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JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND
Portfolio Manager, Sandy R. Rufenacht
Performance Review
For the fiscal year ended October 31, 1996 Janus Intermediate Government
Securities Fund had a total return of 2.31%, versus a gain of 5.67% for the
Lehman Brothers Intermediate Government Bond Index. All returns include
reinvested dividends.
The bond market was under pressure for much of the year, due to a volatile
interest rate environment. The Fund did not respond appropriately to the
swings in rates, and on the whole was positioned too conservatively, which
caused it to underperform.
We chose to keep the Fund's weighted average maturity relatively short, at
4.5 to 5 years. During the 12-month period, short-term yields were very
competitive with longer-term yields--a situation known as a flat yield curve.
The Fund currently holds a single, four-year Treasury issue, which in our
opinion provides the best return given the Fund's limited asset base. We
modeled many combinations of securities and came to the conclusion that, due
to economies of scale, holding a single bond would provide the best total
return. This strategy allowed us to lower capital risk, maximize our buying
power, and offer a competitive yield.
Subject to shareholder approval, we intend to liquidate Janus Intermediate
Government Securities Fund on January 31, 1997. This marks the first time we
have liquidated a fund at Janus, but the Intermediate Government Securities
Fund's relatively narrow objective--100% of assets are invested in AAA-rated
intermediate government issues--limited our ability to add value through
active management and in-depth credit and business research.
We appreciate your investment in Janus Intermediate Government Securities
Fund.
Performance Overview
GRAPHIC
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, 1996. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Intermediate Government Securities Fund
($13,020) as compared to the Lehman Brothers Intermediate Government Bond
Index ($15,280). There is a legend in the upper left quadrant of the graph
which indicates Janus Intermediate Government Securities Fund's one-year,
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five-year and since inception (July 26, 1991) average annual total returns as
2.31%, 4.35% and 5.16%, respectively.
Source - Lipper Analytical Services, Inc. 1996. 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 and
therefore does not reflect the cost of portfolio management or trading.
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND OCTOBER 31, 1996
Principal Amount Market Value
_____________________________________________________________________________
U.S. Government Obligation - 98.2%
$27,035,000 U.S. Treasury Note 5.75%, $26,759,784
due 10/31/00**
_____________________________________________________________________________
Total Investments
(total cost $26,582,858) - 98.2% 26,759,784
_____________________________________________________________________________
Cash, Receivables and Other Assets,
net of Liabilities -1.8% 483,070
_____________________________________________________________________________
Net Assets - 100% $27,242.854
_____________________________________________________________________________
**A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open future contracts.
_____________________________________________________________________________
Financial Futures - Short
15 Contracts U.S. Treasury - 5 year note,
expires December 1996,
principal amount $1,567,969
value $1,608,516,
cumulative depreciation ($40,547)
_____________________________________________________________________________
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STATEMENT OF OPERATIONS
Janus
Intermediate
For the fiscal year ended October 31, 1996 Government
(all numbers in thousands) Securities Fund
______________________________________________________________________________
Investment Income:
Interest: $2,126
______________________________________________________________________________
2,126
______________________________________________________________________________
Expenses:
Advisory fees 178
Transfer agent fees and expenses 131
Registration fees 26
Postage and mailing expenses 31
Custodian fees 7
Audit fees 8
Other expenses 10
______________________________________________________________________________
Total Expenses 391
______________________________________________________________________________
Expenses and fee offsets (4)
______________________________________________________________________________
Net expenses 387
______________________________________________________________________________
Less: Excess expense reimbursement (156)
______________________________________________________________________________
231
______________________________________________________________________________
Net investment income 1,895
______________________________________________________________________________
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions (414)
Net realized gain/(loss) from futures contracts (285)
Change in net unrealized appreciation or depreciation of investments (508)
______________________________________________________________________________
Net gain/(loss) on investments (1,207)
______________________________________________________________________________
Net increase/(decrease) in net assets resulting from operations $ 688
______________________________________________________________________________
______________________________________________________________________________
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STATEMENT OF ASSETS AND LIABILITIES
Janus
Intermediate
As of October 31, 1996 Government
(all numbers in thousands except net asset value per share) Securities Fund
______________________________________________________________________________
Assets:
Investments at cost $26,583
______________________________________________________________________________
______________________________________________________________________________
Investments at value $26,760
Cash 606
Receivables:
Fund shares sold 11
Interest 4
Other Assets 1
______________________________________________________________________________
Total Assets $27,382
______________________________________________________________________________
Liabilities:
Payables:
Fund shares repurchased 65
Dividends 7
Advisory fee 33
Transfer agent fee 15
Accrued expenses 17
Variation margin - futures contracts 2
