TABLE OF CONTENTS
Our Message to You 1
Portfolio Manager's Commentary and Schedule of Investments
Janus Flexible Income Fund 3
Janus Federal Tax-Exempt Fund 7
Janus Intermediate Government Securities Fund 10
Janus Short-Term Bond Fund 11
Janus Money Market Fund 13
Janus Government Money Market Fund 16
Janus Tax-Exempt Money Market Fund 17
Notes to Schedule of Investments 18
Statements of Operations - Bond Funds 19
Statements of Assets and Liabilities - Bond Funds 20
Statements of Changes in Net Assets - Bond Funds 21
Financial Highlights - Bond Funds 22
Statements of Operations - Money Market Funds 24
Statements of Assets and Liabilities - Money Market Funds 24
Statements of Changes in Net Assets - Money Market Funds 25
Financial Highlights - Money Market Funds 26
Notes to Financial Statements 27
Report of Independent Accountants 29
PERFORMANCE INFORMATION
Performance Overview Graphs on the following pages compare the performance
of a $10,000 investment in each fund, since its inception, to one or more widely
used market indexes. Each graph reflects the lifetime performance of the fund
through October 31, 1995.
When comparing the performance of a fund to an index, keep in mind that
market indexes do not take into account brokerage commissions that would be
incurred if you purchased the individual securities that comprise the index.
They also do not include taxes payable on dividends and interest payments, or
operating expenses necessary to maintain a portfolio investing in the index.
You will see average annual total returns quoted for each fund. Average
annual total return is calculated by taking the growth or decline in value of an
investment over a period of time, including reinvestment of dividends and
distributions, and then calculating the annual compound percentage rate that
would have produced the same result had the rate of growth been constant
throughout the period.
AN EXPLANATION OF THE SCHEDULE OF INVESTMENTS
Following the performance overview graph is each fund's Schedule of
Investments. This schedule reports the industry concentrations and the different
types of securities held in the fund's portfolio on the last day of the
reporting period. Securities are usually listed by type (common stocks,
corporate bonds, U.S. government obligations, etc.) and by industry
classification (banking, communications, insurance, etc.).
The market value of each security represents its value on the last day of
the reporting period. Funds that own securities denominated in foreign
currencies convert the value of their securities into U.S. dollars. Funds that
invest primarily in foreign securities also provide a summary of investments by
country. This summary reports the fund's exposure in different countries by
indicating the percentage of securities invested in each country.
AN EXPLANATION OF THE FORWARD FOREIGN CURRENCY CONTRACT TABLE
A table listing forward foreign currency contracts will follow each fund's
Schedule of Investments (if applicable). Forward foreign currency contracts
represent agreements to deliver or receive a preset amount of currency at a
future date. Foreign currency contracts are used to hedge against foreign
currency risk in the fund's long-term holdings.
The table provides the foreign currency being sold and the settlement date,
the amount sold, the value of the currency in U.S. dollars, and the amount of
unrealized gain or loss. The amount of unrealized gain or loss reflects the
change in currency exchange rates from the time the contract was opened to the
last day of the reporting period.
<PAGE>
OUR MESSAGE TO YOU
Dear Shareholders:
The beginning of the fixed-income rally coincided almost exactly with the
start of our fiscal year on November 1, 1994. Although the Federal Reserve Board
continued to raise short-term interest rates as late as February 1, 1995, rates
in the intermediate and long sectors of the bond market (maturities of 5-30
years), peaked much earlier and then began to decline. The bond rally correctly
anticipated that the economy would soon begin to slow, even though Gross
Domestic Product (GDP) hit an annual rate of 5.1% in the final quarter of 1994.
Bonds also correctly anticipated that inflation, unlike in previous recoveries,
would remain low. By mid-year, economic data had turned mixed, growth was
proceeding at a moderate pace, and intermediate- and long-term interest rates
continued to decline.
TREASURY YIELDS
- --------------------------------------------------------------------------------
October 31, April 30, October 31,
1994 1995 1995
30-Year Treasury Bond 7.97% 7.34% 6.33%
10-Year Treasury Note 7.81 7.05 6.02
Treasury Bills 6.14 6.31 5.55
- --------------------------------------------------------------------------------
HOW BOND SECTORS PERFORMED
Investment-Grade Corporate Bonds. Investment-grade corporate bonds (those
rated BBB or better by Standard & Poor's Rating Services) tend to respond in
line with Treasury issues to changes in interest rates. They also offer higher
yields. The good business climate and declining interest rates we have enjoyed
this year provided ideal conditions for the corporate market. These conditions
helped mitigate the risk of deterioration in corporate balance sheets (also
known as credit risk). As a result, corporate bonds have done extremely well
this year.
High-Yield Bonds. High-yield/high-risk (junk) bonds have also provided
excellent returns. With rates declining and credit quality improving, the yields
on these bonds were very attractive.
Municipals Faltered. Municipal bonds underperformed the taxable market due
primarily to the flat-tax debate in Congress. A flat tax could potentially lower
the tax advantage of municipal bonds and make their lower yields less
competitive.
International Markets Continued to Underperform. Although interest rates
have remained somewhat higher in Europe, the strength in the U.S. dollar against
most foreign currencies has made foreign debt less attractive. Mexico continues
to be a minefield due to the devaluation of the peso, which has severely eroded
returns for foreign investors. We have not purchased many foreign bonds this
year, and those we do own are short-term.
ECONOMIC TRENDS
The Economy Landed Softly. The economy slowed sufficiently to avoid higher
inflation but not enough to cause a recession. It is still uncertain whether the
current soft landing is an exception to the typical business cycle or the
beginning of a new trend. Usually an economic boom brings increasing inflation,
and interest rates must rise to choke off growth. If we are indeed seeing a new
cyclical trend - one that does not frequently include recession - we can thank
technology and the additional flexibility it has brought to the marketplace.
Leaner, more streamlined operations allow businesses to absorb costs and adjust
quickly to consumer demand, while global competition in labor and manufacturing
holds down prices.
Inflation Was Subdued. Inflation has not posed a problem during the recent
recovery because business has been able to absorb the increased cost of raw
materials by more efficient production. As a result, cost increases have not
reached either the wholesale or retail buyer. Streamlined operations and
international competition have also kept the lid on labor costs, which, along
with the cost of raw materials, have been the driving forces behind inflation in
past cycles. In the month of September, for example, unit labor costs (the cost
of labor embedded in each individual product) was unchanged compared to
September 1994. This is the first time in 30 years unit labor costs have not
risen from the previous year.
The Mid-Year Rise in Inventories. In 1994 GDP was a robust 4.1%, and then
slowed to an annual rate of 2.8% and 1.3% in the first and second calendar
quarters of 1995. This was well within the 2%-3% range that is sustainable
without higher inflation in mature economies such as the U.S. In July, the
Federal Reserve Board lowered short-term interest rates. Why did growth slow?
One reason was that the higher interest rates of 1994 were finally beginning to
bite. Consumer and business loans were more expensive and had discouraged
prospective buyers of homes, cars, and furniture. Slowing demand meant
inventories accumulated in corporate warehouses and on the lots at auto
dealerships. More supply, less demand, meant lower inflation. Due to the
increased flexibility in corporate America the excess inventory was worked off
quickly, however, and by the third quarter of 1995 annualized GDP growth jumped
to 4.2%. But even as this data was released in late October, retail demand
turned sluggish and was also waning in the manufacturing sector. The price of
industrial commodities (fuel, copper, steel, etc.) had gone into decline.
Clearly, the economy was bouncing around, but business was able to adjust and
overall growth remained moderate.
The Dollar Gathered Strength. After a historic decline against the Japanese
yen and the German mark, the U.S. dollar began to strengthen in 1995. This was
good news for the bond market. A stronger dollar reduces the possibility of
inflation and means more buying power for the U.S. consumer, because imported
goods are less expensive. A weak dollar makes foreign goods more expensive, and
can eventually fuel inflation.
Fiscal Crises Helped Keep Interest Rates Low. While the default of Orange
County, California, and the devaluation of the Mexican peso caused nervousness
in the fixed-income markets, these events also tended to lower investors'
expectations for economic growth. The bond market likes a slow-growth,
low-inflation environment. Even the demise of Barings Securities and more
recently the troubles at Daiwa Bank, where rogue traders
Janus Funds October 31, 1995 Annual Report
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<PAGE>
OUR MESSAGE TO YOU
hid huge losses, helped create demand in the fixed-income markets when investors
sought safety in U.S. Treasury and corporate issues. The chart below illustrates
how financial crises often coincide with a downturn in U.S. interest rates, and
poses the question: Will the current financial crisis in Japanese banking be the
next event to push rates lower? We don't know, but the argument is interesting
nonetheless.
FINANCIAL CRISES CAN INFLUENCE U.S. INTEREST RATES
[line graph]
A graphic illustration of the 30 Year Treasury Yield. The "y" axis reflects
interest rates from 5% to 13%. The "x" axis reflects the computation period from
1968 through 1994. The graph illustrates through certain economic events how
financial crises can coincide with the decline in U.S. interest rates.
Source: ISI
The Budget Debate. The budget debate in Washington and the current push for
fiscal responsibility is another important factor in the performance of the bond
market. Congress' focus on curbing the deficit helped support bond prices this
year and a responsible budget agreement would very likely have a positive impact
going forward.
HOW OUR FUNDS PERFORMED
We Were Too Conservative Early in the Year. Our fixed-income funds were
defensive early in the year when the economy was still growing very rapidly. We
held cash and shorter maturities in many of our portfolios, and some Funds were
hedged with bond and note futures to protect against price declines. We believed
the risk of higher inflation and higher interest rates outweighed the potential
reward of a more aggressive position. As a result, we underperformed against
several of our benchmark indexes. Janus Flexible Income Fund was able to make up
much of the lost ground during the year. The Fund's modest underperformance
still seems a relatively small price to pay given the effect higher interest
rates could have had on bond prices. By mid-year all our funds were positioned
to take advantage of stable or lower interest rates, and that remains our
current strategy.
JANUS HIGH-YIELD FUND
Janus High-Yield Fund will open on December 29, 1995. The Fund's primary
objective is to provide maximum income through investments in
high-yield/high-risk (junk) securities.
Ron Speaker will manage Janus High-Yield Fund. Ron believes careful,
detailed research is key to the long-term performance of non-investment grade
securities, which are among the most aggressive instruments in the fixed-income
spectrum. The Fund is appropriate for investors who want higher yield than can
be obtained from investment-grade securities and who can tolerate additional
risk to achieve their objective.(1)
NEW PORTFOLIO MANAGERS IN 1996
Effective January 1, 1996, Sandy Rufenacht will take over portfolio
responsibilities for Janus Intermediate Government Securities Fund and Janus
Short-Term Bond Fund. Sandy started with Janus in 1990 as a senior accountant,
but for the last four years has been a fixed-income analyst working with Ron
Speaker on Janus Flexible Income Fund, Janus Short-Term Bond Fund, and Janus
Intermediate Government Securities Fund.
Darrell Watters will also take over Janus Federal Tax-Exempt Fund on
January 1. Darrell has been a municipal bond trader at Janus since 1993. Before
joining Janus, Darrell worked on the Chicago Stock Exchange and as a municipal
bond trader at a national brokerage firm.
Both Sandy and Darrell have done an excellent job at Janus and we believe
they will be fine additions to our portfolio management team.
We appreciate your investment with Janus.
/s/ Thomas H. Bailey
Thomas H. Bailey
Chairman
- ------------------------------
(1) For a prospectus containing more complete information, including expenses,
please call a Janus Investor Service Representative at 1-800-525-3713. Read
the prospectus carefully before you invest or send money.
Janus Funds October 31, 1995 Annual Report
2
<PAGE>
JANUS FLEXIBLE INCOME FUND Portfolio Manager, Ronald V. Speaker
PERFORMANCE REVIEW
Janus Flexible Income Fund moderately underperformed the Lehman
Government/Corporate Bond Index for the fiscal year ended October 31, 1995. The
Fund had a return of 15.35%, versus 16.16% for the Lehman Index. Both returns
include reinvested dividends.
Underperformance was the result of the Fund's conservative position early
in the year, when the Federal Reserve was still pushing up short-term interest
rates and the economy was experiencing a strong recovery. Gross Domestic Product
(GDP) grew at an annual rate of 5.1% in the last calendar quarter of 1994. When
signs of moderate growth appeared early in 1995, the Fund became more fully
invested and results improved. Since the end of January the Fund has performed
in line with the Lehman Index, returning 15.72% versus 15.61% for the Index.
FUND STRATEGY
To take advantage of the decline in interest rates, the Fund deployed cash
in two areas: investment-grade corporate bonds, and U.S. Treasury issues. The
portfolio's weighted average maturity was also extended from 10.4 to 13.7 years.
Investment-grade corporate bonds increased from 32% of assets at the end of
October 1994 to 39% by the end of April 1995. U.S. Treasury securities increased
from zero to 19%.
This strategy has served the Fund well. A good market in initial public
offerings of convertible securities, which have performed in line with this
year's strong equities market, has also helped performance.
PORTFOLIO ASSET MIX
The portfolio is currently positioned to take advantage of stable to lower
interest rates.
- --------------------------------------------------------------------------------
Investment-Grade Corporate Bonds 39%
High-Yield/High-Risk Bonds 37%
U.S. Government Bonds 13%
Foreign Bonds 4%
Preferred Stock 1%
Cash 6%
- --------------------------------------------------------------------------------
As of fiscal year end, the portfolio's weighted average maturity was 12.8
years, compared to 9.58 years for the Lehman Index. This reflects a continuing
positive outlook for the bond market. Average modified duration (a theoretical
measure of price volatility) was 6.7 years, and 30-day yield stood at 7.39%. The
average rating of all securities in the portfolio was BBB.
PORTFOLIO HOLDINGS
The Fund's investment-grade corporate holdings include high-quality banks
and financial institutions such as First National Bank of Boston, First Union,
BankAmerica, and NationsBank. Industrial corporations include IBM, Ford Motor
Credit, GMAC, and TCI Communications.
