Registration No. 2-34393
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. /__/
Post-Effective Amendment No. 79 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
Amendment No. 62 /X/
(Check appropriate box or boxes.)
JANUS INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
100 Fillmore Street, Denver, Colorado 80206-4928
Address of Principal Executive Offices (Zip Code)
Registrant's Telephone No., including Area Code: 303-333-3863
David C. Tucker - 100 Fillmore Street, Denver, Colorado 80206-4928
(Name and Address of Agent for Service)
Approximate Date of Proposed Offering: February 17, 1997
It is proposed that this filing will become effective (check appropriate line):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485.
_____ on (date) pursuant to paragraph (b) of Rule 485.
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
__X__ on February 17, 1997, pursuant to paragraph (a)(1) of Rule 485.
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
_____ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following line:
_____ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2(a) and filed a Rule
24f-2 Notice on December 13, 1996, for the fiscal year ended October 31, 1996,
with respect to all of its series and classes in existence as of October 31,
1996.
<PAGE>
JANUS INVESTMENT FUND
Cross Reference Sheet
Between the Prospectus and Statement of
Additional Information and Form N-1A Item
(Cross Reference Sheet for Janus Special Situations Fund is
included in a previous post-effective amendment relating to that series)
FORM N-1A ITEM CAPTION IN PROSPECTUS
PART A
1. Cover Page Cover Page
2. Synopsis Cover Page; Fund(s) at a Glance (in
Combined Income, Combined Equity and
Venture Prospectuses only); Expense
Information
3. Condensed Financial Financial Highlights (not included in
Information Money Market Funds - Service Shares
Prospectus); Understanding the Financial
Highlights (not included in Money Market
Funds - Institutional Prospectus or
Money Market Funds - Service Shares
Prospectus); Performance Terms (in
Combined Income, Combined Equity and
Venture Prospectuses only); Performance
(Money Market Fund - Institutional and
Service Shares Prospectuses only)
<PAGE>
4. General Description of Fund(s) at a Glance (in Combined Income,
Registrant Combined Equity and Venture Prospectuses
only); The Fund(s) in Detail (in
Combined Income, Combined Equity and
Venture Prospectuses only); Investment
Objectives and Policies (Combined Income
and Combined Equity Prospectuses only);
Investment Objective and Types of
Investments (Venture Prospectus only)
and Investment Objectives, Policies and
Techniques (Money Market Fund
Institutional and Service Shares
Prospectuses only); General Portfolio
Policies (Combined Income, Combined
Equity and Venture Prospectuses only);
Common Investment Policies (Money Market
Fund - Institutional Prospectus only);
Additional Risk Factors (not included in
Money Market Fund - Institutional
Prospectus); Appendix A - Glossary of
Investment Terms (Combined Income,
Combined Equity and Venture Prospectuses
only); Appendix B - Explanation of
Rating Categories (Combined Income
Prospectus only)
5. Management of the Fund Management of the Fund(s) (Combined
Income, Combined Equity and Venture
Prospectuses only); Investment Adviser
and Administrator (Money Market Fund -
Institutional, Service Shares and
Combined Income Prospectuses only)
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Distributions and Taxes; Shareholder's
Securities Manual; Shareholder's Guide (Money
Market Funds - Institutional and Service
Shares Prospectuses only)
7. Purchase of Securities Being Shareholder's Manual; Shareholder's
Offered Guide (Money Market Funds -
Institutional and Service Shares
Prospectuses only)
8. Redemption or Repurchase Shareholder's Manual; Shareholder's
Guide (Money Market Funds -
Institutional and Service Shares
Prospectuses only)
9. Pending Legal Proceedings Not Applicable
<PAGE>
FORM N-1A ITEM CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
PART B
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Miscellaneous Information
History
13. Investment Objectives and Investment Policies, Restrictions and
Policies Techniques (Combined Equity and Income
and Venture Statements of Additional
Information only); Investment Policies
and Restrictions (Money Market Funds
Statements of Additional Information
only); Types of Securities and
Investment Techniques; Appendix A
Description of Securities Ratings (Money
Market Funds Statements of Additional
Information only); Appendix B -
Description of Municipal Securities
(Money Market Funds Statements of
Additional Information only); Appendix A
- Explanation of Rating Categories
(Combined Equity and Income and Venture
Statements of Additional Information
only)
14. Management of the Fund Investment Adviser (Combined and Venture
Statements of Additional Information
only); Investment Adviser and
Administrator (Money Market Funds
Statements of Additional Information
only); Officers and Trustees
15. Control Persons and Principal Principal Shareholders
Holders of Securities
16. Investment Advisory and Investment Adviser (Combined and Venture
Other Services Statements of Additional Information
only); Investment Adviser and
Administrator (Money Market Funds
Statements of Additional Information
only); Custodian, Transfer Agent and
Certain Affiliations; Portfolio
Transactions and Brokerage; Officers and
Trustees; Miscellaneous Information
17. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices
<PAGE>
18. Capital Stock and Other Purchase of Shares; Redemption of
Securities Shares; Miscellaneous Information
19. Purchase, Redemption and Purchase of Shares; Redemption of
Pricing of Securities Being Shares; Shareholder Accounts
Offered
20. Tax Status Income Dividends, Capital Gains
Distributions and Tax Status (Combined
Equity and Income and Venture Statements
of Additional Information only);
Dividends and Tax Status (Money Market
Funds Statements of Additional
Information only)
21. Underwriters Custodian, Transfer Agent and Certain
Affiliations
22. Calculation of Performance Performance Information (Combined Equity
Data and Income and Venture Statements of
Additional Information only);
Performance Data (Money Market Funds
Statements of Additional Information
only)
23. Financial Statements Financial Statements
<PAGE>
CONTENTS
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FUNDS AT A GLANCE
Brief description of each Fund .............................................. 1
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EXPENSE INFORMATION
Each Fund's annual
operating expenses ....................................................... 3
Financial Highlights-a summary
of financial data ........................................................ 4
- --------------------------------------------------------------------------------
THE FUNDS IN DETAIL
Investment Objectives and Policies .......................................... 8
General Portfolio Policies .................................................. 11
Additional Risk Factors ..................................................... 12
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SHAREHOLDER'S MANUAL
Types of Account Ownership .................................................. 14
How to Open Your Janus Account .............................................. 15
How to Purchase Shares ...................................................... 15
How to Exchange Shares ...................................................... 15
How to Redeem Shares ........................................................ 16
Shareholder Services
and Account Policies ..................................................... 17
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MANAGEMENT OF THE FUNDS
Investment Adviser and
Investment Personnel ..................................................... 19
Management Expenses ......................................................... 20
Portfolio Transactions ...................................................... 20
Other Service Providers ..................................................... 20
Other Information ........................................................... 21
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DISTRIBUTIONS AND TAXES
Distributions ............................................................... 22
Taxes ....................................................................... 23
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PERFORMANCE TERMS
An Explanation of Performance Terms ......................................... 23
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APPENDIX A
Glossary of Investment Terms ................................................ 24
[LOGO]
JANUS INVESTMENT FUND
JANUS EQUITY FUNDS
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
http://www.JanusFunds.com
February 17, 1997
A FAMILY OF NO-LOAD MUTUAL FUNDS
All Janus Funds are no-load investments. This means you may purchase and sell
shares in any of our mutual funds without incurring any sales charges. If you
enroll in our low minimum initial investment program, you can open your account
for as little as $500 and a $100 subsequent purchase per month. Otherwise, the
minimum initial investment is $2,500. For complete information on how to
purchase, exchange and sell shares, please see the Shareholder's Manual
beginning on page 14.
This Prospectus describes ten equity mutual funds that emphasize growth of
capital or a combination of growth and income (the "Funds"). Janus Capital
Corporation ("Janus Capital") serves as investment adviser to each Fund. Janus
Capital has been in the investment advisory business for over 26 years and
currently manages approximately $45 billion in assets.
Each Fund is a series of Janus Investment Fund (the "Trust"). The Trust is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Funds that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Funds is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated February 17, 1997, is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Funds at the address or phone number listed above. The SEC maintains a
Web site located at http://www.sec.gov that contains the SAI, material
incorporated by reference, and other information regarding the Funds.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
JANUS EQUITY FUNDS COMBINED PROSPECTUS
<PAGE>
FUNDS AT A GLANCE
This section is designed to provide you with a brief overview of the Funds and
their investment emphasis. A more detailed discussion of the Funds' investment
objectives and policies begins on page 8 and complete information on how to
purchase, redeem and exchange shares begins on pages 15-17.
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GROWTH FUNDS
Janus Fund
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on companies with larger
market capitalizations.
Fund Inception: February 1970
Fund Manager: James P. Craig, III
Assistant Fund Managers: David Decker
Blaine Rollins
Janus Enterprise Fund
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on securities issued by
medium-sized companies.
Fund Inception: September 1992
Fund Manager: James P. Goff
Janus Equity Income Fund
Fund Focus: A diversified fund that seeks current income and long-term growth of
capital by investing primarily in income-producing equity securities.
Fund Inception: June 1996
Fund Manager: Blaine P. Rollins
Janus Mercury Fund
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of companies of any size.
Fund Inception: May 1993
Fund Manager: Warren B. Lammert
Assistant Fund Manager: Tom Malley
Janus Olympus Fund
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
investing primarily in common stocks of companies of any size.
Fund Inception: December 1995
Fund Manager: Scott W. Schoelzel
Assistant Fund Manager: Mike Lu
Janus Overseas Fund
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of foreign companies.
Fund Inception: May 1994
Fund Manager: Helen Young Hayes
Assistant Fund Manager: Laurence Chang
Janus Twenty Fund
Fund Focus: A nondiversified fund that seeks long-term growth of capital by
normally concentrating its investments in a core position of 20-30 common
stocks.
Fund Inception: April 1985
Fund Manager: Thomas F. Marsico
Assistant Fund Managers: Marc Pinto
Claire Young
Janus Worldwide Fund
Fund Focus: A diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of foreign and domestic companies.
Fund Inception: May 1991
Fund Manager: Helen Young Hayes
Assistant Fund Manager: Laurence Chang
- --------------------------------------------------------------------------------
COMBINATION FUNDS
Janus Balanced Fund
Fund Focus: A diversified fund that seeks long-term growth of capital, balanced
by current income. The Fund normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets in
securities selected primarily for their income potential.
Fund Inception: September 1992
Fund Manager: Blaine P. Rollins
Janus Growth and Income Fund
Fund Focus: A diversified fund that seeks long-term growth of capital with a
limited emphasis on income. Although the Fund normally invests at least 25% of
its assets in securities that have income potential, it emphasizes equity
securities selected for their growth potential.
Fund Inception: May 1991
Fund Manager: Thomas F. Marsico
Assistant Fund Managers: Marc Pinto
Claire Young
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
1
<PAGE>
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JANUS SPECTRUM
The spectrum below shows Janus Capital's assessment of the potential overall
risk of the Janus Funds relative to one another and should not be used to
compare the Funds to other mutual funds or other types of investments. A Fund's
position in the spectrum was determined based on a number of factors such as
selected historic volatility measurements, the types of securities in which the
Fund intends to invest, the degree of diversification intended and/or permitted,
and the sizes of the Fund. In addition, the spectrum is significantly affected
by the portfolio managers' investment styles. These factors were considered as
of the date of this prospectus and will be reassessed with each new prospectus.
Specific risks of certain types of instruments in which some of the Funds may
invest, including foreign securities, junk bonds and derivative instruments such
as futures contracts and options, are described under "Additional Risk Factors"
on pages 12-13. THE SPECTRUM IS NOT INDICATIVE OF THE FUTURE VOLATILITY OR
PERFORMANCE OF A FUND AND RELATIVE POSITIONS OF FUNDS WITHIN THE SPECTRUM MAY
CHANGE IN THE FUTURE.
[SPECTRUM CHART]
The spectrum illustrates the potential overall risk of the Janus funds relative
to one another. The funds' risk ranges from conservative to aggressive. The
Growth Funds are illustrated as follows: Janus Fund is shown as moderate; Janus
Enterprise Fund is shown as aggressive; Janus Equity Income Fund is shown as
moderate (but less aggressive than Janus Fund); Janus Mercury Fund is shown as
moderate-aggressive; Janus Olympus Fund is shown as aggressive; Janus Overseas
Fund is shown as moderate-aggressive; Janus Special Situations Fund* is shown as
moderate-aggressive (but less aggressive than Janus Overseas Fund); Janus Twenty
Fund is shown as aggressive; Janus Venture Fund, which is closed to new
investors, is shown as moderate-aggressive; Janus Worldwide Fund is shown as
moderate-aggressive (but less aggressive than Janus Special Situations Fund).
The Combination Funds are illustrated as follows: Janus Balanced Fund is shown
as moderate. Janus Growth and Income Fund is shown as moderate-aggressive. The
Fixed-Income Funds are illustrated as follows: Janus Flexible Income Fund* is
shown as conservative-moderate; Janus High-Yield Fund* is shown as
moderate-aggressive; Janus Federal Tax-Exempt Fund* is shown as
conservative-moderate (but more conservative than Janus Flexible Income Fund);
Janus Short-Term Bond Fund* is shown as conservative (but more conservative than
Janus Federal Tax-Exempt Fund). The Money Market Funds are illustrated as
follows: Janus Money Market Fund* is shown as conservative (but less
conservative than Janus Short-Term Bond Fund); Janus Government Money Market
Fund* is shown equally as conservative as Janus Money Market Fund; and Janus
Tax-Exempt Money Market Fund* is shown equally as conservative as Janus
Government Money Market Fund.
*These funds are offered by separate prospectuses.
+This fund is closed to new investors and is offered by a separate prospectus.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
2
<PAGE>
EXPENSE INFORMATION
The tables and example below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Funds. Shareholder Transaction Expenses are fees charged
directly to your individual account when you buy, sell or exchange shares. The
table below shows that you pay no such fees. Annual Fund Operating Expenses are
paid out of each Fund's assets and include fees for portfolio management,
maintenance of shareholder accounts, shareholder servicing, accounting and other
services.