______________________________________________________________________________
Total Liabilities 139
______________________________________________________________________________
Net Assets $27,243
Shares Outstanding, $0.01 Par Value (unlimited shares
authorized) 5,644
______________________________________________________________________________
______________________________________________________________________________
Net Asset Value Per Share $4.83
______________________________________________________________________________
______________________________________________________________________________
See Notes to Financial Statements
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND OCTOBER 31, 1996 ANNUAL REPORT
4
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STATEMENT OF CHANGES IN NET ASSETS
Janus
Intermediate
For the fiscal year ended October 31, 1996 Government
(all numbers in thousands) Securities Fund
_____________________________________________________________________________
1996 1995
_____________________________________________________________________________
Operations:
Net investment income $ 1,895 $ 2,245
Net realized gain/(loss) from investment transactions (699) (118)
Change in unrealized net appreciation or depreciation of
investments (508) 1,347
_____________________________________________________________________________
Net increase/(decrease) in net assets resulting from
operations 688 3,474
_____________________________________________________________________________
Dividends and Distributions to Shareholders:
Net investment income (1,895) (2,245)
Net realized gain from investment transactions -- --
_____________________________________________________________________________
Net decrease from dividends and distributions (1,895) (2,245)
_____________________________________________________________________________
Capital Share Transactions:
Shares sold 14,010 15,220
Reinvested dividends and distributions 1,725 2,015
Shares repurchased (25,316) (17,150)
______________________________________________________________________________
Net Increase/(decrease) from capital share transactions (9,581) 85
______________________________________________________________________________
Net increase/(decrease) in net assets (10,788) 1,314
Net Assets:
Beginning of period 38,031 36,717
______________________________________________________________________________
End of Period $27,243 $38,031
______________________________________________________________________________
______________________________________________________________________________
Net Assets consist of:
Capital (par value and paid-in surplus) $31,819 $41,400
Undistributed net investment income 3 3
Undistributed net realized gain/(loss) from investments (4,715) (4,017)
Unrealized appreciation/(depreciation) of investments 136 645
______________________________________________________________________________
27,243 $38,031
==============================================================================
Transactions in Fund Shares:
Shares sold 2,862 3,132
Reinvested distributions 354 414
______________________________________________________________________________
Total 3,216 3,546
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Shares repurchased (5,207) (3,544)
______________________________________________________________________________
Net increase/(decrease) (1,991) 2
______________________________________________________________________________
Shares outstanding beginning of period 7,635 7,633
Shares outstanding ending of period 5,644 7,635
______________________________________________________________________________
______________________________________________________________________________
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Long-Term U.S. Government Obligations $208,109 $89,908
Proceeds from Sales of Long-Term U.S. Government
Obligations 220,877 $90,221
______________________________________________________________________________
______________________________________________________________________________
See Notes to Financial Statements
JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND OCTOBER 31, 1996 ANNUAL REPORT
6
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FINANCIAL HIGHLIGHTS
For a share outstanding
throughout the fiscal year Janus Intermediate Government Securities Fund(1)
or period ended October 31 1996 1995 1994 1993 1992
______________________________________________________________________________
Net asset value, beginning of
period $4.98 $4.81 $5.16 $5.36 $5.35
______________________________________________________________________________
Income from investment
operations
Net investment income .26 .30 .25 .22 .22
Net gains or (losses) on
securities (both realized
and unrealized) (.15) .17 (.35) (.09) .01
______________________________________________________________________________
Total from investment
operations .11 .47 (.10) .13 .23
______________________________________________________________________________
Less distributions
Dividends (from net
investment income) (.26) (.30) (.25) (.22) (.22)
Distributions (from capital
gains) -- -- -- (.11) --
______________________________________________________________________________
Total distributions (.26) (.30) (.25) (.33) (.22)
______________________________________________________________________________
Net asset value, end of
period $4.83 $4.98 $4.81 $5.16 $5.36
______________________________________________________________________________
______________________________________________________________________________
Total return* 2.31% 10.19% (1.89%) 2.68% 4.48%*
______________________________________________________________________________
______________________________________________________________________________
Net assets, end of period
(in thousands) $27,243 $38,031 $36,717 $64,784 $69,702
Average net assets for the
period (in thousands) $35,562 $35,962 $46,621 $67,972 $39,960
Ratio of gross expenses to
average net assets** 0.66%(2) 0.65%(2) NA NA NA
Ratio of net expenses to
average net assets** 0.65% 0.65% 0.65%(2) 0.91%(2) 1.00%(2)
Ratio of net investment
income to average net
assets** 5.33% 6.24% 4.97% 4.27% 4.95%
Portfolio turnover rate** 602% 252% 304% 371% 270%
______________________________________________________________________________
(1) Fiscal period from January 1, 1992 to October 31, 1992
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(2) The ratio was 1.10% in 1996, 1.22% in 1995, 1.15% in 1994, 1.09% in 1993
and 1.32% in 1992 before voluntary waiver of certain fees incurred by the
Fund.