The Fund's weighting in high-yield/high risk (junk) bonds is less than last
year. Our average weighting was over 40% in 1994, versus 37% at the end of
October 1995. We have become more cautious on credit quality as the economy
slows. Also, as interest rates decline, there are attractive capital gains
opportunities in long-term investment-grade bonds. The high-yield securities we
own are solid performers or special situations where we are comfortable with our
analysis. Grocery stores are overweighted in the high-yield sector due to their
consistent revenue streams.
U.S. Treasury issues have performed well this year, and are mostly in
10-year maturities, with a small position in 30-year bonds. These longer-term
bonds should provide more capital appreciation if interest rates continue to
decline.
A position in German bonds was established this summer when the German
economy looked to be slowing in tandem with the U.S. The German bonds pay higher
yields than U.S. bonds.
GOING FORWARD
There are many reasons to be optimistic about the bond market heading into
1996. Moderate economic growth and low inflation should continue to exert
downward pressure on interest rates and boost fixed-income prices. Weak retail
sales, including big ticket items such as automobiles, as well as slower order
flow at the manufacturing level, all suggest the economy is slowing. The third
quarter jump in the annual rate of GDP growth (to 4.2%) appears to be tapering
off. GDP growth of 2%-3% is more sustainable.
The current budget debate in Washington needs to be monitored closely,
however. A productive and responsible budget accord is critical, and would have
a long-term positive impact on the debt markets. Inflation data and political
developments will be a focus of attention in the coming months.
Thank you for your continued investment in Janus Flexible Income Fund.
Janus Funds October 31, 1995 Annual Report
3
<PAGE>
JANUS FLEXIBLE INCOME FUND Portfolio Manager, Ronald V. Speaker
PERFORMANCE OVERVIEW
[line graph]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Flexible Income Fund and the Lehman Brothers Government Corporate Bond
Index. Janus Flexible Income Fund is represented by a solid blue line. The
Lehman Brothers Government Corporate Bond Index is represented by a single
dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, July 2, 1987, through
October 31, 1995. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Flexible Income Fund ($21,007) as compared to
the Lehman Brothers Government Corporate Bond Index ($21,067). There is a legend
in the upper left quadrant of the graph which indicates Janus Flexible Income
Fund's one-year, five-year and since inception (July 2, 1987) average annual
total returns as 15.35%, 13.98%, and 9.29%, respectively.
Source - Lipper Analytical Services, Inc. 1995. All returns reflect reinvested
dividends.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
The Fund's portfolio may differ significantly from the securities in the index.
The index is unmanaged.
JANUS FLEXIBLE INCOME FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Corporate Bonds - 75.9%
Aerospace and Defense - 0.6%
$ 3,000,000 Alliant Techsystems, Inc., 11.75%
senior subordinated notes, due 3/1/03 $ 3,285,000
Agriculture - 0.9%
5,000,000 Hines Horticulture, Inc., 11.75%
senior subordinated notes, due 10/15/05+ 5,100,000
Auto and Truck - 2.4%
13,500,000 General Motors Corp., 7.40%
debentures, due 9/1/25 13,786,875
Auto Parts - Original - 0.6%
3,500,000 Harvard Industries, Inc., 11.125%
senior notes, due 8/1/05+ 3,548,125
Broadcasting, Radio and Television - 5.3%
3,000,000 CF Cable TV, Inc., 11.625%
senior notes, due 2/15/05 3,255,000
2,000,000 Heartland Wireless Communications, Inc., 13.00%
senior notes, due 4/15/03+ 2,095,000
4,000,000 Marcus Cable Co. L.P., 11.875%
debentures, due 10/1/05 4,070,000
5,500,000 Pegasus Media & Communications, Inc., 12.50%
notes, due 7/1/05+ 5,541,250
3,000,000 Rogers Cablesystems of America, 10.00%
senior secured second priority notes,
due 3/15/05 3,150,000
12,500,000 Viacom, Inc., 8.00%
subordinated debentures, due 7/7/06 12,375,000
30,486,250
Principal Amount Market Value
- ---------------- ------------
Building Materials - 1.1%
USG Corp.:
$ 5,000,000 8.50% senior notes, due 8/1/05 $ 5,156,250
1,325,000 8.75% sinking fund debentures, due 3/1/17 1,349,844
6,506,094
Captive Finance - Auto - 3.5%
10,000,000 Ford Motor Credit Corp., 7.75%
notes, due 3/15/05 10,650,000
10,000,000 General Motors Acceptance Corp., 6.625%
notes, 10/15/05 9,875,000
20,525,000
Commercial Services - 0.4%
2,075,000 Primeco, Inc., 12.75%
senior subordinated notes, due 3/1/05 2,150,219
Computer Software and Services - 0.7%
3,500,000 SHL Systemhouse, Inc., 12.25%
senior subordinated notes, due 9/1/01 4,348,750
Computers - 3.1%
17,000,000 IBM Corp., 7.50%
debentures, due 6/15/13 17,871,250
Electrical Equipment - 0.3%
2,000,000 Westinghouse Electric Corp., 8.625%
debentures, due 8/1/12 2,005,000
Electronics - 1.6%
9,250,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 9,065,000
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
4
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JANUS FLEXIBLE INCOME FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Entertainment - 4.1%
$ 3,000,000 GNF Corp., 10.625%
first mortgage bonds, due 4/1/03 $ 2,617,500
2,000,000 Premier Parks, Inc., 12.00%
senior notes, due 8/15/03+ 2,060,000
1,000,000 Rio Hotel & Casino, Inc., 10.625%
senior subordinated notes, due 7/15/05+ 975,000
3,000,000 Station Casinos, Inc., 9.625%
senior subordinated notes, due 6/1/03 2,872,500
Time Warner, Inc.:
10,000,000 7.75% notes, due 6/15/05 10,187,500
5,000,000 8.11% notes, due 8/15/06 5,218,750
23,931,250
Financial - Bank Commercial - 7.0%
6,000,000 Bank of Boston Co., 6.625%
subordinated notes, due 12/1/05 5,910,000
1,065,000 Centerbank, 8.375%
subordinated notes, due 10/1/02 1,083,638
2,500,000 Chemical Banking Corp., 6.70%
subordinated notes, due 8/15/08 2,443,750
14,500,000 First National Bank of Boston, 8.00%
subordinated notes, due 9/15/04 15,587,500
10,000,000 First Union Corp., 7.05%
subordinated notes, due 8/1/05 10,162,500
5,000,000 NationsBank Corp., 7.75%
subordinated notes, due 8/15/15 5,237,500
40,424,888
Financial - Bank Money Center - 1.7%
10,000,000 BankAmerica Corp., 6.75%
subordinated notes, due 9/15/05 9,975,000
Financial - Savings/Loan/Thrift - 0.4%
2,435,000 Anchor Bancorp, Inc., 8.9375%
senior notes, due 7/9/03 2,477,613
Food Processing - 5.5%
Borden, Inc.:
3,000,000 9.20% debentures, due 3/15/21 3,348,750
8,500,000 7.875% debentures, due 2/15/23 8,319,375
10,000,000 Nabisco, Inc., 7.55%
debentures, due 6/15/15 10,037,500
10,000,000 Ralston Purina Co., 7.875%
debentures, 6/15/25 10,500,000
32,205,625
Food Wholesale - 0.7%
4,000,000 Dominick's Finer Foods, Inc., 10.875%
senior subordinated notes, due 5/1/05 4,200,000
Forest Products and Paper - 0.7%
4,000,000 Repap New Brunswick, Inc., 9.875%
senior notes, due 7/15/00 4,090,000
Homebuilders - 0.2%
1,000,000 M.D.C. Holdings, Inc., 11.125%
senior notes, due 12/15/03 935,000
Insurance - Life - 2.8%
11,000,000 Delphi Financial Group, Inc. 8.00%
senior notes, due 10/1/03 10,670,000
5,000,000 Life Partners Group, Inc., 12.75%
senior subordinated notes, due 7/15/02 5,525,000
16,195,000
Principal Amount Market Value
- ---------------- ------------
Insurance - Multiline - 2.8%
$ 10,000,000 Leucadia National Corp., 10.375%
senior subordinated notes, due 6/15/02 $ 10,825,000
5,000,000 Liberty Mutual, 8.50%
notes, due 5/15/25+ 5,337,500
16,162,500
Insurance - Property and Casualty - 1.5%
9,000,000 Orion Capital Corp., 7.25%
senior notes, due 7/15/05 8,988,750
Medical - Hospital Management Services - 3.4%
Tenet Healthcare Corp.:
3,000,000 9.625% senior notes, due 9/1/02 3,232,500
10,000,000 8.625% senior notes, due 12/1/03 10,250,000
6,000,000 10.125% senior subordinated notes,
due 3/1/05 6,480,000
19,962,500
Oil and Gas - Domestic - 2.4%
3,000,000 Coastal Corp., 7.75%
debentures, due 10/15/35 2,988,750
3,000,000 Noram Energy Corp., 8.00%
debentures, due 1/15/97 3,000,000
7,670,000 Texas Eastern Transmission Corp., 10.00%
sinking fund debentures, due 10/1/11 8,139,788
14,128,538
Oil and Gas - International - 0.9%
5,000,000 Texaco Capital, Inc., 7.50%
debentures, due 3/1/43 5,143,750
Packaging and Containers - 2.6%
Stone Container Corp.:
10,500,000 11.00% senior subordinated notes,
due 8/15/99 10,736,250
4,000,000 11.50% senior subordinated notes,
due 9/1/99 4,100,000
14,836,250
Personal Credit - 0.9%
5,000,000 Household Finance Corp., 7.65%
notes, due 5/15/07 5,368,750
Publishing and Printing - 1.2%
7,000,000 News America Holdings, Inc., 7.75%
notes, due 2/1/24 6,912,500
Retail - Grocery - 3.2%
2,450,000 Food 4 Less Supermarkets, Inc., zero coupon
senior discount notes, due 7/15/05 1,102,500
18,000,000 Ralph's Grocery Co., 11.00%
senior subordinated notes, due 6/15/05 17,482,500
18,585,000
Retail - Special Line - 0.4%
2,076,000 Pier 1 Imports, Inc., 11.50%
subordinated debentures, due 7/15/03 2,122,710
Telecommunications - 4.6%
3,225,000 A+ Communications, Inc., 11.875%
senior subordinated notes, due 11/1/05 3,225,000
5,000,000 CAI Wireless Systems, Inc., 12.25%
senior notes, due 9/15/02 5,300,000
12,500,000 TCI Communications, Inc., 8.00%
senior notes, due 8/1/05 12,968,750
3,250,000 WinStar Communications, Inc., zero coupon
units, due 10/15/05+ 5,037,500
26,531,250
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
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JANUS FLEXIBLE INCOME FUND October 31, 1995
Shares or
Principal Amount Market Value
- ---------------- ------------
Telecommunications Equipment - 1.8%
$ 10,000,000 Wireless One, Inc., 13.00%
units, due 10/15/03 $ 10,350,000
Tobacco - 1.3%
7,000,000 RJR Nabisco, Inc., 8.625%
medium term notes, due 12/1/02 7,420,000
Transportation - Air - 4.7%
10,000,000 AMR Corp., 9.00%
debentures, due 8/1/12 10,787,500
15,000,000 Delta Air Lines, Inc., 9.25%
debentures, due 3/15/22 16,593,750
27,381,250
Utilities - 0.6%
3,000,000 Intermedia Communications of Florida, Inc.,
13.50% senior notes, due 6/1/05 3,270,000
Total Corporate Bonds (cost $425,853,186) 440,275,687
Warrants - 0.1%
12,000 Heartland Wireless Communications, Inc. -
exp. 4/15/00*,+ 126,000
3,000 Intermedia Communications of Florida, Inc. -
exp. 6/1/00*,+ 3,000
1,131 Wright Medical Technology, Inc. -
exp. 6/30/03*,+ 186,623
Total Warrants (cost $139,179) 315,623
Common Stock - 0.1%
550 Pegasus Media & Communications, Inc.* 6
10,000 Wireless One, Inc.* 117,500
Total Common Stock (cost $105,000) 117,506
Shares or
Principal Amount Market Value
- ---------------- ------------
Preferred Stock - 1.1%
200,000 Chevy Chase Savings, 13.00%,
Non-Cumulative (cost $6,088,750) $ 6,400,000
U.S. Government Agency - 4.6%
$ 26,600,000 Federal Home Loan Mortgage Corp.
5.85%, 11/1/95
(amortized cost $26,600,000) 26,600,000
U.S. Government Obligations - 12.6%
U. S. Treasury Notes:
34,000,000 7.875%, due 11/15/04** 38,298,960
25,000,000 7.50%, due 2/15/05 27,565,750
5,000,000 6.50%, due 8/15/05 5,174,183
2,000,000 7.625%, due 2/15/25 2,320,780
Total U.S. Government Obligations (cost $68,268,492) 73,359,673
Foreign Bonds - 4.3%
DEM 22,500,000 Baden Wurt LKB, 6.50%
bank guaranteed notes, due 9/15/08** 15,257,738
DEM 3,000,000 Deutschland Republic, 6.875%
notes, due 5/12/05** 2,190,513
DEM 11,500,000 Deutschland Republic, 6.25%
notes, due 1/4/24** 7,213,733
NZD 1,000,000 New Zealand Government, 8.00%
foreign government guaranteed,
due 4/15/04 691,254
Total Foreign Bonds (cost $25,282,774) 25,353,238
Short-Term Corporate Notes - 1.7%
$ 5,000,000 Ford Motor Credit Co.
5.72%, 11/10/95 4,992,850
5,000,000 General Electric Capital Corp.
