The Fund was made available for public sale on May 2, 1985. The one year,
five year, ten year and lifetime average annual total returns, computed as of
October 31, 1995, for each of those periods, are 19.24%, 19.52%, 17.63% and
17.52%, respectively.
From time to time in advertisements or sales material, the Fund may discuss
its performance ratings or other information as published by recognized mutual
fund statistical rating services, including, but not limited to, Lipper
Analytical Services, Inc., Ibbotson Associates, Micropal or Morningstar or by
publications of general interest such as Forbes or Money. The Fund may also
compare its performance to that of other selected mutual funds, mutual fund
averages or recognized stock market indicators, including, but not limited to,
the Standard & Poor's 500 Composite Stock Price Index, the Standard & Poor's
Midcap Index, the Dow Jones Industrial Average, the Russell 2000 Index and the
NASDAQ composite. In addition, the Fund may compare its total return to the
yield on U.S. Treasury obligations and to the percentage change in the Consumer
Price Index. Such performance ratings or comparisons may be made with funds that
may have different investment restrictions, objectives, policies or techniques
than the Fund and such other funds or market indicators may be comprised of
securities that differ significantly from the Fund's investments.
FINANCIAL STATEMENTS
The following audited financial statements for the period ended October 31,
1995 are hereby incorporated into this SAI by reference to the Fund's Annual
Report dated October 31, 1995. A copy of such report accompanies this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1995
Statement of Operations for the period ended October 31, 1995
Statement of Assets and Liabilities as of October 31, 1995
Statements of Changes in Net Assets for the periods ended October 31, 1995
and 1994
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
25
<PAGE>
APPENDIX A
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, Predominantly speculative with respect to the issuer's capacity
CCC, CC, C 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.
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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.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless the
portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received ratings from more
than one agency are considered investment grade if at least one agency has rated
the security investment grade.
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[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4923
(800) 525-3713
STATEMENT OF ADDITIONAL INFORMATION
February 18, 1996
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
INVESTOR SHARES
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectus for the Investor
Shares (the "Shares") of Janus Money Market Fund, Janus Government Money Market
Fund and Janus Tax-Exempt Money Market Fund (individually, a "Fund" and,
collectively, the "Funds"). The Funds are each a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Each Fund
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies, and is managed separately
by Janus Capital Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus dated February 18, 1996, which is incorporated by reference into this
SAI and may be obtained from the Trust at the above phone number or address.
This SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectus.
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
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Investment Policies and Restrictions ...................................... 3
Types of Securities and Investment Techniques ............................. 4
Performance Data .......................................................... 7
Determination of Net Asset Value .......................................... 8
Investment Adviser and Administrator ...................................... 8
Custodian, Transfer Agent and Certain Affiliations ........................ 10
Portfolio Transactions and Brokerage ...................................... 10
Officers and Trustees ..................................................... 11
Purchase of Shares ........................................................ 13
Redemption of Shares ...................................................... 13
Retirement Plans .......................................................... 14
Dividends and Tax Status .................................................. 14
Principal Shareholders .................................................... 15
Miscellaneous Information ................................................. 15
Shares of the Trust ....................................................... 15
Voting Rights ............................................................. 15
Independent Accountants ................................................... 15
Registration Statement .................................................... 16
Financial Statements ...................................................... 16
Appendix A - Description of Securities Ratings ............................ 17
Appendix B - Description of Municipal Securities .......................... 19
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INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of each of Janus
Money Market Fund and Janus Government Money Market Fund is to seek maximum
current income to the extent consistent with stability of capital. The
investment objective of Janus Tax-Exempt Money Market Fund is to seek maximum
current income that is exempt from federal income taxes to the extent consistent
with stability of capital. There can be no assurance that a Fund will achieve
its investment objective or maintain a stable net asset value of $1.00 per
share. The investment objectives of the Funds are not fundamental and may be
changed by the Trustees of the Trust (the "Trustees") without shareholder
approval.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, each Fund has adopted certain fundamental
investment restrictions that cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund or particular
class of Shares if a matter affects just that Fund or that class of Shares), or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of Shares) are present or represented by proxy.
As used in the restrictions set forth below and as used elsewhere in this
SAI, the term "U.S. Government Securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act
defines U.S. government securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities and has been
interpreted to include repurchase agreements collaterized and municipal
securities refunded with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a security
other than a U.S. Government Security, if, as a result, more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
the Fund would own more than 10% of the outstanding voting securities of any
single issuer. (As noted in the Prospectus, Janus Money Market Fund and Janus
Government Money Market Fund are currently subject to the greater
diversification standards of Rule 2a-7, which are not fundamental.)
(2) A Fund may not purchase securities if more than 25% of the value of a
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that: (i)
there is no limit on investments in U.S. Government Securities or in obligations
of domestic commercial banks (including U.S. branches of foreign banks subject
to regulations under U.S. laws applicable to domestic banks and, to the extent
that its parent is unconditionally liable for the obligation, foreign branches
of U.S. banks); (ii) this limitation shall not apply to a Fund's investments in
municipal securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies are classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry); and (v) utility companies are classified according to their services
(for example, gas, gas transmission, electric, and telephone are each considered
to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by others,
except to the extent that a Fund may be deemed an underwriter in connection with
the disposition of portfolio securities of such Fund.
(4) A Fund may not lend any security or make any other loan if, as a
result, more than 25% of a Fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial paper, debt
securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest therein,
except that the Fund may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes (not for
leveraging) in an amount not exceeding 25% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings). If
borrowings exceed 25% of the value of a Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation. Reverse
repurchase agreements or the segregation of assets in connection with such
agreements shall not be considered borrowing for the purposes of this limit.
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(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as that
Fund.
Each Fund has adopted the following nonfundamental investment restrictions
that may be changed by the Trustees without shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase agreements
with respect to any securities if, as a result, more than 10% of the Fund's net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in other securities that are not
readily marketable ("illiquid securities"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the Trustees, may
determine that a readily available market exists for certain securities such as
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, Section 4(2) commercial paper and municipal
lease obligations. Accordingly, such securities may not be subject to the
foregoing limitation.
(2) A Fund may not invest in the securities of another investment company,
except to the extent permitted by the 1940 Act.
(3) A Fund may not purchase securities on margin, or make short sales of
securities, except for short sales against the box and the use of short-term
credit necessary for the clearance of purchases and sales of portfolio
securities.
(4) A Fund may not invest more than 5% of the value of its total assets in
the securities of any issuer that has conducted continuous operations for less
than three years, including operations of predecessors, except that this shall
not affect the Fund's ability to invest in U.S. Government Securities, fully
collateralized debt obligations, municipal obligations, securities that are
rated by at least one nationally recognized statistical rating organization and
securities guaranteed as to principal and interest by an issuer in whose
securities the Fund could invest.
(5) A Fund may not pledge, mortgage, hypothecate or encumber any of its
assets except to secure permitted borrowings or in connection with permitted
short sales.
(6) A Fund may not invest directly in interests in oil and gas or interests
in other mineral exploration or development programs or leases; however, the
Fund may own debt securities of companies engaged in those businesses.
(7) A Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P., subject to the exceptions noted in fundamental restriction
number two above. To the extent that such classifications are so broad that the
primary economic characteristics in a single class are materially different, the
Funds may further classify issuers in accordance with industry classifications
as published by the Securities and Exchange Commission.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
Each of the Funds may invest only in "eligible securities" as defined in
Rule 2a-7 adopted under the 1940 Act. Generally, an eligible security is a
security that (i) is denominated in U.S. dollars and has a remaining maturity of
397 days or less (as calculated pursuant to Rule 2a-7); (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO (the "Requisite NRSROs") or is unrated and of comparable quality to a
rated security, as determined by Janus Capital; and (iii) has been determined by
Janus Capital to present minimal credit risks pursuant to procedures approved by
the Trustees. In addition, the Funds will maintain a dollar-weighted average
portfolio maturity of 90 days or less. A description of the ratings of some
NRSROs appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of its total
assets in the securities of any one issuer other than U.S. Government
Securities, provided that in certain cases a Fund may invest more than 5% of its
assets in a single issuer for a period of up to three business days. In the case
of Janus Tax-Exempt Money Market Fund, up to 25% of its assets may be invested
without regard to the foregoing limitations.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money Market
Fund) will invest at least 95% of its total assets in "first-tier" securities.
First-tier securities are eligible securities that are rated, or are issued by
an issuer with short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable quality to a
rated security. In addition, a Fund may invest in "second-tier" securities which
are eligible securities that are not first-tier securities. However, a Fund
(except for Janus Tax-Exempt Money Market Fund) may not invest in a second-tier
security if immediately after the acquisition thereof the Fund would
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have invested more than (i) the greater of one percent of its total assets or
one million dollars in second-tier securities issued by that issuer, or (ii)
five percent of its total assets in second-tier securities.
The following discussion of types of securities in which the Funds may
invest supplements and should be read in conjunction with the Prospectus.
PARTICIPATION INTERESTS
Each Fund may purchase participation interests in loans or securities in
which the Funds may invest directly. Participation interests are generally
sponsored or issued by banks or other financial institutions. A participation
interest gives a Fund an undivided interest in the underlying loans or
securities in the proportion that the Fund's interest bears to the total
principal amount of the underlying loans or securities. Participation interests,
which may have fixed, floating or variable rates, may carry a demand feature
backed by a letter of credit or guarantee of a bank or institution permitting
the holder to tender them back to the bank or other institution. For certain
participation interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's participation
interest. The Funds intend to exercise any demand rights it may have upon
default under the terms of the loan or security, to provide liquidity or to
maintain or improve the quality of the Funds' investment portfolio. A Fund will
only purchase participation interests that Janus Capital determines present
minimal credit risks.
VARIABLE AND FLOATING RATE NOTES
Janus Money Market Fund also may purchase variable and floating rate demand
notes of corporations and other entities, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
the outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid investment.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities, which represent an
interest in a pool of mortgages made by lenders such as commercial banks,
savings and loan institutions, mortgage bankers, mortgage brokers and savings
banks. Mortgage-backed securities may be issued by governmental or
government-related entities or by non-governmental entities such as banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from other forms of
debt securities which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. In
contrast, mortgage-backed securities provide periodic payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Although mortgage-backed securities are issued with stated maturities of up to
forty years, unscheduled or early payments of principal and interest on the
underlying mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for average life. The
volume of prepayments of principal on a pool of mortgages underlying a
particular security will influence the yield of that security, and the principal
returned to a Fund may be reinvested in instruments whose yield may be higher or
lower than that which might have been obtained had the prepayments not occurred.
When interest rates are declining, prepayments usually increase, with the result
that reinvestment of principal prepayments will be at a lower rate than the rate
applicable to the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are issued by
agencies or instrumentalities of the U.S. government. The Government National
Mortgage Association ("GNMA") is the principal federal government guarantor of
mortgage-backed securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA Certificates are
debt securities which represent an interest in one mortgage or a pool of
mortgages which are insured by the Federal Housing Administration or the Farmers
Home Administration or are guaranteed by the Veterans Administration. The Funds
may also invest in pools of conventional
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mortgages which are issued or guaranteed by agencies of the U.S. government.
GNMA pass-through securities are considered to be riskless with respect to
default in that (i) the underlying mortgage loan portfolio is comprised entirely
of government-backed loans and (ii) the timely payment of both principal and
interest on the securities is guaranteed by the full faith and credit of the
U.S. government, regardless of whether or not payments have been made on the
underlying mortgages. GNMA pass-through securities are, however, subject to the
same market risk as comparable debt securities. Therefore, the market value of a
Fund's GNMA securities can be expected to fluctuate in response to changes in
prevailing interest rate levels.
Residential mortgage loans are pooled also by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a privately managed, publicly chartered
agency created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. FHLMC issues
participation certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. The mortgage loans in FHLMC's portfolio are not U.S.
government backed; rather, the loans are either uninsured with loan-to-value
ratios of 80% or less, or privately insured if the loan-to-value ratio exceeds
80%. FHLMC guarantees the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee any aspect of
FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private shareholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks, commercial banks,
credit unions and mortgage bankers. FNMA guarantees the timely payment of
principal and interest on the pass-through securities issued by FNMA; the U.S.
government does not guarantee any aspect of the FNMA pass-through securities.
The Funds may also invest in privately-issued mortgage-backed securities to
the extent permitted by their investment restrictions. Mortgage-backed
securities offered by private issuers include pass-through securities comprised
of pools of conventional residential mortgage loans; mortgage-backed bonds which
are considered to be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized mortgage
obligations ("CMOs") which are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA or by pools of conventional mortgages.
Asset-backed securities represent direct or indirect participations in, or
are secured by and payable from, assets other than mortgage-backed assets such
as motor vehicle installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables from revolving
credit agreements (credit cards). Asset-backed securities have yield
characteristics similar to those of mortgage-backed securities and, accordingly,
are subject to many of the same risks.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate. The
Funds will use the proceeds of reverse repurchase agreements only to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. In addition, interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery
basis. A Fund will enter into such transactions only when it has the intention
of actually acquiring the securities. To facilitate such acquisitions, the
Funds' custodian will segregate cash or high quality liquid assets in an amount
at least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities, sales of the segregated
securities or from other available sources of cash. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation, incur a gain
or loss
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due to market fluctuation. At the time a Fund makes the commitment to purchase
securities on a when-issued or delayed delivery basis, it will record the
transaction as a purchase and thereafter reflect the value of such securities in
determining its net asset value.
MUNICIPAL LEASES
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund may invest
in municipal leases. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. Leases and installment
purchase or conditional sales contracts (which normally provide for title to the
leased asset to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. The Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest is
backed by an unconditional, irrevocable letter of credit, or guarantee of a bank
or other entity that meets the criteria described in the Prospectus under
"Taxable Investments".
In evaluating municipal lease obligations, Janus Capital will consider such
factors as it deems appropriate, including: (a) whether the lease can be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer considered essential
by the municipality; (e) the legal recourse of the lease obligee in the event of
such a failure to appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations which are imposed
on the lease obligor's ability to utilize substitute property or services other
than those covered by the lease obligation. If a lease is backed by an
unconditional letter of credit or other unconditional credit enhancement, then
Janus Capital may determine that a lease is an eligible security solely on the
basis of its evaluation of the credit enhancement.
Municipal leases, like other municipal debt obligations, are subject to the
risk of non-payment. The ability of issuers of municipal leases to make timely
lease payments may be adversely impacted in general economic downturns and as
relative governmental cost burdens are allocated and reallocated among federal,
state and local governmental units. Such non-payment would result in a reduction
of income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the net
asset value of the Fund.
PERFORMANCE DATA
A Fund may provide current annualized and effective annualized yield
quotations based on its daily dividends. These quotations may from time to time
be used in advertisements, shareholder reports or other communications to
shareholders. All performance information supplied by the Funds in advertising
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares' performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., CDC/Wiesenberger, Donoghue's Money Fund
Report or other companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare their Shares'
performance information with the performance of recognized stock, bond and other
indices, including but not limited to the Municipal Bond Buyers Indices, the
Salomon Brothers Bond Index, the Lehman Bond Index, the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average, U.S. Treasury
bonds, bills or notes and changes in the Consumer Price Index as published by
the U.S. Department of Commerce. The Funds may refer to general market
performance over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers and financial
magazines.
Any current yield quotation of the Shares which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent, based on a specific seven calendar day
period. The Fund's current yield shall be calculated by (a) determining the net
change during a seven calendar day period in the value of a hypothetical account
having a balance of one share at the beginning of the period, (b) dividing the
net change by the value of the account at the beginning of the period to obtain
a base period return, and (c) multiplying the quotient
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by 365/7 (i.e., annualizing). For this purpose, the net change in account value
would reflect the value of additional Shares purchased with dividends declared
on the original Share and dividends declared on both the original Share and any
such additional Shares, but would not reflect any realized gains or losses from
the sale of securities or any unrealized appreciation or depreciation on
portfolio securities. In addition, the Shares may advertise effective yield
quotations. Effective yield quotations are calculated by adding 1 to the base
period return, raising the sum to a power equal to 365/7, and subtracting 1 from
the result (i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the rate an
investor would have to earn from a fully taxable investment in order to equal
such Shares' yield after taxes. Tax equivalent yields are calculated by dividing
Janus Tax-Exempt Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the Shares' yield is
tax-exempt, only that portion is adjusted in the calculation.
The Shares' current yield and effective yield for the seven day period
ended October 31, 1995 is shown below:
Seven-day Effective
Fund Name yield Seven-day Yield
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Janus Money Market Fund-Investor Shares 5.37% 5.51%
Janus Government Money Market Fund-Investor Shares 5.30% 5.45%
Janus Tax-Exempt Money Market Fund-Investor Shares* 3.48% 3.54%
- --------------------------------------------------------------------------------
*Janus Tax-Exempt Money Market Fund Investor Shares' tax equivalent yield for
the seven day period ended October 31, 1995 was 4.83%.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Shares. Also, Processing Organizations may charge their customers direct
fees in connection with an investment in a Fund, which will have the effect of
reducing the Fund's net yield to those shareholders. The yield on a class of
Shares is not fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly, yield information may not necessarily be used to compare
Shares with investment alternatives which, like money market instruments or bank
accounts, may provide a fixed rate of interest. In addition, because investments
in the Funds are not insured or guaranteed, yield on the Shares may not
necessarily be used to compare the Shares with investment alternatives which are
insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the Securities and Exchange Commission, the
Trustees have established procedures to stabilize each Fund's net asset value at
$1.00 per Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating interest
rates, based on available market rates, from the Fund's $1.00 amortized cost
price per Share. Should that deviation exceed 1/2 of 1%, the Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends and utilizing a net asset value per Share as
determined by using available market quotations. Each Fund i) will maintain a
dollar-weighted average portfolio maturity of 90 days or less; ii) will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than 397 days;
iii) will limit portfolio investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Janus Capital has determined present
minimal credit risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures. The Trust has
also established procedures to ensure that portfolio securities meet the Funds'
high quality criteria.
INVESTMENT ADVISER AND ADMINISTRATOR
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments. The Funds have each
agreed to compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the average daily net
assets of each Fund. However, Janus Capital has agreed to waive .10% of the
advisory fee through June 16, 1996. In addition, the Funds pay brokerage
commissions or dealer spreads and other expenses in connection with the
execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into an
Administration Agreement with Janus Capital. Under the terms of the
Administration Agreements, each of the Funds has agreed to compensate Janus
Capital for administrative services at the annual rate of .50% of the value of
the average daily net assets of the Shares for certain services, including
custody, transfer agent fees and expenses, legal fees not related to litigation,
accounting expenses,
8
<PAGE>
net asset value determination and Fund accounting, recordkeeping, and blue sky
registration and monitoring services, registration fees, expenses of
shareholders' meetings and reports to shareholders, costs of preparing, printing
and mailing the Shares' Prospectuses and Statements of Additional Information to
current shareholders, and other costs of complying with applicable laws
regulating the sale of Shares. Each Fund will pay those expenses not assumed by
Janus Capital, including interest and taxes, fees and expenses of Trustees who
are not affiliated with Janus Capital, audit fees and expenses, and
extraordinary costs.