* Total return not annualized for periods of less than one year
** Annualized for periods less than one year
NA- Disclosure not required for prior periods
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. Janus Intermediate Government Securities Fund (the Fund)
is a series of the Trust.
The following policies have been consistently followed by the Fund 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 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 Fund are valued at amortized cost, which approximates
market value. If 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. 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.
Futures Contracts
The Fund may enter into "futures contracts" and "options" on securities
and financial indices; forward contracts; and interest rate swaps and swap-
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related products. The Fund intends to use such derivative instruments
primarily to hedge or protect from adverse movements in 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.
Dividend Distributions and Expenses
Dividends are declared daily and distributed monthly. The Fund bears
expenses incurred specifically on its behalf as well as a portion of general
expenses.
Federal Income Taxes
The Fund intends to distribute to shareholders all taxable investment
income and realized gains and otherwise comply with the Internal Revenue Code
applicable to regulated investment companies.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
2. Investment Advisory Agreement and
Other Transactions with Affiliates
The advisory agreement with the Fund spells out the expenses that the Fund
must pay.
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
______________________________________________________________________________
Janus Intermediate First $300 Million .50 .65*
Government Securities
Fund Over $300 Million .40
______________________________________________________________________________
* Janus Capital will waive certain fees and expenses to the extent that net
expenses exceed the stated limits.
Janus Capital will reduce advisory fees to the extent that the 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 2.50% of the first $30 million, 2% of the next $70 million and
1.50% of the balance of the Fund's average net assets for a fiscal year.
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Janus Service Corporation (Janus Service), a wholly owned subsidiary of
Janus Capital, receives an annual fee of 0.16% of average net assets per fund
plus $4.00 per shareholder account from the Fund for transfer agent services
plus reimbursement of certain out of pocket expenses.
Officers and certain trustees of the Fund 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 Fund through Janus Capital and Janus Service. Fees paid to DST for the
period ended October 31, 1996 are noted below.
DST Fees
______________________________________________________________________________
Janus Intermediate Government Securities Fund $45,846
______________________________________________________________________________
3. Federal Income Tax
Net capital loss carryovers noted below as of October 31, 1996, 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, 2004. 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, 1996, are as follows:
10
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at October 31, 1996 at October 31, 1996
__________________________________________________
Net Net Appre-
Capital Federal Unrealized Unrealized ciation/
Loss Tax Appre- (Deprecia- (Deprecia-
Carryovers Cost ciation tion) tion)
______________________________________________________________________________
Janus
Intermediate
Government
Securities
Fund ($4,727,063)$26,611,827 $147,957 -- $147,957
______________________________________________________________________________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders
of Janus Investment Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule 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 Intermediate
Government Securities Fund (one of the portfolios constituting the Janus
Investment Fund, the "Fund") at October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended 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 Fund's
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, 1996 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
/s/ Price Waterhouse LLP
Denver, Colorado
December 2, 1996
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JANUS INTERMEDIATE GOVERNMENT SECURITIES FUND OCTOBER 31, 1996 ANNUAL REPORT
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00178001.AT8