5.72%, 11/2/95 4,999,206
Total Short-Term Corporate Notes
(amortized cost $9,992,056) 9,992,056
Total Investments - 100.4% (total cost $562,329,437) 582,413,783
Liabilities, net of Cash, Receivables and Other Assets - (0.4%) (2,054,463)
Net Assets - 100% $580,359,320
Financial Futures - Short
50 Contracts U.S. Treasury - 10 year note,
expires December, 1995, principal amount
$5,550,000, value $5,576,563
cumulative depreciation $ 26,563
FORWARD FOREIGN CURRENCY CONTRACTS
Open at October 31, 1995
<TABLE>
<CAPTION>
Currency Currency Unrealized
Fund Currency Sold and Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income Fund German Deutschemark 12/28/95 12,057,833 $ 8,590,648 $ 90,023
German Deutschemark 1/17/96 21,793,646 15,542,466 (44,259)
$24,133,114 $ 45,764
</TABLE>
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
6
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND Portfolio Manager, Ronald V. Speaker
PERFORMANCE REVIEW
The municipal market joined in the bond rally that occurred during the
fiscal year ended October 31, 1995. Economic growth was moderate and inflation
remained low. This caused interest rates to decline and bond prices to move
higher. However, the municipal bond market hit a bump in the Spring as concerns
arose over a flat tax proposal in Congress, which if approved, would change the
preferred tax treatment of municipal bonds. The flat tax did not materialize,
but the proposal's effects were felt in the municipal market through the end of
the year. Municipal bonds remain inexpensive compared to Treasuries as a result
of uncertainty about their tax treatment.
Janus Federal Tax-Exempt Fund achieved a total return of 12.60% for the
twelve-month period, versus 14.84% for the Lehman Brothers Municipal Bond Index.
Both returns include reinvested dividends.
The Fund underperformed as a result of its conservative position following
the very difficult market of 1994. Early in the year, the Fund held bonds with
higher coupons, shorter maturities, and less interest rate sensitivity than the
Lehman Index. Later, maturities were extended and the Fund became 100% invested.
THE PORTFOLIO
As of October 31, 1995, the Fund had positions in high-quality essential
service bonds (70%) and general obligation bonds (30%). Approximately 56% of the
bonds held were insured and rated AAA. The Fund's average rating is AA1. The
weighted average maturity was 13.29 years, and reflected our positive outlook on
the market. Average modified duration (a theoretical measure of price
volatility) was 8.13 years. The Fund's average 30-day yield was 5.18%, which is
the taxable equivalent of 7.51% for investors in the 31% federal tax bracket.
GOING FORWARD
The bond market should continue to benefit from moderate economic growth
and low inflation. Weak retail sales and reduced demand in the manufacturing
sector suggest the economy is slowing. Gross Domestic Product reached an annual
rate of 4.2% in the third calendar quarter, but appears to be tapering off to
more sustainable levels.
The current budget discussions in Congress are critical, however. A
productive and responsible budget accord would positively affect the debt
markets. We will continue to monitor political developments in Washington.
NEW PORTFOLIO MANAGER IN 1996
Effective January 1, 1996, Darrell Watters will assume responsibilities for
the Fund. Darrell has been with Janus since 1993 as a municipal bond trader and
has worked closely with current portfolio manager Ron Speaker.
Thank you for your continued investment in Janus Federal Tax-Exempt Fund.
PERFORMANCE OVERVIEW
[line graph]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Federal Tax-Exempt Fund and the Lehman Brothers Municipal Bond Index.
Janus Federal Tax-Exempt Fund is represented by a solid blue line. The Lehman
Brothers Municipal Bond Index is represented by a single dashed black line. The
"y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 3, 1993, through October 31, 1995. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Federal Tax-Exempt Fund ($11,178) as compared to the Lehman Brothers
Municipal Bond Index ($11,697). There is a legend in the upper left quadrant of
the graph which indicates Janus Federal Tax-Exempt Fund's one-year and since
inception (May 3, 1993) average annual total returns for the period ended
October 31, 1995 as 12.60% and 4.56%, respectively.
Source - Lipper Analytical Services, Inc. 1995. All returns reflect reinvested
dividends.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
The Fund's portfolio may differ significantly from the securities in the index.
The index is unmanaged.
Janus Funds October 31, 1995 Annual Report
7
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Municipal Securities - 113.9%
Alaska - 3.0%
$ 1,000,000 Alaska State Housing Finance Corp.,
(MBIA Insured), 5.875%, 12/1/30 $ 973,750
Arizona - 3.2%
1,000,000 Phoenix, 6.00%, 7/1/12 1,047,500
California - 9.0%
900,000 Irvine Ranch Water District,
(Capital Improvement Project),
3.75%, Variable Rate, 8/1/16 900,000
1,000,000 Los Angeles Wastewater System Revenue,
(FGIC Insured), Series D, 5.20%, 11/1/21 926,250
1,000,000 San Francisco City and County Sewer Revenue,
(AMBAC Insured), 6.50%, 10/1/21 1,097,500
2,923,750
Colorado - 19.1%
200,000 Arvada Urban Renewal Authority,
(Arvada County Center Urban Renewal),
8.75%, 3/1/06 196,500
1,000,000 Colorado Health Facilities Authority Revenue,
(Vail Valley Medical Center Project),
Series A, 6.50%, 1/15/13 1,021,250
Denver City and County Airport Revenue,
(MBIA Insured):
1,000,000 Series A, 5.60%, 11/15/20 973,750
1,000,000 Series A, 5.70%, 11/15/25 985,000
750,000 Mountain Village Metropolitan District,
(San Miguel County), 8.10%, 12/1/11 796,875
275,000 North Jeffco Parks and Recreation District,
(Colorado Golf Course Revenue),
6.75%, 12/1/09 289,094
500,000 Summit County School District,
(FGIC Insured), Series A, 5.70%, 12/1/14 504,375
1,500,000 University of Colorado University Revenues,
(Research Building Revolving Fund),
(MBIA Insured), 5.00%, 6/1/09 1,455,000
6,221,844
Florida - 3.0%
1,000,000 Florida State Board of Education Capital
Outlay Public Education, (MBIA Insured),
Series C, 5.60%, 6/1/25 978,750
Georgia - 1.5%
500,000 Burke County Development Authority Pollution
Control Revenue, (Georgia Power Company
Pilot Vogtle), 3.85%, Variable Rate, 7/1/24 500,000
Illinois - 3.3%
1,000,000 Chicago Motor Fuel Tax Revenue,
(AMBAC Insured), 6.125%, 1/1/09 1,063,750
Louisiana - 3.1%
1,000,000 Louisiana State Recovery District Sales
Tax Revenue, 3.90%, Variable Rate, 7/1/98 1,000,000
Massachusetts - 3.1%
1,000,000 Worcester Municipal Purpose Loan,
(MBIA Insured), Series C, 5.75%, 10/1/13 1,010,000
Montana - 6.5%
1,000,000 Montana State Board of Investment Workers
Compensation Program, (MBIA Insured),
6.875%, 6/1/20 1,086,250
1,000,000 Montana State Health Facility Authority
Healthcare Revenue, (Montana Development
Center Project), 6.40%, 6/1/19 1,037,500
2,123,750
Principal Amount Market Value
- ---------------- ------------
New Jersey - 3.3%
$ 1,000,000 North Brunswick Township Board of Education,
6.30%, 2/1/14 $ 1,062,500
New Mexico - 9.2%
1,000,000 Albuquerque Airport Revenue, 7.60%, 7/1/08 1,067,500
395,000 Chaves County Hospital Revenue,
(Eastern New Mexico Medical Center Project),
7.25%, 12/1/10 404,381
1,000,000 Gallup New Mexico Pollution Control Revenue,
(Plains Electric Generation Project),
6.65%, 8/15/17 1,065,000
450,000 University of New Mexico University Revenue,
Series A, 6.00%, 6/1/21 466,875
3,003,756
New York - 4.7%
1,000,000 New York State Dorm Authority Revenue
(State University Educational Facilities),
Series A, 5.50%, 5/15/19 940,000
600,000 New York State Energy Research and
Development Authority Pollution Control
Revenue, (New York State Electric and Gas),
Series C, 3.60%, Variable Rate, 6/1/29 600,000
1,540,000
North Dakota - 2.4%
500,000 Bismarck Hospital Revenue,
(Medcenter One), 7.375%, 5/1/06 550,000
250,000 Fargo Sales Tax Revenue,
(AMBAC Insured), 5.20%, 1/1/09 246,250
796,250
Oklahoma - 5.0%
1,000,000 Grand River Dam Authority Revenue,
(AMBAC Insured), 6.25%, 6/1/11 1,102,500
500,000 McGee Creek Authority Water Revenue,
(MBIA Insured), 6.00%, 1/1/23 524,375
1,626,875
Pennsylvania - 3.0%
1,000,000 Philadelphia School District,
(AMBAC Insured), Series B, 5.50%, 9/1/25 962,500
Tennessee - 6.7%
1,000,000 Memphis, 5.75%, 8/1/13 1,013,750
1,100,000 Memphis-Shelby County Tennesee Airport
Authority Facilities Project Revenue,
(Federal Express Corp.), 6.75%, 9/1/12 1,159,125
2,172,875
Texas - 8.1%
1,000,000 Lewisville Independent School District,
(PSFG Insured), 5.50%, 8/15/16 985,000
700,000 Lone Star Texas Airport Improvement Revenue,
Series A-2, 3.90%, Variable Rate, 12/1/14 700,000
1,000,000 San Antonio Electric and Gas, (MBIA Insured),
5.375%, 2/1/17 963,750
2,648,750
Utah - 3.0%
900,000 Intermountain Power Agency Power Supply
Revenue, Series D, 8.625%, 7/1/21 985,500
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
8
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Virginia - 9.0%
$ 1,000,000 Fairfax County Virginia Water Authority Water
Revenue, (AMBAC Insured), 6.00%, 4/1/22 $ 1,020,000
1,000,000 Hampton Roads Sanitation District, (Primary
Plumbing Sewer Revenue), 7.10%, 7/1/05 1,111,250
800,000 Peninsula Ports Authority Coal Term Revenue,
(Dominion Term Project), Series C, 3.80%,
Variable Rate, 7/1/16 800,000
2,931,250
Washington - 1.6%
500,000 Seatac Local Option Transportation Tax
Revenue, (MBIA Insured), 6.50%, 12/1/13 532,500
Principal Amount Market Value
- ---------------- ------------
Wyoming - 3.1%
$ 1,000,000 Cheyenne, 6.20%, 12/1/11 $ 1,025,000
Total Municipal Securities - 113.9% (total cost $36,563,942) 37,130,850
Liabilities, net of Cash, Receivables
and Other Assets - (13.9%) (4,537,946)
Net Assets - 100% $32,592,904
AMBAC - American Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
MBIA - Municipal Bond Insurance Association
PSFG - Permanent School Fund Guaranty
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
9
<PAGE>
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND
Portfolio Manager, Ronald V. Speaker
PERFORMANCE REVIEW
During the fiscal year ended October 31, 1995, the intermediate segment of
the government securities market rallied in tandem with the broad financial
markets. The U.S. economy continued to slow, which caused interest rates to
decline. Bond prices were pushed higher as a result. Inflation remained low
during the period.
The Janus Intermediate Government Securities Fund had a total return of
10.19% for the fiscal year. This compares to 11.79% for the Lehman Brothers
Intermediate Government Bond Index. Both returns include reinvested dividends.
The Fund slightly underperformed the Lehman Index due to its conservative
stance early in the year, when the economy was still experiencing rapid growth.
From October 1994 to March 1995, the Fund had a shorter weighted average
maturity than the Lehman Index. Shorter maturities are less volatile, and more
defensive, than longer bonds. In late March, portfolio maturities were extended
and 40% of assets were moved into 5-year Treasuries. Later in the year, the
Fund's weighted average maturity was in line with the index.
CURRENT STRATEGY
We lengthened the Fund's maturities during the year to reflect our
increasingly optimistic outlook for the market. At fiscal year end, the weighted
average maturity was 4.2 years, with a modified duration (a theoretical measure
of price volatility) of 3.6 years. The average 30-day yield was 5.37%. The Fund
is positioned to produce competitive returns should intermediate and long-term
rates continue to decline or remain stable.
GOING FORWARD
The current positive environment for the bond market should continue into
1996, as long as inflation remains in check and economic growth is moderate. The
budget debate in Washington will play a critical role in the future performance
of the bond market. A responsible and productive budget accord would have a
long-term positive impact.
NEW PORTFOLIO MANAGER IN 1996
On January 1, 1996, Sandy Rufenacht will assume portfolio responsibilities
for the Fund. Sandy has been with Janus since 1990, starting as a senior fund
accountant and moving into fixed-income research in 1991 where he assisted
current portfolio manager Ron Speaker.
Thank you for your continued investment in Janus Intermediate Government
Securities Fund.
PERFORMANCE OVERVIEW
[line graph]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Intermediate Government Securities Fund and the Lehman Brothers
Intermediate Government Bond Index. Janus Intermediate Government Securities
Fund is represented by a solid blue line. The Lehman Brothers Intermediate
Government Bond Index is represented by a single dashed black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, July 26, 1991, through October 31, 1995. The upper right
quadrant reflects the ending value of the hypothetical investment in Janus
Intermediate Government Securities Fund ($12,727) as compared to the Lehman
Brothers Intermediate Government Bond Index ($14,781). There is a legend in the
upper left quadrant of the graph which indicates Janus Intermediate Government
Securities Fund's one-year and since inception (July 26, 1991) average annual
total returns for the period ended October 31, 1995 as 10.19% and 5.84%,
respectively.
Source - Lipper Analytical Services, Inc. 1995. All returns reflect reinvested
dividends.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
The Fund's portfolio may differ significantly from the securities in the index.
The index is unmanaged.