- --------------------------------------------------------------------------------
WHY DO EXPENSES VARY ACROSS THE FUNDS? EXPENSES VARY FOR A NUMBER OF REASONS,
INCLUDING DIFFERENCES IN MANAGEMENT FEES, AVERAGE SHAREHOLDER ACCOUNT SIZE, THE
FREQUENCY OF DIVIDEND PAYMENTS, AND THE EXTENT OF FOREIGN INVESTMENTS WHICH
ENTAIL GREATER TRANSACTION COSTS.
SHAREHOLDER TRANSACTION EXPENSES (applicable to each Fund)
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fee* None
Exchange fee None
* There is an $8 service fee for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
<TABLE>
Management Fee Other Expenses Total Fund Operating Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund .65% .21% .86%
Janus Enterprise Fund .73% .41% 1.14%
Janus Equity Income Fund 1.00% .79%(2) 1.79%
Janus Mercury Fund .67% .35% 1.02%
Janus Olympus Fund .78% .39%(2) 1.17%
Janus Overseas Fund .75% .51% 1.26%
Janus Twenty Fund .66% .27% .93%
Janus Worldwide Fund .67% .35% 1.02%
Janus Balanced Fund .80% .43% 1.23%
Janus Growth and Income Fund .71% .34% 1.05%
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</TABLE>
(1) The information in the table above is based on expenses before expense
offset arrangements for the fiscal year ended October 31, 1996.
(2) "Other Expenses" are based on the fees and expenses that the Fund incurred
in its initial fiscal period.
EXAMPLE
Assume you invest $1,000, the Funds return 5% annually and each Fund's expense
ratios remain as listed above. The example below shows the operating expenses
that you would indirectly bear as an investor in the Funds.
<TABLE>
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C> <C>
Janus Fund $ 9 $27 $48 $106
Janus Enterprise Fund $12 $36 $63 $139
Janus Equity Income Fund $18 $56 $97 $211
Janus Mercury Fund $10 $32 $56 $125
Janus Olympus Fund $12 $37 $64 $142
Janus Overseas Fund $13 $40 $69 $152
Janus Twenty Fund $ 9 $30 $51 $114
Janus Worldwide Fund $10 $32 $56 $125
Janus Balanced Fund $13 $39 $68 $149
Janus Growth and Income Fund $11 $33 $58 $128
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</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
3
<PAGE>
FINANCIAL HIGHLIGHTS
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Funds' financial statements since October 1, 1990. Their report is included
in the Funds' Annual Reports, which are incorporated by reference into the SAI.
Expense and income ratios and portfolio turnover rates have been annualized for
periods of less than one year. Total returns for periods of less than one year
are not annualized. A DETAILED EXPLANATION OF THE FINANCIAL HIGHLIGHTS CAN BE
FOUND ON PAGE 7.
<TABLE>
[TO BE FILED BY
AMENDMENT] Janus Fund
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $19.62 $20.81 $18.86 $18.27 $13.25 $16.36 $12.11 $12.39 $14.77
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Income from investment
operations:
2. Net investment income 0.16 0.17 0.26 0.23 0.25 0.25 0.22 0.60 0.19
3. Net gains or (losses)
on securities
(both realized and unrealized) 3.99 (0.03) 2.88 1.46 5.09 (0.67) 4.59 1.05 0.30
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4. Total from investment
operations 4.15 0.14 3.14 1.69 5.34 (0.42) 4.81 1.65 0.49
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Less distributions:
5. Dividends
(from net investment income) (.01) (0.39)(1) (0.29) (0.19) (0.31) (0.19) (0.56) (0.32) (0.38)
6. Distributions
(from capital gains) (.39) (0.94) (0.90) (0.91) (0.01) (2.50) -- (1.61) (2.49)
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7. Total distributions (.40) (1.33) (1.19) (1.10) (0.32) (2.69) (0.56) (1.93) (2.87)
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8. Net asset value,
end of period $23.37 $19.62 $20.81 $18.86 $18.27 $13.25 $16.36 $12.11 $12.39
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9. Total return 21.62% 0.75% 17.41% 9.35% 40.95% (3.68%) 41.67% 15.83% 4.14%
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10. Net assets,
end of period (in millions) $11,963 $9,647 $9,098 $4,989 $2,598 $1,049 $673 $391 $387
11. Average net assets
for the period (in millions) $10,560 $9,339 $7,336 $3,871 $1,785 $930 $487 $382 $486
12. Ratio of gross expenses
to average net assets 0.87% N/A N/A N/A N/A N/A N/A N/A N/A
13. Ratio of net expenses
to average net assets 0.86% 0.91% 0.92% 0.97% 0.98% 1.02% 0.92% 0.98% 1.01%
14. Ratio of net investment
income to average net assets 1.25% 1.12% 1.55% 1.54% 1.77% 2.11% 1.68% 4.99% 1.55%
15. Portfolio turnover rate 118% 139% 127% 153% 132% 307% 205% 175% 214%
16. Average commission rate $ N/A N/A N/A N/A N/A N/A N/A N/A N/A
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</TABLE>
(1) Distribution in excess of financial statement income of $0.02.
<TABLE>
[TO BE FILED BY
AMENDMENT] Janus Enterprise Fund
1996 1995 1994 1993 1992(1)
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<S> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $24.43 $21.87 $17.09 $15.00
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Income from investment operations:
2. Net investment income (loss) 0.52 (0.06) 0.04 --
3. Net gains or (losses) on securities
(both realized and unrealized) 3.09 3.18 4.76 2.09
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4. Total from investment operations 3.61 3.12 4.80 2.09
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Less distributions:
5. Dividends (from net investment income) (0.52) (0.02) (0.02) --
6. Distributions (from capital gains) (0.38) (0.54) -- --
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7. Total distributions (0.90) (0.56) (0.02) --
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8. Net asset value, end of period $27.14 $24.43 $21.87 $17.09
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9. Total return 15.46% 14.56% 28.09% 13.93%
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10. Net assets, end of period (in millions) $459 $370 $239 $8
11. Average net assets for the period (in millions) $408 $270 $188 $2
12. Ratio of gross expenses to average net assets 1.26% N/A N/A N/A
13. Ratio of net expenses to average net assets 1.23% 1.25% 1.36% 2.50%
14. Ratio of net investment income
to average net assets 0.02% (0.32%) 0.14% (0.81%)
15. Portfolio turnover rate 194% 193% 201% 53%
16. Average commission rate $ N/A N/A N/A N/A
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</TABLE>
(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
4
<PAGE>
<TABLE>
Janus
Equity Income Fund Janus Mercury Fund
1996(1) 1996 1995 1994 1993(2)
[TO BE FILED BY [TO BE FILED BY
AMENDMENT] AMENDMENT]
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<S> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $14.12 $11.70 $10.00
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Income from investment
operations:
2. Net investment income (loss) 0.16 0.02 (0.01)
3. Net gains or (losses)
on securities
(both realized and unrealized) 3.37 2.40 1.71
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4. Total from investment
operations 3.53 2.42 1.70
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Less distributions:
5. Dividends
(from net investment income) (0.16) -- --
6. Distributions
(from capital gains) (0.11) -- --
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7. Total distributions (0.27) -- --
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8. Net asset value,
end of period $17.38 $14.12 $11.70
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9. Total return 25.53% 20.68% 17.00%
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10. Net assets,
end of period (in millions) $1,521 $596 $113
11. Average net assets
for the period (in millions) $ $ $1,116 $258 $67
12. Ratio of gross expenses
to average net assets 1.14% N/A N/A
13. Ratio of net expenses
to average net assets 1.12% 1.33% 1.75%
14. Ratio of net investment
income to average net assets 0.50% 0.25% (0.40%)
15. Portfolio turnover rate 201% 283% 151%
16. Average commission rate $_____ $_____ N/A N/A N/A
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</TABLE>
(1) Fiscal period from June 28, 1996 (inception) to October 31, 1996.
(2) Fiscal period from May 3, 1993 (inception) to October 31, 1993.
<TABLE>
Janus Olympus Fund Janus Overseas Fund
1996(1) 1996 1995 1994(2)
[TO BE FILED BY [TO BE FILED BY
AMENDMENT] AMENDMENT]
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<S> <C> <C> <C> <C>
1. Net asset value,
beginning of period $ $ $10.36 $10.00
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Income from investment
operations:
2. Net investment income (loss) 0.12 (0.02)
3. Net gains or (losses)
on securities
(both realized and unrealized) 1.10 0.38
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4. Total from investment
operations 1.22 0.36
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Less distributions:
5. Dividends
(from net investment income) -- --
6. Distributions
(from capital gains) -- --
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7. Total distributions -- --
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8. Net asset value,
end of period $11.58 $10.36
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9. Total return 11.78% 3.60%
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10. Net assets,
end of period (in millions) $111 $64
11. Average net assets
for the period (in millions) $ $ $78 $37
12. Ratio of gross expenses
to average net assets 1.76% N/A
13. Ratio of net expenses
to average net assets 1.73% 2.16%
14. Ratio of net investment
income to average net assets 0.36% (0.64%)
15. Portfolio turnover rate 188% 181%
16. Average commission rate $_____ $_____ N/A N/A
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</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) Fiscal period from May 2, 1994 (inception) to October 31, 1994.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
5
<PAGE>
<TABLE>
[TO BE FILED BY
AMENDMENT] Janus Twenty Fund
1996 1995 1994 1993 1992(1) 1992(2) 1991(2) 1990(2) 1989(2) 1988(2) 1987(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $24.24 $25.85 $22.75 $22.17 $18.88 $16.01 $13.05 $9.66 $13.69 $14.27
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
2. Net investment income .01 0.16 0.17 0.09 0.11 0.16 0.05 0.46 0.42 0.30
3. Net gains or (losses)
on securities
(both realized and
unrealized) 5.94 (1.07) 3.31 0.49 3.62 2.90 3.35 3.73 (2.86) 0.74
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment
operations 5.95 (0.91) 3.48 0.58 3.73 3.06 3.40 4.19 (2.44) 1.04
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends
(from net investment income) (.07) (0.25) (0.18) -- (0.02) (0.19) (0.02) (0.80) (0.41) (0.25)
6. Distributions
(from capital gains) -- (0.45) (0.20) -- (0.42) -- (0.42) -- (1.18) (1.37)
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (.07) (0.70) (0.38) -- (0.44) (0.19) (0.44) (0.80) (1.59) (1.62)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value,
end of period $30.12 $24.24 $25.85 $22.75 $22.17 $18.88 $16.01 $13.05 $9.66 $13.69
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 24.67% (3.52%) 15.39% 2.62% 19.60% 19.43% 26.36% 45.89% (17.13%) 8.66%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets,
end of period (in millions) $2,996 $2,743 $3,749 $2,434 $2,081 $556 $175 $20 $13 $19
11. Average net assets
for the period (in millions) $ $2,716 $3,051 $3,546 $2,221 $1,188 $294 $64 $10 $16 $16
12. Ratio of gross expenses
to average net assets 1.00% N/A N/A N/A N/A N/A N/A N/A N/A N/A
13. Ratio of net expenses
to average net assets 0.99% 1.02% 1.05% 1.12% 1.01% 1.07% 1.32% 1.88% 1.70% 1.79%
14. Ratio of net investment
income to average net assets 0.62% 0.57% 0.87% 1.27% 1.08% 1.30% 1.28% 0.68% 3.35% 2.98%
15. Portfolio turnover rate 147% 102% 99% 79% 83% 163% 228% 220% 317% 202%
16. Average commission rate $ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from June 1, 1992 to October 31, 1992.
(2) Fiscal year ended on May 31st of each year.
<TABLE>
[TO BE FILED BY
AMENDMENT] Janus Worldwide Fund
1996 1995 1994 1993 1992 1991(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $27.00 $24.16 $18.95 $17.45 $15.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income 0.81 0.15 0.14 0.16 --
3. Net gains or (losses) on securities
(both realized and unrealized) 1.39 3.34 5.29 1.39 2.45
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations 2.20 3.49 5.43 1.55 2.45
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income) (0.54) (0.27) (0.22) -- --
6. Distributions (from capital gains) (1.01) (0.38) -- (0.05) --
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (1.55) (0.65) (0.22) (0.05) --
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $27.65 $27.00 $24.16 $18.95 $17.45
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 8.89% 14.76% 28.79% 9.20% 16.00%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period (in millions) $1,804 $1,587 $755 $161 $18
11. Average net assets for the period (in millions) $ $1,622 $1,244 $379 $80 $7
12. Ratio of gross expenses to average net assets 1.24% N/A N/A N/A N/A
13. Ratio of net expenses to average net assets 1.23% 1.12% 1.32% 1.73% 2.50%
14. Ratio of net investment income
to average net assets 0.99% 0.42% 0.92% 1.74% 0.02%
15. Portfolio turnover rate 142% 158% 124% 147% 40%
16. Average commission rate $ N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 15, 1991 (inception) to October 31, 1991.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
6
<PAGE>
<TABLE>
[TO BE [TO BE
FILED BY FILED BY
AMENDMENT] Janus Balanced Fund AMENDMENT] Janus Growth and Income Fund
1996 1995 1994 1993 1992(1) 1996 1995 1994 1993 1992 1991(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $12.17 $12.23 $10.64 $10.00 $14.69 $15.24 $12.95 $12.13 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income 0.61 0.27 0.19 -- 0.11 0.19 0.14 0.17 0.02
3. Net gains or (losses) on securities
(both realized and unrealized) 1.52 (0.09) 1.56 0.64 3.43 (0.31) 2.29 0.80 2.13
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations 2.13 0.18 1.75 0.64 3.54 (0.12) 2.43 0.97 2.15
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income) (0.58) (0.24) (0.16) -- (0.10) (0.10) (0.14) (0.15) (0.02)
6. Distributions (from capital gains) -- -- -- -- -- (0.33) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (0.58) (0.24) (0.16) -- (0.10) (0.43) (0.14) (0.15) (0.02)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $13.72 $12.17 $12.23 $10.64 $18.13 $14.69 $15.24 $12.95 $12.13
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 18.26% 1.51% 16.54% 6.40% 24.20% (0.76%) 18.81% 7.98% 21.50%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period (in millions) $125 $94 $73 $2 $583 $490 $519 $244 $56
11. Average net assets for the period
(in millions) $ $107 $86 $44 $1 $ $498 $500 $404 $157 $21
12. Ratio of gross expenses to average
net assets 1.35% N/A N/A N/A 1.19% N/A N/A N/A N/A
13. Ratio of net expenses to average
net assets 1.32% 1.42% 1.70% 2.50% 1.17% 1.22% 1.28% 1.52% 2.33%
14. Ratio of net investment income
to average net assets 2.52% 2.28% 2.15% (0.12%) 1.11% 1.26% 1.13% 1.61% 0.76%
15. Portfolio turnover rate 185% 167% 131% 130% 195% 123% 138% 120% 14%
16. Average commission rate $ N/A N/A N/A N/A $ N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(2) Fiscal period from May 15, 1991 (inception) to October 31, 1991.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights tables. The tables contain important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Funds' Annual
Reports contain additional information about each Fund's performance, including
a comparison to an appropriate securities index. For a copy of your Fund's
Annual Report, call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of a Fund. It is computed
by adding the value of all of a Fund's investments and other assets, subtracting
any liabilities and dividing the result by the number of shares outstanding. The
difference between line 1 and line 8 in the Financial Highlights tables
represents the change in value of a Fund's shares over the fiscal period, but
not its total return.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that a Fund paid from net investment
income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities a Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that a Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purposes of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. A FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLES.