The following table summarizes the advisory fees and administration fees
paid by the Shares and any advisory fee waivers for the fiscal period ended
October 31, 1995:
<TABLE>
<CAPTION>
Advisory Fees Advisory Fees Administration
Fund Name Prior to Waiver After Waiver Fees
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund-Investor Shares $654,682 $327,341 $1,636,704
Janus Government Money Market Fund-Investor Shares $124,754 $ 62,377 $ 311,886
Janus Tax-Exempt Money Market Fund-Investor Shares $ 81,412 $ 40,706 $ 203,529
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Advisory Agreements for each Fund became effective on December 9, 1994
and will continue in effect until June 16, 1996, and thereafter from year to
year so long as such continuance is approved annually by a majority of the
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the outstanding voting shares or the
Trustees of the Funds. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
is managed in accordance with that objective by a particular portfolio manager
or team of portfolio managers. As a result, from time to time two or more
different managed accounts may pursue divergent investment strategies with
respect to investments or categories of investments.
As indicated in the Prospectus, Janus Capital permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a Janus Capital policy regarding personal investing by directors, officers
and employees of Janus Capital and the Funds. The policy requires investment
personnel and officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not otherwise exempt
under the policy. Requests for trading authority will be denied when, among
other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
then known to be under consideration for or to have been effected on behalf of
any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns 12% of
its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
9
<PAGE>
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' custodian. The custodian holds the Funds' assets in
safekeeping and collects and remits the income thereon, subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
The Funds do not pay Janus Service a fee.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4923, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which were instrumental in the acquisition of shareholders for the
Funds or which performed services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. In placing portfolio transactions
for the Funds, Janus Capital may agree to pay brokerage commissions for
effecting a securities transaction in an amount higher than another broker or
dealer would have charged for effecting that transaction as authorized, under
certain circumstances, by the Exchange Act.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. These research and
other services may include, but are not limited to, general economic and
security market reviews, industry and company reviews, evaluations of
securities, recommendations as to the purchase and sale of securities, and
access to third party publications, computer and electronic equipment and
software. Research received from brokers or dealers is supplemental to Janus
Capital's own research efforts.
For the fiscal period ended October 31, 1995, the Funds did not incur any
brokerage commissions. Brokerage commissions are not normally charged on the
purchase and sale of money market instruments.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Shares as
a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a 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.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
10
<PAGE>
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4923
Trustee, Chairman and President of Janus Aspen Series. Chairman, Director
and President of Janus Capital. Chairman and Director of IDEX Management,
Inc., Largo, Florida (50% subsidiary of Janus Capital and investment
adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund series of the Trust.
Sharon S. Pichler* - Executive Vice President and Portfolio Manager
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President of Janus Money Market Fund, Janus Tax-Exempt Money
Market Fund and Janus Government Money Market Fund series of the Trust.
Vice President of Janus Capital. Formerly, Assistant Vice President and
Portfolio Manager at USAA Investment Management Co. (1990-1994) and
teaching associate at The University of Texas at San Antonio (1984-1990).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4923
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4923
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance and Chief Financial Officer of Janus Service, Janus
Distributors and Janus Capital. Director of IDEX and Janus Distributors.
Director, Treasurer and Vice President of Finance of Janus Capital
International Ltd. Formerly (1979 to 1992), with the accounting firm of
Price Waterhouse LLP, Denver, Colorado, and Kansas City, Missouri.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4923
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital. Formerly (1990-1991), with The Boston
Company Advisors, Inc., Boston Massachusetts (mutual fund administration
services).
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4923
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc.
John W. Shepardson# - Trustee
910 16th Street, Suite 222
Denver, CO 80202
Trustee of Janus Aspen Series. Historian.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
11
<PAGE>
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments) since 1987.
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Declaration of Trust,
Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Craig, Shepardson,
Loo and Waldinger, monitors the compliance with policies and procedures adopted
particularly for money market funds.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement benefits from the Funds or the Janus
Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1995** ended December 31, 1995***
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* $0 $
James P. Craig, Trustee*+ $0 $
John W. Shepardson, Trustee $0 $
William D. Stewart, Trustee $0 $
Gary O. Loo, Trustee $0 $
Dennis B. Mullen, Trustee $0 $
Martin H. Waldinger, Trustee $0 $
- -----------------------------------------------------------------------------------------------
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by
Janus Capital and not the Funds.
** For the fiscal year ended October 31, 1995, Janus Capital paid the
Trustees' expenses.
*** As of December 31, 1995, Janus Funds consisted of two registered investment
companies comprised of a total of 26 funds.
+ Mr. Craig became a Trustee as of June 30, 1995.
- --------------------------------------------------------------------------------
# Member of the Executive Committee.
12
<PAGE>
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock Exchange (the
"NYSE" or the "Exchange") next occurring after a purchase order is received and
accepted by a Fund. As stated in the Prospectus, the Funds each seek to maintain
a stable net asset value per share of $1.00. The Shareholder's Manual Section of
the Prospectus contains detailed information about the purchase of Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on Shares are reinvested automatically in additional Shares of that Fund
at the NAV determined on the first business day following the record date.
Checks for cash dividends and distributions and confirmations of reinvestments
are usually mailed to shareholders within ten days after the record date. Any
election (which may be made on the New Account Application form or by phone)
will apply to dividends and distributions the record dates of which fall on or
after the date that a Fund receives such notice. Investors receiving cash
distributions and dividends may elect in writing or by phone to change back to
automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of Shares are set forth in the Shareholder's
Manual section of the Prospectus. Shares normally will be redeemed for cash,
although each Fund retains the right to redeem Shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to
redeem Shares solely in cash up to the lesser of $250,000 or 1% of the net asset
value of that Fund during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, their Fund will have the
option of redeeming the excess in cash or in kind. If Shares are redeemed in
kind, the redeeming shareholder might incur brokerage costs in converting the
assets to cash. The method of valuing securities used to make redemptions in
kind will be the same as the method of valuing portfolio securities described
under "Determination of Net Asset Value" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Funds to redeem Shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the Securities and Exchange Commission, or the NYSE
is closed except for holidays and weekends, (2) the Securities and Exchange
Commission permits such suspension and so orders, or (3) an emergency exists as
determined by the Securities and Exchange Commission so that disposal of
securities or determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectus. Applications for
specific types of accounts may be obtained by calling the Funds at
1-800-525-3713 or writing to the Funds at P.O. Box 173375, Denver, Colorado
80217-3375.
SYSTEMATIC WITHDRAWALS
As stated in the Shareholder's Manual section of the Prospectus, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic withdrawal program. The payments
will be made from the proceeds of periodic redemptions of Shares in the account
at the net asset value. Depending on the size or frequency of the disbursements
requested, and the fluctuation in value of the Shares in the Fund's portfolio,
redemptions for the purpose of making such disbursements may reduce or even
exhaust the shareholder's account. Either an investor or their Fund, by written
notice to the other, may terminate the investor's systematic withdrawal program
without penalty at any time.
Information about requirements to establish a systematic withdrawal program
may be obtained by writing or calling the Funds at the address or phone number
shown above.
13
<PAGE>
RETIREMENT PLANS
The Funds offer several different types of tax-deferred retirement plans
that an investor may establish to invest in Shares, depending on rules
prescribed by the Internal Revenue Code of 1986 and the regulations thereunder
(the "Code"). The Individual Retirement Account ("IRA") may be used by most
individuals who have taxable compensation. The Simplified Employee Pension
("SEP") and the Defined Contribution Plans may be used by most employers,
including corporations, partnerships and sole proprietors, for the benefit of
business owners and their employees. In addition, the Funds offer a Section
403(b)(7) Plan for employees of educational organizations and other qualifying
tax-exempt organizations. Investors should consult their tax advisor or legal
counsel before selecting a retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans (Profit Sharing
or Money Purchase Pension Plans) and Section 403(b)(7) Plans are subject to
specific contribution limitations. Generally, such contributions may be invested
at the direction of the participant. The investment is then held by Investors
Fiduciary Trust Company ("IFTC") as custodian. Each participant's account is
charged an annual fee of $12, including any account with any of the Janus Funds.
There is a maximum annual fee of $24 per taxpayer identification number.
Distributions from retirement plans are generally subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
59 1/2. Several exceptions to the general rule may apply. However, shareholders
must start withdrawing retirement plan assets no later than April 1 of the year
after they reach age 70 1/2. Several methods exist to determine the amount of
the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Funds at 1-800-525-3713 or write to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an
IRA, SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until
the appropriate forms to establish any such plan have been completed.
DIVIDENDS AND TAX STATUS
Dividends representing substantially all of the net investment income and
any net realized gains on sales of securities are declared daily, Saturdays,
Sundays and holidays included, and distributed on the last business day of each
month. If a month begins on a Saturday, Sunday, or holiday, dividends for those
days are declared at the end of the preceding month and on the first business
day of a month. A shareholder may receive dividends in cash or may choose to
have dividends automatically reinvested in a Fund's Shares. As described in the
Prospectus, Shares purchased by wire on a day on which the Funds calculate their
net asset value will receive that day's dividend if the purchase is effected at
or prior to 3:00 p.m. (New York time) for Janus Money Market Fund and Janus
Government Money Market Fund and 12:00 p.m. (New York time) for Janus Tax-Exempt
Money Market Fund. Otherwise, such Shares will begin to accrue dividends on the
following day. Orders for purchase accompanied by a check or other negotiable
bank draft will be accepted and effected as of 4:00 p.m. (New York time) on the
day of receipt and such Shares will begin to accrue dividends on the first
business day following receipt of the order. Requests for redemption of Shares
of a Fund will be redeemed at the next determined net asset value. If processed
by 4:00 p.m. (New York time) such redemption will generally include dividends
declared through the day of redemption. However, redemption requests made by
wire that are received prior to 3:00 p.m. (New York time) for Janus Money Market
Fund and Janus Government Money Market Fund and 12:00 p.m. (New York time) for
Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that day
and no dividend will be accrued for such day. Proceeds of such a redemption will
normally be sent to the predesignated bank account on that day, but that day's
dividend will not be received. If shares of a Fund were originally purchased by
check or through an Automated Clearing House transaction, the Fund may delay
transmittal of redemption proceeds up to 15 days in order to ensure that
purchase funds have been collected. Closing times for purchase and redemption of
Shares may be changed for days in which the bond market or the New York Stock
Exchange close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market
Fund) are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full information regarding the tax
status of income dividends and any capital gains distributions will be mailed to
shareholders for tax purposes on or before January 31st of each year. As
described in detail in the Prospectus, Janus Tax-Exempt Money Market Fund
anticipates that substantially all income dividends it pays will be exempt from
federal income tax, although dividends attributable to interest on taxable
investments, together with distributions from any net realized short- or
long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Code.
14
<PAGE>
PRINCIPAL SHAREHOLDERS
As of December 1, 1995, the officers and Trustees of the Funds as a group
owned less than 1% of the outstanding shares of each of the Funds. To the
knowledge of the Funds, no other person owned more than 5% of the outstanding
Shares of any Fund as of the above date.
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts business trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
consists of 18 separate series, three of which currently offer two classes of
shares. The Funds were added to the Trust as separate series on December 9,
1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Agreement and Declaration of Trust (the "Declaration of Trust") disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The Declaration of Trust
also provides for indemnification from the assets of the Funds for all losses
and expenses of any Fund shareholder held liable for the obligations of their
Fund. Thus, the risk of a shareholder incurring a financial loss on account of
its liability as a shareholder of one of the Funds is limited to circumstances
in which their Fund would be unable to meet its obligations. The possibility
that these circumstances would occur is remote. The Trustees intend to conduct
the operations of the Funds to avoid, to the extent possible, liability of
shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
The Trust is authorized to issue multiple classes of shares for each Fund.
Currently, Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund each offer two classes of shares. The Shares
discussed in this SAI are offered to the general public. A second class of
shares, Institutional Shares, is offered only to clients meeting certain minimum
investment criteria.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992 with the exception of Mr. Craig who was appointed by the Trustees as of
June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, resignation,
bankruptcy, incapacity or removal. Vacancies will be filled by a majority of the
remaining Trustees, subject to the 1940 Act. Therefore, no annual or regular
meetings of shareholders normally will be held, unless otherwise required by the
Declaration of Trust or the 1940 Act. Subject to the foregoing, shareholders
have the power to vote to elect or remove Trustees, to terminate or reorganize
their Fund, to amend the Declaration of Trust, to bring certain derivative
actions and on any other matters on which a shareholder vote is required by the
1940 Act, the Declaration of Trust, the Trust's Bylaws or the Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series or class of
the Trust will vote separately only with respect to those matters that affect
only that series or class or if the interest of the series or class in the
matter differs from the interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
15
<PAGE>
REGISTRATION STATEMENT
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI relates. If further
information is desired with respect to the Funds or such securities, reference
is made to the Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The following audited financial statements of the Funds for the period
ended October 31, 1995 are hereby incorporated into this SAI by reference to the
Funds' Annual Report dated October 31, 1995. A copy of such report accompanies
this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1995
Statements of Operations for the period February 15, 1995 to October 31,
1995
Statements of Assets and Liabilities as of October 31, 1995
Statements of Changes in Net Assets for the period February 15, 1995 to
October 31, 1995
Financial Highlights for Investor Shares for the period February 15, 1995
to October 31, 1995
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
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APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD AND POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS
The two highest ratings of Standard & Poor's Ratings Services ("S&P") for
municipal and corporate bonds are AAA and AA. Bonds rated AAA have the highest
rating assigned by S&P to a debt obligation. Capacity to pay interest and repay
principal is extremely strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated issues only in a
small degree. The AA rating may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within that rating category.
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are judged by
Moody's to be of the best quality. Bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa bonds are rated
lower than the best bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The generic rating
Aa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT-TERM MUNICIPAL LOANS
S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have a strong
capacity to pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service will be given a
plus (+) designation. Issues rated SP-2 have satisfactory capacity to pay
principal and interest with some vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/VMIG-1.
Moody's states that short-term municipal securities rated MIG-1/VMIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2 designation are
of high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES
Prime-1 and Prime-2 are the two highest ratings assigned by Moody's for
other short-term debt securities and commercial paper, and A-1 and A-2 are the
two highest ratings for commercial paper assigned by S&P. Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest classification
of Prime, while S&P uses the numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt obligations and have
many of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 by Moody's have a strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics displayed by issuers
rated Prime-1, but to a lesser degree. Issuers rated A-1 by S&P carry a strong
degree of safety regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) designation.
Issuers rated A-2 by S&P carry a satisfactory degree of safety regarding timely
repayment.
FITCH
F-1+ Exceptionally strong credit quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very strong credit quality. Issues assigned this rating reflect
an assurance for timely payment only slightly less in degree than
issues rated F-1+.
F-2 Good credit quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-1+ and F-1 ratings.
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DUFF & PHELPS INC.
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or ready access to
alternative sources of funds, is clearly outstanding, and safety
is just below risk-free U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets
is good. Risk factors are small.
THOMSON BANKWATCH, INC.
TBW-1 The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated
TBW-1.
TBW-3 The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external)
than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered
adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
IBCA, INC.
A1+ Obligations supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit
feature, a rating of A1+ is assigned.
A2 Obligations supported by a good capacity for timely repayment.
A3 Obligations supported by a satisfactory capacity for timely
repayment.
B Obligations for which there is an uncertainty as to the capacity
to ensure timely repayment.
C Obligations for which there is a high risk of default or which
are currently in default.
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APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital needs
and usually have maturities of one year or less. They include the following:
1. Project Notes, which carry a U.S. government guarantee, are issued by
public bodies (called "local issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have maturities that range up to one
year from the date of issuance. Project Notes are backed by an agreement between
the local issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of financial
assistance programs for housing, redevelopment, and related needs (such as
low-income housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business taxes, and are payable
from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of receipt of other
types of revenues, such as Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction financing.
After successful completion and acceptance, many projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association ("Fannie Mae") or the Government National Mortgage
Association ("Ginnie Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer term financing.
Municipal Bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds in recent years have come to include an increasingly wide
variety of types of municipal obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may consist of virtually any form of
state or local governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or redevelopment
authorities, and special districts, such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the revenues or net revenues derived
from a particular facility, group of facilities, or, in some cases, the proceeds
of a special excise or other specific revenue source. Revenue bonds are issued
to finance a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these bonds provide additional
security in the form of a debt service reserve fund to be used to make principal
and interest payments. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large volumes for
projects that are privately owned and operated (see 3 below).
Private Activity Bonds are considered municipal bonds if the interest paid
thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing and health. These bonds are
also used to finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations
and the pledge, if any, of real and personal property as security for such
payment.
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While, at one time, the pertinent provisions of the Internal Revenue Code
permitted private activity bonds to bear tax-exempt interest in connection with
virtually any type of commercial or industrial project (subject to various
restrictions as to authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying projects under the
Code have become increasingly limited, particularly since the enactment of the
Tax Reform Act of 1986. Under current provisions of the Code, tax-exempt
financing remains available, under prescribed conditions, for certain privately
owned and operated rental multi-family housing facilities, nonprofit hospital
and nursing home projects, airports, docks and wharves, mass commuting
facilities and solid waste disposal projects, among others, and for the
refunding (that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt bonds. In future
years, the types of projects qualifying under the Code for tax-exempt financing
are expected to become increasingly limited.
Because of terminology formerly used in the Internal Revenue Code,
virtually any form of private activity bond may still be referred to as an
"industrial development bond," but more and more frequently revenue bonds have
become classified according to the particular type of facility being financed,
such as hospital revenue bonds, nursing home revenue bonds, multi-family housing
revenues bonds, single family housing revenue bonds, industrial development
revenue bonds, solid waste resource recovery revenue bonds, and so on.
Other Municipal Obligations, incurred for a variety of financing purposes,
include: municipal leases, which may take the form of a lease or an installment
purchase or conditional sale contract, are issued by state and local governments
and authorities to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, telecommunications equipment and other capital
assets. Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase municipal
leases subject to a non-appropriation clause when the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether the interest is
or is not includible in the calculation of alternative minimum taxes imposed on
individuals, according to whether the costs of acquiring or carrying the bonds
are or are not deductible in part by banks and other financial institutions, and
according to other criteria relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code and related requirements
governing the issuance of tax-exempt bonds, industry practice has uniformly
required, as a condition to the issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally recognized bond counsel as to the
tax-exempt status of interest on the bonds.