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
U.S. Government Obligations - 99.0%
U.S. Treasury Notes:
$ 4,100,000 7.875%, due 4/15/98 $ 4,303,360
6,000,000 6.125%, due 5/15/98 6,060,660
4,215,000 5.875%, due 8/15/98 4,233,293
9,025,000 5.875%, due 3/31/99 9,061,642
Principal Amount Market Value
- ---------------- ------------
U.S. Treasury Notes (continued)
8,250,000 7.125%, due 2/29/00 $ 8,656,890
5,150,000 6.50%, due 8/15/05 5,330,765
Total U.S. Government Obligations (cost $37,002,230) 37,646,610
Total Investments - 99.0% 37,646,610
Cash, Receivables and Other Assets, net of Liabilities - 1.0% 383,931
Net Assets - 100% $38,030,541
Janus Funds October 31, 1995 Annual Report
10
<PAGE>
JANUS SHORT-TERM BOND FUND Portfolio Manager, Ronald V. Speaker
PERFORMANCE REVIEW
During the fiscal year, the rally in the short end of the fixed-income
market continued as economic growth remained moderate, inflation was low, and
interest rates declined.
The Janus Short-Term Bond Fund had a total return of 5.55% for the year
ending October 31, 1995, versus 8.93% for the Lehman Government/Corporate 1-3
Year Bond Index. Both results include reinvested dividends.
Janus Short-Term Bond Fund underperformed because it was positioned
defensively early in the year, when the economy was still experiencing a strong
recovery. Gross Domestic Product (GDP) grew at an annual rate of 5.1% during the
last calendar quarter of 1994, and the Federal Reserve Board raised short-term
interest rates again in February 1995. Though the Fund managed a positive return
in the very difficult bond market of 1994, it remained defensive too long.
Assets were partially hedged with 2-year note futures as late as May, and the
portfolio's average weighted maturity was less than 2 years, which is relatively
short.
CURRENT STRATEGY
The Fund's current strategy is intended to take advantage of stable or
decling interest rates. Weighted average maturity has been extended to 2.4
years, with a duration (a theoretical measure of price volatility) of 2.0 years.
As of fiscal year end, the portfolio's average rating was A+, and the average
30-day yield was 5.81%.
PORTFOLIO COMPOSITION
The Fund remains heavily positioned in high-quality corporate bonds, which
have better yields than similar maturities in the U.S. Treasury market. The
price of investment-grade corporates also tends to be more responsive to
positive, i.e., lower, trends in interest rates. Investment-grade bonds (rated
BBB or better by Standard & Poor's Rating Services) make up 78% of the
portfolio, and include IBM, Ford Motor Credit, NationsBank, GMAC, and
BankAmerica. Two-year government notes are 21% of assets, and cash is 1%.
GOING FORWARD
The current economic environment is positive for the bond market, and
should remain so as long as economic growth is moderate and inflation is in
check.
Political developments in Washington will probably take on increased
importance as 1996 approaches. A productive and responsible budget accord would
have positive implications for the bond market. In the meantime, the budget
debate deserves investors' close attention.
NEW PORTFOLIO MANAGER IN 1996
On January 1, 1996, Sandy Rufenacht will take over portfolio management of
the Fund. Sandy started with Janus in 1990 as a senior fund accountant and then
moved to fixed-income research where he assisted current portfolio manager Ron
Speaker with both Janus Short-Term Bond Fund and Janus Flexible Income Fund.
Thank you for your continued investment in Janus Short-Term Bond Fund.
PERFORMANCE OVERVIEW
[line graph]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Short-Term Bond Fund and the Lehman Brothers 1-3 Year
Government/Corporate Bond Index. Janus Short-Term Bond Fund is represented by a
solid blue line. The Lehman Brothers 1-3 Year Government/Corporate Bond Index is
represented by a single dashed black line. The "y" axis reflects the value of
the investment. The "x" axis reflects the computation periods from inception,
September 1, 1992, through October 31, 1995. The upper right quadrant reflects
the ending value of the hypothetical investment in Janus Short-Term Bond Fund
($11,332) as compared to the Lehman Brothers 1-3 Year Government/Corporate Bond
Index ($11,723). There is a legend in the upper left quadrant of the graph which
indicates Janus Short-Term Bond Fund's one-year and since inception (September
1, 1992) average annual total returns for the period ended October 31, 1995 as
5.55% and 4.01%, respectively.
Source - Lipper Analytical Services, Inc. 1995. All returns reflect reinvested
dividends.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
The Fund's portfolio may differ significantly from the securities in the index.
The index is unmanaged.
Janus Funds October 31, 1995 Annual Report
11
<PAGE>
JANUS SHORT-TERM BOND FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Corporate Bonds - 77.6%
Business Credit - 8.8%
$ 2,000,000 First USA Bank, 5.75%
bank notes, due 1/15/99 $ 1,962,500
2,250,000 Pitney Bowes Credit Corp., 6.25%
notes, due 6/1/98 2,258,438
4,220,938
Captive Finance - Auto - 9.4%
2,250,000 Ford Motor Credit Corp., 6.25%
unsubordinated notes, due 2/26/98 2,258,437
2,250,000 General Motors Acceptance Corp., 6.25%
global notes, due 7/8/98 2,247,188
4,505,625
Captive Finance - Industrial - 2.1%
1,000,000 General Electric Capital Corp., 6.125%
notes, due 4/15/97 1,003,750
Computers - 4.5%
2,150,000 IBM Corp., 6.375%
notes, due 11/1/97 2,160,750
Environmental Control - 2.1%
1,000,000 WMX Technologies, Inc., 6.25%
notes, due 10/15/00 997,500
Financial - Bank Commercial - 12.3%
2,000,000 BankAmerica Corp., 6.00%
notes, due 7/15/97 2,000,000
2,000,000 Comerica Bank, 5.95%
senior bank notes, due 9/15/97 2,000,000
2,000,000 NationsBank Corp., 5.375%
senior notes, due 4/15/00 1,930,000
5,930,000
Financial - Savings/Loan/Thrift - 4.2%
2,000,000 Great Western Financial Corp., 6.125%
notes, due 6/15/98 2,000,000
Financial - Security Broker - 4.1%
2,000,000 Dean Witter Discover & Co., 6.00%
global notes, due 3/1/98 1,997,500
Financial Services - 4.1%
2,000,000 AVCO Financial Services, Inc., 5.875%
senior notes, due 10/15/97 1,995,000
Insurance - Multiline - 4.2%
2,000,000 International Lease Finance Corp., 6.25%
notes, due 6/15/98 2,005,000
Packaging and Containers - 4.1%
2,000,000 Crown Cork & Seal Co., 5.875%
notes, due 4/15/98 1,980,000
Personal Credit - 2.4%
Travelers Group, Inc.:
50,000 7.625% notes, due 1/15/97 51,000
1,100,000 5.75% notes, 4/15/98 1,090,375
1,141,375
Principal Amount Market Value
- ---------------- ------------
Retail - Department Stores - 3.0%
$ 1,500,000 J.C. Penny Co., Inc., 5.375%
notes, due 11/15/98 $ 1,460,625
Transportation - Miscellaneous - 0.4%
207,000 Federal Express Corp., 6.25%
notes, due 4/15/98 206,741
Utilities - Electric - 7.7%
1,000,000 Consumers Power Co., 6.875%
first mortgage bonds, due 5/1/98 998,750
240,000 Montana Power Co., 7.50%
sinking fund debentures, due 1/1/98 241,200
1,000,000 Pacific Gas & Electric Co., 5.75%
mortgage notes, due 12/1/98 990,000
1,500,000 Public Service Electric & Gas Co., 6.00%
first refunding mortgage notes, due 5/1/00 1,483,125
3,713,075
Utilities - Telecommunications - 4.2%
1,275,000 GTE California Corp., 6.25%
first mortgage notes, due 1/15/98 1,278,188
750,000 General Telephone Co. of California, 6.75%
first mortgage notes, due 12/1/97 753,750
2,031,938
Total Corporate Bonds (cost $37,210,753) 37,349,817
U.S. Government Obligations - 20.8%
U.S. Treasury Notes:
70,000 7.25%, due 11/30/96 71,175
125,000 6.625%, due 3/31/97 126,695
7,320,000 6.00%, due 12/31/97 7,375,193
2,445,000 5.625%, due 1/31/98 2,442,946
Total U.S. Government Obligations (cost $9,993,353) 10,016,009
Total Investments - 98.4% (total cost $47,204,106) 47,365,826
Cash, Receivables and Other Assets, net of Liabilities - 1.6% 751,502
Net Assets - 100% $48,117,328
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
12
<PAGE>
JANUS MONEY MARKET FUNDS Portfolio Manager, Sharon S. Pichler
It has been an exciting first year for our new money market funds. We have
challenged ourselves to bring you money market funds that are up to the high
standards set by other Janus funds. We appreciate your continued patronage and
intend to persist in earning it.
The crosscurrents of economic activity and inflation expectations have kept
the markets guessing as to which way, and by how much, the Federal Reserve Board
will cause interest rates to move. At the beginning of this fiscal year,
November 1, 1994, the economy was still strong enough to create fears that
inflation would be rekindled. The Fed was raising interest rates to cool things
off. The 30-year Treasury Bond was yielding 7.97% and the 1-year Treasury Bill
was at 6.14%. By February 15, 1995, when Janus' Money Market Funds opened, those
yields were 7.56% and 6.63%, respectively. The long-term markets were
anticipating that rates would soon decline, but the Fed kept short-term rates
relatively high. In July the Fed evidently decided that the economy had slowed
down sufficiently to keep inflation from getting out of control, and it lowered
short-term rates. Since then, interest rates across the maturity spectrum have
moved gradually lower. Our fiscal year ended with the 30-year Treasury Bond at
6.33% and the 1-year Treasury Bill at 5.55%.
Market participants are still guessing what the next Fed move will be,
though most prognosticators believe that the Fed will lower rates again. The
disagreement concerns the timing of the decrease.
JANUS MONEY MARKET FUND
Companies are reluctant to issue one-year debt, thinking they will soon be
able to do so at a lower rate. We would like to buy one-year securities now,
thinking that if we wait, we will receive a lower return. Usually we receive a
higher rate for buying longer-term securities, a situation known as a normal
yield curve. Currently, however, overnight rates are higher than one-year rates
(called an inverted yield curve). So we must be very selective when buying
long-term instruments to avoid giving up too much yield.
Our strategy, then, is to search for the best values in very short-term
securities while opportunistically picking up longer-term securities. This is
called a "barbell" approach, where there is a lot of weight at both ends of the
maturity spectrum, and not much in the middle. This structure should enable the
Fund to do well regardless of the direction interest rates take. We can take
advantage of the higher short-term rates while establishing some longer-term
positions that will not decline in yield if the Fed reduces interest rates. This
approach has given us a weighted average maturity of 48 days as of October 31,
1995.
JANUS GOVERNMENT MONEY MARKET FUND
Government money market instruments were also affected by the
flat-to-inverted yield curve. If anything, the market has anticipated a decline
in interest rates even quicker in the government securities market. We have
employed a similar barbell strategy in this Fund, which has given us a weighted
average maturity of 43 days as of October 31, 1995.
All government debt in the Fund is rated AAA, the highest credit quality
available. Janus Government Money Market Fund is AAAm credit rated by Standard
&Poor's Ratings Services. This rating is based on S&P's analysis of the Fund's
credit quality, market price exposure, and management.
JANUS TAX-EXEMPT MONEY MARKET FUND
Interest rates in the short-term municipal markets are almost always lower
than in the taxable markets because investors do not have to subtract the effect
of taxes from the yield. The magnitude of the difference is dependent on
investors' marginal tax rates. When income tax rates are high, municipal yields
will be low in relationship to taxable rates. Currently that differential is
pretty substantial, with a one-year AAA municipal note yielding about 67% of a
comparable maturity U.S. Government security.
Supply and demand also play a large role in the behavior of interest rates
in the tax-exempt market. During certain times of the year there are large,
synchronous cash flows either into or out of tax-exempt money market
instruments. At these times, interest rates can approach taxable levels.
Conversely, they can fall to ridiculously low levels. One-day rates of 0.90%
have been seen on such occasions.
Currently, these extraneous factors are not obscuring fundamental ones, and
the tax-exempt yield curve is flat-to-inverted, parallel with taxable rates. Our
strategy has mirrored the taxable strategy. We have a large position in very
short maturities and a smaller position in longer-term securities. We purchased
longer-term securities when we could invest at levels that were attractive both
in absolute terms and in relation to taxable levels. The combination gave us a
weighted average maturity of 52 days as of October 31.
Thank you for your investment in Janus Money Market Funds.
- -------------------------
Money market funds are not insured or guaranteed by the U.S. Government and
there can be no assurance that these funds will maintain a $1.00 share price in
the future.
Janus Funds October 31, 1995 Annual Report
13
<PAGE>
JANUS MONEY MARKET FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Short-Term Corporate Notes - 27.6%
Allied Signal, Inc.
$ 15,000,000 5.74%, 11/6/95 $ 14,988,042
Aluminum Co. of America
12,000,000 4.625%, 2/15/96 11,953,297
Dean Witter Discover
3,250,000 5.65%, 2/29/96 3,188,792
First Interstate Bancorp
6,000,000 10.50%, 3/1/96 6,087,158
Ford Motor Credit Co.
1,000,000 8.25%, 5/15/96 1,009,759
General Electric Capital Corp.:
25,000,000 5.81%, 6/11/96 25,000,000
10,000,000 5.85%, 8/29/96 9,995,778
General Motors Acceptance Corp.:
10,000,000 5.66%, 3/8/96 9,798,755
8,400,000 8.25%, 8/1/96 8,537,372
Hanna Steel Corp.
8,150,000 5.8844%, 12/1/95 8,150,000
Hanover Direct, Inc.:
2,400,000 Series A, 6.1856%, 11/27/95+ 2,400,000
5,000,000 Series B, 6.1856%, 11/27/95+ 5,000,000
J.P. Morgan and Co.
10,000,000 5.75%, 8/7/96 9,992,706
Lehman Brothers Holdings, Inc.
25,000,000 6.00%, 11/1/95 25,000,000
Los Angeles Metropolitan Transit Authority
18,500,000 6.025%, 11/1/95 18,500,000
PNC Funding Corp.
45,000,000 5.78%, 2/5/96 44,306,933
Shoney's, Inc., No. 3:
400,000 5.8844%, 12/1/95+ 400,000
10,350,000 5.8873%, 12/1/95+ 10,350,000
Southern Container Corp.