Ratio of net expenses to average net assets is the total of a Fund's operating
expenses divided by its average net assets for the stated period. Ratio of gross
expenses to average net assets does not reflect reductions in expenses through
the use of brokerage commissions and uninvested cash balances earning interest
with a Fund's custodian.
Ratio of net investment income to average net assets is a Fund's net investment
income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of a Fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of a Fund's portfolio securities.
Average commission rate is the total of a Fund's agency commissions paid on
equity securities trades divided by the number of shares purchased.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
7
<PAGE>
THE FUNDS IN DETAIL
To help you decide which Fund is appropriate for you, this section takes a
closer look at the Funds' investment objectives, policies and the securities in
which they invest. Please carefully review the "Additional Risk Factors" section
of this Prospectus for a more detailed discussion of the risks associated with
certain investment techniques, as well as the risk spectrum on page 2. Appendix
A contains a more detailed description of investment terms used throughout this
Prospectus. You should carefully consider your own investment goals, time
horizon and risk tolerance before investing in a Fund.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including each Fund's investment objective, are not
fundamental and may be changed by the Funds' Trustees without a shareholder
vote. You will be notified of any such changes that are material. If there is a
material change in a Fund's objective or policies, you should consider whether
that Fund remains an appropriate investment for you.
- --------------------------------------------------------------------------------
A SHAREHOLDER'S INVESTMENT HORIZON IS THE AMOUNT OF TIME YOU SHOULD PLAN TO HOLD
YOUR INVESTMENT IN A FUND TO MAXIMIZE THE POTENTIAL FOR REALIZING THE FUND'S
OBJECTIVE.
- --------------------------------------------------------------------------------
THE JANUS GROWTH FUNDS ARE DESIGNED FOR LONG-TERM INVESTORS WHO SEEK GROWTH OF
CAPITAL AND WHO CAN TOLERATE THE GREATER RISKS ASSOCIATED WITH COMMON STOCK
INVESTMENTS.
GROWTH FUNDS
Investment Objective: ....................................... Growth of Capital
(and Current Income for Janus Equity Income Fund)
Primary Holdings: ............................................... Common Stocks
Shareholder's Investment Horizon: ................................... Long-Term
JANUS FUND
The investment objective of this Fund is long-term growth of capital in a manner
consistent with the preservation of capital. It is a diversified fund that
pursues its objective by investing in common stocks of companies of any size.
Janus Fund was first offered to the public in 1970 and has the largest asset
base of the Funds. This Fund generally invests in larger, more established
issuers.
JANUS ENTERPRISE FUND
The investment objective of this Fund is long-term growth of capital. It is a
non-diversified fund that pursues its investment objective by normally investing
at least 50% of its equity assets in securities issued by medium-sized
companies. Medium-sized companies are those whose market capitalizations fall
within the range of companies in the S&P MidCap 400 Index (the "MidCap Index").
Companies whose capitalization falls outside this range after the Fund's initial
purchase continue to be considered medium-sized companies for the purpose of
this policy. As of ________1996, the MidCap Index included companies with
capitalizations between approximately ___ million to ___ billion. The range of
the MidCap Index is expected to change on a regular basis. Subject to the above
policy, the Fund may also invest in smaller or larger issuers.
JANUS EQUITY INCOME FUND
The investment objective of this Fund is current income and long-term growth of
capital. It is a diversified fund that pursues its objective by normally
investing at least 65% of invested assets in income-producing equity securities.
Equity securities include common stocks, preferred stocks, warrants and
securities convertible into common or preferred stocks. Growth potential is a
significant investment consideration and the Fund may hold securities selected
solely for their growth potential. The Fund seeks to provide a lower level of
volatility than the stock market at large, as measured by the S&P 500. The lower
volatility sought by the Fund is expected to result primarily from investments
in dividend-paying common stocks and other equity securities that are
characterized by relatively greater price stability. The greater price stability
sought by the Fund may be characteristic of companies that generate above
average positive cash flows. A company may use positive cash flows for a number
of purposes including commencing or increasing dividend payments, repurchasing
its own stock or retiring outstanding debt.
JANUS MERCURY FUND
The investment objective of this Fund is long-term growth of capital. It is a
diversified fund that pursues its objective by investing in common stocks of
issuers of any size, which may include larger well-established issuers and/or
smaller emerging growth companies.
JANUS OLYMPUS FUND
The investment objective of this Fund is long-term growth of capital. It is a
nondiversified fund that pursues its objective by investing primarily in common
stocks of issuers of any size, which may include larger well-established issuers
and/or smaller emerging growth companies.
JANUS OVERSEAS FUND
The investment objective of this Fund is long-term growth of capital. It is a
diversified fund that pursues its objective primarily through investments in
common stocks of issuers located outside the United States. The Fund has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The Fund normally invests at least 65% of its total assets in
securities of issuers from at least five different countries, excluding the
United States. Although the Fund intends to invest substantially all of its
assets in issuers located outside the United States, it may at times invest in
U.S. issuers and it may at times invest all of its assets in fewer than five
countries or even a single country.
JANUS TWENTY FUND
The investment objective of this Fund is long-term growth of capital. It is a
non-diversified fund that pursues its objective by normally concentrating its
investments in a core position of 20-30 common stocks.
JANUS WORLDWIDE FUND
The investment objective of this Fund is long-term growth of capital in a manner
consistent with the preservation of capital. It is a diversified fund that
pursues its objective primarily through investments in common stocks of foreign
and domestic issuers. The Fund has the flexibility to invest on a worldwide
basis in companies and organizations of any size, regardless of country of
organization or place of principal business activity. Janus Worldwide Fund
normally invests in issuers from at least five different countries, including
the United States. The Fund may at times invest in fewer than five countries or
even a single country.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
8
<PAGE>
ALL GROWTH FUNDS
Each of the Growth Funds invests primarily in common stocks of foreign and
domestic companies. However, the percentage of each Fund's assets invested in
common stocks will vary and each Fund may at times hold substantial positions in
cash equivalents or interest bearing securities. See "General Portfolio
Policies" on page 11. Each Fund may invest to a lesser degree in other types of
securities including preferred stock, warrants, convertible securities and debt
securities when its portfolio manager perceives an opportunity for capital
growth from such securities or to receive a return on idle cash. The Funds may
purchase securities on a when-issued, delayed delivery or forward commitment
basis. The Funds may invest up to 25% of their assets in mortgage- and
asset-backed securities, up to 10% of their assets in zero coupon, pay-in-kind
and step coupon securities, and without limit in indexed/structured securities.
No Fund will invest 35% or more of its assets in high-yield/high-risk
securities.
Although Janus Worldwide Fund and Janus Overseas Fund are committed to foreign
investing, all of the Growth Funds may invest without limit in foreign equity
and debt securities. The Funds may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the United States.
Other ways of investing in foreign securities include depositary receipts or
shares, and passive foreign investment companies. Each of the Growth Funds may
use futures, options and other derivatives for hedging purposes or for
non-hedging purposes such as seeking to enhance return. See "Additional Risk
Factors" on pages 12-13 for a discussion of the risks associated with foreign
investing and derivatives.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS GROWTH FUNDS.
HOW ARE COMMON STOCKS SELECTED?
Each of the Growth Funds invests substantially all of its assets in common
stocks to the extent its portfolio manager believes that the relevant market
environment favors profitable investing in those securities. Portfolio managers
generally take a "bottom up" approach to building their portfolios. In other
words, they seek to identify individual companies with earnings growth potential
that may not be recognized by the market at large. Although themes may emerge in
any Fund, securities are generally selected without regard to any defined
industry sector or other similarly defined selection procedure. Realization of
income is not a significant investment consideration for the Growth Funds
(except Janus Equity Income Fund). Any income realized on these Growth Funds'
investments will be incidental to their objectives.
- --------------------------------------------------------------------------------
ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. Portfolio managers seek companies that meet their selection
criteria regardless of country of organization or place of principal business
activity. Foreign securities are generally selected on a stock-by-stock basis
without regard to any defined allocation among countries or geographic regions.
However, certain factors such as expected levels of inflation, government
policies influencing business conditions, the outlook for currency
relationships, and prospects for economic growth among countries, regions or
geographic areas may warrant greater consideration in selecting foreign
securities. See "Additional Risk Factors" on pages 12-13.
WHAT IS THE MAIN RISK OF INVESTING IN A COMMON STOCK FUND?
The fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers are more likely to realize more
substantial growth as well as suffer more significant losses than larger or more
established issuers. Investments in such companies can be both more volatile and
more speculative. See "Additional Risk Factors" on pages 12-13.
- --------------------------------------------------------------------------------
WHAT IS MEANT BY "MARKET CAPITALIZATION"?
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. As noted
previously, market capitalization is an important investment criteria for Janus
Enterprise Fund. Although the other Growth Funds offered by this Prospectus do
not emphasize companies of any particular size, Funds with a larger asset base
(e.g., Janus Fund) are more likely to invest in larger, more established
issuers.
- --------------------------------------------------------------------------------
HOW DOES A DIVERSIFIED FUND DIFFER FROM A NONDIVERSIFIED FUND?
Diversification is a means of reducing risk by investing a Fund's assets in a
broad range of stocks or other securities. A "nondiversified" fund has the
ability to take larger positions in a smaller number
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
9
<PAGE>
of issuers. Because the appreciation or depreciation of a single stock may have
a greater impact on the NAV of a nondiversified fund, its share price can be
expected to fluctuate more than a comparable diversified fund. Janus Enterprise
Fund, Janus Olympus Fund, and Janus Twenty Fund are nondiversified funds. See
the risk spectrum on page 2 and "General Portfolio Policies" on page 11.
HOW DO THE GROWTH FUNDS TRY TO REDUCE RISK?
Diversification of a Fund's assets reduces the effect of any single holding on
its overall portfolio value. A Fund may also use futures, options and other
derivative instruments to protect its portfolio from movements in securities
prices and interest rates. The Funds may use a variety of currency hedging
techniques, including forward currency contracts, to manage exchange rate risk.
See "Additional Risk Factors" on pages 12-13. In addition, to the extent that a
Fund holds a larger cash position, it might not participate in market declines
to the same extent as if the Fund remained more fully invested in common stocks.
THE JANUS COMBINATION FUNDS ARE DESIGNED FOR INVESTORS WHO PRIMARILY SEEK GROWTH
OF CAPITAL WITH A DEGREE OF EMPHASIS ON INCOME. THESE FUNDS ARE NOT DESIGNED FOR
INVESTORS WHO DESIRE A CONSISTENT LEVEL OF INCOME.
COMBINATION FUNDS
Investment Objective: .............. Growth of Capital; Some Emphasis on Income
Primary Holdings: ............... Common Stocks and Income-Producing Securities
Shareholder's Investment Horizon: ................................... Long-Term
JANUS BALANCED FUND
The investment objective of this Fund is long-term capital growth, consistent
with preservation of capital and balanced by current income. It is a diversified
fund that, under normal circumstances, pursues its objective by investing 40-60%
of its assets in securities selected primarily for their growth potential and
40-60% of its assets in securities selected primarily for their income
potential. This Fund normally invests at least 25% of its assets in fixed-income
senior securities, which include debt securities and preferred stocks.
JANUS GROWTH AND INCOME FUND
The investment objective of this Fund is long-term capital growth and current
income. It is a diversified fund that, under normal circumstances, pursues its
objective by investing up to 75% of its assets in equity securities selected
primarily for their growth potential and at least 25% of its assets in
securities that have income potential. The Fund normally emphasizes the growth
component. However, in unusual circumstances, this Fund may reduce the growth
component of its portfolio to 25% of its assets.
ALL COMBINATION FUNDS
The Combination Funds may invest in the types of investments previously
described under "Growth Funds" on page 9.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS COMBINATION FUNDS.
HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENT OF A
COMBINATION FUND'S PORTFOLIO?
The Combination Funds may invest in a combination of common stocks, preferred
stocks, convertible securities, debt securities and other fixed-income
securities. A Combination Fund may shift assets between the growth and income
components of its portfolio based on its portfolio manager's analysis of
relevant market, financial and economic conditions. If a portfolio manager
believes that growth securities will provide better returns than the yields then
available or expected on income-producing securities, then that Fund will place
a greater emphasis on the growth component.
- --------------------------------------------------------------------------------
WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF THE COMBINATION FUNDS?