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[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4923
(800) 29JANUS
STATEMENT OF ADDITIONAL INFORMATION
February 18, 1996
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
Institutional Shares
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectus for the
Institutional Shares (the "Shares") of Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt Money Market Fund (individually, a "Fund"
and, collectively, the "Funds"). The Funds are each a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Each Fund
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies, and is managed separately
by Janus Capital Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus dated February 18, 1996, which is incorporated by reference into this
SAI and may be obtained from the Trust at the above phone number or address.
This SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectus.
1
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies and Restrictions ...................................... 3
Types of Securities and Investment Techniques ............................. 4
Performance Data .......................................................... 7
Determination of Net Asset Value .......................................... 8
Investment Adviser and Administrator ...................................... 8
Custodian, Transfer Agent and Certain Affiliations ........................ 10
Portfolio Transactions and Brokerage ...................................... 10
Officers and Trustees ..................................................... 11
Purchase of Shares ........................................................ 13
Redemption of Shares ...................................................... 13
Retirement Plans .......................................................... 13
Shareholder Accounts ...................................................... 13
Dividends and Tax Status .................................................. 14
Principal Shareholders and Significant Shareholders ....................... 14
Miscellaneous Information ................................................. 15
Shares of the Trust ..................................................... 15
Voting Rights ........................................................... 15
Independent Accountants ................................................. 15
Registration Statement .................................................. 15
Financial Statements ...................................................... 16
Appendix A - Description of Securities Ratings ............................ 17
Appendix B - Description of Municipal Securities .......................... 19
- --------------------------------------------------------------------------------
2
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INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of each of Janus
Money Market Fund and Janus Government Money Market Fund is to seek maximum
current income to the extent consistent with stability of capital. The
investment objective of Janus Tax-Exempt Money Market Fund is to seek maximum
current income that is exempt from federal income taxes to the extent consistent
with stability of capital. There can be no assurance that a Fund will achieve
its investment objective or maintain a stable net asset value of $1.00 per
share. The investment objectives of the Funds are not fundamental and may be
changed by the Trustees of the Trust (the "Trustees") without shareholder
approval.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, each Fund has adopted certain fundamental
investment restrictions that cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund or particular
class of Shares if a matter affects just that Fund or that class of Shares), or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of Shares) are present or represented by proxy.
As used in the restrictions set forth below and as used elsewhere in this
SAI, the term "U.S. Government Securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act
defines U.S. government securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities and has been
interpreted to include repurchase agreements collateralized and municipal
securities refunded with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a security
other than a U.S. Government Security, if, as a result, more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
the Fund would own more than 10% of the outstanding voting securities of any
single issuer. (As noted in the Prospectus, Janus Money Market Fund and Janus
Government Money Market Fund are currently subject to the greater
diversification standards of Rule 2a-7, which are not fundamental.)
(2) A Fund may not purchase securities if more than 25% of the value of a
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that: (i)
there is no limit on investments in U.S. Government Securities or in obligations
of domestic commercial banks (including U.S. branches of foreign banks subject
to regulations under U.S. laws applicable to domestic banks and, to the extent
that its parent is unconditionally liable for the obligation, foreign branches
of U.S. banks); (ii) this limitation shall not apply to a Fund's investments in
municipal securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies are classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry); and (v) utility companies are classified according to their services
(for example, gas, gas transmission, electric, and telephone are each considered
to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by others,
except to the extent that a Fund may be deemed an underwriter in connection with
the disposition of portfolio securities of such Fund.
(4) A Fund may not lend any security or make any other loan if, as a
result, more than 25% of a Fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial paper, debt
securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest therein,
except that the Fund may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes (not for
leveraging) in an amount not exceeding 25% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings). If
borrowings exceed 25% of the value of a Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation. Reverse
repurchase agreements or the segregation of assets in connection with such
agreements shall not be considered borrowing for the purposes of this limit.
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(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as that
Fund.
Each Fund has adopted the following nonfundamental investment restrictions
that may be changed by the Trustees without shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase agreements
with respect to any securities if, as a result, more than 10% of the Fund's net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in other securities that are not
readily marketable ("illiquid investments"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the Trustees, may
determine that a readily available market exists for certain securities such as
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, Section 4(2) commercial paper and municipal
lease obligations. Accordingly, such securities may not be subject to the
foregoing limitation.
(2) A Fund may not invest in the securities of another investment company,
except to the extent permitted by the 1940 Act.
(3) A Fund may not purchase securities on margin, or make short sales of
securities, except for short sales against the box and the use of short-term
credit necessary for the clearance of purchases and sales of portfolio
securities.
(4) A Fund may not invest more than 5% of the value of its total assets in
the securities of any issuer that has conducted continuous operations for less
than three years, including operations of predecessors, except that this shall
not affect the Fund's ability to invest in U.S. Government Securities, fully
collateralized debt obligations, municipal obligations, securities that are
rated by at least one nationally recognized statistical rating organization and
securities guaranteed as to principal and interest by an issuer in whose
securities the Fund could invest.
(5) A Fund may not pledge, mortgage, hypothecate or encumber any of its
assets except to secure permitted borrowings or in connection with permitted
short sales.
(6) A Fund may not invest directly in interests in oil and gas or interests
in other mineral exploration or development programs or leases; however, the
Fund may own debt securities of companies engaged in those businesses.
(7) A Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P., subject to the exceptions noted in fundamental restriction
number two above. To the extent that such classifications are so broad that the
primary economic characteristics in a single class are materially different, the
Funds may further classify issuers in accordance with industry classifications
as published by the Securities and Exchange Commission.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
Each of the Funds may invest only in "eligible securities" as defined in
Rule 2a-7 adopted under the 1940 Act. Generally, an eligible security is a
security that (i) is denominated in U.S. dollars and has a remaining maturity of
397 days or less (as calculated pursuant to Rule 2a-7); (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO (the "Requisite NRSROs") or is unrated and of comparable quality to a
rated security, as determined by Janus Capital; and (iii) has been determined by
Janus Capital to present minimal credit risks pursuant to procedures approved by
the Trustees. In addition, the Funds will maintain a dollar-weighted average
portfolio maturity of 90 days or less. A description of the ratings of some
NRSROs appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of its total
assets in the securities of any one issuer other than U.S. Government
Securities, provided that in certain cases a Fund may invest more than 5% of its
assets in a single issuer for a period of up to three business days. In the case
of Janus Tax-Exempt Money Market Fund, up to 25% of its assets may be invested
without regard to the foregoing limitations.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money Market
Fund) will invest at least 95% of its total assets in "first-tier" securities.
First-tier securities are eligible securities that are rated, or are issued by
an issuer with short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable quality to a
rated security. In addition, a Fund may invest in "second-tier" securities which
are eligible securities that are not first-tier securities. However, a Fund
(except for Janus Tax-Exempt Money Market Fund) may not invest in a second-tier
security if immediately after the acquisition thereof the Fund would
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have invested more than (i) the greater of one percent of its total assets or
one million dollars in second-tier securities issued by that issuer, or (ii)
five percent of its total assets in second-tier securities.
The following discussion of types of securities in which the Funds may
invest supplements and should be read in conjunction with the Prospectus.
PARTICIPATION INTERESTS
Each Fund may purchase participation interests in loans or securities in
which the Funds may invest directly. Participation interests are generally
sponsored or issued by banks or other financial institutions. A participation
interest gives a Fund an undivided interest in the underlying loans or
securities in the proportion that the Fund's interest bears to the total
principal amount of the underlying loans or securities. Participation interests,
which may have fixed, floating or variable rates, may carry a demand feature
backed by a letter of credit or guarantee of a bank or institution permitting
the holder to tender them back to the bank or other institution. For certain
participation interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's participation
interest. The Funds intend to exercise any demand rights they may have upon
default under the terms of the loan or security, to provide liquidity or to
maintain or improve the quality of the Funds' investment portfolio. A Fund will
only purchase participation interests that Janus Capital determines present
minimal credit risks.
VARIABLE AND FLOATING RATE NOTES
Janus Money Market Fund also may purchase variable and floating rate demand
notes of corporations and other entities, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
the outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid investment.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities, which represent an
interest in a pool of mortgages made by lenders such as commercial banks,
savings and loan institutions, mortgage bankers, mortgage brokers and savings
banks. Mortgage-backed securities may be issued by governmental or
government-related entities or by non-governmental entities such as banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from other forms of
debt securities which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. In
contrast, mortgage-backed securities provide periodic payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Although mortgage-backed securities are issued with stated maturities of up to
forty years, unscheduled or early payments of principal and interest on the
underlying mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for average life. The
volume of prepayments of principal on a pool of mortgages underlying a
particular security will influence the yield of that security, and the principal
returned to a Fund may be reinvested in instruments whose yield may be higher or
lower than that which might have been obtained had the prepayments not occurred.
When interest rates are declining, prepayments usually increase, with the result
that reinvestment of principal prepayments will be at a lower rate than the rate
applicable to the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are issued by
agencies or instrumentalities of the U.S. government. The Government National
Mortgage Association ("GNMA") is the principal federal government guarantor of
mortgage-backed securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA Certificates are
debt securities which represent an interest in one mortgage or a pool of
mortgages which are insured by the Federal Housing Administration or the Farmers
Home Administration or are guaranteed by the Veterans Administration. The Funds
may also invest in
5
<PAGE>
pools of conventional mortgages which are issued or guaranteed by agencies of
the U.S. government. GNMA pass-through securities are considered to be riskless
with respect to default in that (i) the underlying mortgage loan portfolio is
comprised entirely of government-backed loans and (ii) the timely payment of
both principal and interest on the securities is guaranteed by the full faith
and credit of the U.S. government, regardless of whether or not payments have
been made on the underlying mortgages. GNMA pass-through securities are,
however, subject to the same market risk as comparable debt securities.
Therefore, the market value of a Fund's GNMA securities can be expected to
fluctuate in response to changes in prevailing interest rate levels.
Residential mortgage loans are pooled also by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a privately managed, publicly chartered
agency created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. FHLMC issues
participation certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. The mortgage loans in FHLMC's portfolio are not U.S.
government backed; rather, the loans are either uninsured with loan-to-value
ratios of 80% or less, or privately insured if the loan-to-value ratio exceeds
80%. FHLMC guarantees the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee any aspect of
FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private shareholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks, commercial banks,
credit unions and mortgage bankers. FNMA guarantees the timely payment of
principal and interest on the pass-through securities issued by FNMA; the U.S.
government does not guarantee any aspect of the FNMA pass-through securities.
The Funds may also invest in privately-issued mortgage-backed securities to
the extent permitted by their investment restrictions. Mortgage-backed
securities offered by private issuers include pass-through securities comprised
of pools of conventional residential mortgage loans; mortgage-backed bonds which
are considered to be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized mortgage
obligations ("CMOs") which are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA or by pools of conventional mortgages.
Asset-backed securities represent direct or indirect participation in, or
are secured by and payable from, assets other than mortgage-backed assets such
as motor vehicle installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables from revolving
credit agreements (credit cards). Asset-backed securities have yield
characteristics similar to those of mortgage-backed securities and, accordingly,
are subject to many of the same risks.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate. The
Funds will use the proceeds of reverse repurchase agreements only to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. In addition, interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery
basis. A Fund will enter into such transactions only when it has the intention
of actually acquiring the securities. To facilitate such acquisitions, the
Funds' custodian will segregate cash or high quality liquid assets in an amount
at least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities, sales of the segregated
securities or from other available sources of cash. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation. At the time a Fund makes the commitment to
purchase securities on a when-issued
6
<PAGE>
or delayed delivery basis, it will record the transaction as a purchase and
thereafter reflect the value of such securities in determining its net asset
value.
MUNICIPAL LEASES
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund may invest
in municipal leases. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. Leases and installment
purchase or conditional sale contracts (which normally provide for title to the
leased asset to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. A Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest is
backed by an unconditional irrevocable letter of credit, or guarantee of a bank
or other entity that meets the criteria described in the Prospectus under
"Taxable Investments."
In evaluating municipal lease obligations, Janus Capital will consider such
factors as it deems appropriate, including: (a) whether the lease can be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer considered essential
by the municipality; (e) the legal recourse of the lease obligee in the event of
such a failure to appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations which are imposed
on the lease obligor's ability to utilize substitute property or services other
than those covered by the lease obligation. If a lease is backed by an
unconditional letter of credit or other unconditional credit enhancement, then
Janus Capital may determine that a lease is an eligible security solely on the
basis of its evaluation of the credit enhancement.
Municipal leases, like other municipal debt obligations, are subject to the
risk of non-payment. The ability of issuers of municipal leases to make timely
lease payments may be adversely impacted in general economic downturns and as
relative governmental cost burdens are allocated and reallocated among federal,
state and local governmental units. Such non-payment would result in a reduction
of income to the Funds, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the net
asset value of a Fund.
PERFORMANCE DATA
A Fund may provide current annualized and effective annualized yield
quotations based on its daily dividends. These quotations may from time to time
be used in advertisements, shareholder reports or other communications to
shareholders. All performance information supplied by the Funds in advertising
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares' performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., or CDC/Wiesenberger, Donoghue's Money
Fund Report or other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may also compare
their Shares' performance information with the performance of recognized stock,
bond and other indices, including but not limited to the Municipal Bond Buyers
Indices, the Salomon Brothers Bond Index, the Lehman Bond Index, the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. The Funds may refer to general
market performance over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers and financial
magazines.
Any current yield quotation of the Shares which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent, based on a specific seven calendar day
period. Current yield shall be calculated by (a) determining the net change
during a seven calendar day period in the value of a hypothetical account having
a balance of one Share at the beginning of the period, (b) dividing the net
change by the value of the account at the beginning of the period to obtain a
base period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing).
7
<PAGE>
For this purpose, the net change in account value will reflect the value of
additional Shares purchased with dividends declared on the original Share and
dividends declared on both the original Share and any such additional Shares,
but will not reflect any realized gains or losses from the sale of securities or
any unrealized appreciation or depreciation on portfolio securities. In
addition, the Shares may advertise effective yield quotations. Effective yield
quotations are calculated by adding 1 to the base period return, raising the sum
to a power equal to 365/7, and subtracting 1 from the result (i.e.,
compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the rate an
investor would have to earn from a fully taxable investment in order to equal
such Shares' yield after taxes. Tax equivalent yields are calculated by dividing
Janus Tax-Exempt Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the Shares' yield is
tax-exempt, only that portion is adjusted in the calculation.
The Shares' current yield and effective yield for the seven-day period
ended October 31, 1995 is shown below:
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Institutional Shares 5.82% 5.99%
Janus Government Money Market Fund - Institutional Shares 5.75% 5.92%
Janus Tax-Exempt Money Market Fund - Institutional Shares* 3.87% 3.94%
- ------------------------------------------------------------------------------------------
</TABLE>
*Janus Tax-Exempt Money Market Fund Institutional Shares' tax-equivalent yield
for the seven-day period ended October 31, 1995 was 5.37%.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Shares. Also, Processing Organizations may charge their customers direct
fees in connection with an investment in a Fund, which will have the effect of
reducing the Fund's net yield to those shareholders. The yield on a class of
Shares is not fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly, yield information may not necessarily be used to compare
Shares with investment alternatives which, like money market instruments or bank
accounts, may provide a fixed rate of interest. In addition, because investments
in the Funds are not insured or guaranteed, yield on the Shares may not
necessarily be used to compare the Shares with investment alternatives which are
insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the Securities and Exchange Commission, the
Trustees have established procedures to stabilize each Fund's net asset value at
$1.00 per Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating interest
rates, based on available market rates, from the Fund's $1.00 amortized cost
price per Share. Should that deviation exceed 1/2 of 1%, the Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends and utilizing a net asset value per Share as
determined by using available market quotations. Each Fund i) will maintain a
dollar-weighted average portfolio maturity of 90 days or less; ii) will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than 397 days;
iii) will limit portfolio investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Janus Capital has determined present
minimal credit risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures. The Trust has
also established procedures to ensure that portfolio securities meet the Funds'
high quality criteria.
INVESTMENT ADVISER AND ADMINISTRATOR
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments. The Funds have each
agreed to compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the average daily net
assets of each Fund. However, Janus Capital has agreed to waive .10% of the
advisory fee through June 16, 1996. In addition, the Funds pay brokerage
commissions or dealer spreads and other expenses in connection with the
execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into an
Administration Agreement with Janus Capital. Under the terms of the
Administration Agreements, each of the Funds has agreed to compensate Janus
Capital for administrative services at the annual rate of .15% of the value of
the average daily net assets of the Shares for certain services, including
custody, transfer agent fees and expenses, legal fees not related to litigation,
accounting expenses,
8
<PAGE>
net asset value determination and fund accounting, recordkeeping, and blue sky
registration and monitoring services, registration fees, expenses of
shareholders' meetings and reports to shareholders, costs of preparing, printing
and mailing the Shares' Prospectuses and Statements of Additional Information to
current shareholders, and other costs of complying with applicable laws
regulating the sale of Shares. Each Fund will pay those expenses not assumed by
Janus Capital, including interest and taxes, fees and expenses of Trustees who
are not affiliated with Janus Capital, audit fees and expenses, and
extraordinary costs. For at least the period ending June 16, 1996, Janus Capital
has agreed to waive a portion of the administration fee, and accordingly the
effective rate for calculating the administration fee payable by the Shares will
be .05% for that period.
The following table summarizes the advisory fees and administration fees
paid by the Shares for the period from April 14, 1995 to October 31, 1995:
<TABLE>
<CAPTION>
Advisory Advisory Administration Administration
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund - Institutional Shares $219,620 $109,810 $164,715 $ 54,905
Janus Government Money Market Fund - Institutional Shares $ 26,850 $ 13,426 $ 20,138 $ 6,712
Janus Tax-Exempt Money Market Fund - Institutional Shares $ 1,210 $ 605 $ 907 $ 302
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Advisory Agreements for each Fund became effective on December 9, 1994
and will continue in effect until June 16, 1996, and thereafter from year to
year so long as such continuance is approved annually by a majority of the
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the Funds' outstanding voting shares
or the Trustees. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
is managed in accordance with that objective by a particular portfolio manager
or team of portfolio managers. As a result, from time to time two or more
different managed accounts may pursue divergent investment strategies with
respect to investments or categories of investments.
As indicated in the Prospectus, Janus Capital permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a Janus Capital policy regarding personal investing by directors, officers
and employees of Janus Capital and the Funds. The policy requires investment
personnel and officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not otherwise exempt
under the policy. Requests for trading authority will be denied when, among
other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
then known to be under consideration for or to have been effected on behalf of
any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the 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.
9
<PAGE>
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' custodian. The custodian holds the Funds' assets in
safekeeping and collects and remits the income thereon, subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
The Funds do not pay Janus Service a fee.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which were instrumental in the acquisition of shareholders for the
Funds or which performed services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. The Advisory Agreements
specifically provide that in placing portfolio transactions for the Funds, Janus
Capital may agree to pay brokerage commissions for effecting a securities
transaction in an amount higher than another broker or dealer would have charged
for effecting that transaction as authorized, under certain circumstances, by
the Exchange Act.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. These research and
other services may include, but are not limited to, general economic and
security market reviews, industry and company reviews, evaluations of
securities, recommendations as to the purchase and sale of securities and access
to third party publications, computer and electronic equipment and software.