10,000,000 5.8873%, 12/1/95+ 10,000,000
Spiegel Funding Corp.
25,000,000 5.80%, 11/6/95 24,979,861
Windsor at Pine Ridge
11,650,000 5.8873%, 12/1/95+ 11,650,000
Total Short-Term Corporate Notes
(amortized cost $261,288,453) 261,288,453
Put Bonds - 1.3%
12,200,000 Richmond County, Georgia,
(Monsanto Co. Project), 6.27%, 6/1/20
(cost $12,200,000) 12,200,000
Time Deposits - 2.2%
Hong Kong Bank, New York
20,500,000 5.9063%, 11/1/95 (cost $20,500,000) 20,500,000
Bank Notes - 5.7%
American Express Centurion Bank
25,000,000 6.00%, 11/12/96 25,000,000
First National Bank of Chicago
10,000,000 6.121%, 8/26/96 10,000,000
First National Bank of Ohio
10,000,000 5.95%, 8/1/96 9,996,400
Wachovia Bank of North Carolina
9,000,000 6.20%, 8/5/96 9,022,083
Total Bank Notes (amortized cost $54,018,483) 54,018,483
Principal Amount Market Value
- ---------------- ------------
Taxable Variable Rate Demand Notes - 32.7%
$ 3,700,000 Ann Arundel Medical Center, 5.90%, 7/1/24 $ 3,700,000
2,200,000 Armstrong County, Pennsylvania Hospital
Authority Revenue, (St. Francis Financial
Corp.), Series A, 5.95%, 9/1/17 2,200,000
4,500,000 Bayliss Group Partners, 6.10%, 1/1/10 4,500,000
3,200,000 Columbia County, Georgia Development
Authority Industrial Park Revenue,
5.95%, 3/1/10 3,200,000
5,200,000 Community Health System, Inc., Series A,
6.10%, 10/1/03 5,200,000
10,000,000 FCC National Bank, 5.95%, 4/26/96 9,996,645
15,800,000 Fontana, California Public Finance
Authority COPS, 6.11%, 10/1/20 15,800,000
General Electric Capital Corp.:
5,000,000 6.00%, 4/5/96 4,999,348
3,000,000 6.03%, 4/19/96 3,000,000
General Motors Acceptance Corp.:
10,000,000 6.2625%, 12/22/95 10,003,367
5,000,000 6.125%, 5/6/96 5,004,975
3,155,000 GMG Warehouse LLC, 5.95%, 5/15/25 3,155,000
800,000 Great Bend, Kansas Economic Development
Revenue Board, (Fuller Industries, Inc.
Project), 5.95%, 6/1/09 800,000
10,000,000 H/M Partners LLC, 6.00%, 10/1/20 10,000,000
1,525,000 Health Care Taxable Obligation, (Glencrest
Real Estate & Development LLC Project),
5.95%, 2/15/24 1,525,000
Health Insurance Plan of Greater New York:
4,700,000 Series B, 5.90%, 7/1/16 4,700,000
8,000,000 Series B-2, 5.90%, 7/1/20 8,000,000
7,800,000 Health Midwest Ventures Group, Inc.,
Demand Bond Series 1994A, 6.05%, 8/1/19 7,800,000
1,900,000 Hinds County, Mississippi Industrial
Development Revenue, (Cal-Maine Foods,
Inc. Project), 5.95%, 11/1/05 1,900,000
2,100,000 Illinois Development Finance Authority,
(Chicago Educational Television Assn.),
Series B, 5.95%, 11/1/14 2,100,000
4,000,000 Liliha Partners L.P. of Hawaii, 6.10%, 8/1/24 4,000,000
4,925,000 Mac Papers, Inc., 5.90%, 8/1/15 4,925,000
1,800,000 Maryland State Industrial Development
Financing Authority Terminal Corp. Facility
Revenue, 6.03%, 9/1/09 1,800,000
Mississippi Business Finance Industrial
Development Revenue:
5,000,000 (Dana Lighting, Inc. Project),
5.95%, 5/1/10 5,000,000
11,500,000 (United Technologies Motor Systems,
Inc. Project), 6.00%, 6/1/14 11,500,000
6,000,000 (Choctaw Foods, Inc. Project),
5.95%, 8/1/15 6,000,000
3,200,000 (Bryan Foods, Inc. Project),
5.90%, 2/1/19 3,200,000
1,000,000 Montgomery County, Pennsylvania Industrial
Development Authority, (410 Horsham
Associates Project), 6.15%, 3/1/10 1,000,000
6,700,000 New Orleans, Louisiana, Aviation Board
Revenue, Series A, 5.99%, 8/1/00 6,700,000
30,000,000 New York City, New York General Obligation,
Series A-2, 5.90%, 8/1/25 30,000,000
2,470,000 Nova University Florida Lease Revenue,
(Miami Dolphins Training Facility Project),
5.95%, 3/1/03 2,470,000
12,000,000 Pasadena California COPS, (Los Robles Avenue
Parking Facility Project), 6.00%, 11/1/12 12,000,000
12,120,000 Philip R. Wegman, (The Manors Project),
6.30%, 10/1/20 12,120,000
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
14
<PAGE>
JANUS MONEY MARKET FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Taxable Variable Rate Demand Notes (continued)
$ 1,800,000 Rensselaer County, New York Industrial
Development Authority,
(Allied Signal Project), 5.91%, 9/1/09+ $ 1,800,000
3,175,000 St. Francis, Hawaii Healthcare Foundation
Revenue, 6.10%, 8/1/12 3,175,000
25,500,000 San Bernardino County, California, (County
Center Refining Project), 5.95%, 7/1/16 25,500,000
9,365,000 San Jose, California Financing Authority,
(Hayes Mansion Revenue Project), Series A,
6.10%, 12/1/25 9,365,000
1,000,000 South Central Texas Industrial Development
Corp., (Rohr Industries Project),
5.95%, 5/1/20+ 1,000,000
10,000,000 Taxable Adjustable Demand Notes,
5.97%, 8/1/25 10,000,000
16,000,000 Texas Veterans' Housing Assistance, Series A-2,
5.84%, 12/1/33 16,000,000
5,380,000 Union City, Tennessee Industrial Development
Board, (Cobank Limited LLC Project),
6.00%, 1/1/25 5,380,000
5,000,000 Venturecor, Inc., 6.05%, 5/15/35 5,000,000
24,350,000 Virginia State Housing Development Authority
Residential Mortgage Revenue, Series A,
5.95%, 3/1/02 24,350,000
Total Taxable Variable Rate Demand Notes
(amortized cost $309,869,335) 309,869,335
Certificates of Deposit - 9.5%
Bayerische Vereinsbank:
10,000,000 6.03%, 7/11/96 10,000,000
10,000,000 5.95%, 7/22/96 10,000,000
Canadian Imperial Bank
10,000,000 6.00%, 9/26/96 10,000,000
Mitsubishi Bank, Ltd.
35,000,000 6.06%, 1/17/96 34,983,252
Royal Bank of Canada
25,000,000 5.88%, 9/25/96 24,986,441
Total Certificates of Deposit (amortized cost $89,969,693) 89,969,693
Principal Amount Market Value
- ---------------- ------------
Promissory Notes - 4.7%
$ 45,000,000 Goldman Sachs Group L.P.
5.9375%, 1/22/96 (cost $45,000,000) $ 45,000,000
Repurchase Agreements - 17.8%
65,000,000 First Chicago Repurchase Agreement, 5.93%,
dated 10/31/95, maturing 11/1/95, to be
repurchased at $65,010,707, collateralized
by $63,845,000 in U.S. Treasury Notes
4.75% - 7.50%, 12/31/96 - 3/31/97, with
respective values of $47,881,014, $51,156,
$798,951, $10,317,895, $7,256,079 65,000,000
64,200,000 HSBC Repurchase Agreement, 5.93%,
dated 10/31/95, maturing 11/1/95, to be
repurchased at $64,210,575, collateralized
by $65,595,000 in Federal Home Loan
Discount Notes 5.63% - 5.70%, 11/1/95 -
11/15/95 with respective values of
$9,637,108, $926,536, $289,826, $47,947,
$119,844, $29,162,116, $711,859,
$683,836, $1,740,163, $22,169,438 64,200,000
40,000,000 Morgan Stanley Repurchase Agreement,
5.93%, dated 10/31/95, maturing 11/1/95,
to be repurchased at $40,006,589,
collateralized by $43,499,070 in Federal
National Mortgage Association Notes
6.00% - 7.50%, 3/25/02 - 3/25/24;
with respective values of $14,936,890,
$1,004,869, $15,136,485, $10,097,552 40,000,000
Total Repurchase Agreements (cost $169,200,000) 169,200,000
Total Investments - 101.5% (total cost $962,045,964) 962,045,964
Liabilities, net of Cash, Receivables and Other Assets - (1.5%) (13,875,328)
Net Assets - 100% $948,170,636
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
15
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
U.S. Government Agency Discount Notes - 14.7%
Federal Farm Credit Bank
$ 5,000,000 5.40%, 8/27/96 $ 4,775,000
Federal Home Loan Bank:
1,000,000 5.51%, 2/5/96 985,307
1,000,000 5.80%, 2/8/96 984,050
2,000,000 5.50%, 5/3/96 1,943,778
1,835,000 5.58%, 5/31/96 1,774,702
1,000,000 5.51%, 7/11/96 961,277
1,000,000 5.44%, 7/16/96 961,013
2,000,000 5.39%, 7/26/96 1,919,749
1,000,000 5.44%, 8/1/96 958,595
1,000,000 5.38%, 10/4/96 949,488
2,000,000 5.34%, 10/11/96 1,897,650
Federal Home Loan Mortgage Corp.
2,000,000 5.83%, 11/1/95 2,000,000
Federal National Mortgage Association:
2,000,000 5.49%, 4/15/96 1,949,370
2,000,000 5.39%, 6/20/96 1,930,529
Total U.S. Government Agency Discount Notes
(amortized cost $23,990,508) 23,990,508
U.S. Government Agency Variable Notes - 23.9%
Federal Farm Credit Bank:
5,000,000 5.95%, 3/21/96 4,999,791
2,000,000 5.85%, 6/13/97 1,998,435
Federal Home Loan Bank:
5,000,000 5.48%, 3/8/96 4,996,091
5,000,000 6.18%, 9/6/96 5,015,346
3,000,000 5.57%, 9/2/97 2,983,371
Federal National Mortgage Association
3,000,000 6.12%, 1/26/96 3,000,172
Illinois Student Assistance Commission
1,600,000 5.81%, 12/1/22 1,600,000
Student Loan Marketing Association:
5,000,000 5.67%, 12/14/95 5,000,000
3,200,000 5.90%, 8/22/96 3,204,942
1,240,000 5.77%, 3/3/97 1,240,105
5,000,000 5.56%, 4/18/97 4,996,363
Total U.S. Government Agency Variable Notes
(amortized cost $39,034,616) 39,034,616
Principal Amount Market Value
- ---------------- ------------
Repurchase Agreements - 46.0%
$ 25,100,000 First Chicago Repurchase Agreement, 5.93%,
dated 10/31/95, maturing 11/1/95, to be
repurchased at $25,104,135, collateralized by
$24,565,000 in U.S. Treasury Notes 6.50%,
5/15/97 with a value of $25,605,341 $ 25,100,000
25,100,000 HSBC Repurchase Agreement,5.93%,
dated 10/31/95, maturing
11/1/95, to be repurchased at
$25,104,135, collateralized by
$25,610,000 in Federal Home Loan
Mortgage Discount Notes,
11/1/95 with a value of $25,602,317 25,100,000
25,000,000 Morgan Stanley Repurchase Agreement,
5.93%, dated 10/31/95,
maturing 11/1/95, to be repurchased
at $25,004,118, collateralized by
$26,312,851 in Federal National Mortgage
Association Notes: 5.00% - 7.00%,
3/25/02 - 8/25/23; with
respective values
of $14,933,143, $301,693, $10,445,982 25,000,000
Total Repurchase Agreements (cost $75,200,000) 75,200,000
Total Investments - 84.6% (total cost $138,225,124) 138,225,124
Cash, Receivables and Other Assets, net of Liabilities - 15.4% 25,245,589
Net Assets - 100% $163,470,713
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
16
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
Tax and Revenue Anticipation Notes - 13.0%
$ 1,000,000 Allegheny County, Pennsylvania Port Authority
Grant Anticipation Notes, Series A,
3.875%, 6/28/96 $ 1,000,000
1,000,000 Corcoran, California Joint Unified School
District, Tax and Revenue Anticipation Notes,
4.25%, 6/28/96 1,000,948
1,000,000 Harris County, Texas Hospital District Revenue,
6.90%, 2/15/96 1,008,580
1,000,000 Maricopa County, Arizona Unified High School
District Number 210, Phoenix Tax
Anticipation Notes, Series A, 4.45%, 7/31/96 1,003,467
750,000 Metropolitan Government Nashville and
Davidson County, Tennesse, 4.75%, 1/15/96 750,000
3,295,000 Mono County, California Board of Education
Tax Anticipation Notes, 4.50%, 6/28/96 3,305,018
1,150,000 Port of Seattle, Washington Revenue, Series A,
5.50%, 2/1/96 1,153,326
1,000,000 Tuolomne County, California Board of Education
Tax and Revenue Anticipation Notes,
4.50%, 6/28/96 1,003,484
Total Tax and Revenue Anticipation Notes
(amortized cost $10,224,823) 10,224,823
Put Bonds - 5.3%
500,000 Harris County, Texas Hospital District,
8.50%, 4/1/15 518,915
1,000,000 Klamath Falls, Oregon Electric Revenue,
(Salt Caves Hydroelectric), Series A,
4.40%, 5/1/23 1,000,000
2,180,000 Missouri State Environmental Impact and
Energy Resource Authority, Pollution
Control Revenue, (Union Electric Co.),
Series B, 4.00%, 6/1/14 2,180,000
500,000 Pendleton, Kentucky Self-Insurance Funding,