The growth component of the Combination Funds is expected to consist primarily
of common stocks. The selection criteria for common stocks are described on page
9.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
10
<PAGE>
Because income is a part of the investment objective of the Combination Funds, a
portfolio manager may consider dividend-paying characteristics to a greater
degree in selecting equity securities for these Funds. The Combination Funds may
also find opportunities for capital growth from debt securities because of
anticipated changes in interest rates, credit standing, currency relationships
or other factors.
- --------------------------------------------------------------------------------
WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF THE COMBINATION FUNDS?
The income component of each Combination Fund will consist of securities that
the portfolio manager believes have income potential. Such securities may
include equity securities, convertible securities and all types of debt
securities. Equity securities may be included in the income component of the
Combination Funds if they currently pay dividends or a portfolio manager
believes they have the potential for either increasing their dividends or
commencing dividends, if none are currently paid. Investors in the Combination
Funds should keep in mind that the Combination Funds are not designed to produce
a consistent level of income.
- --------------------------------------------------------------------------------
HOW DO THE COMBINATION FUNDS DIFFER FROM EACH OTHER?
Janus Growth and Income Fund places a greater emphasis on the growth objective.
Because it generally invests more heavily in growth stocks than Janus Balanced
Fund, its share price can be expected to fluctuate more. Janus Growth and Income
Fund has historically derived a greater portion of its income from
dividend-paying common stocks, while Janus Balanced Fund invests to a greater
degree in debt securities and preferred stock.
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all of the
Funds. The percentage limitations included in these policies and elsewhere in
this Prospectus apply at the time of purchase of the security. For example, if a
Fund exceeds a limit as a result of market fluctuations or the sale of other
securities, it will not be required to dispose of any securities.
CASH POSITION
When a Fund's portfolio manager believes that market conditions are not
favorable for profitable investing or when the portfolio manager is otherwise
unable to locate favorable investment opportunities, a Fund's investments may be
hedged to a greater degree and/or its cash or similar investments may increase.
In other words, the Funds do not always stay fully invested in stocks and bonds.
Cash or similar investments are a residual - they represent the assets that
remain after a portfolio manager has committed available assets to desirable
investment opportunities. Partly because the portfolio managers act
independently of each other, the cash positions of the Funds may vary
significantly. Larger hedged positions and/or larger cash positions may serve as
a means of preserving capital in unfavorable market conditions.
Securities that the Funds may invest in as means of receiving a return on idle
cash include high-grade commercial paper, certificates of deposit, repurchase
agreements or other short-term debt obligations. The Funds may also invest in
money market funds (including funds managed by Janus Capital). When a Fund's
investments in cash or similar investments increase, a Fund may not participate
in stock or bond market advances or declines to the same extent that it would if
the Fund remained more fully invested in stocks or bonds.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. All of the Funds (except
Janus Enterprise Fund, Janus Olympus Fund and Janus Twenty Fund) qualify as
diversified funds under the 1940 Act. The Funds are subject to the following
diversification requirements:
o As a fundamental policy, no Fund may own more than 10% of the outstanding
voting shares of any issuer.
o As a fundamental policy, with respect to 50% of the total assets of Janus
Enterprise Fund, Janus Olympus Fund and Janus Twenty Fund and 75% of the
total assets of the other Funds, no Fund will purchase a security of any
issuer (other than cash items and U.S. government securities, as defined in
the 1940 Act) if such purchase would cause a Fund's holdings of that issuer
to amount to more than 5% of that Fund's total assets.
o No Fund will invest more than 25% of its total assets in a single issuer
(other than U.S. government securities).
o Janus Enterprise Fund, Janus Olympus Fund and Janus Twenty Fund reserve the
right to become diversified funds by limiting the investments in which more
than 5% of their total assets are invested.
INDUSTRY CONCENTRATION
As a fundamental policy, no Fund will invest 25% or more of its total assets in
any particular industry (excluding U.S. government securities).
PORTFOLIO TURNOVER
Each Fund generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective, changes
in interest rates or the credit standing of an issuer, or by reason of economic
or other developments not foreseen at the time of the initial investment
decision. Changes are made in a Fund's portfolio whenever its portfolio manager
believes such changes are desirable. Portfolio turnover rates are generally not
a factor in making buy and sell decisions.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
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To a limited extent, a Fund may purchase securities in anticipation of
relatively short-term price gains. A Fund may also sell one security and
simultaneously purchase the same or a comparable security to take advantage of
short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. Certain tax rules may restrict the Funds' ability to engage in short-term
trading if a security has been held for less than three months.
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of quickly in the normal course of business. Some
securities cannot be sold to the U.S. public because of their terms or because
of SEC regulations. Janus Capital will follow guidelines established by the
Funds' Trustees in making liquidity determinations for Rule 144A securities and
certain other securities, including privately placed commercial paper and
municipal lease obligations.
BORROWING AND LENDING
Each Fund may borrow money and lend securities or other assets, as follows:
o Each Fund may borrow money for temporary or emergency purposes in amounts
up to 25% of its total assets.
o Each Fund may mortgage or pledge securities as security for borrowings in
amounts up to 15% of its net assets.
o As a fundamental policy, each Fund may lend securities or other assets if,
as a result, no more than 25% of its total assets would be lent to other
parties.
Each Fund intends to seek permission from the SEC to borrow money from or lend
money to each other and other funds that permit such transactions and for which
Janus Capital serves as investment adviser. All such borrowing and lending will
be subject to the above percentage limits. There is no assurance that such
permission will be granted.
ADDITIONAL RISK FACTORS
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the United
States, but many foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. A Fund may buy the local currency when it buys a foreign
currency denominated security and sell the local currency when it sells the
security. As long as a Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar.
When a Fund sells a foreign security, its value may be worth less in U.S.
dollars even though the security increases in value in its home country.
U.S. dollar denominated securities of foreign issuers may also be affected
by currency risk.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a
company or that the government may impose taxes or limits on the removal of
a Fund's assets from that country. The Funds may invest in emerging market
countries. Emerging market countries involve greater risks such as immature
economic structures, national policies restricting investments by
foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers.
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
INVESTMENTS IN SMALLER COMPANIES
SMALLER OR NEWER COMPANIES MAY SUFFER MORE SIGNIFICANT LOSSES AS WELL AS REALIZE
MORE SUBSTANTIAL GROWTH THAN LARGER OR MORE ESTABLISHED ISSUERS.
Smaller or newer companies may lack depth of management, they may be unable to
generate funds necessary for growth or potential development, or they may be
developing or marketing new products or services for which markets are not yet
established and may never become established. In addition, such companies may be
insignificant factors in their industries and
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
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may become subject to intense competition from larger or more established
companies. Securities of smaller or newer companies may have more limited
trading markets than the markets for securities of larger or more established
issuers, and may be subject to wider price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
FUTURES, OPTIONS AND
OTHER DERIVATIVE INSTRUMENTS
Each Fund may enter into futures contracts on securities, financial indices and
foreign currencies and options on such contracts ("futures contracts") and may
invest in options on securities, financial indices and foreign currencies
("options"), forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Funds intend to use most derivative
instruments primarily to hedge the value of their portfolios against potential
adverse movements in securities prices, foreign currency markets or interest
rates. To a limited extent, the Funds may also use derivative instruments for
non-hedging purposes such as seeking to increase a Fund's income or otherwise
seeking to enhance return. Please refer to Appendix A to this Prospectus and the
SAI for a more detailed discussion of these instruments.
The use of derivative instruments exposes the Funds to additional investment
risks and transaction costs. Risks inherent in the use of derivative instruments
include:
o the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than a Fund's initial
investment in that instrument (in some cases, the potential loss is
unlimited); and
o particularly in the case of privately-negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave a
Fund worse off than if it had not entered into the position.
Although the Funds believe the use of derivative instruments will benefit the
Funds, a Fund's performance could be worse than if the Fund had not used such
instruments if a portfolio manager's judgement proves incorrect.
When a Fund invests in a derivative instrument, it may be required to segregate
cash and other liquid assets or certain portfolio securities with its custodian
to "cover" the Fund's position. Assets segregated or set aside generally may not
be disposed of so long as the Fund maintains the positions requiring segregation
or cover. Segregating assets could diminish the Fund's return due to the
opportunity losses of foregoing other potential investments with the segregated
assets.
HIGH-YIELD/HIGH-RISK SECURITIES
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies (such as, Standard &
Poor's Ratings Services and Moody's Investors Service, Inc.).
The value of lower quality securities generally is more dependent on the ability
of the issuer to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. The market for lower quality securities is generally less liquid
than the market for higher quality bonds. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a greater negative
impact on the market for lower quality securities.
Please refer to the SAI for a description of bond rating categories.
SHORT SALES
Each Fund may engage in "short sales against the box," which involves selling a
security that a Fund owns (or has the right to obtain securities equivalent in
kind and amount to the securities sold short) for delivery at a specified date
in the future, to hedge against anticipated declines in the market price of
portfolio securities or to defer an unrealized gain. If the value of the
securities sold short increases prior to the scheduled delivery date, a Fund
loses the opportunity to participate in the gain.
SPECIAL SITUATIONS
Each Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of a Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
See Appendix A for risks associated with certain other investments.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
13
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SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also explains in detail the wide
array of services and features you can establish on your account. These services
and features may be modified or discontinued without shareholder approval or
prior notice.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00
a.m.-10:00 p.m., and Saturday: 10:00 a.m.-7:00 p.m., New York time.
- --------------------------------------------------------------------------------
MINIMUM INVESTMENTS*
To open a new account ............................. $2,500
To open a new retirement or
UGMA/UTMA account ............................... $500
To open a new account with
an Automatic Investment Program ................. $500**
To add to any type of an account .................. $100
*The Funds reserve the right to change the amount of these minimums from time to
time or to waive them in whole or in part for certain types of accounts.
**There is a $100 minimum for each subsequent investment.
- --------------------------------------------------------------------------------
TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds for the first time, you will need to establish
an account. You can establish the following types of accounts by completing the
New Account Application. To request an application, call 1-800-525-3713.
o Individual or Joint Ownership. Individual accounts are owned by one person.
Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA or
UTMA account, you must include the minor's Social Security number on the
application.
o Trust. An established trust can open an account. The names of each trustee,
the name of the trust and the date of the trust agreement must be included
on the application.
o Business Accounts. Corporations and partnerships may also open an account.
The application must be signed by an authorized officer of the corporation
or a general partner of the partnership.
RETIREMENT ACCOUNTS
If you are eligible, you may set up your account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from a retirement plan are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 59 1/2.
Investors Fiduciary Trust Company serves as custodian for the retirement plans
offered by the Funds. There is an annual $12 fee per account to maintain your
retirement account. The maximum annual fee is $24 per taxpayer identification
number. You may pay the fee by check or have it automatically deducted from your
account (usually in December).
The following plans require a special application. For an application and more
details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account: An IRA allows individuals under age 70 1/2
with earned income to contribute up to the lesser of $2,000 or 100% of
compensation annually. Please refer to the Janus Funds IRA booklet for
complete information regarding IRAs.
o Simplified Employee Pension Plan ("SEP"): This plan allows small business
owners (including sole proprietors) to make tax-deductible contributions
for themselves and any eligible employee(s). A SEP requires an IRA (a
SEP-IRA) to be set up for each SEP participant.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their employees
and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or other
qualifying, tax-exempt organizations may be eligible to participate in a
Section 403(b)(7) Plan.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
14
<PAGE>
HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to provide your
Social Security or taxpayer identification number on the application. Make your
check payable to Janus Funds. Send all items to one of the following addresses:
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
For Overnight Carrier
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the next NAV
calculated after your order is received and accepted. Please note the following:
o Cash, credit cards, third party checks and credit card checks will not be
accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on U.S. banks and made payable to Janus Funds.
o If a check does not clear your bank, the Funds reserve the right to cancel
the purchase.
o If the Funds are unable to debit your predesignated bank account on the day
of purchase, they may make additional attempts or cancel the purchase.
o The Funds reserve the right to reject any specific purchase request.
If your purchase is cancelled, you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the cancelled purchase. The Funds (or their agents) have the
authority to redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR AN ADDITIONAL
INVESTMENT IS $100. You may add to your account at any time through any of the
following options:
BY MAIL
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and conveniently
through an electronic transfer of money. When you make an additional purchase by
telephone, Janus will automatically debit your predesignated bank account for
the desired amount. To establish the telephone purchase option on your new
account, complete the "Telephone Purchase of Shares Option" section on the
application and attach a "voided" check or deposit slip from your bank account.
If your account is already established, call 1-800-525-3713 to request the
appropriate form. This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account to your Janus
account. Call 1-800-525-3713 to receive wiring instructions.
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o Automatic Monthly
Investment Program
You select the day each month that your money ($100 minimum) will be
electronically transferred from your bank account to your Fund account. To
establish this option, complete the "Automatic Monthly Investment Program"
section on the application and attach a "voided" check or deposit slip from
your bank account. If your Fund account is already established, call
1-800-525-3713 to request the appropriate form.
o Payroll Deduction
If your employer can initiate an automatic payroll deduction, you may have
all or a portion of your paycheck ($100 minimum) invested directly into
your Fund account. To obtain information on establishing this option, call
1-800-525-3713.
o Systematic Exchange
With a Systematic Exchange you determine the amount of money ($100 minimum)
you would like automatically exchanged from one Janus account to another on
any day of the month. For more information on how to establish this option,
call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into any
other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions for written
requests on page 17.
BY TELEPHONE
All accounts are automatically eligible for the telephone exchange option. To
exchange shares by telephone, call an Investor Service Representative at
1-800-525-3713
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
15
<PAGE>
during normal business hours or call the Janus Electronic Telephone Service
(JETS(R)) line at 1-800-525-6125.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of each Fund during a calendar year
(exclusive of Systematic Exchanges) free of charge.
o Exchanges between accounts will be accepted only if the registrations are
identical.
o If the shares you are exchanging are held in certificate form, you must
return the certificate to your Fund prior to making any exchanges.
o Be sure that you read the prospectus for the Fund into which you are
exchanging.
o The Funds reserve the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Funds may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are believed to be detrimental to the
Funds.
o An exchange represents the sale of shares from one Fund and the purchase of
shares of another Fund, which may produce a taxable gain or loss in a
non-tax deferred account.