Research received from brokers or dealers is supplemental to Janus Capital's own
research efforts.
For the period from April 14, 1995 to October 31, 1995, the Funds did not
incur any brokerage commissions. Brokerage commissions are not normally charged
on the purchase and sale of money market instruments.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Shares as
a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a 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.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
10
<PAGE>
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4923
Trustee, Chairman and President of Janus Aspen Series. Chairman, Director
and President of Janus Capital. Chairman and Director of IDEX Management,
Inc., Largo, Florida (50% subsidiary of Janus Capital and investment
adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4923
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund series of the Trust.
Sharon S. Pichler* - Executive Vice President and Portfolio Manager
100 Fillmore Street
Denver, CO 80206-4923
Executive Vice President of Janus Money Market Fund, Janus Tax-Exempt Money
Market Fund and Janus Government Money Market Fund series of the Trust.
Vice President of Janus Capital. Formerly, Assistant Vice President and
Portfolio Manager at USAA Investment Management Co. (1990-1994) and
teaching associate at The University of Texas at San Antonio (1984-1990).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4923
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4923
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance and Chief Financial Officer of Janus Service, Janus
Distributors and Janus Capital. Director of IDEX and Janus Distributors.
Director, Treasurer and Vice President of Finance of Janus Capital
International Ltd. Formerly (1979 to 1992), with the accounting firm of
Price Waterhouse LLP, Denver, Colorado, and Kansas City, Missouri.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4923
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital. Formerly (1990-1991), with The Boston
Company Advisors, Inc., Boston Massachusetts (mutual fund administration
services).
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4923
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc.
John W. Shepardson# - Trustee
910 16th Street, Suite 222
Denver, CO 80202
Trustee of Janus Aspen Series. Historian.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Executive Committee.
11
<PAGE>
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments) since 1987.
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Declaration of Trust,
Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Craig, Shepardson,
Loo and Waldinger, monitors the compliance with policies and procedures adopted
particularly for money market funds.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement benefits from the Funds or the Janus
Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1995** ended December 31, 1995***
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* $0 $
James P. Craig, Trustee*+ $0 $
John W. Shepardson, Trustee $0 $
William D. Stewart, Trustee $0 $
Gary O. Loo, Trustee $0 $
Dennis B. Mullen, Trustee $0 $
Martin H. Waldinger, Trustee $0 $
- ------------------------------------------------------------------------------------------------------
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by
Janus Capital and not the Funds.
** For the fiscal year ended October 31, 1995, Janus Capital paid the
Trustees' expenses.
*** As of December 31, 1995, Janus Funds consisted of two registered investment
companies comprised of a total of 26 funds.
+ Mr. Craig became a Trustee as of June 30, 1995.
- --------------------------------------------------------------------------------
# Member of the Executive Committee.
12
<PAGE>
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock Exchange (the
"NYSE" or the "Exchange") next occurring after a purchase order is received and
accepted by a Fund. As stated in the Prospectus, the Funds each seek to maintain
a stable net asset value per share of $1.00. The Shareholder's Guide Section of
the Prospectus contains detailed information about the purchase of Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions via wire transfer, all income dividends and capital gains
distributions, if any, on Shares are reinvested automatically in additional
Shares of that Fund at the NAV determined on the first business day following
the record date. Any such election (which may be made on the Application or by
phone) will apply to dividends and distributions the record dates of which fall
on or after the date that a Fund receives such notice. Investors receiving
distributions and dividends via wire transfer may elect in writing or by phone
to change back to automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of Shares are set forth in the Shareholder's
Guide section of the Prospectus. Shares normally will be redeemed for cash (via
wire), although each Fund retains the right to redeem Shares in kind under
unusual circumstances, in order to protect the interests of remaining
shareholders, by delivery of securities selected from its assets at its
discretion. However, the Funds are governed by Rule 18f-1 under the 1940 Act,
which requires each Fund to redeem Shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of that Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed such
limitation, their Fund will have the option of redeeming the excess in cash or
in kind. If Shares are redeemed in kind, the redeeming shareholder might incur
brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Determination of Net Asset Value"
and such valuation will be made as of the same time the redemption price is
determined.
The right to require the Funds to redeem Shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the Securities and Exchange Commission, or the NYSE
is closed except for holidays and weekends, (2) the Securities and Exchange
Commission permits such suspension and so orders, or (3) an emergency exists as
determined by the Securities and Exchange Commission so that disposal of
securities or determination of NAV is not reasonably practicable.
RETIREMENT PLANS
The Funds offer tax-deferred retirement plans for rollover accounts in
excess of $250,000. The Individual Retirement Account ("IRA") may be used by
individuals who meet the above requirement.
Contributions under IRAs are subject to specific contribution limitations.
Generally, such contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary Trust Company
("IFTC") as custodian. Each participant's account is charged an annual fee of
$12, including any account with any of the Janus Funds. There is a maximum
annual fee of $24 per taxpayer identification number.
Distributions from retirement plans are generally subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
59 1/2. Several exceptions to the general rule may apply. However, shareholders
must start withdrawing retirement plan assets no later than April 1 of the year
after they reach age 70 1/2. Several methods exist to determine the amount of
the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs along with the necessary
materials to establish an account, please call the Funds at 1-800-525-3713 or
write the Funds at P.O. Box 173375, Denver, CO 80217-3375. No contribution to
any IRA can be made until the appropriate forms to establish any such plan have
been completed.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
is set forth in the Prospectus. Applications to open accounts may be obtained by
calling the Funds at 1-800-29JANUS or writing to the Funds at 100 Fillmore
Street, Denver, Colorado 80206-4923, Attention: Extended Services.
13
<PAGE>
DIVIDENDS AND TAX STATUS
Dividends representing substantially all of the net investment income and
any net realized gains on sales of securities are declared daily, Saturdays,
Sundays and holidays included, and distributed on the last business day of each
month. If a month begins on a Saturday, Sunday or holiday, dividends for those
days are declared at the end of the preceding month and paid on the first
business day of a month. A shareholder may receive dividends via wire transfer
or may choose to have dividends automatically reinvested in a Fund's Shares. As
described in the Prospectus, Shares purchased by wire on a day on which the
Funds calculate their net asset value will receive that day's dividend if the
purchase is effected at or prior to 3:00 p.m. (New York time) for Janus Money
Market Fund and Janus Government Money Market Fund and 12:00 p.m. (New York
time) for Janus Tax-Exempt Money Market Fund. Otherwise, such Shares will begin
to accrue dividends on the first business day following receipt of the order.
Requests for redemption of Shares will be redeemed at the next determined net
asset value. Redemption requests made by wire that are received prior to 3:00
p.m. (New York time) for Janus Money Market Fund and Janus Government Money
Market Fund and 12:00 p.m. (New York time) for Janus Tax-Exempt Money Market
Fund will result in Shares being redeemed that day. Proceeds of such a
redemption will normally be sent to the predesignated bank account on that day,
but that day's dividend will not be received. Closing times for purchase and
redemption of Shares may be changed for days in which the market or the New York
Stock Exchange close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market
Fund) are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received
via wire transfer or are reinvested in additional Shares. Full information
regarding the tax status of income dividends and any capital gains distributions
will be mailed to shareholders for tax purposes on or before January 31st of
each year. As described in detail in the Prospectus, Janus Tax-Exempt Money
Market Fund anticipates that substantially all income dividends it pays will be
exempt from federal income tax, although dividends attributable to interest on
taxable investments, together with distributions from any net realized short- or
long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Internal Revenue Code of
1986.
PRINCIPAL SHAREHOLDERS AND SIGNIFICANT SHAREHOLDERS
As of December 1, 1995, the Fund's officers and Trustees as a group owned
less than 1% of the outstanding Shares.
As of December 1, 1995, the following institutions owned more than 5% of
Janus Money Market Fund - Institutional Shares:
<TABLE>
<CAPTION>
Institution Address Ownership %
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE Capital 570 Lexington Avenue, 11th Floor, 5.47%
New York, NY 10022-6824
Western Digital Corporation 8150 Irvine Drive, Irvine, CA 92718 7.94%
Pacificare of California 5995 Plaza Drive, Cypress, CA 90630-5028 24.12%
Wells Fargo Institutional Trust 45 Fremont Street, San Francisco, CA 94105-2204 9.82%
Janus Fund* 100 Fillmore Street, Denver, CO 80206-4923 6.93%
Janus Mercury Fund* 100 Fillmore Street, Denver, CO 80206-4923 6.93%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
As of December 1, 1995, the following institutions owned more than 5% of
Janus Government Money Market Fund Institutional Shares:
<TABLE>
<CAPTION>
Institution Address Ownership %
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Western Digital Corporation 8105 Irvine Drive, Irvine, CA 92718 35.23%
Rio Properties, Inc. P.O. Box 14160, Las Vegas, NV 89114-4160 15.56%
Janus Venture Fund* 100 Fillmore Street, Denver, CO 80206-4923 5.97%
Janus Mercury Fund* 100 Fillmore Street, Denver, CO 80206-4923 14.91%
Janus Worldwide Fund* 100 Fillmore Street, Denver, CO 80206-4923 13.42%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
As of December 1, 1995, Thomas F. Marsico, 100 Fillmore Street, Denver, CO
80206-4923, owned 41.66% and The Gap, Inc., 900 Cherry Avenue, San Bruno, CA
94066-3909, owned 58.34% of Janus Tax-Exempt Money Market Fund - Institutional
Shares.
- --------------------------------------------------------------------------------
*These shareholders own 5% or less of the total shares (Institutional Shares and
Investor Shares combined) of the Fund in compliance with Section 12(d)(1) of The
Investment Company Act of 1940.
14
<PAGE>
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts Business Trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
consists of 18 separate series, three of which currently offer two classes of
Shares. The Funds were added to the Trust as separate series on December 9,
1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Agreement and Declaration of Trust (the "Declaration of Trust") disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The Declaration of Trust
also provides for indemnification from the assets of the Funds for all losses
and expenses of any Fund shareholder held liable for the obligations of their
Fund. Thus, the risk of a shareholder incurring a financial loss on account of
its liability as a shareholder of one of the Funds is limited to circumstances
in which their Fund would be unable to meet its obligations. The possibility
that these circumstances would occur is remote. The Trustees intend to conduct
the operations of the Funds to avoid, to the extent possible, liability of
shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
The Trust is authorized to issue multiple classes of shares for each Fund.
Currently, Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund each offer two classes of shares. The Shares
discussed in this SAI are offered only to individual, institutional and
corporate clients meeting certain minimum investment criteria. A second class of
shares, Investor Shares, is offered to the general public.
VOTING RIGHTS
The present Trustees were elected at a meeting of the Trust's shareholders
held on July 10, 1992, with the exception of Mr. Craig who was appointed by the
Trustees as of June 30, 1995. Under the Declaration of Trust, each Trustee will
continue in office until the termination of the Trust or his earlier death,
resignation, bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held, unless
otherwise required by the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize their Fund, to amend the Declaration of Trust, to bring
certain derivative actions and on any other matters on which a shareholder vote
is required by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or the
Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series or class of
the Trust will vote separately only with respect to those matters that affect
only that series or class or if the interest of the series or class in the
matter differs from the interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI relates. If further
information is desired with respect to the Funds or such securities, reference
is made to the Registration Statement and the exhibits filed as a part thereof.
15
<PAGE>
FINANCIAL STATEMENTS
The following audited financial statements of the Funds for the period
ended October 31, 1995 are hereby incorporated into this SAI by reference to the
Funds' Annual Report dated October 31, 1995. A copy of such report accompanies
this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1995
Statements of Operations for the period February 15, 1995 to October 31,
1995
Statements of Assets and Liabilities as of October 31, 1995
Statements of Changes in Net Assets for the period February 15, 1995 to
October 31, 1995*
Financial Highlights for Institutional Shares for the period April 14, 1995
to October 31, 1995
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
- --------------------------------------------------------------------------------
*Transactions in fund shares for the period April 14, 1995 to October 31, 1995.
16
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS
The two highest ratings of Standard & Poor's Ratings Services ("S&P") for
municipal and corporate bonds are AAA and AA. Bonds rated AAA have the highest
rating assigned by S&P to a debt obligation. Capacity to pay interest and repay
principal is extremely strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated issues only in a
small degree. The AA rating may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within that rating category.
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are judged by
Moody's to be of the best quality. Bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa bonds are rated
lower than the best bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The generic rating
Aa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT TERM MUNICIPAL LOANS
S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have a strong
capacity to pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service will be given a
plus (+) designation. Issues rated SP-2 have satisfactory capacity to pay
principal and interest with some vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/VMIG-1.
Moody's states that short-term municipal securities rated MIG-1/VMIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2 designation are
of high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES
Prime-1 and Prime-2 are the two highest ratings assigned by Moody's for
other short-term debt securities and commercial paper, and A-1 and A-2 are the
two highest ratings for commercial paper assigned by S&P. Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest classification
of Prime, while S&P uses the numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt obligations and have
many of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 by Moody's have a strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics displayed by issuers
rated Prime-1, but to a lesser degree. Issuers rated A-1 by S&P carry a strong
degree of safety regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) designation.
Issuers rated A-2 by S&P carry a satisfactory degree of safety regarding timely
repayment.
FITCH
F-1+ - Exceptionally strong credit quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 - Very strong credit quality. Issues assigned this rating reflect
an assurance for timely payment only slightly less in degree than
issues rated F-1+.
F-2 - Good credit quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-1+ and F-1 ratings.
17
<PAGE>
DUFF & PHELPS INC.
Duff 1+ - Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or ready access to
alternative sources of funds, is clearly outstanding, and safety
is just below risk-free U.S. Treasury short-term obligations.
Duff 1 - Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1- - High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2 - Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets
is good. Risk factors are small.
THOMSON BANKWATCH, INC.
TBW-1 - The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2 - The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated
TBW-1.
TBW-3 - The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external)
than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered
adequate.
TBW-4 - The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
IBCA, INC.
A1+ - Obligations supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit
feature, a rating of A1+ is assigned.
A2 - Obligations supported by a good capacity for timely repayment.
A3 - Obligations supported by a satisfactory capacity for timely
repayment.
B - Obligations for which there is an uncertainty as to the capacity
to ensure timely repayment.
C - Obligations for which there is a high risk of default or which
are currently in default.
18
<PAGE>
APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital needs
and usually have maturities of one year or less. They include the following:
1. Project Notes, which carry a U.S. government guarantee, are issued by
public bodies (called "local issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have maturities that range up to one
year from the date of issuance. Project Notes are backed by an agreement between
the local issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of financial
assistance programs for housing, redevelopment, and related needs (such as
low-income housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business taxes, and are payable
from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of receipt of other
types of revenues, such as Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction financing.
After successful completion and acceptance, many projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association ("Fannie Mae") or the Government National Mortgage
Association ("Ginnie Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer term financing.
Municipal Bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds in recent years have come to include an increasingly wide
variety of types of municipal obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may consist of virtually any form of
state or local governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or redevelopment
authorities, and special districts, such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the revenues or net revenues derived
from a particular facility, group of facilities, or, in some cases, the proceeds
of a special excise or other specific revenue source. Revenue bonds are issued
to finance a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these bonds provide additional
security in the form of a debt service reserve fund to be used to make principal
and interest payments. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large volumes for
projects that are privately owned and operated (see 3 below).
3. Private Activity Bonds are considered municipal bonds if the interest
paid thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing and health. These bonds are
also used to finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations
and the pledge, if any, of real and personal property as security for such
payment.
19
<PAGE>
While, at one time, the pertinent provisions of the Internal Revenue Code
permitted private activity bonds to bear tax-exempt interest in connection with
virtually any type of commercial or industrial project (subject to various
restrictions as to authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying projects under the
Code have become increasingly limited, particularly since the enactment of the
Tax Reform Act of 1986. Under current provisions of the Code, tax-exempt
financing remains available, under prescribed conditions, for certain privately
owned and operated rental multi-family housing facilities, nonprofit hospital
and nursing home projects, airports, docks and wharves, mass commuting
facilities and solid waste disposal projects, among others, and for the
refunding (that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt bonds. In future
years, the types of projects qualifying under the Code for tax-exempt financing
are expected to become increasingly limited.
Because of terminology formerly used in the Internal Revenue Code,
virtually any form of private activity bond may still be referred to as an
"industrial development bond," but more and more frequently revenue bonds have
become classified according to the particular type of facility being financed,
such as hospital revenue bonds, nursing home revenue bonds, multi-family housing
revenue bonds, single family housing revenue bonds, industrial development
revenue bonds, solid waste resource recovery revenue bonds, and so on.
Other Municipal Obligations, incurred for a variety of financing purposes,
include: municipal leases, which may take the form of a lease or an installment
purchase or conditional sale contract, are issued by state and local governments
and authorities to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, telecommunications equipment and other capital
assets. Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase municipal
leases subject to a non-appropriation clause when the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether the interest is
or is not includible in the calculation of alternative minimum taxes imposed on
individuals, according to whether the costs of acquiring or carrying the bonds
are or are not deductible in part by banks and other financial institutions, and
according to other criteria relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code and related requirements
governing the issuance of tax-exempt bonds, industry practice has uniformly
required, as a condition to the issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally recognized bond counsel as to the
tax-exempt status of interest on the bonds.
20
<PAGE>
JANUS INVESTMENT FUND
PART C - OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
List all financial statements and exhibits filed as part of the
Registration Statement.
(a)(1) Financial Statements Included in the Prospectus:
Financial Highlights for each of the following Funds (or classes
thereof):
Janus Fund
Janus Twenty Fund
Janus Venture Fund
Janus Worldwide Fund
Janus Overseas Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Growth and Income Fund
Janus Balanced Fund
Janus Flexible Income Fund
Janus Intermediate Government Securities Fund
Janus Short-Term Bond Fund
Janus Federal Tax-Exempt Fund
Janus Money Market Fund - Investor Shares
Janus Government Money Market Fund - Investor Shares
Janus Tax-Exempt Money Market Fund - Investor Shares
Janus Money Market Fund - Institutional Shares
Janus Government Money Market Fund - Institutional Shares
Janus Tax-Exempt Money Market Fund - Institutional Shares
(a)(2) Financial Statements included in the Statement of Additional
Information:
The Financial Statements for each of the following Funds,
included in the Annual Report dated October 31, 1995, are
incorporated by reference into the Statement of Additional
Information:
Janus Fund
Janus Twenty Fund
Janus Venture Fund
Janus Worldwide Fund
Janus Overseas Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Growth and Income Fund
Janus Balanced Fund
Janus Flexible Income Fund
Janus Intermediate Government Securities Fund
Janus Short-Term Bond Fund
C-1
<PAGE>
Janus Federal Tax-Exempt Fund
Janus Money Market Fund - Investor Shares
Janus Government Money Market Fund - Investor Shares
Janus Tax-Exempt Money Market Fund - Investor Shares
Janus Money Market Fund - Institutional Shares
Janus Government Money Market Fund - Institutional Shares
Janus Tax-Exempt Money Market Fund - Institutional Shares
(b) Exhibits:
Exhibit 1 (a) Agreement and Declaration of Trust, dated
February 11, 1986 is incorporated herein
by reference to Exhibit 1 to
Post-Effective Amendment No. 30.