4.00%, 7/1/01 500,000
Total Put Bonds (amortized cost $4,198,915) 4,198,915
Variable Rate Demand Notes - 78.1%
Alabama - 3.8%
3,000,000 Montgomery-Wynlakes Government Utility
Service Corp. Revenue, (Wynlakes Project),
4.00%, 4/1/26 3,000,000
California - 20.2%
3,500,000 California School Cash Reserve Program
Authority, 4.75%, 7/5/96 3,522,726
3,100,000 California Statewide Communities,
(Whispering Winds Apartments),
Series D, 4.10%, 12/1/22 3,100,000
1,800,000 Carlsbad Housing & Redevelopment Commission,
(Seascape Village Project), 4.10%, 12/1/05 1,800,000
200,000 Irvine Improvement District 89-10 Special
Assessment, 4.60%, 9/2/15 200,000
Irvine Ranch Water District:
100,000 (Consolidated Refunding Project), Series B,
4.00%, 10/1/04 100,000
100,000 (Consolidated Refunding Project), Series B
4.00%, 10/1/09 100,000
700,000 (Waterworks Improvement District), Series A
4.00%, 11/15/13 700,000
1,700,000 (Sewer Improvement District), Series A
4.00%, 11/15/13 1,700,000
1,000,000 (Consolidated Refunding Project),
4.00%, 6/1/15 1,000,000
500,000 Los Angeles Regional Airport Improvements
Corp. Lease Revenue, (American Airlines -
L.A. International), Series F, 3.75%, 12/1/24 500,000
Principal Amount Market Value
- ---------------- ------------
California (continued)
$ 900,000 Orange County Apartment Development
Revenue, (Aliso Creek Project), Series B
4.30%, 11/1/05 $ 900,000
2,300,000 Orange County Improvement District 88-1
Special Assessment, 4.30%, 9/2/18 2,300,000
15,922,726
Colorado - 9.3%
3,500,000 Denver City & County Airport Revenue,
Series B, 4.20%, 12/1/25 3,500,000
Colorado Multi-Family Housing Finance
Authority Revenue Refunding:
1,270,000 (Silver Project), 4.25%, 3/1/12 1,270,000
2,555,000 (Huntersridge Partnership), 4.25%, 3/1/12 2,555,000
7,325,000
Florida - 5.1%
3,000,000 Dade County, Florida (Apartment Revenue),
Series A, 4.15%, 10/1/09 3,000,000
1,000,000 Florida Housing Finance Authority Multi-Family
Housing Revenue, (Vinyard II Project),
3.80%, 12/1/07 1,000,000
4,000,000
Georgia - 3.0%
2,335,000 Peachtree City Development Authority Revenue,
(Equitable PCDC Project), 3.85%, 7/1/10 2,335,000
Hawaii - 0.9%
700,000 Hawaii State Housing Finance & Development
Corp. Revenue, (Rental Housing System),
Series A, 4.15%, 7/1/25 700,000
Illinois - 2.8%
649,070 Village of Franklin Park, (AM Castle and
Company Project), 4.10%, 6/1/17 649,070
187,500 Village of Rosemont, (AM Castle and
Company Project), 4.10%, 9/1/17 187,500
1,400,000 Wood Dale Industrial Development Revenue,
(Nippon Express, Inc. Project),
4.15%, 6/1/00 1,400,000
2,236,570
Kansas - 2.7%
2,100,000 Wichita, Kansas Revenue, (CSJ Health Systems
Project), Series XXV, 4.15%, 10/1/11 2,100,000
Kentucky - 1.3%
1,000,000 Calvert City, Kentucky PCRB, (Air Products
and Chemical Income Project), Series B
4.00%, 2/1/07 1,000,000
Louisiana - 4.2%
1,800,000 Quachita, Lousiana Industrial Development
Bond, (McRaes Inc. Project), 4.05%, 7/1/04 1,800,000
1,485,000 Sulphur, Louisiana Industrial Development
Revenue, (La Quinta Inns Project),
4.05%, 12/1/04 1,485,000
3,285,000
Missouri - 2.0%
973,000 Kansas City Industrial Development Authority,
(AM Castle and Company Project),
4.10%, 6/1/10 973,000
600,000 West Plains Industrial Revenue Authority,
(West Plains Manor Project), 3.90%, 11/1/10 600,000
1,573,000
See Notes to Schedule of Investments
Janus Funds October 31, 1995 Annual Report
17
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND October 31, 1995
Principal Amount Market Value
- ---------------- ------------
New York - 2.7%
$ 500,000 New York City General Obligation Refunding,
Subseries E5, 3.80%, 8/1/10 $ 500,000
740,000 New York City Industrial Development Agency
Civil Facilities Revenue, (Nightingale-Bamford
Project), 4.00%, 1/15/20 740,114
900,000 Ontario County Industrial Development
Authority, (Eastman Kodak Assoc. Project),
4.85%, 8/1/15 900,000
2,140,114
Ohio - 0.8%
590,000 Ohio Industrial Development Revenue Bond,
(AM Castle and Company Project),
4.10%, 12/1/06 590,000
Oklahoma - 4.7%
1,210,000 Claremore Redevelopment Authority Industrial
Development Revenue, (Worthington Cylinder
Corp. Project), 4.05%, 1/1/11 1,210,000
2,500,000 Tulsa Home Finance Authority, (Greenbriar
Project), Series B, 4.25%, 3/15/05 2,500,000
3,710,000
Pennsylvania - 1.7%
1,300,000 Venango Industrial Development Authority,
(Pennzoil Co. Project), Series A,
4.40%, 12/1/12 1,300,000
South Carolina - 1.2%
975,000 Lexington County, (Charter Rivers Hospital),
3.95%, 6/1/07 975,000
Principal Amount Market Value
- ---------------- ------------
Tennessee - 1.8%
$ 1,395,000 Metropolitan Government Nashville & Davidson
County Health and Educational Facilities
Board, (Belmont University Project),
4.05%, 8/1/09 $ 1,395,000
Texas - 9.9%
3,000,000 Austin Higher Education Authority, Inc.,
(St. Edwards University Project),
4.05%, 8/1/19 3,000,000
Grapevine Industrial Development Corp.
Revenue, (American Airlines, Inc.):
1,100,000 Series B-2, 3.75%, 12/1/24 1,100,000
600,000 Series B-3, 3.75%, 12/1/24 600,000
1,200,000 Series B-4, 3.75%, 12/1/24 1,200,000
1,910,000 Maverick County Industrial Developement
Revenue Bond, (La Quinta Motor Inns),
4.05%, 12/1/01 1,910,000
7,810,000
Total Variable Rate Notes (amortized cost $61,397,410) 61,397,410
Total Investments - 96.4% (total cost $75,821,148) 75,821,148
Cash, Receivables and Other Assets, net of Liabilities - 3.6% 2,850,186
Net Assets - 100% $78,671,334
NOTES TO SCHEDULE OF INVESTMENTS
* Non-Income producing security
** A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open futures contracts and/or foreign
currency contracts.
+ Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
1) Variable Rate Notes. The interest rate, which is based on specific, or an
index of, market interest rates, is subject to change. Rates in the
security description are as of October 31, 1995. Adjustable Rate Preferred
Stock Dividend Rates are as of 10/31/95.
2) Money Market Funds may hold securities with stated maturities of greater
than one year, when those securities have features which allow the Fund to
"put" back the security to the issuer or to a third party within a year of
acquisition.
The maturity date shown in the security descriptions are the stated
maturity dates.
DEM - German Deutschemarks
NZD - New Zealand Dollars
Janus Funds October 31, 1995 Annual Report
18
<PAGE>
STATEMENTS OF OPERATIONS - BOND FUNDS
<TABLE>
<CAPTION>
Janus
Janus Janus Janus Intermediate Short-Term
Flexible Income Federal Tax-Exempt Government Bond
For the year ended October 31, 1995 (all numbers in thousands) Fund Fund Securities Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest $ 38,623 $ 1,782 $ 2,479 $ 3,386
Dividends 1,292 -- -- 80
39,915 1,782 2,479 3,466
Expenses:
Advisory fees 2,775 176 180 308
Transfer agent fees and expenses 1,022 106 139 156
Registration fees 131 30 32 26
Postage and mailing expenses 245 33 46 51
Custodian fees 66 6 12 12
Printing expenses 19 2 5 2
Audit fees 20 13 8 8
Trustees' fees and expenses 6 1 -- 1
Other expenses 53 18 18 19
Total expenses 4,337 385 440 583
Expense and fee offsets (27) (14) (1) (6)
Net expenses 4,310 371 439 577
Less: Excess expense reimbursement -- (180) (205) (269)
4,310 191 234 308
Net investment income/(loss) 35,605 1,591 2,245 3,158
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions (1,477) (172) (110) (758)
Net realized gain/(loss) from foreign currency 36 -- -- (121)
Net realized gain/(loss) from futures contracts (1,353) (145) (8) (984)
Change in net unrealized appreciation or depreciation of investments 34,614 2,038 1,347 1,234
Net gain/(loss) on investments 31,820 1,721 1,229 (629)
Net increase/(decrease) in net assets resulting from operations $ 67,425 $ 3,312 $ 3,474 $ 2,529
</TABLE>
AN EXPLANATION OF THE STATEMENT OF OPERATIONS
This financial statement details the Funds' income, expenses, and gains and
losses on securities and currency transactions and from appreciation or
depreciation of portfolio holdings. The first section in this statement, called
"Investment Income," reports both the dividends earned from stocks and interest
earned from interest-bearing securities held in the portfolio.
The next section reports the expenses incurred by the Funds' including the
advisory fee paid to the investment advisor, the transfer agent fees for
shareholder servicing expenses, and printing and postage for mailing statements,
financial reports and prospectuses to investors.
The last section lists the increase or decrease in the value of securities
held in the Funds' portfolio. Funds realize a gain (or loss) when they sell
their position in a particular security. Unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the Funds' portfolio during the
period. This figure is affected by both changes in the market value of portfolio
holdings and by gains (or losses) realized during the reporting period.
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
19
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES - BOND FUNDS
<TABLE>
<CAPTION>
As of October 31, 1995 Janus Janus Janus Intermediate Janus
(all numbers in thousands except Flexible Income Federal Tax-Exempt Government Short-Term Bond
net asset value per share) Fund Fund Securities Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at cost $562,329 $ 36,564 $ 37,002 $ 47,204
Investments at value $582,414 $ 37,131 $ 37,647 $ 47,366
Cash 121 1,571 4 2
Receivables:
Investments sold 8,086 963 -- --
Fund shares sold 1,077 1 8 6
Interest 11,291 609 455 797
Forward currency contracts 46 -- -- --
Other assets 11 -- 1 83
Total Assets 603,046 40,275 38,115 48,254
Liabilities:
Payables:
Investments purchased 21,070 7,411 -- --
Fund shares repurchased 572 206 30 67
Dividends 490 21 10 10
Advisory fee 289 11 3 26
Transfer agent fee 121 11 13 13
Variation margin - futures contracts 5 -- -- --
Accrued expenses 140 22 28 21
Total Liabilities 22,687 7,682 84 137
Net Assets $580,359 $ 32,593 $ 38,031 $ 48,117
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 60,795 4,737 7,635 16,925
Net Asset Value Per Share $ 9.55 $ 6.88 $ 4.98 $ 2.84
</TABLE>
AN EXPLANATION OF THE STATEMENT OF ASSETS AND LIABILITIES
This financial statement is often referred to as the "balance sheet." It
lists the assets and liabilities of the Fund on the last day of the fiscal
period.
The Funds' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared on stocks owned but not yet received, and the receivable
for Fund shares sold to investors but not yet settled. The Funds' liabilities
include payables for securities purchased but not yet settled, fund shares
redeemed but not yet paid, and expenses owed but not yet paid.
The last line of this schedule reports the Funds' net asset value (NAV) per
share on the last day of the fiscal period. The NAV is calculated by dividing
the Funds' total net assets (assets minus liabilities) by the number of shares
outstanding.