QUICK ADDRESS AND TELEPHONE REFERENCE
MAILING ADDRESS
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
JANUS INTERNET ADDRESS
http://www.JanusFunds.com
JANUS INVESTOR SERVICES 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and Fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS QUOTELINE(R)
For automated daily quotes on Fund share prices, yields and total returns.
JANUS LITERATURE LINE 1-800-525-8983
To request a prospectus, shareholder reports or marketing materials.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. If the
shares are held in certificate form, the certificate must be returned with or
before your redemption request. Your transaction will be processed at the next
NAV calculated after your order is received and accepted.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests on page 17.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing. This option enables you
to redeem up to $100,000 daily from your account by simply calling
1-800-525-3713 by 4:00 p.m. New York time.
SYSTEMATIC REDEMPTION OPTION
Systematic Redemption Options allow you to redeem a specific dollar amount from
your account on a regular basis. For more information or to request the
appropriate form, please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o By Check
Redemption proceeds will be sent to the shareholder(s) of record at the
address of record within seven days after receipt of a valid redemption
request.
o Electronic Transfer
If you have established this option, your redemption proceeds can be
electronically transferred to your predesignated bank account on the second
business day after receipt of your redemption request. To establish this
option, call 1-800-525-3713. There is no fee for this option.
o By Wire
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on the
next business day after receipt of your redemption request. There is no
limitation on redemptions by wire; however, there is an $8 fee for each
wire and your bank may charge an additional fee to receive the wire. If you
would like to establish this option on an existing account, please call
1-800-525-3713 to request the appropriate form. Wire redemptions are not
available for retirement accounts.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUNDS MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
16
<PAGE>
Unless you provide alternate instructions, your proceeds will be invested in
Janus Money Market Fund - Investor Shares during the 15 day hold period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your request should
be sent to one of the addresses listed on page 15 and must include the following
information:
o the name of the Fund(s)
o the account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o the signature(s) of all registered account owners
o your daytime telephone number
SIGNATURE REQUIREMENTS
BASED ON ACCOUNT TYPE
o Individual, Joint Tenants, Tenants in Common: Written instructions must be
signed by each shareholder, exactly as the names appear in the account
registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in his/
her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed by an
authorized individual in his/her capacity as it appears in the account
registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified copy
of the corporate resolution authorizing the signer to act must accompany
the request.
o Trust: Written instructions must be signed by the trustee(s). If the name
of the current trustee(s) does not appear in the account registration, a
certificate of incumbency dated within 60 days must also be submitted.
o IRA: Written instructions must be signed by the account owner. If you do
not want federal income tax withheld from your redemption, you must state
that you elect not to have such withholding apply. In addition, your
instructions must state whether the distribution is normal (after age 59
1/2) or premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to the 10%
additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. A Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by the
close of the regular trading session of the NYSE. Securities are valued at
market value or, if a market quotation is not readily available, at their fair
value determined in good faith under procedures established by and under the
supervision of the Trustees. Short-term instruments maturing within 60 days are
valued at amortized cost, which approximates market value. See the SAI for more
detailed information.
SHAREHOLDER SERVICES
AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE
SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder money market fund checks, to exchange your shares or
to purchase shares. JETS can be accessed by calling 1-800-525-6125. Calls on
JETS are limited to seven minutes.
JANUS WEB SITE
Janus maintains a Web site located at http://www.JanusFunds.com. You can access
information such as your account balance and the Funds' NAVs through the Web
site. In addition, you may request and/or download a Janus funds prospectus.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable:
o The redemption exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been changed within
10 days of the redemption request.
o You would like the check mailed to an address other than the address of
record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. FOR
MORE INFORMATION PERTAINING TO SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A
SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers, and member
firms of a national securities exchange. Call your financial institution to see
if they have the ability to guarantee a signature. A SIGNATURE GUARANTEE MAY NOT
BE PROVIDED BY A NOTARY PUBLIC.
If you live outside the United States, a foreign bank properly authorized to do
business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
17
<PAGE>
ACCOUNT MINIMUMS
Minimum account sizes are noted on page 14. An account established on or before
February 18, 1996 is required to meet the minimum balances in effect when the
account was established ($1,000 for regular accounts and $250 for retirement and
UGMA/UTMA accounts). An active Automatic Monthly Investment (AMI) on any such
account exempted it from any minimum initial investment requirement and
continues to do so. In addition, an active AMI on these accounts may continue at
$50 per month, provided there is no interruption in the AMI program. All other
subsequent investments must meet the $100 required minimum.
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 minimum balance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
on page 14 or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. This policy does not
apply to accounts that fall below the minimums solely as a result of market
value fluctuations. It is expected that accounts will be valued in September.
The $10 fee will be assessed on the second Friday of September of each year. You
will receive notice before we charge the $10 fee or close your account so that
you may increase your account balance to the required minimum.
TRANSACTIONS THROUGH
PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other employee benefit plans (a
"Processing Organization"). Processing Organizations may charge you a fee for
this service and may require different minimum initial and subsequent
investments than the Funds. The Processing Organization may also impose other
charges or restrictions different from those applicable to shareholders who
invest in the Funds directly. The Processing Organization, rather than its
customers, may be the shareholder of record of your shares. The Funds are not
responsible for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations may receive
compensation from Janus Capital or its affiliates and certain Processing
Organizations may receive compensation from the Funds for shareholder
recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Funds for
any penalty that the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate form because
account transactions such as exchanges and redemptions cannot be completed until
the certificate has been returned to the Funds. The Funds will issue share
certificates upon written request only. Share certificates will not be issued
until the shares have been held for at least 15 days and will not be issued for
accounts that do not meet the minimum investment requirements. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise believed to be detrimental
to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and their agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Funds by telephone during periods of unusual
market activity. If you are unable to reach a representative by telephone,
please consider sending written instructions, stopping by a Service Center or,
in the case of purchases and exchanges, calling the JETS line.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or send a written
request signed by all account owners. Include the name of your Fund(s), the
account number(s), the name(s) on the account and both the old and new
addresses. Certain options may be suspended for 10 days following an address
change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a new
account. In some cases, legal documentation may be required. For more
information, call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will receive
quarterly confirmations of all transactions. (Dividend information will be
distributed annually.) The Funds will send you a confirmation statement after
every non-systematic transaction. Tax information regarding the tax status of
income dividends and capital gains distributions will be mailed to shareholders
on or before January 31st of each year. Account tax information will also be
sent to the IRS.
Financial reports for the Funds, which include a list of the Funds' portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such reports will be mailed to all accounts in the
same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
18
<PAGE>
MANAGEMENT OF THE FUNDS
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objectives and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to each of the Funds and is responsible for the day-to-day
management of the investment portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to Janus Fund at its inception
in 1970 and currently serves as investment adviser to all of the Janus funds, as
well as adviser or subadviser to other mutual funds and individual, corporate,
charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of the
outstanding voting stock of Janus Capital, most of which it acquired in 1984.
KCSI is a publicly traded holding company whose primary subsidiaries are engaged
in transportation, information processing and financial services. Thomas H.
Bailey, President and Chairman of the Board of Janus Capital, owns approximately
12% of its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning each
Fund's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Funds, and may be reimbursed by the
Funds for its costs in providing those services. In addition, Janus Capital
employees serve as officers of the Trust and Janus Capital provides office space
for the Funds and pays the salaries, fees and expenses of all Fund officers and
those Trustees who are affiliated with Janus Capital.
INVESTMENT PERSONNEL
James P. Craig, III is Chief Investment Officer of Janus Capital. He is also
Executive Vice President and portfolio manager of Janus Fund, which he has
managed since 1986. Mr. Craig previously managed Janus Venture Fund from its
inception to December 1993 and Janus Balanced Fund from December 1993 through
December 1995. He holds a Bachelor of Arts in Business from the University of
Alabama and a Master of Arts in Finance from the Wharton School of the
University of Pennsylvania.
- --------------------------------------------------------------------------------
James P. Goff is Executive Vice President and portfolio manager of Janus
Enterprise Fund. Mr. Goff joined Janus Capital in 1988 and has managed this Fund
since its inception. Mr. Goff co-managed Janus Venture Fund from December 1993
to December 1996. Effective January 1, 1997, he became sole portfolio manager of
Janus Venture Fund. He holds a Bachelor of Arts in Economics from Yale
University and is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Helen Young Hayes is Executive Vice President and portfolio manager of Janus
Worldwide Fund and Janus Overseas Fund. Ms. Hayes joined Janus Capital in 1987
and has managed or co-managed Janus Worldwide Fund and Janus Overseas Fund since
their inceptions. She holds a Bachelor of Arts in Economics from Yale University
and is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Warren B. Lammert is Executive Vice President and portfolio manager of Janus
Mercury Fund. Mr. Lammert joined Janus Capital in 1987 and has managed Janus
Mercury Fund since its inception and Janus Balanced Fund from its inception to
December 1993. He also co-managed Janus Venture Fund from December 1993 to
December 1996. He holds a Bachelor of Arts in Economics from Yale University and
a Master of Science in Economic History from the London School of Economics and
is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Thomas F. Marsico is Executive Vice President and portfolio manager of Janus
Growth and Income Fund and Janus Twenty Fund. Mr. Marsico has managed Janus
Growth and Income Fund since its inception and Janus Twenty Fund since March
1988. He holds a Bachelor of Arts in Biology from the University of Colorado and
Master of Business Administration in Finance from the University of Denver.
- --------------------------------------------------------------------------------
Blaine P. Rollins is Executive Vice President and portfolio manager of Janus
Balanced Fund, which he has managed since January 1996 and Janus Equity Income
Fund which he has managed since inception. He has been an assistant portfolio
manager of Janus Fund since January 1995. Mr. Rollins joined Janus Capital in
1990 and gained experience as a fixed-income trader and equity research analyst
prior to assuming management responsibility for Janus Balanced Fund. He holds a
Bachelor of Science in Finance from the University of Colorado and is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Scott W. Schoelzel is Executive Vice President and portfolio manager of Janus
Olympus Fund, which he has managed since inception. Mr. Schoelzel joined Janus
Capital in January 1994. From 1991 to 1993, Mr. Schoelzel was a portfolio
manager with Founders Asset Management, Denver, Colorado. Prior to 1991, he was
a general partner of Ivy Lane Investments, Denver, Colorado (a real estate
investment partnership). He holds a Bachelor of Arts in Business from Colorado
College.
ASSISTANT PORTFOLIO MANAGERS
Laurence Chang is assistant portfolio manager of Janus Overseas Fund and Janus
Worldwide Fund. He received an undergraduate degree with honors in religion and
philosophy from Dartmouth College and a Master's Degree in Political Science
from Stanford University. He is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
David Decker is an assistant portfolio manager of Janus Fund. He is Executive
Vice President and portfolio manager of Janus Special Situations Fund, which he
has managed since inception. Mr. Decker received a Masters of Business
Administration in Finance from the Fuqua School of Business at Duke University
and a Bachelor's Degree in Economics and Political Science from Tufts
University. He is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Mike Lu is assistant portfolio manager of Janus Olympus Fund. He received an
undergraduate degree in Economics and History from Yale University. He is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Tom Malley is assistant portfolio manager of Janus Mercury Fund. He received an
undergraduate degree in Molecular Biology from Stanford University. He is a
Chartered Financial Analyst.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
19
<PAGE>
Marc Pinto is an assistant portfolio manager of Janus Growth and Income Fund and
Janus Twenty Fund. He received an undergraduate degree in History from Yale
University and a Masters of Business Administration from Harvard. He is a
Chartered Financial Analyst.
Claire Young is an assistant portfolio manager of Janus Growth and Income Fund
and Janus Twenty Fund. She received an undergraduate degree in Electrical
Engineering from Yale University. She is a Chartered Financial Analyst.
PERSONAL INVESTING
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Funds or Janus
Capital's other advisory clients. See the SAI for more detailed information.
BREAKDOWN OF MANAGEMENT EXPENSES
Each Fund pays Janus Capital a management fee which is accrued daily and paid
monthly. The advisory agreement with each Fund spells out the management fee and
other expenses that the Funds must pay. Each of the Funds is subject to the
following management fee schedule (expressed as an annual rate):
<TABLE>
Average Daily Net Annual Rate
Fee Schedule Assets of Fund Percentage (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Funds and Combination Funds First $ 30 Million 1.00
Next $270 Million .75
Next $200 Million .70
Over $500 Million .65
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Differences in the actual management fees incurred by the Funds are due
primarily to variances in the asset size of the Funds. As asset size increases,
the annual rate of the management fee declines in accordance with the above
schedules. In addition, each Fund incurs expenses not assumed by Janus Capital,
including transfer agent and custodian fees and expenses, legal and auditing
fees, printing and mailing costs of sending reports and other information to
existing shareholders, and independent Trustees' fees and expenses. The Annual
Fund Operating Expenses table on page 3 lists the management fees and total
operating expenses of each Fund for the most recent fiscal year.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for a Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for a Fund i) to the Fund or ii) to other persons
on behalf of the Fund for services provided to the Fund for which it would be
obligated to pay. Janus Capital may also consider sales of shares of a Fund as a
factor in the selection of broker-dealers. The Funds' Trustees have authorized
Janus Capital to place portfolio transactions on an agency basis with a
broker-dealer affiliated with Janus Capital. When transactions for a Fund are
effected with that broker-dealer, the commissions payable by the Fund are
credited against certain Fund operating expenses. The SAI further explains the
selection of broker-dealers.
OTHER SERVICE PROVIDERS
The following parties provide the Funds with administrative and other services.