(b) Certificate of Designation for Janus
Growth and Income Fund is incorporated
herein by reference to Exhibit 1(b) to
Post-Effective Amendment No. 42.
(c) Certificate of Designation for Janus
Worldwide Fund is incorporated herein by
reference to Exhibit 1(c) to Post-
Effective Amendment No. 42.
(d) Certificate of Designation for Janus
Twenty Fund is incorporated herein by
reference to Exhibit 1(d) to Post-
Effective Amendment No. 46.
(e) Certificate of Designation for Janus
Flexible Income Fund is incorporated
herein by reference to Exhibit 1(e) to
Post- Effective Amendment No. 46.
(f) Certificate of Designation for Janus
Intermediate Government Securities Fund
is incorporated herein by reference to
Exhibit 1(f) to Post-Effective Amendment
No. 46.
(g) Certificate of Designation for Janus
Venture Fund is incorporated herein by
reference to Exhibit 1(g) to Post-
Effective Amendment No. 47.
(h) Certificate of Designation for Janus
Enterprise Fund is incorporated herein by
reference to Exhibit 1(h) to Post-
Effective Amendment No. 48.
(i) Certificate of Designation for Janus
Balanced Fund is incorporated herein by
reference to Exhibit 1(i) to Post-
Effective Amendment No. 48.
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<PAGE>
(j) Certificate of Designation for Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 1(j) to
Post- Effective Amendment No. 48.
(k) Certificate of Designation for Janus
Federal Tax-Exempt Fund is incorporated
herein by reference to Exhibit 1(k) to
Post-Effective Amendment No. 54.
(l) Certificate of Designation for Janus
Mercury Fund is incorporated herein by
reference to Exhibit 1(l) to Post-
Effective Amendment No. 54.
(m) Certificate of Designation for Janus
Overseas Fund is incorporated herein by
reference to Exhibit 1(m) to
Post-Effective Amendment No. 60.
(n) Form of Amendment to the Registrant's
Agreement and Declaration of Trust is
incorporated herein by reference to
Exhibit 1(n) to Post-Effective Amendment
No. 62.
(o) Form of Certificate of Designation for
Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt
Money Market Fund is incorporated herein
by reference to Exhibit 1(o) to
Post-Effective Amendment No. 62.
(p) Form of Certificate of Designation for
Janus High-Yield Fund and Janus Olympus
Fund is incorporated herein by reference
to Exhibit 1(p) to Post-Effective
Amendment No. 68.
Exhibit 2 (a) Restated Bylaws are filed herein as
Exhibit 2(a).
(b) First Amendment to the Bylaws is filed
herein as Exhibit 2(b).
Exhibit 3 Not Applicable.
Exhibit 4 (a) Specimen Stock Certificate for Janus
Fund(1) is incorporated herein by
reference to Exhibit 4(b) to
Post-Effective Amendment No. 42.
- -------------------
(1) Outstanding certificates representing shares of predecessor entity to this
series of the Trust are deemed to represent shares of this series.
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<PAGE>
(b) Specimen Stock Certificate for Janus
Growth and Income Fund is incorporated
herein by reference to Exhibit 4(b) to
Post-Effective Amendment No. 42.
(c) Specimen Stock Certificate for Janus
Worldwide Fund is incorporated herein by
reference to Exhibit 4(c) to Post-
Effective Amendment No. 42.
(d) Specimen Stock Certificate for Janus
Twenty Fund(1) is incorporated herein by
reference to Exhibit 4(d) to Post-
Effective Amendment No. 46.
(e) Specimen Stock Certificate for Janus
Flexible Income Fund(1) is incorporated
herein by reference to Exhibit 4(e) to
Post-Effective Amendment No. 46.
(f) Specimen Stock Certificate for Janus
Intermediate Government Securities
Fund(1) is incorporated herein by
reference to Exhibit 4(f) to
Post-Effective Amendment No. 46.
(g) Specimen Stock Certificate for Janus
Venture Fund(1) is incorporated herein by
reference to Exhibit 4(g) to
Post-Effective Amendment 47.
(h) Specimen Stock Certificate for Janus
Enterprise Fund is incorporated herein by
reference to Exhibit 4(h) to Post-
Effective Amendment No. 48.
(i) Specimen Stock Certificate for Janus
Balanced Fund is incorporated herein by
reference to Exhibit 4(i) to Post-
Effective Amendment No. 48.
(j) Specimen Stock Certificate for Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 4(j) to
Post- Effective Amendment No. 48.
(k) Specimen Stock Certificate for Janus
Federal Tax-Exempt Fund is incorporated
herein by reference to Exhibit 4(k) to
Post-Effective Amendment No. 54.
(l) Specimen Stock Certificate for Janus
Mercury Fund is incorporated herein by
reference to Exhibit 4(l) to Post-
Effective Amendment No. 54.
- -------------------
(1) Outstanding certificates representing shares of predecessor entity to this
series of the Trust are deemed to represent shares of this series.
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<PAGE>
(m) Specimen Stock Certificate for Janus
Overseas Fund is incorporated herein by
reference to Exhibit 4(m) to
Post-Effective Amendment No. 60.
(n) Specimen Stock Certificates for Janus
High-Yield Fund and Janus Olympus Fund
are incorporated herein by reference to
Exhibit 4(n) to Post-Effective Amendment
No. 68.
Exhibit 5 (a) Investment Advisory Agreement for Janus
Fund is incorporated herein by reference
to Exhibit 5 to Post- Effective Amendment
No. 30.
(b) Investment Advisory Agreement for Janus
Growth and Income Fund and Janus
Worldwide Fund is incorporated herein by
reference to Exhibit 5(b) to
Post-Effective Amendment No. 42.
(c) Form of Investment Advisory Agreement for
Janus Twenty Fund and Janus Venture Fund
is incorporated herein by reference to
Exhibit 5(c) to Post-Effective Amendment
No. 46.
(d) Form of Investment Advisory Agreement for
Janus Flexible Income Fund and Janus
Intermediate Government Securities Fund
is incorporated herein by reference to
Exhibit 5(d) to Post-Effective Amendment
No. 46.
(e) Form of Investment Advisory Agreement for
Janus Enterprise Fund, Janus Balanced
Fund and Janus Short- Term Bond Fund is
incorporated herein by reference to
Exhibit 5(e) to Post-Effective Amendment
No. 48.
(f) Form of Investment Advisory Agreement for
Janus Federal Tax-Exempt Fund and Janus
Mercury Fund is incorporated herein by
reference to Exhibit 5(f) to
Post-Effective Amendment No. 54.
(g) Form of Investment Advisory Agreement for
Janus Overseas Fund is incorporated
herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 60.
(h) Form of Investment Advisory Agreement for
Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt
Money Market Fund is incorporated herein
by reference to Exhibit 5(h) to
Post-Effective Amendment No. 64.
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<PAGE>
(i) Form of Investment Advisory Agreement for
Janus High- Yield Fund is incorporated
herein by reference to Exhibit 5(i) to
Post-Effective Amendment No. 70.
(j) Form of Investment Advisory Agreement for
Janus Olympus Fund is incorporated herein
by reference to Exhibit 5(j) to
Post-Effective Amendment No. 70.
Exhibit 6 Form of Distribution Agreement between
Janus Investment Fund and Janus
Distributors, Inc. is incorporated herein
by reference to Exhibit 6 to
Post-Effective Amendment No. 57.
Exhibit 7 Not Applicable.
Exhibit 8 (a) Custodian Contract between Janus
Investment Fund and State Street Bank and
Trust Company is incorporated herein by
reference to Exhibit 8(a) to
Post-Effective Amendment No. 32.
(b) Amendment dated April 25, 1990 of State
Street Custodian Contract is incorporated
herein by reference to Exhibit 8(b) to
Post-Effective Amendment No. 40.
(c) Letter Agreement dated February 1, 1991
regarding State Street Custodian Contract
is incorporated herein by reference to
Exhibit 8(c) to Post-Effective Amendment
No. 42.
(d) Custodian Contract between Janus
Investment Fund and Investors Fiduciary
Trust Company is incorporated herein by
reference to Exhibit 8(d) to
Post-Effective Amendment No. 42.
(e) Letter Agreement dated October 9, 1992
regarding State Street Custodian
Agreement is incorporated herein by
reference to Exhibit 8(e) to
Post-Effective Amendment No. 52.
(f) Letter Agreement dated April 28, 1993
regarding State Street Custodian
Agreement is incorporated herein by
reference to Exhibit 8(f) to
Post-Effective Amendment No. 60.
(g) Letter Agreement dated April 4, 1994
regarding State Street Custodian
Agreement is incorporated herein by
reference to Exhibit 8(g) to
Post-Effective Amendment No. 64.
(h) Form of Custody Agreement between Janus
Investment Fund, on behalf of Janus Money
Market Fund, Janus
C-6
<PAGE>
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund, and United
Missouri Bank, N.A. is incorporated
herein by reference to Exhibit 8(h) to
Post- Effective Amendment No. 64.
(i) Letter Agreement regarding State Street
Custodian Agreement, with respect to
Janus High-Yield Fund and Janus Olympus
Fund will be filed by amendment.
(j) Amendment dated October 11, 1995 of State
Street Custodian Contract is filed herein
as Exhibit 8(j).
Exhibit 9 (a) Transfer Agency Agreement with Investors
Fiduciary Trust Company is incorporated
herein by reference to Exhibit 9(b) to
Post-Effective Amendment No. 42.
(b) Subagency Agreement between Janus Service
Corporation and Investors Fiduciary Trust
Company is incorporated herein by
reference to Exhibit 9(c) to
Post-Effective Amendment No. 42.
(c) Form of Administration Agreement with
Janus Capital Corporation for Janus Money
Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money
Market Fund is incorporated herein by
reference to Exhibit 9(c) to
Post-Effective Amendment No. 64.
(d) Transfer Agency Agreement dated December
9, 1994 with Janus Service Corporation
for Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund filed as
Exhibit 9(d) to Post-Effective Amendment
No. 64 is withdrawn.
(e) Transfer Agency Agreement dated September
27, 1995 with Janus Service Corporation
for Janus Money Market Fund, Janus
Government Money Market Fund, Janus
Tax-Exempt Money Market Fund, Janus
High-Yield Fund and Janus Olympus Fund is
incorporated herein by reference to
Exhibit 9(e) to Post-Effective Amendment
No. 70.
Exhibit 10 (a) Opinion and Consent of Messrs. Davis,
Graham & Stubbs with respect to shares of
Janus Fund is incorporated herein by
reference to Exhibit 10 (a) to
Post-Effective Amendment No. 31.
(b) Opinion and Consent of Fund Counsel with
respect to shares of Janus Growth and
Income Fund and Janus Worldwide Fund is
incorporated herein by reference to
Exhibit 10(b) to Post-Effective Amendment
42.
C-7
<PAGE>
(c) Opinion and Consent of Fund Counsel with
respect to shares of Janus Enterprise
Fund, Janus Balanced Fund and Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 10(d) to
Post-Effective Amendment No. 48.
(d) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Twenty Fund is incorporated herein
by reference to Exhibit 10(e) to
Post-Effective Amendment No. 49.
(e) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Venture Fund is incorporated herein
by reference to Exhibit 10(f) to
Post-Effective Amendment No. 49.
(f) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Flexible Income Fund is
incorporated herein by reference to
Exhibit 10(g) to Post- Effective
Amendment No. 49.
(g) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Intermediate Government Securities
Fund is incorporated herein by reference
to Exhibit 10(h) to Post-Effective
Amendment No. 49.
(h) Opinion and Consent of Fund Counsel with
respect to shares of Janus Federal
Tax-Exempt Fund and Janus Mercury Fund is
incorporated herein by reference to
Exhibit 10(i) to Post- Effective
Amendment No. 54.
(i) Opinion and Consent of Fund Counsel with
respect to shares of Janus Overseas Fund
is incorporated herein by reference to
Exhibit 10(i) to Post-Effective Amendment
No. 60.
(j) Opinion and Consent of Fund Counsel with
respect to shares of Janus Money Market
Fund, Janus Government Money Market Fund
and Janus Tax-Exempt Money Market Fund is
incorporated herein by reference to
Exhibit 10(j) to Post- Effective
Amendment No. 62.
(k) Opinion and Consent of Fund Counsel with
respect to Institutional Shares of Janus
Money Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money
Market Fund is incorporated herein by
reference to Exhibit 10(k) to
Post-Effective Amendment No. 65.
(l) Opinion and Consent of Fund Counsel with
respect to shares of Janus High-Yield
Fund and Janus Olympus Fund is
C-8
<PAGE>
incorporated herein by reference to
Exhibit 10(l) to Post- Effective
Amendment No. 68.
Exhibit 11 Consent of Price Waterhouse LLP is filed
herein as Exhibit 11.
Exhibit 12 Not Applicable.
Exhibit 13 Not Applicable.
Exhibit 14 (a) Model Individual Retirement Plan is
incorporated herein by reference to
Exhibit 14(a) to Post-Effective Amendment
No. 57.
(b) Model Defined Contribution Retirement
Plan is incorporated herein by reference
to Exhibit 14(b) to Post-Effective
Amendment No. 41.
(c) Model Section 403(b)(7) Plan is
incorporated herein by reference to
Exhibit 14(c) to Post-Effective Amendment
No. 38.
Exhibit 15 Not Applicable.
Exhibit 16 (a) Computation of Total Return is
incorporated herein by reference to
Exhibit 16 to Post-Effective Amendment
No. 44.
(b) Computation of Current Yield and
Effective Yield is incorporated herein by
reference to Exhibit 16(b) to Post-
Effective Amendment No. 67.
Exhibit 17 Powers of Attorney dated as of June 30,
1995, are incorporated herein by
reference to Exhibit 17 to Post-
Effective Amendment No. 67.
Exhibit 18 (a) Form of plan entered into by Janus Money
Market Fund, Janus Government Money
Market Fund and Janus Tax- Exempt Money
Market Fund pursuant to Rule 18f-3
setting forth the separate arrangement
and expense allocation of each class of
such Funds filed as Exhibit 18 to
Post-Effective Amendment No. 66 is
withdrawn.
(b) Restated form of Rule 18f-3 plan entered
into by Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund is
incorporated by reference to Exhibit
18(b) to Post-Effective Amendment No. 69.
C-9
<PAGE>
Exhibit 27 A Financial Data Schedule for each of the
following Funds (or classes thereof) is
filed herein as Exhibit 27:
Janus Fund
Janus Twenty Fund
Janus Venture Fund
Janus Worldwide Fund
Janus Overseas Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Growth and Income Fund
Janus Balanced Fund
Janus Flexible Income Fund
Janus Intermediate Government
Securities Fund
Janus Short-Term Bond Fund
Janus Federal Tax-Exempt Fund
Janus Money Market Fund -
Investor Shares
Janus Government Money Market Fund -
Investor Shares
Janus Tax-Exempt Money Market Fund -
Investor Shares
Janus Money Market Fund -
Institutional Shares
Janus Government Money Market Fund -
Institutional Shares
Janus Tax-Exempt Money Market Fund -
Institutional Shares
ITEM 25. Persons Controlled by or Under Common Control with Registrant
None
ITEM 26. Number of Holders of Securities
The number of record holders of shares of the Registrant as of October
31, 1995, was as follows:
C-10
<PAGE>
Number of
Title of Class Record Holders
-------------- --------------
Janus Fund shares 784,131
Janus Growth and Income Fund shares 81,603
Janus Worldwide Fund shares 194,966
Janus Overseas Fund shares 22,748
Janus Twenty Fund shares 343,751
Janus Flexible Income Fund shares 34,297
Janus Intermediate Government
Securities Fund shares 5,088
Janus Venture Fund shares 143,660
Janus Enterprise Fund shares 69,935
Janus Balanced Fund shares 19,110
Janus Short-Term Bond Fund shares 5,161
Janus Federal Tax-Exempt Fund shares 3,780
Janus Mercury Fund shares 181,279
Janus Money Market Fund - Investor Shares 70,899
Janus Money Market Fund - Institutional Shares 26
Janus Government Money
Market Fund - Investor Shares 12,298
Janus Government Money
Market Fund - Institutional Shares 5
Janus Tax-Exempt Money
Market Fund - Investor Shares 6,310
Janus Tax-Exempt Money
Market Fund - Institutional Shares 2
Janus High-Yield Fund shares N/A
Janus Olympus Fund shares N/A
ITEM 27. Indemnification
Article VIII of Janus Investment Fund's Agreement and Declaration of Trust
provides for indemnification of certain persons acting on behalf of the Funds.
In general, Trustees and officers will be indemnified against liability and
against all expenses of litigation incurred by them in connection with any
claim, action, suit or proceeding (or settlement of the same) in which they
become involved by virtue of their Fund office, unless their conduct is
determined to constitute willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties, or unless it has been determined that they
have not acted in good faith in the reasonable belief that their actions were in
or not opposed to the best interests of the Funds. A determination that a person
covered by the indemnification provisions is entitled to indemnification may be
made by the court or other body before which the proceeding is brought, or by
either a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust nor parties to the proceeding or by an independent legal
counsel in a written opinion. The Funds also may advance money for these
expenses, provided that the Trustee or officer undertakes to repay the Funds if
his conduct is later determined to preclude indemnification, and that either he
provide security for the undertaking, the Trust be insured against losses
resulting from lawful advances or a majority of a quorum of disinterested
Trustees, or independent counsel in a written opinion, determines that he
ultimately will be found to be entitled to indemnification. The Trust also
maintains a liability insurance policy covering its Trustees and officers.