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
20
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - BOND FUNDS
<TABLE>
<CAPTION>
Janus Janus
Flexible Income Federal Tax-Exempt
For the year ended October 31 (all numbers in thousands) Fund Fund
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income/(loss) $ 35,605 $ 33,228 $ 1,591 $ 1,476
Net realized gain/(loss) from investment transactions (2,794) (7,953) (317) (1,592)
Change in unrealized net appreciation or depreciation of investments 34,614 (30,819) 2,038 (1,943)
Net increase/(decrease) in net assets resulting from operations 67,425 (5,544) 3,312 (2,059)
Dividends and Distributions to Shareholders:
Net investment income* (35,571) (32,659) (1,591) (1,476)
Net realized gain from investment transactions -- (10,835) -- (80)
Net decrease from dividends and distributions (35,571) (43,494) (1,591) (1,556)
Capital Share Transactions:
Shares sold 349,106 255,714 26,365 24,505
Reinvested dividends and distributions 27,431 34,014 1,284 1,290
Shares repurchased (205,377) (336,461) (23,241) (23,047)
Net increase/(decrease) from capital share transactions 171,160 (46,733) 4,408 2,748
Net increase/(decrease) in net assets 203,014 (95,771) 6,129 (867)
Net Assets:
Beginning of period 377,345 473,116 26,464 27,331
End of Period $ 580,359 $ 377,345 $ 32,593 $ 26,464
Net Assets consist of:
Capital (par value and paid-in surplus)* $ 570,403 $ 399,242 $ 33,935 $ 29,531
Undistributed net investment income* 454 340 -- --
Undistributed net realized gain/(loss)* from investments (10,601) (7,726) (1,909) (1,596)
Unrealized appreciation/(depreciation) of investments 20,103 (14,511) 567 (1,471)
$ 580,359 $ 377,345 $ 32,593 $ 26,464
Transactions in Fund Shares:
Shares sold 38,305 26,898 3,916 3,504
Reinvested distributions 2,993 3,585 192 187
Total 41,298 30,843 4,108 3,691
Shares repurchased (22,614) (35,552) (3,475) (3,331)
Net increase/(decrease) 18,684 (5,069) 633 360
Shares outstanding beginning of period 42,111 47,180 4,104 3,744
Shares outstanding end of period 60,795 42,111 4,737 4,104
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 1,000,286 $ 452,205 $ 53,375 $ 46,083
Proceeds from Sales of Securities 901,698 513,795 46,184 45,101
Purchases of Long-Term U.S. Government Obligations 213,741 97,873 -- --
Proceeds from Sales of Long-Term U.S. Government Obligations 152,266 155,639 -- --
</TABLE>
**********************
<TABLE>
<CAPTION>
Janus Intermediate Janus
Government Short-Term Bond
For the year ended October 31 (all numbers in thousands) Securities Fund Fund
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income/(loss) $ 2,245 $ 2,318 $ 3,158 $ 3,625
Net realized gain/(loss) from investment transactions (118) (2,564) (1,863) (1,744)
Change in unrealized net appreciation or depreciation of investments 1,347 (682) 1,234 (1,284)
Net increase/(decrease) in net assets resulting from operations 3,474 (928) 2,529 597
Dividends and Distributions to Shareholders:
Net investment income* (2,245) (2,318) (3,062) (3,443)
Net realized gain from investment transactions -- -- -- (248)
Net decrease from dividends and distributions (2,245) (2,318) (3,062) (3,691)
Capital Share Transactions:
Shares sold 15,220 19,067 32,690 75,314
Reinvested dividends and distributions 2,015 2,092 2,664 3,286
Shares repurchased (17,150) (45,980) (40,989) (97,317)
Net increase/(decrease) from capital share transactions 85 (24,821) (5,635) (18,717)
Net increase/(decrease) in net assets 1,314 (28,067) (6,168) (21,811)
Net Assets:
Beginning of period 36,717 64,784 54,285 76,096
End of Period $ 38,031 $ 36,717 $ 48,117 $ 54,285
Net Assets consist of:
Capital (par value and paid-in surplus)* $ 41,400 $ 41,316 $ 51,328 $ 56,963
Undistributed net investment income* 3 3 1 26
Undistributed net realized gain/(loss)* from investments (4,017) (3,900) (3,374) (1,633)
Unrealized appreciation/(depreciation) of investments 645 (702) 162 (1,071)
$ 38,031 $ 36,717 $ 48,117 $ 54,285
Transactions in Fund Shares:
Shares sold 3,132 3,800 11,546 25,336
Reinvested distributions 414 422 941 1,117
Total 3,546 4,222 12,487 26,453
Shares repurchased (3,544) (9,139) (14,449) (32,730)
Net increase/(decrease) 2 (4,917) (1,962) (6,277)
Shares outstanding beginning of period 7,633 12,550 18,887 25,164
Shares outstanding end of period 7,635 7,633 16,925 18,887
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities -- -- $ 81,206 $ 117,332
Proceeds from Sales of Securities -- -- 90,036 102,092
Purchases of Long-Term U.S. Government Obligations $ 89,908 $ 141,493 74,963 82,855
Proceeds from Sales of Long-Term U.S. Government Obligations 90,221 166,869 70,371 111,465
</TABLE>
AN EXPLANATION OF THE STATEMENT OF CHANGES IN NET ASSETS
This financial statement reports the increase or decrease in the Funds' net
assets during the reporting period. Changes in a Funds' net assets are
attributable to investment operations, dividends, distributions, and capital
share transactions. This schedule is of importance to investors because it shows
exactly what caused the Funds' asset size to change during the period. Investors
can use this information to determine if the Funds' growth was a result of
operations or an increase in the number of shares being purchased.
The first section summarizes the information from the Statement of
Operations regarding changes in net assets due to the Funds' investment
performance. The Funds' net assets will also change as a result of dividend and
capital gain distributions to investors. If investors receive their dividends in
cash, money is taken out of the fund to pay the distribution. If investors
reinvest their dividends, the Funds' net assets will not be affected. If you
compare each fund's "Net decrease from dividends and distributions" to the
"Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Funds' net assets. This is because the
majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share
Transactions." "Capital Shares" refers to the money investors contribute to the
Fund through purchases or withdraw via redemptions. The Funds' net assets will
increase and decrease in value as investors purchase and redeem shares from the
Fund.
The section titled "Net Assets Consist of" breaks down the components of
the Funds' net assets. Since funds must distribute substantially all earnings,
you'll notice that a significant portion of net assets is shareholder capital.
*See Note 3 in Notes to Financial Statements
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
21
<PAGE>
FINANCIAL HIGHLIGHTS - BOND FUNDS
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Flexible Income Fund
each fiscal year or period ended October 31 1995 1994 1993 1992(1) 1991(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.96 $ 10.03 $ 9.26 $ 9.09 $ 8.01
Income from investment operations
Net investment income .72 .74 .77 .68 .68
Net gains or (losses) on securities (both realized
and unrealized) .59 (.86) .79 .15 1.29
Total from investment operations 1.31 (.12) 1.56 .83 1.97
Less distributions
Dividends (from net investment income) (.72) (.72) (.77) (.66) (.72)
Distributions (from capital gains) -- (.23) (.02) -- (.17)
Total distributions (.72) (.95) (.79) (.66) (.89)
Net asset value, end of period $ 9.55 $ 8.96 $ 10.03 $ 9.26 $ 9.09
Total return** 15.35% (1.26%) 17.48% 9.43% 25.98%
Net assets, end of period (in thousands) $ 580,359 $ 377,345 $ 473,116 $ 205,371 $ 72,145
Average net assets for the period (in thousands) $ 450,001 $ 428,962 $ 337,568 $ 143,766 $ 33,260
Ratio of expenses to average net assets* 0.96% 0.93% 1.00%(3) 1.00%(3) 1.00%(3)
Ratio of net investment income to average net assets* 7.91% 7.75% 7.96% 8.98% 9.38%
Portfolio turnover rate* 250% 137% 201% 210% 88%
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Federal Tax-Exempt Fund
each fiscal year or period ended October 31 1995 1994 1993(4)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 6.45 $ 7.30 $ 7.00
Income from investment operations
Net investment income .36 .36 .14
Net gains or (losses) on securities (both realized
and unrealized) .43 (.83) .30
Total from investment operations .79 (.47) .44
Less distributions
Dividends (from net investment income) (.36) (.36) (.14)
Distributions (from capital gains) -- (.02) --
Total distributions (.36) (.38) (.14)
Net asset value, end of period $ 6.88 $ 6.45 $ 7.30
Total return** 12.60% (6.62%) 6.33%**
Net assets, end of period (in thousands) $ 32,593 $ 26,464 $ 27,331
Average net assets for the period (in thousands) $ 29,318 $ 28,384 $ 16,038
Ratio of expenses to average net assets* 0.70%(6) 0.65%(6) 0.75%(6)
Ratio of net investment income to average net assets* 5.43% 5.20% 4.58%
Portfolio turnover rate* 164% 160% 124%
</TABLE>
****************************
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Short-Term Bond Fund
each fiscal year or period ended October 31 1995 1994 1993 1992(5)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 2.87 $ 3.02 $ 2.98 $ 3.00
Income from investment operations
Net investment income .18 .18 .14 .01
Net gains or (losses) on securities (both realized
and unrealized) (.03) (.15) .04 (.02)
Total from investment operations .15 .03 .18 (.01)
Less distributions
Dividends (from net investment income) (.18) (.17) (.14) (.01)
Distributions (from capital gains) -- (.01) -- --
Total distributions (.18) (.18) (.14) (.01)
Net asset value, end of period $ 2.84 $ 2.87 $ 3.02 $ 2.98
Total return** 5.55% 1.26% 6.17% (0.19%)**
Net assets, end of period (in thousands) $ 48,117 $ 54,285 $ 76,096 $ 3,472
Average net assets for the period (in thousands) $ 47,383 $ 59,584 $ 36,794 $ 779
Ratio of expenses to average net assets* 0.66%(7) 0.65%(7) 0.83%(7) 1.00%(7)
Ratio of net investment income to average net assets* 6.67% 6.08% 4.86% 3.22%
Portfolio turnover rate* 337% 346% 372% 7%
</TABLE>
****************************
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Intermediate Government Securities Fund
each fiscal year or period ended October 31 1995 1994 1993 1992(1) 1991(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.81 $ 5.16 $ 5.36 $ 5.35 $ 5.00
Income from investment operations
Net investment income .30 .25 .22 .22 .13
Net gains or (losses) on securities (both realized
and unrealized) .17 (.35) (.09) .01 .35
Total from investment operations .47 (.10) .13 .23 .48
Less distributions
Dividends (from net investment income) (.30) (.25) (.22) (.22) (.13)
Distributions (from capital gains) -- -- (.11) -- --
Total distributions (.30) (.25) (.33) (.22) (.13)
Net asset value, end of period $ 4.98 $ 4.81 $ 5.16 $ 5.36 $ 5.35
Total return** 10.19% (1.89%) 2.68% 4.48%** 9.74%**
Net assets, end of period (in thousands) $ 38,031 $ 36,717 $ 64,784 $ 69,702 $ 14,545
Average net assets for the period (in thousands) $ 35,962 $ 46,621 $ 67,972 $ 39,960 $ 5,814
Ratio of expenses to average net assets* 0.65%(8) 0.65%(8) 0.91%(8) 1.00%(8) 1.00%(8)
Ratio of net investment income to average net assets* 6.24% 4.97% 4.27% 4.95% 5.93%
Portfolio turnover rate* 252% 304% 371% 270% 0%
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992
(2) Fiscal year ended December 31
(3) The ratio was 1.01% in 1993, 1.21% in 1992 and 1.74% in 1991 before
voluntary waiver of certain fees incurred by the Fund
(4) Fiscal period from May 3, 1993 (inception) to October 31, 1993
(5) Fiscal period from September 1, 1992 (inception) to October 31, 1992
(6) The ratio was 1.31% in 1995, 1.41% in 1994 and 1.60% in 1993 before
voluntary waiver of certain fees incurred by the Fund
(7) The ratio was 1.23% in 1995, 1.15% in 1994, 1.40% in 1993 and 2.50% in 1992
before voluntary waiver of certain fees incurred by the Fund
(8) The ratio 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 fees incurred by the
Fund
*Annualized for periods less than one year
**Total return not annualized for periods of less than one year
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
22
<PAGE>
FINANCIAL HIGHLIGHTS - BOND FUNDS
The Fund's expenses may be reduced through expense reduction arrangements.
Those arrangements include the use of broker commissions paid to DST Securities
Inc. and uninvested cash balances earning interest with the Fund's custodian.
The Statements of Operations reflect the total expenses before any offset, the
amount of offset and the net expenses. The expense ratios listed in the
Financial Highlights reflect total expenses prior to any expense offset.
These changes are part of new disclosure requirements beginning this fiscal
year. Prior years do not reflect these changes. Listed in the table are the
expense ratios before and after offsets.
Expense Ratio Comparisons for Fiscal Year October 31, 1995
Exense Ratio Actual
Prior to Offsets Expense Ratio
- --------------------------------------------------------------------------------
Janus Flexible Income Fund 0.96% 0.96%
Janus Federal Tax-Exempt Fund 0.70% 0.65%
Janus Intermediate Government
Securities Fund 0.65% 0.65%
Janus Short-Term Bond Fund 0.66% 0.65%
AN EXPLANATION OF THE FINANCIAL HIGHLIGHTS
This schedule provides a per share breakdown of the components that affect
the fund's NAV for the current and past reporting periods. Not only does this
table provide you with total return, it also reports total distributions, asset
size, expense ratios and portfolio turnover rate.
The first line in the table reflects the fund's NAV per share at the
beginning of the fiscal period. The next line reports the fund's net investment
income per share which is comprised of dividends and interest income earned on
securities held by the Fund. Dividends and distributions are then subtracted to
arrive at the NAV per share at the end of the fiscal period.
Also included in the Financial Highlights is the fund's expense ratio, or
the percentage of net assets that was used to cover operating expenses during
the period. Expense ratios vary across the funds for a number of reasons
including the differences in management fees, average shareholder account size,
the frequency of dividend payments, and the extent of foreign investments, which
entail greater transaction costs.
The next line reports the ratio of net investment income, which is the
income earned divided by the average net assets of the fund during the reporting
period. Don't confuse this ratio with a fund's yield. The net investment income
ratio is not a true measure of a fund's yield because it doesn't take into
account the dividends distributed to the fund's investors.
The last ratio provided in this table is the portfolio turnover rate, which
measures the amount of buying and selling activity in the fund's portfolio.
Portfolio turnover is affected by market conditions, changes in the size of a
fund, the nature of the fund's investments, and the investment style of the
portfolio manager. A 100% rate implies that an amount equal to the value of the
entire portfolio is turned over in a year; a 50% rate means that an amount equal
to the value of half the portfolio is traded in a year; and a 200% rate would
mean that an amount equal to the value of the portfolio is sold in an average of
six months.