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
TRANSFER AGENT
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
DISTRIBUTOR
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206-4928
Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
20
<PAGE>
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
As of the date of this Prospectus, the Trust offers 19 separate series, three of
which currently offer three classes of shares. This Prospectus describes ten
series of the Trust; the other series are offered by separate prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific Fund or for the Trust as a whole for
purposes such as electing or removing Trustees, terminating or reorganizing the
Trust, changing fundamental policies, or for any other purpose requiring a
shareholder vote under the 1940 Act. Separate votes are taken by each Fund only
if a matter affects or requires the vote of only that Fund or that Fund's
interest in the matter differs from the interest of other portfolios of the
Trust. As a shareholder, you are entitled to one vote for each share that you
own.
SIZE OF FUNDS
The Funds have no present plans to limit their size. However, any Fund may
discontinue sales of its shares if management believes that continued sales may
adversely affect the Fund's ability to achieve its investment objective. If
sales of a Fund are discontinued, it is expected that existing shareholders of
that Fund would be permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions, absent highly unusual circumstances.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve any Fund's investment objective by
investing all of that Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to that Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the existing Fund. The Trust's shareholders of record on April 30,
1992, and the initial shareholder(s) of all Funds created after April 30, 1992,
have voted to vest authority to use this investment structure in the sole
discretion of the Trustees. No further approval of the shareholders of the Funds
is required. You will receive at least 30 days' prior notice of any such
investment. Such investment would be made only if the Trustees determine it to
be in the best interests of a Fund and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/ or the opportunity to reduce costs and achieve operational
efficiencies. Although management of the Funds believe the Trustees will not
approve an arrangement that is likely to result in higher costs, no assurance is
given that costs will be materially reduced if this option is implemented.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
21
<PAGE>
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation, the Internal Revenue Code requires each Fund to distribute
net income and any net gains realized by its investments annually. A Fund's
income from dividends and interest and any net realized short-term capital gains
are paid to shareholders as ordinary income dividends. Net realized long-term
gains are paid to shareholders as capital gains distributions.
- --------------------------------------------------------------------------------
DISTRIBUTION SCHEDULE
<TABLE>
Dividends Capital Gains
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Funds Declared and paid in December Declared and paid in December
(except Janus Equity Income Fund)
- ------------------------------------------------------------------------------------------------------------------------------------
Combination Funds Declared and paid in March, June, Declared and paid in December
and Janus Equity Income Fund September and December
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
HOW DISTRIBUTIONS
AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of a distribution
of a Fund, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in each Fund's daily NAV. The
share price of a Fund drops by the amount of the distribution, net of any
subsequent market fluctuations. As an example, assume that on December 31, Janus
Fund declared a dividend in the amount of $0.25 per share. If Janus Fund's share
price was $10.00 on December 30, the Fund's share price on December 31 would be
$9.75, barring market fluctuations. Shareholders should be aware that
distributions from a taxable mutual fund are a taxable event and not a
value-enhancing event.
"BUYING A DIVIDEND"
If you purchase shares of a Fund just before the distribution, you will pay the
full price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is referred to as "buying a dividend." In the above
example, if you bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as a dividend and
your shares would now be worth $9.75 per share. Unless your account is set up as
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want to
receive your distributions. You may change your distribution option at any time
by writing or calling 1-800-525-3713. The Funds offer the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital gains
distributions in additional shares. This option is assigned automatically if no
other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest And Cash Option. You may receive either your income dividends or
capital gains distributions in cash and reinvest the other in additional shares.
4. Redirect Option. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Funds reserve the right to reinvest into your account undeliverable and
uncashed dividend and distribution checks that remain outstanding for six months
in shares of the applicable Fund at the NAV next computed after the check is
cancelled. Subsequent distributions may also be reinvested.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
22
<PAGE>
- --------------------------------------------------------------------------------
TAXES
As with any investment, you should consider the tax consequences of investing in
the Funds. The following discussion does not apply to tax-deferred retirement
accounts, nor is it a complete analysis of the federal tax implications of
investing in the Funds. You may wish to consult your own tax adviser.
Additionally, state or local taxes may apply to your investment, depending upon
the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions of the Funds are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of a Fund. In certain states, a portion of the dividends and
distributions (depending on the sources of a Fund's income) may be exempt from
state and local taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on or before
January 31st of each year.
TAXATION OF THE FUNDS
Dividends, interest and some capital gains received by a Fund on foreign
securities may be subject to tax withholding or other foreign taxes. Any foreign
taxes paid by a Fund will be treated as an expense to the particular Fund or
passed through to shareholders as a foreign tax credit, depending on particular
facts and circumstances. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes.
The Funds do not expect to pay any federal income or excise taxes because they
intend to meet certain requirements of the Internal Revenue Code. It is
important that the Funds meet these requirements so that any earnings on your
investment will not be taxed twice.
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used to
describe a Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Growth and Combination Funds generally measure performance
in terms of total return.
Cumulative total return represents the actual rate of return on an investment
for a specified period. The Financial Highlights tables beginning on page 4 show
total return for a single fiscal period. Cumulative total return is generally
quoted for more than one year (e.g., the life of the Fund). A cumulative total
return does not show interim fluctuations in the value of an investment.
Average annual total return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual returns for more
than one year tend to smooth out variations in a Fund's return and are not the
same as actual annual results.
THE FUNDS IMPOSE NO SALES OR OTHER CHARGES THAT WOULD AFFECT TOTAL RETURN
COMPUTATIONS. FUND PERFORMANCE FIGURES ARE BASED UPON HISTORICAL RESULTS AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET ASSET
VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
23
<PAGE>
Appendix A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Funds may invest. The Funds may
invest in these instruments to the extent permitted by their investment
objectives and policies. The Funds are not limited by this discussion and may
invest in any other types of instruments not precluded by the policies discussed
elsewhere in this Prospectus. Please refer to the SAI for a more detailed
discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Commercial paper is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Funds may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
Common stock represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
Convertible securities are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
Fixed-income securities are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk securities are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard &Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Mortgage- and asset-backed securities are shares in a pool of mortgages or other
debt. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying mortgages or
other debt may be refinanced or paid off prior to their maturities during
periods of declining interest rates. In that case, a portfolio manager may have
to reinvest the proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Passive foreign investment companies (PFICs) are any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Funds to
recognize income associated with a PFIC prior to the actual receipt of any such
income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
Preferred stock is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
Repurchase agreements involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, a Fund will bear the risk of market value fluctuations until the security
can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique may be used to provide cash to satisfy unusually high redemption
requests, to earn additional income on portfolio securities, such as Treasury
bills or notes, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by a Fund from a dealer that give
the Fund the option to sell a security to the dealer at a specified price.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
24
<PAGE>
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from the face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
Strip bonds are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
U.S. government securities include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
Warrants are securities, typically issued with preferred stock or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery at some time in the future -
i.e., beyond normal settlement. The Funds do not earn interest on such
securities until settlement and bear the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities of comparable maturity.
II. FUTURES, OPTIONS
AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Funds may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. They may also enter into forward contracts to
purchase or sell securities or other financial indices.
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Funds may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Funds may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e. their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/ structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. A Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Options are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Funds may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS EQUITY FUNDS COMBINED PROSPECTUS February 17, 1997
25
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
FUNDS AT A GLANCE
Brief description of the Funds ............................................. 1
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
Each Fund's annual
operating expenses ...................................................... 3
Financial Highlights-a summary
of financial data ....................................................... 4
- --------------------------------------------------------------------------------
THE FIXED-INCOME FUNDS IN DETAIL
Investment Objectives and Policies ......................................... 7
General Portfolio Policies ................................................. 10
Additional Risk Factors .................................................... 11
- --------------------------------------------------------------------------------
THE MONEY MARKET FUNDS IN DETAIL
Investment Objectives,
Policies and Techniques ................................................. 13
- --------------------------------------------------------------------------------
SHAREHOLDER'S MANUAL
Types of Account Ownership ................................................. 17
How to Open Your Janus Account ............................................. 18
How to Purchase Shares ..................................................... 18
How to Exchange Shares ..................................................... 18
How to Redeem Shares ....................................................... 19
Shareholder Services
and Account Policies .................................................... 21
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
Investment Adviser, Administrator
and Investment Personnel ................................................ 23
Management Expenses ........................................................ 24
Portfolio Transactions ..................................................... 24
Other Service Providers .................................................... 25
Other Information .......................................................... 25
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
Distributions .............................................................. 26
Taxes ...................................................................... 27
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
An Explanation of Performance Terms ........................................ 27
- --------------------------------------------------------------------------------
APPENDIX A
Glossary of Investment Terms ............................................... 28
- --------------------------------------------------------------------------------
APPENDIX B
Explanation of Rating Categories ........................................... 31
[LOGO]
JANUS INVESTMENT FUND
JANUS INCOME FUNDS
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
http://www.JanusFunds.com
February 17, 1997
A FAMILY OF NO-LOAD MUTUAL FUNDS
All Janus Funds are no-load investments. This means you may purchase and sell
shares in any of our mutual funds without incurring any sales charges. If you
enroll in our low minimum initial investment program, you can open your account
for as little as $500 and a $100 subsequent purchase per month. Otherwise, the
minimum initial investment is $2,500. For complete information on how to
purchase, exchange and sell shares, please see the Shareholder's Manual
beginning on page 17.
This Prospectus describes seven mutual funds that emphasize income-producing
securities (the "Funds"). Included in this Prospectus is a separate class of
shares, Investor Shares, of Janus Money Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money Market Fund (collectively, the "Shares").
Janus Capital Corporation ("Janus Capital") serves as investment adviser to each
Fund. Janus Capital has been in the investment advisory business for over 26
years and currently manages approximately $45 billion in assets.
JANUS HIGH-YIELD FUND MAY INVEST ALL OF ITS ASSETS IN HIGH-YIELD CORPORATE DEBT
SECURITIES, COMMONLY KNOWN AS "JUNK BONDS." SEE "ADDITIONAL RISK FACTORS" ON
PAGE 11 FOR THE RISKS ASSOCIATED WITH INVESTING IN THESE SECURITIES. AN
INVESTMENT IN JANUS MONEY MARKET FUND, JANUS GOVERNMENT MONEY MARKET FUND OR
JANUS TAX-EXEMPT MONEY MARKET FUND (COLLECTIVELY, THE "MONEY MARKET FUNDS"), IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE
THAT A MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
Each Fund is a series of Janus Investment Fund (the "Trust"). The Trust is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Funds that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Funds is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated February 17, 1997, is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Funds at the address or phone number listed above. The SEC maintains a
Web site located at http://www.sec.gov that contains the SAI, material
incorporated by reference, and other information regarding the Funds.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
JANUS INCOME FUNDS COMBINED PROSPECTUS
<PAGE>
FUNDS AT A GLANCE
This section is designed to provide you with a brief overview of the Funds and
their investment emphasis. A more detailed discussion of the Funds' investment
objectives and policies begins on page 7 and complete information on how to
purchase, redeem and exchange shares begins on pages 18-19.
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
JANUS MONEY MARKET FUND
Fund Focus: A money market mutual fund that seeks maximum current income to the
extent consistent with stability of capital. The Fund seeks to achieve this
objective by investing primarily in high quality commercial paper and
obligations of financial institutions.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
JANUS GOVERNMENT MONEY MARKET FUND
Fund Focus: A money market mutual fund that seeks maximum current income to the
extent consistent with stability of capital. The Fund seeks to achieve this
objective by investing exclusively in obligations issued and/or guaranteed as to
principal and interest by the United States government or its agencies and
instrumentalities and repurchase agreements secured by such obligations.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
JANUS TAX-EXEMPT MONEY MARKET FUND
Fund Focus: A money market mutual fund that seeks maximum current income that is
exempt from federal income taxes to the extent consistent with stability of
capital. The Fund seeks to achieve this objective by investing primarily in
municipal securities whose interest is exempt from federal income taxes
including the federal alternative minimum tax.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
FIXED-INCOME FUNDS
JANUS FLEXIBLE INCOME FUND
Fund Focus: A diversified fund that seeks to maximize total return from a
combination of income and capital appreciation by investing in income-producing
securities. This Fund may have substantial holdings of lower rated debt
securities or "junk" bonds.
Fund Inception: July 1987
Fund Managers: Ronald V. Speaker
Sandy R. Rufenacht
JANUS FEDERAL TAX-EXEMPT FUND
Fund Focus: A diversified fund that seeks a high level of current income exempt
from federal income tax by normally investing at least 80% of its assets in
municipal obligations whose interest is exempt from federal income taxes,
including the federal alternative minimum tax.
Fund Inception: May 1993
Fund Manager: Darrell W. Watters
JANUS HIGH-YIELD FUND
Fund Focus: A diversified fund that seeks high current income as its primary
objective. Capital appreciation is a secondary objective when consistent with
the primary objective. The Fund seeks to achieve these objectives by investing
primarily in high-yield/high-risk fixed-income securities.
Fund Inception: December 1995
Fund Managers: Ronald V. Speaker
Sandy R. Rufenacht
JANUS SHORT-TERM BOND FUND
Fund Focus: A diversified fund that seeks a high level of current income while
minimizing interest rate risk by investing in shorter term fixed-income
securities. Its average-weighted effective maturity is normally less than three
years.
Fund Inception: September 1992
Fund Manager: Sandy R. Rufenacht
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
1
<PAGE>
- --------------------------------------------------------------------------------
JANUS SPECTRUM
The spectrum below shows Janus Capital's assessment of the potential overall
risk of the Janus Funds relative to one another and should not be used to
compare the Funds to other mutual funds or other types of investments. A Fund's
position in the spectrum was determined based on a number of factors such as
selected historic volatility measurements, the types of securities in which the
Fund intends to invest, the degree of diversification intended and/or permitted,
and the sizes of the Fund. In addition, the spectrum is significantly affected
by the portfolio managers' investment styles. These factors were considered as
of the date of this prospectus and will be reassessed with each new prospectus.