C-11
<PAGE>
ITEM 28. Business and Other Connections of Investment Adviser
The only business of Janus Capital Corporation is to serve as the
investment adviser of the Registrant and as investment adviser or subadviser to
several other mutual funds and private and retirement accounts. The only
businesses, professions, vocations or employments of a substantial nature of
Thomas H. Bailey, James P. Craig III, Thomas F. Marsico, James P. Goff, Warren
B. Lammert, Ronald V. Speaker, Helen Young Hayes, Sharon S. Pichler, Scott W.
Schoelzel, David C. Tucker and Steven R. Goodbarn, officers and/or directors of
Janus Capital Corporation, are described under "Officers and Trustees" in the
currently effective Statements of Additional Information included in this
Registration Statement. Mr. Michael E. Herman, a director of Janus Capital
Corporation, is Chairman of the Finance Committee (1990 to present) of Ewing
Marion Kauffman Foundation, 4900 Oak, Kansas City, Missouri 64112. Mr. Michael
N. Stolper, a director of Janus Capital Corporation, is President of Stolper &
Company, Inc., 525 "B" Street, Suite 1080, San Diego, California 92101, an
investment performance consultant. Mr. Thomas A. McDonnell, a director of Janus
Capital Corporation, is President, Chief Executive Officer and a Director of DST
Systems, Inc., 1004 Baltimore Avenue, Kansas City, Missouri 64105, provider of
data processing and recordkeeping services for various mutual funds, and is
Executive Vice President and a director of Kansas City Southern Industries,
Inc., 114 W. 11th Street, Kansas City, Missouri 64105, a publicly traded holding
company whose primary subsidiaries are engaged in transportation, information
processing and financial services.
ITEM 29. Principal Underwriters
(a) Janus Distributors, Inc. ("Janus Distributors") does not serve as
a principal underwriter for any investment company other than
Registrant.
(b) The principal business address, positions with Janus Distributors
and positions with Registrant of David C. Tucker and Steven R.
Goodbarn, officers and directors of Janus Distributors, are
described under "Officers and Trustees" in the Statement of
Additional Information included in this Registration Statement.
(c) Not applicable.
ITEM 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by Janus Capital Corporation and Janus Service
Corporation, both of which are located at 100 Fillmore Street, Denver, Colorado
80206-4923 and by Investors Fiduciary Trust Company, 127 W. 10th Street, Kansas
City, Missouri 64105, State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts 02101 and United Missouri Bank, P.O. Box 419226, Kansas City,
Missouri 64141-6226.
C-12
<PAGE>
ITEM 31. Management Services
The Registrant has no management-related service contract which is not
discussed in Part A or Part B of this form.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
C-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Denver, and State of Colorado, on the
19th day of December, 1995.
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
Janus Investment Fund is organized under the Agreement and Declaration of
Trust of the Registrant dated February 11, 1986, a copy of which is on file with
the Secretary of State of The Commonwealth of Massachusetts. The obligations of
the Registrant hereunder are not binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Registrant personally, but bind
only the trust property of the Registrant, as provided in the Agreement and
Declaration of Trust of the Registrant. The execution of this Amendment to the
Registration Statement has been authorized by the Trustees of the Registrant and
this Amendment to the Registration Statement has been signed by an authorized
officer of the Registrant, acting as such, and neither such authorization by
such Trustees nor such execution by such officer shall be deemed to have been
made by any of them personally, but shall bind only the trust property of the
Registrant as provided in its Declaration of Trust.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Thomas H. Bailey President December 19, 1995
Thomas H. Bailey (Principal Executive
Officer) and Trustee
/s/ Steven R. Goodbarn Treasurer and Chief December 19, 1995
Steven R. Goodbarn Financial Officer
(Principal Financial
and Accounting Officer)
/s/ James P. Craig Trustee December 19, 1995
James P. Craig
<PAGE>
Gary O. Loo* Trustee December 19, 1995
Gary O. Loo
Dennis B. Mullen* Trustee December 19, 1995
Dennis B. Mullen
John W. Shepardson* Trustee December 19, 1995
John W. Shepardson
William D. Stewart* Trustee December 19, 1995
William D. Stewart
Martin H. Waldinger* Trustee December 19, 1995
Martin H. Waldinger
/s/ Steven R. Goodbarn
*By Steven R. Goodbarn
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
Exhibit 2(a) Restated Bylaws
Exhibit 2(b) First Amendment to the Bylaws
Exhibit 8(j) Amendment to Custodian Contract
Exhibit 11 Consent of Price Waterhouse
Exhibit 27 Financial Data Schedules
EXHIBIT 2(a)
JANUS INVESTMENT FUND
Bylaws
<PAGE>
JANUS INVESTMENT FUND
BYLAWS
Table of Contents
Page
RECITALS.............................................................1
ARTICLE I SHAREHOLDERS AND SHAREHOLDERS' MEETINGS...................1
SECTION 1.1. Meetings......................................1
SECTION 1.2. Presiding Officer; Secretary..................1
SECTION 1.3. Authority of Chairman of Meeting to
Interpret Declaration and Bylaws..........................1
SECTION 1.4. Voting; Quorum................................2
SECTION 1.5. Inspectors....................................2
SECTION 1.6. Shareholders' Action in Writing...............2
SECTION 1.7. Waiver of Notice..............................2
ARTICLE II TRUSTEES AND TRUSTEES' MEETINGS..........................2
SECTION 2.1. Number of Trustees............................3
SECTION 2.2. Regular Meetings of Trustees..................3
SECTION 2.3. Special Meetings of Trustees..................3
SECTION 2.4. Notice of Meetings............................3
SECTION 2.5. Quorum; Presiding Officer.....................3
SECTION 2.6. Participation by Telephone....................4
SECTION 2.7. Location of Meetings..........................4
SECTION 2.8. Votes.........................................4
SECTION 2.9. Rulings of Chairman...........................4
SECTION 2.10. Trustees' Action in Writing..................4
SECTION 2.11. Resignations.................................4
ARTICLE III OFFICERS................................................4
SECTION 3.1. Officers of the Trust.........................4
SECTION 3.2. Time and Terms of Election....................4
SECTION 3.3. Resignation and Removal.......................5
SECTION 3.4. Fidelity Bond.................................5
SECTION 3.5. Chairman of the Trustees......................5
SECTION 3.6. Vice Chairmen.................................5
SECTION 3.7. President.....................................5
i
<PAGE>
SECTION 3.8. Vice Presidents................................5
SECTION 3.9. Treasurer and Assistant Treasurers.............6
SECTION 3.10. Controller and Assistant Controllers..........6
SECTION 3.11. Secretary and Assistant Secretaries...........6
SECTION 3.12. Substitutions.................................7
SECTION 3.13. Execution of Deeds, etc.......................7
SECTION 3.14. Power to Vote Securities......................7
ARTICLE IV COMMITTEES................................................7
SECTION 4.1. Power of Trustees to Designate Committees......7
SECTION 4.2. Rules for Conduct of Committee Affairs.........7
SECTION 4.3. Trustees May Alter, Abolish, etc., Committees..8
SECTION 4.4. Minutes; Review by Trustees....................8
ARTICLE V SEAL.......................................................8
ARTICLE VI SHARES....................................................8
SECTION 6.1. Issuance of Shares.............................8
SECTION 6.2. Uncertificated Shares..........................8
SECTION 6.3. Share Certificates.............................9
SECTION 6.4. Lost, Stolen, etc., Certificates...............9
SECTION 6.5. Record Transfer of Pledged Shares..............9
ARTICLE VII CUSTODIAN................................................9
ARTICLE VIII AMENDMENTS.............................................10
SECTION 8.1. Bylaws Subject to Amendment...................10
SECTION 8.2. Notice of Proposal to Amend Bylaws Required...10
ii
<PAGE>
BYLAWS
OF
JANUS INVESTMENT FUND
These are the BYLAWS of Janus Investment Fund, a trust with transferable
shares established under the laws of The Commonwealth of Massachusetts (the
"Trust"), pursuant to an Agreement and Declaration of Trust (the "Declaration")
made the 11th day of February, 1986, and filed in the office of the Secretary of
the Commonwealth. These Bylaws have been adopted by the Trustees pursuant to the
authority granted by Section 3.1 of the Declaration.
All words and terms capitalized in these Bylaws, unless otherwise defined
herein, shall have the same meanings as they have in the Declaration.
ARTICLE I
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
SECTION 1.1. Meetings. A meeting of the Shareholders of the Trust shall be
held whenever called by the Trustees and whenever election of a Trustee or
Trustees by Shareholders is required by the provisions of the 1940 Act. Meetings
of Shareholders also shall be called by the Trustees when requested in writing
by Shareholders holding at least ten percent (10%) of the Shares then
outstanding for the purpose of voting upon removal of any Trustee, or if the
Trustees shall fail to call or give notice of any such meeting of Shareholders
for a period of thirty (30) days after such application, then Shareholders
holding at least ten percent (10%) of the Shares then outstanding may call and
give notice of such meeting. Notice of Shareholders' meetings shall be given as
provided in the Declaration. Any meeting of the Shareholders may be held at such
time and place, within or outside of the Commonwealth of Massachusetts, as may
be fixed by the Trustees or as shall be specified in the notice or waiver of
notice of the meeting.
SECTION 1.2. Presiding Officer; Secretary. The Chairman of the Trustees, or
in his absence the Vice Chairman or Chairmen, if any, in the order of their
seniority or as the Trustees shall otherwise determine, and in the absence of
the Chairman and all Vice Chairmen, if any, the President, shall preside at each
Shareholders' meeting as chairman of the meeting, or in the absence of the
Chairman, all Vice Chairmen and the President, the Trustees present at the
meeting shall elect one of their number as chairman of the meeting. Unless
otherwise provided for by the Trustees, the Secretary of the Trust shall be the
secretary of all meetings of Shareholders and shall record the minutes thereof.
SECTION 1.3. Authority of Chairman of Meeting to Interpret Declaration and
Bylaws. At any Shareholders' meeting the chairman of the meeting shall be
empowered to
<PAGE>
determine the construction or interpretation of the Declaration or these Bylaws,
or any part thereof or hereof, and his ruling shall be final.
SECTION 1.4. Voting; Quorum. At each meeting of Shareholders, except as
otherwise provided by the Declaration, every holder of record of Shares entitled
to vote shall be entitled to a number of votes equal to the number of Shares
standing in his name on the Share register of the Trust. Shareholders may vote
by proxy and the form of any such proxy may be prescribed from time to time by
the Trustees. A quorum shall exist if the holders of at least thirty percent
(30%) of the outstanding Shares of the Trust entitled to vote without regard to
Series, are present in person or by proxy, but any lesser number shall be
sufficient for adjournments. At all meetings of the Shareholders, votes shall be
taken by ballot for all matters which may be binding upon the Trustees pursuant
to Section 7.1 of the Declaration. On other matters, votes of Shareholders need
not be taken by ballot unless otherwise provided for by the Declaration or by
vote of the Trustees, or as required by the Act, but the chairman of the meeting
may in his discretion authorize any matter to be voted upon by ballot.
SECTION 1.5. Inspectors. At any meeting of Shareholders, the chairman of
the meeting may, and on the request of any Shareholder present or represented
and entitled to vote shall, appoint one or more Inspectors of Election or
Balloting to supervise the voting at such meeting or any adjournment thereof. If
appointed, Inspectors shall take charge of the polls and, when the vote is
completed, shall make a certificate of the result of the vote taken and of such
other facts as may be required by law.
SECTION 1.6. Shareholders' Action in Writing. Nothing in this Article I
shall limit the power of the Shareholders to take any action by means of written
instruments without a meeting, as permitted by Section 7.6 of the Declaration.
SECTION 1.7. Waiver of Notice. Whenever law or these Bylaws require notice
of a Shareholders' meeting to be given, a written waiver of notice signed by a
Shareholder entitled to notice, whether before, at, or after the time stated in
the notice, shall be equivalent to the giving of notice. By attending a meeting,
a Shareholder waives any objection to (i) lack of notice or defective notice of
such meeting unless he objects, at the beginning of the meeting, to the holding
of the meeting or the transaction of business at the meeting or (ii)
consideration at such meeting of any matter not within the purpose or purposes
described in the notice of the meeting, unless he objects to considering the
matter when it is presented.
2
<PAGE>
ARTICLE II
TRUSTEES AND TRUSTEES' MEETINGS
SECTION 2.1. Number of Trustees. There initially shall be one (1) Trustee,
and the number of Trustees shall thereafter be such number, authorized by the
Declaration, as from time to time shall be fixed by a vote adopted by a Majority
of the Trustees.
SECTION 2.2. Regular Meetings of Trustees. Regular meetings of the Trustees
may be held without call or notice at such places and at such times as the
Trustees may from time to time determine; provided, that notice of such
determination, and of the time, place and purposes of the first regular meeting
thereafter, shall be given to each absent Trustee in accordance with Section 2.4
hereof.
SECTION 2.3. Special Meetings of Trustees. Special meetings of the Trustees
may be held at any time and at any place when called by the Chairman of the
Trustees, any Vice Chairman, the President or the Treasurer or by two (2) or
more Trustees, or if there shall be less than three (3) Trustees, by any
Trustee; provided, that notice of the time, place and purposes thereof is given
to each Trustee in accordance with Section 2.4 hereof by the Secretary or an
Assistant Secretary or by the officer or the Trustees calling the meeting.
SECTION 2.4. Notice of Meetings. Notice of any regular or special meeting
of the Trustees shall be sufficient if given in writing to each Trustee, and if
sent by mail at least five (5) days, or by telegram at least twenty-four (24)
hours , before the meeting, addressed to his usual or last known business or
residence address, or if delivered to him in person at least twenty-four (24)
hours before the meeting. Notice of a special meeting need not be given to any
Trustee who was present at an earlier meeting, not more than thirty-one (31)
days prior to the subsequent meeting, at which the subsequent meeting was
called. Notice of a meeting may be waived by any Trustee by written waiver of
notice, executed by him before or after the meeting, and such waiver shall be
filed with the records of the meeting. Attendance by a Trustee at a meeting
shall constitute a waiver of notice, except where a Trustee attends a meeting
for the purpose of protesting prior thereto or at its commencement the lack of
notice.
SECTION 2.5. Quorum; Presiding Officer. At any meeting of the Trustees, a
Majority of the Trustees shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice. Unless the Trustees shall otherwise elect, generally or in a
particular case, the Chairman of the Trustees, or in his absence the Vice
Chairman or Vice Chairmen, if any, in the order of their seniority or as the
Trustees shall otherwise determine, or in the absence of the Chairman and all
Vice Chairmen, if any, and if he shall be a Trustee, the President, shall
preside at each meeting of the Trustees as chairman of the meeting.
3
<PAGE>
SECTION 2.6. Participation by Telephone. One or more of the Trustees may
participate in a meeting thereof or of any Committee of the Trustees by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
SECTION 2.7. Location of Meetings. Trustees' meetings may be held at any
place, within or without Massachusetts.
SECTION 2.8. Votes. Voting at Trustees' meetings may be conducted orally,
by show of hands, or, if requested by any Trustee, by written ballot. The
results of all voting shall be recorded by the Secretary in the minute book.
SECTION 2.9. Rulings of Chairman. All other rules of conduct adopted and
used at any Trustees; meeting shall be determined by the chairman of such
meeting, whose ruling on all procedural matters shall be final.
SECTION 2.10. Trustees' Action in Writing. Nothing in this Article II shall
limit the power of the Trustees to take action by means of a written instrument
without a meeting, as provided in Section 4.2 of the Declaration.
SECTION 2.11. Resignations. Any Trustee may resign at any time by written
instrument signed by him and delivered to the Chairman, the President or the
Secretary or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time.
ARTICLE III
OFFICERS
SECTION 3.1. Officers of the Trust. The officers of the Trust shall consist
of a Chairman of the Trustees, a President, a Treasurer and a Secretary, and may
include one or more Vice Chairmen, Vice Presidents, Assistant Treasurers and
Assistant Secretaries, and such other officers as the Trustees may designate.
Any person may hold more than one office. Except for the Chairman and any Vice
Chairmen, no officer need be a Trustee.
SECTION 3.2. Time and Terms of Election. The Chairman, the President, the
Treasurer and the Secretary shall be elected by the Trustees at their first
meeting and thereafter at the annual meeting of the Trustees, as provided in
Section 4.2 of the Declaration. Such officers shall hold office until the next
annual meeting of the Trustees and until their successors shall have been duly
elected and qualified, and may be removed at any meeting by the affirmative vote
of a Majority of the Trustees. All other officers of the Trust may be elected or
appointed at any
4
<PAGE>
meeting of the Trustees. Such officers shall hold office for any term, or
indefinitely, as determined by the Trustees, and shall be subject to removal,
with or without cause, at any time by the Trustees.
SECTION 3.3. Resignation and Removal. Any officer may resign at any time by
giving written notice to the Trustees. Such resignation shall take effect at the
time specified therein, and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective. If the office
of any officer or agent becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or otherwise, the Trustees may
choose a successor, who shall hold office for the unexpired term in respect of
which such vacancy occurred. Except to the extent expressly provided in a
written agreement with the Trust, no officer resigning or removed shall have any
right to any compensation for any period following such resignation or removal,
or any right to damage on account of such removal.
SECTION 3.4. Fidelity Bond. The Trustees may, in their discretion, direct
any officer appointed by them to furnish at the expense of the Trust a fidelity
bond approved by the Trustees, in such amount as the Trustees may prescribe.
SECTION 3.5. Chairman of the Trustees. Unless the Trustees otherwise
provide, the Chairman of the Trustees shall preside at all meetings of the
Shareholders and of the Trustees. The Chairman shall be the chief executive
officer of the Trust and, subject to the supervision of the Trustees, shall have
general charge and supervision of the business, property and affairs of the
Trust and such other powers and duties as the Trustees may prescribe, and unless
otherwise provided by law, the Declaration, these Bylaws or specific vote of the
Trustees, shall have and may exercise all of the powers given to the Trustees by
the Declaration and by these Bylaws.
SECTION 3.6. Vice Chairmen. If the Trustees shall elect one or more Vice
Chairmen, the Vice Chairman or if there shall be more than one, such Vice
Chairmen in the order or their seniority or as otherwise designated by the
Trustees, shall, upon the death, absence or disability of the Chairman, preside
at meetings of the Shareholders and of the Trustees and exercise such other
powers and duties of the Chairman as the Trustees shall determine.
SECTION 3.7. President. The President shall be the chief administrative
officer of the Trust and, subject to the supervision of the Chairman, shall have
general charge of the operations of the Trust and general supervision of the
personnel of the Trust, and such other powers and duties as the Trustees or the
Chairman shall prescribe. In the absence or disability of the Chairman, the
President shall exercise the powers and duties of the Chairman, except to the
extent that the Trustees shall have delegated such powers and duties to the Vice
Chairman or Chairmen, and except that he shall not preside at meetings Trustees
if he is not himself a Trustee.
SECTION 3.8. Vice Presidents. Upon the death, absence or disability of the
President, the Vice President or, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all the powers and
5
<PAGE>
duties of the President. The Vice Presidents shall have the power to execute
bonds, notes, mortgages and other contracts, agreements and instruments in the
name of the Trust, and shall do and perform such other duties as the Trustees,
the Chairman or the President shall direct.