Janus Funds October 31, 1995 Annual Report
23
<PAGE>
STATEMENTS OF OPERATIONS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
Janus
Janus Janus Tax-Exempt
For the period February 15, 1995 (inception) Money Market Government Money Market Money Market
to October 31, 1995 (all numbers in thousands) Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income:
Interest $26,427 $ 4,519 $ 1,637
26,427 4,519 1,637
Expenses:
Advisory Fee for Investor Shares 327 62 40
Advisory Fee for Institutional Shares 110 13 1
Administrative Fee for Investor Shares 1,637 312 204
Administrative Fee for Institutional Shares 55 7 --
2,129 394 245
Net Investment Income: $24,298 $ 4,125 $ 1,392
Net Realized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 9 8 (3)
Net gain/(loss) on investments 9 8 (3)
Net increase/(decrease) in net assets resulting from operations $24,307 $ 4,133 $ 1,389
</TABLE>
STATEMENTS OF ASSETS AND LIABILITIES - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
Janus Janus Janus
As of October 31, 1995 (all numbers in Money Market Government Money Market Tax-Exempt Money Market
thousands except net asset value) Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments at amortized cost $962,046 $138,225 $ 75,821
Cash 111 22 64
Receivables:
Investments Sold 5,000 29,887 5,401
Fund Shares Sold 1,989 355 259
Interest 4,297 363 501
Total Assets $973,443 $168,852 $ 82,046
Liabilities:
Payables
Investments Purchased 21,700 5,000 3,055
Fund Shares Repurchased 2,195 242 275
Dividends and Distributions 1,012 75 10
Advisory Fee 82 13 6
Administrative Fee 283 51 29
Total Liabilities $ 25,272 $ 5,381 $ 3,375
Total Net Assets $948,171 $163,471 $ 78,671
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 948,171 163,471 78,671
Net Asset Value Per Share $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
24
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
Janus
Janus Janus Tax-Exempt
For the period February 15, 1995 (inception) Money Market Government Money Market Money Market
to October 31, 1995 (all numbers in thousands) Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income/(loss) $ 24,298 $ 4,125 $ 1,392
Net realized gain/(loss) from investment transactions 9 8 (3)
Change in unrealized net appreciation or depreciation
of investments -- -- --
Net increase/(decrease) in net assets resulting
from operations $ 24,307 $ 4,133 $ 1,389
Dividends and Distributions to Shareholders:
Net investment income:
Investor Shares ($ 17,868) ($ 3,353) ($ 1,366)
Institutional Shares (6,430) (772) (23)
Net realized gain/(loss) from investment transactions:
Investor Shares (6) (8) --
Institutional Shares (3) -- --
Net decrease from dividends and distributions ($ 24,307) ($ 4,133) ($ 1,389)
Capital Share Transactions:
Shares sold:
Investor Shares $ 1,109,965 $ 183,758 $126,046
Institutional Shares 1,974,800 179,373 37,121
Reinvested dividends and distributions:
Investor Shares 17,285 3,252 1,323
Institutional Shares 1,269 435 11
Shares repurchased:
Investor Shares (484,031) (67,703) (59,890)
Institutional Shares (1,671,117) (135,644) (25,940)
Net increase/(decrease) from capital share transactions $ 948,171 $ 163,471 $ 78,671
Net increase/(decrease) in net assets $ 948,171 $ 163,471 $ 78,671
Net Assets beginning of period -- -- --
Net Assets end of period $ 948,171 $ 163,471 $ 78,671
Net Assets consist of:
Capital (par value and paid-in surplus) $ 948,171 $ 163,471 $ 78,671
Undistributed net investment income -- -- --
Undistributed net realized gain/(loss) from investments -- -- --
Unrealized appreciation/(depreciation) of investments -- -- --
$ 948,171 $ 163,471 $ 78,671
Transactions in Fund Shares - Investor Shares
Shares Sold 1,109,965 183,758 126,046
Reinvested dividends and distributions 17,285 3,252 1,323
Total 1,127,250 187,010 127,369
Shares repurchased (484,031) (67,703) (59,890)
Net increase(decrease) in fund shares 643,219 119,307 67,479
Shares outstanding at beginning of period -- -- --
Shares outstanding at end of period 643,219 119,307 67,479
Transactions in Fund Shares - Institutional Shares
Shares Sold 1,974,800 179,373 37,121
Reinvested dividends and distributions 1,269 435 11
Total 1,976,069 179,808 37,132
Shares repurchased (1,671,117) (135,644) (25,940)
Net increase/(decrease) in fund shares 304,952 44,164 11,192
Shares outstanding at beginning of period -- -- --
Shares outstanding at end of period 304,952 44,164 11,192
</TABLE>
Janus Funds October 31, 1995 Annual Report
25
<PAGE>
FINANCIAL HIGHLIGHTS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
Janus Janus Janus
For a share outstanding throughout the period Money Market Government Money Market Tax-Exempt Money Market
February 15, 1995 (inception) to October 31, 1995 Fund Fund Fund
Investor Shares 1995 1995 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income .04 .04 .02
Total from investment operations .04 .04 .02
Less Dividends and Distributions:
Dividends (from net investment income) (.04) (.04) (.02)
Total dividends and distributions (.04) (.04) (.02)
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
Total return* 3.95% 3.90% 2.40%
Net assets at end of period (in thousands) $ 643,219 $ 119,307 $ 67,479
Average net assets for the period (in thousands) $ 461,311 $ 87,906 $ 57,366
Ratio of expenses to average net assets** 0.60%(1) 0.60%(1) 0.60%(1)
Ratio of net investment income to average net assets** 5.56% 5.40% 3.38%
</TABLE>
<TABLE>
<CAPTION>
Janus
Janus Janus Tax-Exempt
For a share outstanding throughout the period Money Market Government Money Market Money Market
April 17, 1995 (inception) to October 31, 1995 Fund Fund Fund
Institutional Shares 1995 1995 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income .03 .03 .02
Total from investment operations .03 .03 .02
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.03) (.02)
Total dividends and distributions (.03) (.03) (.02)
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
Total return* 3.25% 3.20% 2.09%
Net assets at end of period (in thousands) $ 304,952 $ 44,164 $ 11,192
Average net assets for the period (in thousands) $ 202,427 $ 24,748 $ 1,115
Ratio of expenses to average net assets** 0.15%(2) 0.15%(2) 0.15%(2)
Ratio of net investment income to average net assets** 5.86% 5.75% 3.82%
</TABLE>
*Total return is not annualized for periods of less than one year
**Annualized
(1) The ratio was .70% before voluntary reduction of fees.
(2) The ratio was .35% before voluntary reduction of fees.
See Notes to Financial Statements
Janus Funds October 31, 1995 Annual Report
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The following section describes the organization and significant accounting
policies of the funds and provides more detailed information about the schedules
and tables that appear throughout this report. In addition, the Notes explain
how the funds operate and the methods used in preparing and presenting this
report.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Janus Investment Fund (the Trust) is registered under the Investment
Company Act of 1940 (the 1940 Act) as a no-load, open-end management investment
company. Four series of shares (the "Bond Funds") included in this report invest
primarily in income producing securities and three series of shares (the "Money
Market Funds") invest exclusively in high quality money market instruments.
The Janus Money Market, Janus Government Money Market and Janus Tax-Exempt
Money Market Funds began operations on February 15, 1995 with the issuance of
the investor class of shares.
Effective April 17, 1995, the Janus Money Market, Janus Government Money
Market and Janus Tax-Exempt Money Market Funds began offering an institutional
class of shares. "Investor Shares" are available to the general public and
"Institutional Shares" are available only to investors that meet the $250,000
minimum account size, and allow wire transactions only.
The following policies have been consistently followed by the Funds and are
in conformity with accounting principles generally accepted in the investment
company industry.
INVESTMENT VALUATION
Securities are valued at the closing price for securities traded on a
principal exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Funds' Trustees. Short-term investments
maturing within 60 days for the Bond Funds and all money market securities in
the Money Market Funds are valued at amortized cost, which approximates market
value. Foreign securities are converted to U.S. dollars using exchange rates at
the close of the New York Stock Exchange. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
the Funds' Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis and includes amortization of discounts and premiums. Gains
and losses are determined on the identified cost basis, which is the same basis
used for federal income tax purposes.
FORWARD FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS
The Funds enter into forward exchange currency contracts in order to hedge
their exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to hedge certain firm purchase and sale commitments
denominated in foreign currencies. A forward exchange currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the original contract and the closing of such contract is included in net
realized gain or loss on foreign currency transactions.
Currency gain and loss is also calculated on payables and receivables that
are denominated in foreign currencies. The payables and receivables are
generally related to security transactions and income.
Futures contracts are marked to market daily and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market for federal income tax purposes at fiscal year-end.
Foreign denominated assets and forward currency contracts may involve more
risks than domestic transactions, including: currency risk, political and
economic risk, regulatory risk, and market risk. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
The Funds may enter into "futures contracts" and "options" on securities,
financial indices and foreign currencies; forward contracts; and interest rate
swaps and swap-related products. The Funds intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities, or that the counterparty will fail to perform its obligations.
ADDITIONAL INVESTMENT RISK
A portion of the Janus Flexible Income Fund may be invested in lower rated
debt securities that have a higher risk of default or loss of value due to
changes in the economy or in their respective industry.
DIVIDEND DISTRIBUTIONS AND EXPENSES
Dividends are declared daily and distributed monthly. Each Bond Fund bears
expenses incurred specifically on its behalf as well as a portion of general
expenses.
FEDERAL INCOME TAXES
The Funds intend to distribute to shareholders all taxable investment
income and realized gains and otherwise comply with the Internal Revenue Code
applicable to regulated investment companies.
Janus Funds October 31, 1995 Annual Report
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The advisory agreement with the Bond Funds spells out the expenses that the
Funds must pay. Each of the Funds are subject to the following schedule:
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- --------------------------------------------------------------------------------
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 First $300 Million .50 .65*
Government Securities Fund Over $300 Million .40
- --------------------------------------------------------------------------------
Janus Federal First $300 Million .60 .65*
Tax-Exempt Fund Over $300 Million .55
- --------------------------------------------------------------------------------
* Janus Capital will waive certain fees and expenses to the extent that total
expenses exceed the stated limits.
Each of the Money Market Funds pays Janus Capital .20% of average daily net
assets as an investment advisory fee. In addition, each class of shares of each
Fund pays Janus Capital an administrative fee. This fee is .50% and .15% of
average daily net assets for the investor shares and institutional shares,
respectively. Janus Capital has voluntarily agreed to reduce its advisory fee
for the Janus Money Market Funds to .10%. In addition, Janus Capital has
voluntarily agreed to reduce the administrative fee on the institutional shares
to .05%. All other expenses of the Money Market Funds, except Trustees fees and
expenses and audit fees, are paid by Janus Capital. However, Janus Capital has
agreed to reduce its fees to the extent of these expenses for the period ending
10/31/95.
Janus Capital will reduce advisory fees to the extent that a Fund's normal
operating expenses (exclusive of brokerage commissions, interest and taxes)
exceed the most restrictive state limitation, which is believed by the Funds to
be 2 1/2% of the first $30 million, 2% of the next $70 million and 1 1/2% of the
balance of a Fund's average net assets for a fiscal year.
Janus Service Corporation (Janus Service), a wholly owned subsidiary of
Janus Capital, receives an annual fee of $16 per shareholder account from each
Bond Fund for transfer agent services plus reimbursement of certain out of
pocket expenses.
Officers and certain trustees of the Funds are also officers and/or
directors of Janus Capital; however, they receive no compensation from the
Funds.
DST Systems Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides fund accounting and shareholder accounting systems to
the Funds through Janus Capital and Janus Service. Investors Fiduciary Trust
Company (IFTC), formerly 50% owned by DST, provides domestic custody services to
the Bond Funds. Fees paid to DST and IFTC for the period ended October 31, 1995
are noted below.
Fee
DST Fees IFTC Fees Reduction*
- --------------------------------------------------------------------------------
Janus Flexible Income Fund $275,926 $ 36,002 $ 27,302
Janus Federal Tax-Exempt Fund 46,790 10,188 14,345
Janus Intermediate Government
Securities Fund 59,474 9,118 522
Janus Short-Term Bond Fund 61,463 13,330 5,927
- --------------------------------------------------------------------------------
* Interest earned on uninvested cash balances which serve to reduce the
custodian fees.
3. FEDERAL INCOME TAX
Gains and losses on forward currency contracts and foreign currency gains
and losses on debt instruments are treated as ordinary income for federal income
tax purposes pursuant to Section 988 of the Internal Revenue Code. Listed below
are such currency gains or losses for the year or period ended October 31, 1995.
Net capital loss carryovers noted below as of October 31, 1995 are
available to offset future realized capital gains and thereby reduce future
taxable gains distributions. These carryovers expire between October 31, 2001,
and October 31, 2003. The aggregate cost of investments and the composition of
unrealized appreciation and depreciation of investment securities for federal
income tax purposes as of October 31, 1995 are as follows:
<TABLE>
<CAPTION>
at October 31, 1995 at October 31, 1995
------------------- ---------------------------------------------------------------------------
Net
Currency Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Gains/(Losses) Carryovers Cost Appreciation (Depreciation) (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Flexible Income Fund 81,306 10,433,198 $562,479,347 $ 21,201,661 $ 1,267,225 $ 19,934,436
Janus Federal Tax-Exempt Fund -- 1,908,578 36,563,942 693,479 (126,571) 566,908
Janus Intermediate Government
Securities Fund -- 4,010,719 37,008,287 642,380 (4,057) 638,323
Janus Short-Term Bond Fund (121,381) 3,360,334 47,217,516 184,498 (36,188) 148,310
</TABLE>
Janus Funds October 31, 1995 Annual Report
28
<PAGE>
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales, foreign currency
transactions, net operating losses and capital loss carryforwards. Permanent
items identified in the period ended October 31, 1995 have been reclassified
among the components of net assets as follows:
Undistributed Undistributed
Net Investment Net Realized Paid-In
Income Gains/(Losses) Capital
- --------------------------------------------------------------------------------
Janus Flexible Income Fund 80,624 (81,897) 1,273
Janus Federal Tax-Exempt Fund 35 3,894 (3,929)
Janus Intermediate Government
Securities Fund -- 1,060 (1,060)
Janus Short-Term Bond Fund (122,489) 122,489 --
- --------------------------------------------------------------------------------
Net investment income, net realized gains and net assets were not affected by
these changes.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND SHAREHOLDERS OF JANUS INVESTMENT FUND
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights, present fairly, in
all material respects, the financial position of Janus Flexible Income Fund,
Janus Federal Tax-Exempt Fund, Janus Intermediate Government Securities Fund,
Janus Short-Term Bond Fund, Janus Money Market Fund, Janus Government Money
Market Fund, and Janus Tax-Exempt Money Market Fund (seven of the portfolios
constituting the Janus Investment Fund, hereafter referred to as the "Funds"),
at October 31, 1995, the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1995 by correspondence with the custodian and the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
November 30, 1995