Specific risks of certain types of instruments in which some of the Funds may
invest, including foreign securities, junk bonds and derivative instruments such
as futures contracts and options, are described under "Additional Risk Factors"
on pages 11-12. THE SPECTRUM IS NOT INDICATIVE OF THE FUTURE VOLATILITY OR
PERFORMANCE OF A FUND AND RELATIVE POSITIONS OF FUNDS WITHIN THE SPECTRUM MAY
CHANGE IN THE FUTURE.
[SPECTRUM CHART]
The spectrum illustrates the potential overall risk of the Janus funds relative
to one another. The funds' risk ranges from conservative to aggressive. The
Growth Funds are illustrated as follows: Janus Fund* is shown as moderate; Janus
Enterprise Fund* is shown as aggressive; Janus Equity Income Fund* is shown as
moderate (but less aggressive than Janus Fund); Janus Mercury Fund* is shown as
moderate-aggressive; Janus Olympus Fund* is shown as aggressive; Janus Overseas
Fund* is shown as moderate-aggressive; Janus Special Situations Fund* is shown
as moderate-aggressive (but less aggressive than Janus Overseas Fund); Janus
Twenty Fund* is shown as aggressive; Janus Venture Fund, which is closed to new
investors, is shown as moderate-aggressive; Janus Worldwide Fund* is shown as
moderate-aggressive (but less aggressive than Janus Special Situations Fund).
The Combination Funds are illustrated as follows: Janus Balanced Fund* is shown
as moderate. Janus Growth and Income Fund* is shown as moderate-aggressive. The
Fixed-Income Funds are illustrated as follows: Janus Flexible Income Fund is
shown as conservative-moderate; Janus High-Yield Fund is shown as
moderate-aggressive; Janus Federal Tax-Exempt Fund is shown as
conservative-moderate (but more conservative than Janus Flexible Income Fund);
Janus Short-Term Bond Fund is shown as conservative (but more conservative than
Janus Federal Tax-Exempt Fund). The Money Market Funds are illustrated as
follows: Janus Money Market Fund is shown as conservative (but less conservative
than Janus Short-Term Bond Fund); Janus Government Money Market Fund is shown
equally as conservative as Janus Money Market Fund; and Janus Tax-Exempt Money
Market Fund is shown equally as conservative as Janus Government Money Market
Fund.
*These funds are offered by separate prospectuses.
+ This fund is closed to new investors and is offered by a separate prospectus.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
2
<PAGE>
EXPENSE INFORMATION
The tables and example below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Funds. Shareholder Transaction Expenses are fees charged
directly to your individual account when you buy, sell or exchange shares. The
table below shows that you pay no such fees. Annual Operating Expenses are paid
out of each Fund's assets and include fees for portfolio management, maintenance
of shareholder accounts, shareholder servicing, accounting and other services.
- --------------------------------------------------------------------------------
WHY DO EXPENSES VARY ACROSS THE FUNDS? EXPENSES VARY FOR A NUMBER OF REASONS,
INCLUDING DIFFERENCES IN MANAGEMENT FEES, AVERAGE SHAREHOLDER ACCOUNT SIZE, AND
THE EXTENT OF FOREIGN INVESTMENTS WHICH ENTAIL GREATER TRANSACTION COSTS.
SHAREHOLDER TRANSACTION EXPENSES (applicable to each Fund)
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fee* None
Exchange fee None
* There is an $8 service fee for redemptions by wire.
ANNUAL OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
<TABLE>
Management Fee Other Expenses Total Operating Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund .60% .28% .88%
Janus High-Yield Fund(2) .58% .43% 1.01%
Janus Federal Tax-Exempt Fund(2) .14% .54% .68%
Janus Short-Term Bond Fund(2) .09% .58% .67%
Janus Money Market Fund-Investor Shares(2) .10% .50% .60%
Janus Government Money Market Fund-Investor Shares(2) .10% .50% .60%
Janus Tax-Exempt Money Market Fund-Investor Shares(2) .10% .50% .60%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The information in the table above is based on expenses before expense
offset arrangements for the fiscal year ended October 31, 1996. When
applicable, all expenses are stated net of waivers by Janus Capital.
Waivers for the Fixed-Income Funds are first applied against the management
fee and then against other expenses.
(2) Net of waivers. Without such waivers, the Management Fee, Other Expenses
and Total Operating Expenses would have been.75%, .43% and 1.18%,
respectively, for Janus High-Yield Fund; .60%, .54% and 1.14%,
respectively, for Janus Federal Tax-Exempt Fund; .65%, .58% and 1.23%,
respectively, for Janus Short-Term Bond Fund; and .20%, .50% and .70% for
each of the Money Market Funds - Investor Shares. Janus Capital may modify
or terminate the waivers at any time upon 90 days' notice to the Trustees.
EXAMPLE
Assume you invest $1,000, the Funds return 5% annually and each Fund's expense
ratios remain as listed above. The example below shows the operating expenses
that you would indirectly bear as an investor in the Funds.
<TABLE>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income Fund $ 9 $28 $49 $108
Janus High-Yield Fund $10 $32 $56 $124
Janus Federal Tax-Exempt Fund $ 7 $22 $38 $ 85
Janus Short-Term Bond Fund $ 7 $21 $37 $ 83
Janus Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
Janus Government Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
Janus Tax-Exempt Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
3
<PAGE>
FINANCIAL HIGHLIGHTS
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Funds' financial statements since October 1, 1990. Their report is included
in the Funds' Annual Reports, which are incorporated by reference into the SAI.
Expense and income ratios and portfolio turnover rates have been annualized for
periods of less than one year. Total returns for periods of less than one year
are not annualized. A detailed explanation of the Financial Highlights can be
found on page 6.
<TABLE>
Janus Flexible Income Fund
1996 1995 1994 1993 1992(1) 1991(2) 1990(2) 1989(2) 1988(2) 1987(3)
[TO BE FILED
BY AMENDMENT]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $8.96 $10.03 $9.26 $9.09 $8.01 $9.35 $9.99 $9.92 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from
investment operations:
2. Net investment income 0.72 0.74 0.77 0.68 0.68 0.95 0.97 0.92 0.40
3. Net gains or
(losses) on securities
(both realized
and unrealized) 0.59 (0.86) 0.79 0.15 1.29 (1.38) (0.56) 0.09 (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from
investment operations 1.31 (0.12) 1.56 0.83 1.97 (0.43) 0.41 1.01 0.33
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from
net investment income) (0.72) (0.72) (0.77) (0.66) (0.72) (0.91) (0.97) (0.92) (.40)
6. Distributions
(from capital gains) -- (0.23) (0.02) -- (0.17) -- (0.08) (0.02) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (0.72) (0.95) (0.79) (0.66) (0.89) (0.91) (1.05) (0.94) (0.41)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value,
end of period $9.55 $8.96 $10.03 $9.26 $9.09 $8.01 $9.35 $9.99 $9.92
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 15.35% (1.26%) 17.48% 9.43% 25.98% (4.62%) 4.12% 10.70% 3.40%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets,
end of period
(in millions) $580 $377 $473 $205 $72 $14 $18 $10 $4
11. Average net assets
for the period
(in millions) $450 $429 $338 $143 $33 $15 $15 $7 $2
12. Ratio of gross
expenses to
average net assets 0.96% N/A N/A N/A N/A N/A N/A N/A N/A
13. Ratio of net
expenses to
average net assets 0.96% 0.93% 1.00%(4) 1.00%(4) 1.00%(4) 1.00%(4) 1.00%(4) 1.00%(4) 1.00%(4)
14. Ratio of net
investment income
to average net assets 7.91% 7.75% 7.96% 8.98% 9.38% 11.24% 10.00% 9.32% 8.52%
15. Portfolio turnover rate 250% 137% 201% 210% 88% 96% 75% 76% 130%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992.
(2) Fiscal year ended on December 31st of each year.
(3) Fiscal period from July 2, 1987 (inception) to December 31, 1987.
(4) The ratio of net expenses to average net assets was 1.01% in 1993, 1.21% in
1992 and 1.74% in 1991 before waiver of certain Fund expenses. The ratio was 2%
in prior years.
<TABLE>
Janus High-Yield Fund
1996 (1)
[TO BE FILED BY AMENDMENT]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Net asset value, beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income
3. Net gains or (losses) on securities (both realized and unrealized)
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income)
6. Distributions (from capital gains)
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return
10. Net assets, end of period (in millions)
11. Average net assets for the period (in millions) $
12. Ratio of gross expenses to average net assets
13. Ratio of net expenses to average net assets ___%(2)
14. Ratio of net investment income to average net assets
15. Portfolio turnover rate
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) The ratio was ___% before waiver of certain Fund expenses.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
4
<PAGE>
<TABLE>
Janus Janus
Federal Tax-Exempt Fund Short-Term Bond Fund
1996 1995 1994 1993(1) 1996 1995 1994 1993 1992(2)
[TO BE FILED BY [TO BE FILED BY
AMENDMENT] AMENDMENT]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $6.45 $7.30 $7.00 $2.87 $3.02 $2.98 $3.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from
investment operations:
2. Net investment income 0.36 0.36 0.14 0.18 0.18 0.14 0.01
3. Net gains or (losses)
on securities
(both realized
and unrealized) 0.43 (0.83) 0.30 (0.03) (0.15) 0.04 (0.02)
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from
investment operations 0.79 (0.47) 0.44 0.15 0.03 0.18 (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from
net investment income) (0.36) (0.36) (0.14) (0.18) (0.17) (0.14) (0.01)
6. Distributions (from
capital gains) -- (0.02) -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (0.36) (0.38) (0.14) (0.18) (0.18) (0.14) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value,
end of period $6.88 $6.45 $7.30 $2.84 $2.87 $3.02 $2.98
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 12.60% (6.62%) 6.33% 5.55% 1.26% 6.17% (0.19%)
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets,
end of period
(in millions) $33 $26 $27 $48 $54 $76 $3
11. Average net assets
for the period
(in millions) $29 $28 $16 $47 $60 $37 $1
12. Ratio of gross
expenses to average
net assets 0.70% N/A N/A 0.66% N/A N/A N/A
13. Ratio of net
expenses to average
net assets 0.65%(3) 0.65%(3) 0.75%(3,4) 0.65%(5) 0.65%(5) 0.83%(4,5) 1.00%(4)(5)
14. Ratio of net
investment income
to average net assets 5.43% 5.20% 4.58% 6.67% 6.08% 4.86% 3.22%
15. Portfolio turnover rate 164% 160% 124% 337% 346% 372% 7%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 3, 1993 (inception) to October 31, 1993.
(2) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(3) The ratio of net expenses to average net assets was 1.31% in 1995, 1.41% in
1994 and 1.60% in 1993 before waiver of certain Fund expenses.
4) The ratio of net expenses to average net assets reflects the Fund's
previous expense limit of 1.00%. This limit was reduced to .65% as of
August 1, 1993.
(5) The ratio of net expenses to average net assets was 1.23% in 1995, 1.15% in
1994, 1.40% in 1993 and 2.50% in 1992 before waiver of certain Fund
expenses.
<TABLE>
Janus Janus Janus
Money Market Government Money Market Tax-Exempt Money Market
Fund Fund Fund
1996 1995(1) 1996 1995(1) 1996 1995(1)
[TO BE FILED [TO BE FILED [TO BE FILED
Investor Shares BY AMENDMENT] BY AMENDMENT] BY AMENDMENT]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
2. Net investment income .04 .04 .02
3. Net gains or (losses)
on securities
(both realized and
unrealized) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment
operations .04 .04 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net
investment income) (.04) (.04) (.02)
6. Distributions (from
capital gains) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (.04) (.04) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value,
end of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 3.95% 3.90% 2.40%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Average net assets
for the period
(in millions) $ $461 $ $87 $ $57
11. Net assets,
end of period
(in thousands) $643,219 $119,307 $67,479
12. Ratio of expenses
to average net assets 0.60%(2) 0.60%(2) 0.60%(2)
13. Ratio of net
investment income
to average net assets 5.56% 5.40% 3.38%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from February 15, 1995 (inception) to October 31, 1995.
(2) The ratio of expenses to average net assets was 0.70% before voluntary
reduction of fees.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
5
<PAGE>
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights tables. The tables contain important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Funds' Annual
Reports contain additional information about each Fund's performance, including
a comparison to an appropriate securities index. For a copy of your Fund's
Annual Report, call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of a Fund. It is computed
by adding the value of all of a Fund's investments and other assets, subtracting
any liabilities and dividing the result by the number of shares outstanding. The
difference between line 1 and line 8 in the Financial Highlights tables
represents the change in value of a Fund's shares over the fiscal period, but
not its total return. The Money Market Funds' NAV is expected to be $1.00.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that a Fund paid from net investment
income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities a Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that a Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purposes of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. A FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLES.
Ratio of net expenses to average net assets is the total of a Fund's operating
expenses divided by its average net assets for the stated period. Ratio of gross
expenses to average net assets does not reflect reductions in expenses through
the use of brokerage commissions and uninvested cash balances earning interest
with a Fund's custodian.
Ratio of net investment income to average net assets is a Fund's net investment
income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of a fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of a fund's portfolio securities.
The Money Market Funds do not calculate portfolio turnover.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
6
<PAGE>
THE FIXED-INCOME FUNDS IN DETAIL
To help you decide which Fixed-Income Fund is appropriate for you, this section
takes a closer look at the Fixed-Income Funds' investment objectives, policies
and the securities in which they invest. Please carefully review the "Additional
Risk Factors" section of this Prospectus for a more detailed discussion of the
risks associated with certain investment techniques, as well as the risk
spectrum on page 2. Appendix A contains a more detailed description of
investment terms used throughout this Prospectus. You should carefully consider
your own investment goals, time horizon and risk tolerance before investing in a
Fixed-Income Fund.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including each Fixed-Income Fund's investment
objective, are not fundamental and may be changed by the Funds' Trustees without
a shareholder vote. You will be notified of any such changes that are material.
If there is a material change in a Fixed-Income Fund's objective or policies,
you should consider whether that Fixed-Income Fund remains an appropriate
investment for you.