SECTION 3.9. Treasurer and Assistant Treasurers. The Treasurer shall be the
chief financial officer of the Trust, and shall have the custody of the Trust's
funds and Securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Trust and shall deposit all moneys, and
other valuable effects in the name and to the credit of the Trust, in such
depositories as may be designated by the Trustees, taking proper vouchers for
such disbursements, shall have such other duties and powers as may be prescribed
from time to time by the Trustees or the Chairman, and shall render to the
Trustees, whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Trust. If no Controller is
elected, the Treasurer shall also have the duties and powers of the Controller,
as provided in these Bylaws. Any Assistant Treasurer shall have such duties and
powers as shall be prescribed from time to time by the Trustees or the
Treasurer, and shall be responsible to and shall report to the Treasurer. Upon
the death, absence or disability of the Treasurer, the Assistant Treasurer or,
if there shall be more than one, the Assistant Treasurers in the order of their
seniority or as otherwise designated by the Trustees or the Chairman, shall have
the powers and duties of the Treasurer.
SECTION 3.10. Controller and Assistant Controllers. If a Controller is
elected, he shall be the chief accounting officer of the Trust and shall be in
charge of its books of account and accounting records and of its accounting
procedures, and shall have such duties and powers as are commonly incident to
the office of a controller, and such other duties and powers as may be
prescribed from time to time by the Trustees. The Controller shall be
responsible to and shall report to the Trustees, but in the ordinary conduct of
the Trust's business, shall be under the supervision of the Treasurer. Any
Assistant Controller shall have such duties and powers as shall be prescribed
from time to time by the Trustees or the Controller, and shall be responsible to
and shall report to the Controller. Upon the death, absence or disability of the
Controller, the Assistant Controller or, if there shall be more than one, the
Assistant Controllers in the order of their seniority or as otherwise designated
by the Trustees or the Chairman, shall have the powers and duties of the
Controller.
SECTION 3.11. Secretary and Assistant Secretaries. The Secretary shall, if
and to the extent requested by the Trustees, attend all meeting of the Trustees,
any Committee of the Trustees and/or the Shareholders and record all votes and
the minutes of proceedings in a book to be kept for that purpose, shall give or
cause to be given notice of all meetings of the Trustees, any Committee of the
Trustees, and of the Shareholders and shall perform such other duties as may be
prescribed by the Trustees. The Secretary, or in his absence any Assistant
Secretary, shall affix the Trust's seal to any instrument requiring it, and when
so affixed, it shall be attested by the signature of the Secretary or an
Assistant Secretary. The Secretary shall be the custodian of the Share records
and all other books, records and papers of the Trust (other than financial) and
shall see that all books, reports, statements, certificates and other documents
and records required by
6
<PAGE>
law are properly kept and filed. Upon the death, absence or disability of the
Secretary, the Assistant Secretary or, if there shall be more than one, the
Assistant Secretaries in the order of their seniority or as otherwise designated
by the Trustees or the Chairman, shall have the powers and duties of the
Secretary.
SECTION 3.12. Substitutions. In case of the absence or disability of any
officer of the Trust, or for any other reason that the Trustees may deem
sufficient, the Trustees may delegate, for the time being, the powers or duties,
or any of them, of such officer to any other officer, or to any Trustee.
SECTION 3.13. Execution of Deeds, etc. Except as the Trustees may generally
or in particular cases otherwise authorize or direct, all deeds, leases,
transfers, contracts, proposals, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Trust shall be signed or endorsed
on behalf of the Trust by the Chairman, the President, one of the Vice
Presidents or the Treasurer.
SECTION 3.14. Power to Vote Securities. Unless otherwise ordered by the
Trustees, the Treasurer shall have full power and authority on behalf of the
Trust to give proxies for, and/or to attend and to act and to vote at, any
meeting of stockholders of any corporation in which the Trust may hold stock,
and at any such meeting the Treasurer or his proxy shall possess and may
exercise any and all rights and powers incident to the ownership of such stock
which, as the owner thereof, the Trust might have possessed and exercised if
present. The Trustees, by resolution from time to time, or, in the absence
thereof, the Treasurer, may confer like powers upon any other person or persons
as attorneys and proxies of the Trust.
ARTICLE IV
COMMITTEES
SECTION 4.1. Power of Trustees to Designate Committees. The Trustees, by
vote of a Majority of the Trustees, may elect from their number an Executive
Committee and any other Committees and may delegate thereto some or all of their
powers except those which by law, by the Declaration or by these Bylaws may not
be delegated; provided, that the Executive Committee shall not be empowered to
elect the Chairman of the Trustees, the President, the Treasurer or the
Secretary, to amend the Bylaws, to exercise the powers of the Trustees under
this Section 4.1 or under Section 4.3 hereof, or to perform any act for which
the action of a Majority of the Trustees is required by law, by the Declaration
or by these Bylaws. The members of any such Committee shall serve at the
pleasure of the Trustees.
SECTION 4.2. Rules for Conduct of Committee Affairs. Except as otherwise
provided by the Trustees, each Committee elected or appointed pursuant to this
Article IV may adopt such standing rules and regulations for the conduct of its
affairs as it may deem desirable, subject to review and approval of such rules
and regulations by the Trustees at the next
7
<PAGE>
succeeding meeting of the Trustees, but in the absence of any such action or any
contrary provisions by the Trustees, the business of each Committee shall be
conducted, so far as practicable, in the same manner as provided herein and in
the Declaration for the Trustees.
SECTION 4.3. Trustees May Alter, Abolish, etc., Committees. The Trustees
may at any time alter or abolish any Committee, change the membership of any
Committee, or revoke, rescind or modify any action of any Committee or the
authority of any Committee with respect to any matter or class of matters;
provided, that no such action shall impair the rights of any third parties.
SECTION 4.4. Minutes; Review by Trustees. Any Committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees.
ARTICLE V
SEAL
The Trustees may adopt a seal, circular in form and bearing the name of the
Trust and the words "TRUST," "1986" and "MASSACHUSETTS," which, when adopted,
shall constitute the seal of the Trust. The seal may be used by causing it or a
facsimile of it to be impressed, affixed, manually reproduced, or rubber stamped
with indelible ink. Unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on, and its absence shall not impair the validity
of, any document, instrument or other paper executed and delivered by or on
behalf of the Trust.
ARTICLE VI
SHARES
SECTION 6.1. Issuance of Shares. The Trustees may issue Shares of any or
all Series either in certificated or uncertificated form, they may issue
certificates to the holders of Shares of a Series which was originally issued in
uncertificated form, and if they have issued Shares of any Series in
certificated form, they may at any time discontinue the issuance of Share
certificates for such Series and may, by written notice to such Shareholders of
such Series require the surrender of their Share certificates to the Trust for
cancellation, which surrender and cancellation shall not affect the ownership of
Shares for such Series.
SECTION 6.2. Uncertificated Shares. For any Series of Shares for which the
Trustees issue Shares without certificates, the Trust or the Transfer Agent may
either issue receipts therefor or may keep accounts upon the books of the Trust
for the record holders of such
8
<PAGE>
Shares, who shall in either case be deemed, for all purposes hereunder, to be
the holders of such Shares as if they had received certificates therefor and
shall be held to have expressly assented and agreed to the terms hereof and of
the Declaration.
SECTION 6.3. Share Certificates. For any Series of Shares for which the
Trustees shall issue Share certificates, each Shareholder of such Series shall
be entitled to a certificate stating the number of Shares owned by him in such
form as shall be prescribed from time to time by the Trustees. Such certificate
shall be signed by the Chairman or a Vice Chairman, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Trust. Such signatures may be facsimiles if the
certificate is countersigned by a Transfer Agent, or by a Registrar, other than
a Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.
SECTION 6.4. Lost, Stolen, etc., Certificates. If any certificate for
certificated Shares shall be lost, stolen, destroyed or mutilated, the Trustees
may authorize the issuance of a new certificate of the same tenor and for the
same number of Shares in lieu thereof. The Trustees shall require the surrender
of any mutiliated certificate in respect of which a new certificate is issued,
and may, in their discretion, before the issuance of a new certificate, require
the owner of a lost, stolen or destroyed certificate, or the owner's legal
representative, to make an affidavit or affirmation setting forth such facts as
to the loss, theft or destruction as they deem necessary, and to give the Trust
a bond in such reasonable sum as the Trustees direct, in order to indemnify the
Trust.
SECTION 6.5. Record Transfer of Pledged Shares. A pledgee of Shares pledged
as collateral security shall be entitled to a new certificate in his name as
pledgee, in the case of certificated Shares, or to be registered as the holder
in pledge of such Shares in the case of uncertificated Shares; provided, that
the instrument of pledge substantially describes the debt or duty that is
intended to be secured thereby. Any such new certificate shall express on its
face that it is held as collateral security, and the name of the pledgor shall
be stated thereon, and any such registration of uncertificated Shares shall be
in a form which indicates that the registered holder holds such Shares in
pledge. After such issue or registration, and unless and until such pledge is
released, such pledgee and his successors and assigns shall alone be entitled to
the rights of a Shareholder, and entitled to vote such Shares.
ARTICLE VII
CUSTODIAN
The Trust shall at all times employ a bank or trust company having a
capital, surplus and undivided profits of at least Two Million Dollars
($2,000,000) as Custodian of the
9
<PAGE>
capital assets of the Trust. The Custodian shall be compensated for its services
by the Trust upon such basis as shall be agreed upon from time to time between
the Trust and the Custodian.
ARTICLE VIII
AMENDMENTS
SECTION 8.1. Bylaws Subject to Amendment. These Bylaws may be altered,
amended or repealed, in whole or in part, at any time by vote of the holders of
a majority of the Shares (or whenever there shall be more than one Series of
Shares, of the holders of a majority of the Shares of each Series) issued,
outstanding and entitled to vote. The Trustees, by vote of a Majority of the
Trustees, may alter, amend or repeal these Bylaws, in whole or in part,
including Bylaws adopted by the Shareholders, except with respect to any
provision hereof which by law, the Declaration or these Bylaws requires action
by the Shareholders. Bylaws adopted by the Trustees may be altered, amended or
repealed by the Shareholders.
SECTION 8.2. Notice of Proposal to Amend Bylaws Required. No proposal to
amend or repeal these Bylaws or to adopt new Bylaws shall be acted upon at a
meeting unless either (i) such proposal is stated in the notice or in the waiver
of notice, as the case may be, of the meeting of the Trustees or Shareholders at
which such action is taken, or (ii) all of the Trustees or Shareholders, as the
case may be, are present at such meeting and all agree to consider such proposal
without protesting the lack of notice.
* * *
10
EXHIBIT 2(b)
FIRST AMENDMENT TO THE BYLAWS OF
JANUS INVESTMENT FUND
Pursuant to the authority granted by Section 3.1 of Janus Investment Fund's
Agreement and Declaration of Trust (the "Declaration") made the 11th day of
February 1986, as amended, and by the affirmative vote of a majority of the
Trustees at a meeting duly called and held on December 8, 1995, the Bylaws are
amended as follows:
Sections 3.9 and 3.10 are amended and restated in their entirety to read as
follows:
SECTION 3.9. Chief Financial Officer. The Chief Financial Officer of the
Trust shall have general charge of the finances of the Trust. The Chief
Financial Officer shall make annual reports regarding the business and financial
condition of the Trust as soon as possible after the close of the Trust's fiscal
year and shall furnish such other reports concerning the business and financial
condition of the Trust as the Trustees may from time to time require. The Chief
Financial Officer shall perform all acts incidental to the office of Chief
Financial Officer, subject to the supervision of the Trustees, and shall perform
such additional duties as the Trustees or the Chairman may from time to time
designate. The Chief Financial Officer shall be responsible to and shall report
to the Trustees. In the absence of the Chief Financial Officer, the Treasurer
may perform all duties of the Chief Financial Officer.
SECTION 3.10 Treasurer and Assistant Treasurers. The Treasurer shall be the
chief accounting officer of the Trust, and shall have general charge of the
Trust's books of account, accounting records and accounting procedures. The
Treasurer shall deliver all funds and securities of the Trust to such company as
the Trustees shall retain as custodian in accordance with the Declaration, these
Bylaws, and applicable law. The Treasurer shall have such other duties and
powers as may be prescribed from time to time by the Trustees or the Chief
Financial Officer, and shall render to the Trustees, whenever they may require
it, an account of all his transactions as Treasurer. The Treasurer shall be
responsible to and shall report to the Trustees, but in the ordinary conduct of
the Trust's business, shall be under the supervision of the Chief Financial
Officer of the Trust.
Any Assistant Treasurer shall have such duties and powers as shall be prescribed
from time to time by the Trustees or the Treasurer, and shall be responsible to
and shall report to the Treasurer, and in the absence of the Treasurer, may
perform all duties of the Treasurer.
EXHIBIT 8(j)
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and Janus Investment Fund (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract,
dated July 31, 1986 as amended January 7, 1987 and April 25, 1990 (the
"Custodian Contract"), governing the terms and conditions under which the
Custodian maintains custody of the securities and other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions:
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 11th day of October, 1995.
JANUS INVESTMENT FUND
By: /s/ Steven R. Goodbarn
Name: Steven R. Goodbarn
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
Name: Ronald E. Logue
Title: Executive Vice President
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 71 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated November 30, 1995, relating to the financial
statements and financial highlights appearing in the October 31, 1995 Annual
Reports to Shareholders of Janus Investment Fund, which are also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Highlights" in the Prospectus and under the
heading "Independent Accountants" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Denver, Colorado
December 18, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> JANUS FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 9,901,237
<INVESTMENTS-AT-VALUE> 12,144,698
<RECEIVABLES> 247,258
<ASSETS-OTHER> 2,557
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,394,513
<PAYABLE-FOR-SECURITIES> 374,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,395
<TOTAL-LIABILITIES> 431,543
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,085,739
<SHARES-COMMON-STOCK> 511,868
<SHARES-COMMON-PRIOR> 491,627
<ACCUMULATED-NII-CURRENT> 66,492
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 606,668
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,204,071
<NET-ASSETS> 11,962,970
<DIVIDEND-INCOME> 118,448
<INTEREST-INCOME> 104,338
<OTHER-INCOME> 0
<EXPENSES-NET> (90,607)
<NET-INVESTMENT-INCOME> 132,179
<REALIZED-GAINS-CURRENT> 539,152
<APPREC-INCREASE-CURRENT> 1,433,338
<NET-CHANGE-FROM-OPS> 2,104,669
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,024)
<DISTRIBUTIONS-OF-GAINS> (190,268)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,147,778
<NUMBER-OF-SHARES-REDEEMED> (1,928,817)
<SHARES-REINVESTED> 186,387
<NET-CHANGE-IN-ASSETS> 2,315,725
<ACCUMULATED-NII-PRIOR> (8,497)
<ACCUMULATED-GAINS-PRIOR> 196,098
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 69,102
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 91,539
<AVERAGE-NET-ASSETS> 10,559,806
<PER-SHARE-NAV-BEGIN> 19.620
<PER-SHARE-NII> 0.160
<PER-SHARE-GAIN-APPREC> 3.990
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> (0.390)
<PER-SHARE-NAV-END> 23.370
<EXPENSE-RATIO> 0.870
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> JANUS TWENTY FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 2,518,301
<INVESTMENTS-AT-VALUE> 2,975,194
<RECEIVABLES> 81,336
<ASSETS-OTHER> 1,544
<OTHER-ITEMS-ASSETS> 50
<TOTAL-ASSETS> 3,058,124
<PAYABLE-FOR-SECURITIES> 50,512
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,861
<TOTAL-LIABILITIES> 62,373
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,015,292
<SHARES-COMMON-STOCK> 99,445
<SHARES-COMMON-PRIOR> 113,164
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530,087
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 450,372
<NET-ASSETS> 2,995,751
<DIVIDEND-INCOME> 31,433
<INTEREST-INCOME> 12,385
<OTHER-INCOME> 0
<EXPENSES-NET> 26,913
<NET-INVESTMENT-INCOME> 16,905
<REALIZED-GAINS-CURRENT> 533,237
<APPREC-INCREASE-CURRENT> 47,686
<NET-CHANGE-FROM-OPS> 597,828
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,400)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 387,080
<NUMBER-OF-SHARES-REDEEMED> (731,771)
<SHARES-REINVESTED> 7,202
<NET-CHANGE-IN-ASSETS> 252,939
<ACCUMULATED-NII-PRIOR> 6,472
<ACCUMULATED-GAINS-PRIOR> (19,118)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18,128
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,262
<AVERAGE-NET-ASSETS> 2,716,278
<PER-SHARE-NAV-BEGIN> 24.240
<PER-SHARE-NII> 0.010
<PER-SHARE-GAIN-APPREC> 5.940
<PER-SHARE-DIVIDEND> (0.070)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 30.120
<EXPENSE-RATIO> 1.000
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 006
<NAME> JANUS GROWTH AND INCOME FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 499,804
<INVESTMENTS-AT-VALUE> 581,566
<RECEIVABLES> 44,505
<ASSETS-OTHER> 648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 626,719
<PAYABLE-FOR-SECURITIES> 41,928
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,828
<TOTAL-LIABILITIES> 43,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 428,405
<SHARES-COMMON-STOCK> 32,158
<SHARES-COMMON-PRIOR> 33,362
<ACCUMULATED-NII-CURRENT> 607
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 72,981
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 80,970
<NET-ASSETS> 582,963
<DIVIDEND-INCOME> 7,182
<INTEREST-INCOME> 4,158
<OTHER-INCOME> 0
<EXPENSES-NET> (5,807)
<NET-INVESTMENT-INCOME> 5,533
<REALIZED-GAINS-CURRENT> 84,111
<APPREC-INCREASE-CURRENT> 20,058
<NET-CHANGE-FROM-OPS> 109,702
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,346)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113,855
<NUMBER-OF-SHARES-REDEEMED> (130,404)
<SHARES-REINVESTED> 3,214
<NET-CHANGE-IN-ASSETS> 93,021
<ACCUMULATED-NII-PRIOR> 406
<ACCUMULATED-GAINS-PRIOR> (13,116)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,704
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,911
<AVERAGE-NET-ASSETS> 498,442
<PER-SHARE-NAV-BEGIN> 14.690
<PER-SHARE-NII> 0.110
<PER-SHARE-GAIN-APPREC> 3.430
<PER-SHARE-DIVIDEND> (0.100)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.130
<EXPENSE-RATIO> 1.190
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 007
<NAME> JANUS BALANCED FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 111,344
<INVESTMENTS-AT-VALUE> 121,102
<RECEIVABLES> 7,883
<ASSETS-OTHER> 122
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 129,108
<PAYABLE-FOR-SECURITIES> 4,059
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 504
<TOTAL-LIABILITIES> 4,563
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106,754
<SHARES-COMMON-STOCK> 9,076
<SHARES-COMMON-PRIOR> 7,686
<ACCUMULATED-NII-CURRENT> 356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,935
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,500
<NET-ASSETS> 124,545
<DIVIDEND-INCOME> 1,322
<INTEREST-INCOME> 2,803
<OTHER-INCOME> 0
<EXPENSES-NET> 1,417
<NET-INVESTMENT-INCOME> 2,708
<REALIZED-GAINS-CURRENT> 7,481
<APPREC-INCREASE-CURRENT> 8,194
<NET-CHANGE-FROM-OPS> 18,383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,692)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 44,222
<NUMBER-OF-SHARES-REDEEMED> (31,378)
<SHARES-REINVESTED> 4,464
<NET-CHANGE-IN-ASSETS> 30,999
<ACCUMULATED-NII-PRIOR> 83
<ACCUMULATED-GAINS-PRIOR> 2,711
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 879
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,443
<AVERAGE-NET-ASSETS> 107,259
<PER-SHARE-NAV-BEGIN> 12.170
<PER-SHARE-NII> 0.610
<PER-SHARE-GAIN-APPREC> 1.520
<PER-SHARE-DIVIDEND> (0.580)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 13.720
<EXPENSE-RATIO> 1.350
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 009
<NAME> JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 37,002
<INVESTMENTS-AT-VALUE> 37,647
<RECEIVABLES> 463
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84
<TOTAL-LIABILITIES> 84
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,400
<SHARES-COMMON-STOCK> 7,635
<SHARES-COMMON-PRIOR> 7,633
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,017)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 645
<NET-ASSETS> 38,031
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,479
<OTHER-INCOME> 0
<EXPENSES-NET> (234)
<NET-INVESTMENT-INCOME> 2,245
<REALIZED-GAINS-CURRENT> (118)
<APPREC-INCREASE-CURRENT> 1,347
<NET-CHANGE-FROM-OPS> 3,474
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,245)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,220
<NUMBER-OF-SHARES-REDEEMED> (17,150)
<SHARES-REINVESTED> 2,015
<NET-CHANGE-IN-ASSETS> 1,314
<ACCUMULATED-NII-PRIOR> 3
<ACCUMULATED-GAINS-PRIOR> (3,900)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 180
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440
<AVERAGE-NET-ASSETS> 35,962
<PER-SHARE-NAV-BEGIN> 4.810
<PER-SHARE-NII> 0.300
<PER-SHARE-GAIN-APPREC> 0.170
<PER-SHARE-DIVIDEND> (0.300)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 4.980
<EXPENSE-RATIO> 0.650
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> JANUS SHORT-TERM BOND FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 47,204
<INVESTMENTS-AT-VALUE> 47,366
<RECEIVABLES> 803
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 83
<TOTAL-ASSETS> 48,254
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137
<TOTAL-LIABILITIES> 137
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,328
<SHARES-COMMON-STOCK> 16,925
<SHARES-COMMON-PRIOR> 18,887
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,374)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 162
<NET-ASSETS> 48,117
<DIVIDEND-INCOME> 80
<INTEREST-INCOME> 3,386
<OTHER-INCOME> 0
<EXPENSES-NET> 308
<NET-INVESTMENT-INCOME> 3,158
<REALIZED-GAINS-CURRENT> (1,863)
<APPREC-INCREASE-CURRENT> 1,234
<NET-CHANGE-FROM-OPS> 2,529
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,062)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32,690
<NUMBER-OF-SHARES-REDEEMED> (40,989)
<SHARES-REINVESTED> 2,664
<NET-CHANGE-IN-ASSETS> (6,168)
<ACCUMULATED-NII-PRIOR> 26
<ACCUMULATED-GAINS-PRIOR> (1,633)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 308
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 583
<AVERAGE-NET-ASSETS> 47,383
<PER-SHARE-NAV-BEGIN> 2.870
<PER-SHARE-NII> 0.180
<PER-SHARE-GAIN-APPREC> (0.030)
<PER-SHARE-DIVIDEND> (0.180)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 2.840
<EXPENSE-RATIO> 0.660
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> JANUS MERCURY FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1,345,948
<INVESTMENTS-AT-VALUE> 1,488,071
<RECEIVABLES> 64,848
<ASSETS-OTHER> 656
<OTHER-ITEMS-ASSETS> 5
<TOTAL-ASSETS> 1,553,580
<PAYABLE-FOR-SECURITIES> 17,520
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,292
<TOTAL-LIABILITIES> 32,812
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,199,506
<SHARES-COMMON-STOCK> 87,495
<SHARES-COMMON-PRIOR> 42,238
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 184,857
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136,405
<NET-ASSETS> 1,520,768
<DIVIDEND-INCOME> 8,415
<INTEREST-INCOME> 9,678
<OTHER-INCOME> 0
<EXPENSES-NET> 12,541
<NET-INVESTMENT-INCOME> 5,552
<REALIZED-GAINS-CURRENT> 178,502
<APPREC-INCREASE-CURRENT> 83,666
<NET-CHANGE-FROM-OPS> 267,720
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,192)
<DISTRIBUTIONS-OF-GAINS> (5,231)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,329,738
<NUMBER-OF-SHARES-REDEEMED> (672,396)
<SHARES-REINVESTED> 12,799
<NET-CHANGE-IN-ASSETS> 924,438
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 14,225
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,720
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,696
<AVERAGE-NET-ASSETS> 1,116,377
<PER-SHARE-NAV-BEGIN> 14.120
<PER-SHARE-NII> 0.160
<PER-SHARE-GAIN-APPREC> 3.370
<PER-SHARE-DIVIDEND> (0.160)
<PER-SHARE-DISTRIBUTIONS> (0.110)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.380
<EXPENSE-RATIO> 1.140
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> JANUS FEDERAL TAX-EXEMPT FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 36,564
<INVESTMENTS-AT-VALUE> 37,131
<RECEIVABLES> 1,573
<ASSETS-OTHER> 1,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,275
<PAYABLE-FOR-SECURITIES> 7,411
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 271
<TOTAL-LIABILITIES> 7,682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,935
<SHARES-COMMON-STOCK> 4,737
<SHARES-COMMON-PRIOR> 4,104
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,909)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 567
<NET-ASSETS> 32,593
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,782
<OTHER-INCOME> 0
<EXPENSES-NET> 191
<NET-INVESTMENT-INCOME> 1,591
<REALIZED-GAINS-CURRENT> (317)
<APPREC-INCREASE-CURRENT> 2,038
<NET-CHANGE-FROM-OPS> 3,312
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,591)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,365
<NUMBER-OF-SHARES-REDEEMED> (23,241)
<SHARES-REINVESTED> 1,284
<NET-CHANGE-IN-ASSETS> 6,129
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,596)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 176
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 385
<AVERAGE-NET-ASSETS> 29,318
<PER-SHARE-NAV-BEGIN> 6.450
<PER-SHARE-NII> 0.360
<PER-SHARE-GAIN-APPREC> 0.430
<PER-SHARE-DIVIDEND> (0.360)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 6.880
<EXPENSE-RATIO> 0.700
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> JANUS OVERSEAS FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 95,037
<INVESTMENTS-AT-VALUE> 104,913
<RECEIVABLES> 6,838
<ASSETS-OTHER> 563
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 112,315
<PAYABLE-FOR-SECURITIES> 187
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,262
<TOTAL-LIABILITIES> 1,449
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,841
<SHARES-COMMON-STOCK> 9,571
<SHARES-COMMON-PRIOR> 6,182
<ACCUMULATED-NII-CURRENT> 1,174
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 951
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,900
<NET-ASSETS> 110,866
<DIVIDEND-INCOME> 829
<INTEREST-INCOME> 794
<OTHER-INCOME> 0
<EXPENSES-NET> 1,341
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 2,519
<APPREC-INCREASE-CURRENT> 6,447
<NET-CHANGE-FROM-OPS> 9,248
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 128,820
<NUMBER-OF-SHARES-REDEEMED> (91,267)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 46,801
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (676)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,366
<AVERAGE-NET-ASSETS> 77,668
<PER-SHARE-NAV-BEGIN> 10.360
<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> 1.100
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.580
<EXPENSE-RATIO> 1.760
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 004
<NAME> JANUS ENTERPRISE FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 380,435
<INVESTMENTS-AT-VALUE> 463,112
<RECEIVABLES> 6,331
<ASSETS-OTHER> 587
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 470,030
<PAYABLE-FOR-SECURITIES> 9,618
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,042
<TOTAL-LIABILITIES> 10,660
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 346,567
<SHARES-COMMON-STOCK> 16,925
<SHARES-COMMON-PRIOR> 15,146
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 30,358
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,445
<NET-ASSETS> 459,370
<DIVIDEND-INCOME> 3,080
<INTEREST-INCOME> 1,927
<OTHER-INCOME> 0
<EXPENSES-NET> (4,916)
<NET-INVESTMENT-INCOME> 91
<REALIZED-GAINS-CURRENT> 30,791
<APPREC-INCREASE-CURRENT> 29,273
<NET-CHANGE-FROM-OPS> 60,155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,697)
<DISTRIBUTIONS-OF-GAINS> (5,604)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 362,414
<NUMBER-OF-SHARES-REDEEMED> (332,907)
<SHARES-REINVESTED> 12,981
<NET-CHANGE-IN-ASSETS> 89,342
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 12,782
<OVERDISTRIB-NII-PRIOR> (5)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,079
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (5,013)
<AVERAGE-NET-ASSETS> 407,791
<PER-SHARE-NAV-BEGIN> 24.430
<PER-SHARE-NII> 0.520
<PER-SHARE-GAIN-APPREC> 3.090
<PER-SHARE-DIVIDEND> (0.520)
<PER-SHARE-DISTRIBUTIONS> (0.380)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 27.140
<EXPENSE-RATIO> 1.260
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> JANUS WORLDWIDE FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1,573,003
<INVESTMENTS-AT-VALUE> 1,766,209
<RECEIVABLES> 38,581
<ASSETS-OTHER> 9,295
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,814,085
<PAYABLE-FOR-SECURITIES> 5,485
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,246
<TOTAL-LIABILITIES> 9,731
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,524,605
<SHARES-COMMON-STOCK> 65,255
<SHARES-COMMON-PRIOR> 58,786
<ACCUMULATED-NII-CURRENT> 17,449
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60,375
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 201,925
<NET-ASSETS> 1,804,354
<DIVIDEND-INCOME> 19,263
<INTEREST-INCOME> 14,324
<OTHER-INCOME> 0
<EXPENSES-NET> (17,525)
<NET-INVESTMENT-INCOME> 16,062
<REALIZED-GAINS-CURRENT> 55,175
<APPREC-INCREASE-CURRENT> 65,211
<NET-CHANGE-FROM-OPS> 136,448
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (32,032)
<DISTRIBUTIONS-OF-GAINS> (60,061)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 788,071
<NUMBER-OF-SHARES-REDEEMED> (704,140)
<SHARES-REINVESTED> 88,948
<NET-CHANGE-IN-ASSETS> 217,234
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 98,898
<OVERDISTRIB-NII-PRIOR> (218)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,014
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (17,679)
<AVERAGE-NET-ASSETS> 1,622,142
<PER-SHARE-NAV-BEGIN> 27.000
<PER-SHARE-NII> 0.810
<PER-SHARE-GAIN-APPREC> 1.390
<PER-SHARE-DIVIDEND> (0.540)
<PER-SHARE-DISTRIBUTIONS> (1.010)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 27.650
<EXPENSE-RATIO> 1.240
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 008
<NAME> JANUS FLEXIBLE INCOME FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 562,329
<INVESTMENTS-AT-VALUE> 582,414
<RECEIVABLES> 20,500
<ASSETS-OTHER> 132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 603,046
<PAYABLE-FOR-SECURITIES> 21,070
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,617
<TOTAL-LIABILITIES> 22,687
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 570,403
<SHARES-COMMON-STOCK> 60,795
<SHARES-COMMON-PRIOR> 42,111
<ACCUMULATED-NII-CURRENT> 454
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,601)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,103
<NET-ASSETS> 580,359
<DIVIDEND-INCOME> 1,292
<INTEREST-INCOME> 38,623
<OTHER-INCOME> 0
<EXPENSES-NET> (4,310)
<NET-INVESTMENT-INCOME> 35,605
<REALIZED-GAINS-CURRENT> (2,794)
<APPREC-INCREASE-CURRENT> 34,614
<NET-CHANGE-FROM-OPS> 67,425
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,571)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 349,106
<NUMBER-OF-SHARES-REDEEMED> (205,377)
<SHARES-REINVESTED> 27,431
<NET-CHANGE-IN-ASSETS> 203,014
<ACCUMULATED-NII-PRIOR> 340
<ACCUMULATED-GAINS-PRIOR> (7,726)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (4,337)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,310
<AVERAGE-NET-ASSETS> 450,001
<PER-SHARE-NAV-BEGIN> 8.960
<PER-SHARE-NII> 0.720
<PER-SHARE-GAIN-APPREC> 0.590
<PER-SHARE-DIVIDEND> (0.720)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.550
<EXPENSE-RATIO> 0.960
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> JANUS VENTURE FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1,406,566
<INVESTMENTS-AT-VALUE> 1,742,746
<RECEIVABLES> 43,863
<ASSETS-OTHER> 1,785
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,788,394
<PAYABLE-FOR-SECURITIES> 29,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,974
<TOTAL-LIABILITIES> 35,193
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,199,220
<SHARES-COMMON-STOCK> 29,453
<SHARES-COMMON-PRIOR> 29,332
<ACCUMULATED-NII-CURRENT> 185
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 221,449
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 332,347
<NET-ASSETS> 1,753,201
<DIVIDEND-INCOME> 7,610
<INTEREST-INCOME> 11,885
<OTHER-INCOME> 0
<EXPENSES-NET> (14,742)
<NET-INVESTMENT-INCOME> 4,753
<REALIZED-GAINS-CURRENT> 214,176
<APPREC-INCREASE-CURRENT> 67,671
<NET-CHANGE-FROM-OPS> 286,600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (862)
<DISTRIBUTIONS-OF-GAINS> (82,645)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 145,222
<NUMBER-OF-SHARES-REDEEMED> (226,790)
<SHARES-REINVESTED> 81,200
<NET-CHANGE-IN-ASSETS> 202,725
<ACCUMULATED-NII-PRIOR> (258)
<ACCUMULATED-GAINS-PRIOR> 86,212
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,948
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,907
<AVERAGE-NET-ASSETS> 1,612,514
<PER-SHARE-NAV-BEGIN> 52.860
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 9.490
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> (2.840)
<PER-SHARE-NAV-END> 59.530
<EXPENSE-RATIO> 0.920
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 141
<NAME> JANUS MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> FEB-14-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 962,046
<INVESTMENTS-AT-VALUE> 962,046
<RECEIVABLES> 11,286
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 973,443
<PAYABLE-FOR-SECURITIES> 21,700
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,572
<TOTAL-LIABILITIES> 25,272
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 643,219
<SHARES-COMMON-STOCK> 643,219
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 643,219
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,427
<OTHER-INCOME> 0
<EXPENSES-NET> (2,129)
<NET-INVESTMENT-INCOME> 24,298
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17,868)
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,109,965
<NUMBER-OF-SHARES-REDEEMED> (484,031)
<SHARES-REINVESTED> 17,285
<NET-CHANGE-IN-ASSETS> 643,219
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,129
<AVERAGE-NET-ASSETS> 461,311
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 151
<NAME> JANUS GOVERNMENT MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> FEB-14-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 138,225
<INVESTMENTS-AT-VALUE> 138,225
<RECEIVABLES> 30,605
<ASSETS-OTHER> 22
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 168,852
<PAYABLE-FOR-SECURITIES> 5,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 5,381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 119,307
<SHARES-COMMON-STOCK> 119,307
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,125
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 119,307
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,519
<OTHER-INCOME> 0
<EXPENSES-NET> (394)
<NET-INVESTMENT-INCOME> 4,125
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4,133
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,353)
<DISTRIBUTIONS-OF-GAINS> (8)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 183,758
<NUMBER-OF-SHARES-REDEEMED> (67,703)
<SHARES-REINVESTED> 3,252
<NET-CHANGE-IN-ASSETS> 119,307
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 374
<AVERAGE-NET-ASSETS> 87,906
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 161
<NAME> JANUS TAX EXEMPT MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> FEB-14-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 75,821
<INVESTMENTS-AT-VALUE> 75,821
<RECEIVABLES> 6,161
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82,046
<PAYABLE-FOR-SECURITIES> 3,055
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 320
<TOTAL-LIABILITIES> 3,375
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,479
<SHARES-COMMON-STOCK> 67,479
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,392
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 67,479
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,637
<OTHER-INCOME> 0
<EXPENSES-NET> (245)
<NET-INVESTMENT-INCOME> 1,392
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,366)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 126,046
<NUMBER-OF-SHARES-REDEEMED> (59,890)
<SHARES-REINVESTED> 1,323
<NET-CHANGE-IN-ASSETS> 67,479
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 245
<AVERAGE-NET-ASSETS> 57,366
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.020)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 142
<NAME> JANUS MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> APR-17-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 962,046
<INVESTMENTS-AT-VALUE> 962,046
<RECEIVABLES> 11,286
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 973,443
<PAYABLE-FOR-SECURITIES> 21,700
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,572
<TOTAL-LIABILITIES> 25,272
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 304,952
<SHARES-COMMON-STOCK> 304,952
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 304,952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,427
<OTHER-INCOME> 0
<EXPENSES-NET> (2,129)
<NET-INVESTMENT-INCOME> 24,298
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,430)
<DISTRIBUTIONS-OF-GAINS> (3)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,974,800
<NUMBER-OF-SHARES-REDEEMED> (1,671,117)
<SHARES-REINVESTED> 1,269
<NET-CHANGE-IN-ASSETS> 304,952
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,129
<AVERAGE-NET-ASSETS> 202,427
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 152
<NAME> JANUS GOVERNMENT MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> APR-17-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 138,225
<INVESTMENTS-AT-VALUE> 138,225
<RECEIVABLES> 30,605
<ASSETS-OTHER> 22
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 168,852
<PAYABLE-FOR-SECURITIES> 5,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 5,381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,164
<SHARES-COMMON-STOCK> 44,164
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,125
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 44,164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,519
<OTHER-INCOME> 0
<EXPENSES-NET> (394)
<NET-INVESTMENT-INCOME> 4,125
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4,133
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (772)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 179,373
<NUMBER-OF-SHARES-REDEEMED> (135,644)
<SHARES-REINVESTED> 435
<NET-CHANGE-IN-ASSETS> 44,164
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 394
<AVERAGE-NET-ASSETS> 24,748
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1995 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 162
<NAME> JANUS TAX EXEMPT MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> APR-17-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 75,821
<INVESTMENTS-AT-VALUE> 75,821
<RECEIVABLES> 6,161
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82,046
<PAYABLE-FOR-SECURITIES> 3,055
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 320
<TOTAL-LIABILITIES> 3,375
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,192
<SHARES-COMMON-STOCK> 11,192
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,392
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 11,192
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,637
<OTHER-INCOME> 0
<EXPENSES-NET> (245)
<NET-INVESTMENT-INCOME> 1,392
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (23)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37,121
<NUMBER-OF-SHARES-REDEEMED> (25,940)
<SHARES-REINVESTED> 11
<NET-CHANGE-IN-ASSETS> 11,192
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 245
<AVERAGE-NET-ASSETS> 1,115
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.020)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