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A SHAREHOLDER'S INVESTMENT HORIZON IS THE AMOUNT OF TIME YOU SHOULD PLAN TO HOLD
YOUR INVESTMENT IN A FUND TO MAXIMIZE THE POTENTIAL FOR REALIZING THE FUND'S
OBJECTIVE.
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THE JANUS FIXED-INCOME FUNDS ARE DESIGNED FOR THOSE INVESTORS WHO PRIMARILY SEEK
CURRENT INCOME.
FIXED-INCOME FUNDS
Investment Objective:
Janus Flexible Income Fund ..................................... Total Return
Others ............................................................... Income
Primary Holdings: ................................. Income-Producing Securities
Shareholder's Investment Horizon:
Janus Short-Term Bond Fund ...................... Short- to Intermediate-Term
Others ........................................... Intermediate- to Long-Term
JANUS FLEXIBLE INCOME FUND
The investment objective of this Fund is to obtain maximum total return,
consistent with preservation of capital. This Fund pursues its objective
primarily through investments in income-producing securities. Total return is
expected to result from a combination of current income and capital
appreciation, although income will normally be the dominant component of total
return. As a fundamental policy, this Fund will invest at least 80% of its
assets in income-producing securities.
Janus Flexible Income Fund may invest in a wide variety of income-producing
securities including corporate bonds and notes, government securities,
indexed/structured securities, preferred stock, income-producing common stocks,
debt securities that are convertible or exchangeable into equity securities, and
debt securities that carry with them the right to acquire equity securities as
evidenced by warrants attached to or acquired with the securities. The Fund may
invest to a lesser degree in common stocks, other equity securities or debt
securities that are not currently paying dividends or interest. The Fund may
purchase securities of any maturity and quality and the average maturity and
quality of its portfolio may vary substantially.
Janus Flexible Income Fund may invest without limit in foreign securities,
including those of corporate and government issuers. The Fund may invest without
limit in high-yield/high-risk securities and may have substantial holdings of
such securities. The Fund may invest without limit in mortgage- and asset-backed
securities and up to 10% in zero coupon, pay-in-kind and step coupon securities.
The risks of foreign securities and high-yield securities are described under
"Additional Risk Factors" on pages 11-12.
The Fund may purchase defaulted debt securities if, in the opinion of Janus
Capital, it appears likely that the issuer may resume interest payments or other
advantageous developments appear likely in the near term. Defaulted debt
securities may be illiquid and subject to the Fund's limit on illiquid
investments.
JANUS HIGH-YIELD FUND
The primary investment objective of this Fund is to obtain high current income.
Capital appreciation is a secondary objective when consistent with its primary
objective. Capital appreciation may result, for example, from an improvement in
the credit standing of an issuer whose securities are held by this Fund or from
a general lowering of interest rates, or both. This Fund pursues its objectives
by investing primarily in high-yield/high-risk fixed-income securities. This
Fund will normally invest at least 65% of its total assets in those securities.
In addition, the Fund may invest in all of the types of securities previously
described under Janus Flexible Income Fund (except this Fund may invest without
limit in zero coupon, pay-in-kind and step coupon securities).
The high yields sought by this Fund are expected to result primarily from
investments in longer-term, lower quality corporate bonds, commonly referred to
as "junk" bonds. This Fund considers lower quality securities to be securities
rated below investment grade by established rating agencies or unrated
securities of comparable quality. Securities rated BB or lower by Standard &
Poor's Ratings Services ("Standard & Poor's") or Ba or lower by Moody's
Investors Service, Inc. ("Moody's") are below investment grade. Lower quality
securities are often considered to be more speculative and involve greater risk
of default or price changes due to changes in interest rates, economic
conditions and the issuer's credit-worthiness. As
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
7
<PAGE>
a result, their market prices tend to fluctuate more than higher quality
securities of comparable maturity. Additional risks of lower quality securities
are described under "Additional Risk Factors" on page 11.
JANUS FEDERAL TAX-EXEMPT FUND
The investment objective of this Fund is to seek as high a level of current
income exempt from federal income tax as is consistent with preservation of
capital. This Fund pursues its objective by investing primarily in municipal
obligations of any maturity whose interest is exempt from federal income tax.
Because of this emphasis, capital appreciation is not a significant investment
consideration. However, to the extent that capital gains are realized, they are
subject to federal income tax. As a fundamental policy, this Fund will normally
invest at least 80% of its net assets in securities whose interest is exempt
from federal income tax, including the federal alternative minimum tax. The Fund
is designed for investors who seek a higher after-tax yield than comparable
investing in taxable securities.
Municipal securities in which the Fund may invest include general obligation
bonds, revenue bonds, industrial development bonds, municipal lease obligations,
certificates of participation (not to exceed 10% of assets), inverse floaters
(not to exceed 5% of assets), instruments with demand features, tender option
bonds and standby commitments.
At times, this Fund may invest more than 25% of its assets in tax-exempt
securities that are related in such a way that an economic, business, or
political development or change affecting one security could similarly affect
the other securities; for example, securities whose issuers are located in the
same state, or securities whose interest is derived from revenues of similar
type projects. The Fund may invest more than 25% of its assets in industrial
development bonds.
Subject to the policies above, the Fund may invest up to 25% of its assets in
mortgage- and asset-backed securities and up to 10% of its assets in zero
coupon, pay-in-kind and step coupon securities. The Fund will invest less than
35% of its net assets in high-yield/high-risk securities.
JANUS SHORT-TERM BOND FUND
The investment objective of this Fund is to seek as high a level of current
income as is consistent with preservation of capital. This Fund pursues its
objective by investing primarily in short- and intermediate-term fixed-income
securities. Under normal circumstances, it is expected that this Fund's
dollar-weighted average portfolio effective maturity will not exceed three
years.
Effective maturity is the weighted average period over which a security's
principal is expected to be paid. It differs from stated maturity in that it
estimates the effect of expected principal prepayments and call provisions.
Targeting effective maturity provides additional flexibility in portfolio
management but, all else being equal, could result in higher volatility than a
fund targeting a stated maturity or maturity range. See the question and answer
section below for a more detailed discussion of the Fund's maturity policy.
Janus Short-Term Bond Fund will normally invest at least 65% of its assets in
debt securities. Subject to this policy and subject to its maturity limits, the
Fund may invest in the types of securities previously described under Janus
Flexible Income Fund except that the Fund will invest less than 35% of its net
assets in high-yield/ high-risk securities and its investments in mortgage- and
asset-backed securities will not exceed 25% of assets.
ALL FIXED-INCOME FUNDS
Each Fund may purchase securities on a when-issued, delayed delivery or forward
commitment basis. In addition, each Fund may use futures, options, swaps and
other derivatives for hedging purposes or for non-hedging purposes such as
seeking to enhance return. See "Additional Risk Factors" on pages 11-12. When
its portfolio manager is unable to locate investment opportunities with
favorable risk/reward characteristics, the cash position of any Fund may
increase and the Fund may have substantial holdings of cash or cash equivalent
short-term obligations. See "General Portfolio Policies" on page 10.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE JANUS FIXED-INCOME FUNDS.
HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
A fundamental risk associated with any fund that invests in fixed-income
securities (e.g., a bond fund) is the risk that the value of the securities it
holds will rise or fall as interest rates change. Generally, a fixed-income
security will increase in value when interest rates fall and decrease in value
when interest rates rise. Longer-term securities are generally more sensitive to
interest rate changes than shorter-term securities, but they generally offer
higher yields to compensate investors for the associated risks. A bond fund's
average-weighted effective maturity and its duration are measures of how the
fund may react to interest rate changes. High-yield bond prices are generally
less directly responsive to interest rate changes than investment grade issues
and may not always follow this pattern.
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WHAT IS MEANT BY A FUND'S "AVERAGE-WEIGHTED EFFECTIVE MATURITY"?
The stated maturity of a bond is the date when the issuer must repay the bond's
entire principal value to an investor, such as a Fund. Some types of bonds, such
as mortgage-backed securities and securities with call provisions, may also have
an "effective maturity" that is shorter than the stated date. With respect to
GNMA securities and other mortgage-backed securities, effective maturity is
likely to be substantially less than the stated maturities of the mortgages in
the underlying pools. With respect to obligations with call provisions,
effective maturity is typically the next
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
8
<PAGE>
call date on which the obligation reasonably may be expected to be called.
Securities without prepayment or call provisions generally have an effective
maturity equal to their stated maturity. Dollar-weighted effective maturity is
calculated by averaging the effective maturity of bonds held by a Fund with each
effective maturity "weighted" according to the percentage of net assets that it
represents.
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WHAT IS MEANT BY A FUND'S "DURATION"?
A bond's duration indicates the time it will take an investor to recoup his
investment. Unlike average maturity, duration reflects both principal and
interest payments. Generally, the higher the coupon rate on a bond, the lower
its duration will be. The duration of a bond fund is calculated by averaging the
duration of bonds held by a fund with each duration "weighted" according to the
percentage of net assets that it represents. Because duration accounts for
interest payments, a Fund's duration is usually shorter than its average
maturity.
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HOW DO THE FIXED-INCOME FUNDS MANAGE INTEREST RATE RISK?
Each Fixed-Income Fund may vary the average-weighted maturity of its portfolio
to reflect its portfolio manager's analysis of interest rate trends and other
factors. A Fund's average-weighted maturity will tend to be shorter when its
portfolio manager expects interest rates to rise and longer when its portfolio
manager expects interest rates to fall. The Funds may also use futures, options
and other derivatives to manage interest rate risk. See "Additional Risk
Factors" on pages 11-12.
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WHAT IS MEANT BY "CREDIT QUALITY"?
Credit quality measures the likelihood that the issuer will meet its obligations
on a bond. One of the fundamental risks associated with all fixed-income funds
is credit risk, which is the risk that an issuer will be unable to make
principal and interest payments when due. U.S. government securities are
generally considered to be the safest type of investment in terms of credit
risk. Municipal obligations generally rank between U.S. government securities
and corporate debt securities in terms of credit safety. Corporate debt
securities, particularly those rated below investment grade, present the highest
credit risk.
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HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized statistical rating agencies such as
Standard & Poor's and Moody's are widely accepted measures of credit risk. The
lower a bond issue is rated by an agency, the more credit risk it is considered
to represent. Lower rated bonds generally pay higher yields to compensate
investors for the associated risk. Please refer to Appendix B for a description
of rating categories.
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WHAT IS A HIGH-YIELD/ HIGH-RISK SECURITY?
A high-yield security (also called a "junk" bond) is a debt security rated below
investment grade by major rating agencies (i.e., BB or lower by Standard &
Poor's or Ba or lower by Moody's) or an unrated bond of similar quality. It
presents greater risk of default (the failure to make timely interest and
principal payments) than higher quality bonds.
- --------------------------------------------------------------------------------
WHAT RISKS DO HIGH-YIELD/HIGH-RISK SECURITIES PRESENT?
High-yield securities are often considered to be more speculative and involve
greater risk of default or price changes due to changes in economic and industry
conditions and the issuer's creditworthiness. Their market prices tend to
fluctuate more than higher quality securities as a result of changes in these
factors.
The default rate of lower quality debt securities is likely to be higher when
issuers have difficulty meeting projected goals or obtaining additional
financing. This could occur during economic recessions or periods of high
interest rates. In addition, there may be a smaller market for lower quality
securities than for higher quality securities, making lower quality securities
more difficult to sell promptly at an acceptable price.
The junk bond market can experience sudden and sharp price swings and thus,
investors should be willing to tolerate significant and sudden changes in the
Fund's NAV.
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WHAT ARE THE TAX ADVANTAGES OF INVESTING IN JANUS FEDERAL TAX-EXEMPT FUND?
Most regular income dividends you receive from Janus Federal Tax-Exempt Fund
generally will not be subject to federal income tax. Additionally, your state
may not tax the portion of this Fund's income derived from obligations issued by
your state (if any). Capital gains distributed by this Fund are taxable to you.
See "Distributions" and "Taxes" on pages 26-27. The higher your income tax level
is, the more you will benefit from tax-exempt investing.
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HOW DO THE FIXED-INCOME FUNDS DIFFER FROM EACH OTHER?
The chart below shows that the Fixed-Income Funds differ substantially in terms
of the type, credit quality and interest rate risk of the securities in which
they invest.
<TABLE>
Primary Interest Rate
Investment Type Credit Risk Risk
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund Corporate Bonds High High
- ------------------------------------------------------------------------------------------------------------------------------------
Janus High-Yield Fund Corporate Bonds Highest Moderate
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Federal Municipal
Tax-Exempt Fund Securities Moderate High
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Short-Term
Bond Fund Corporate Bonds Moderate Low
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
9
<PAGE>
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all of the
Fixed-Income Funds. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if a Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
CASH POSITION
When a Fixed-Income Fund's portfolio manager believes that market conditions are
not favorable for profitable investing or when the portfolio manager is
otherwise unable to locate favorable investment opportunities, the Fund's
investments may be hedged to a greater degree and/or its cash or similar
investments may increase. In other words, the Fixed-Income Funds do not always
stay fully invested in stocks and bonds. Cash or similar investments are a
residual - they represent the assets that remain after a portfolio manager has
committed available assets to desirable investment opportunities. Partly because
the portfolio managers act independently of each other, the cash positions of
the Fixed-Income Funds may vary significantly. Larger hedged positions and/or
larger cash positions may serve as a means of preserving capital in unfavorable
market conditions.
Securities that the Fixed-Income Funds may invest in as means of receiving a
return on idle cash include high-grade commercial paper, certificates of
deposit, repurchase agreements or other short-term debt obligations. The
Fixed-Income Funds may also invest in money market funds (including funds
managed by Janus Capital). Janus Federal Tax-Exempt Fund may invest in such
securities even though they may be federally taxable. When a Fixed-Income Fund's
investments in cash or similar investments increase, a Fund may not participate
in stock or bond market advances or declines to the same extent that it would if
the Fund remained more fully invested in stocks or bonds.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. All of the Fixed-Income Funds
qualify as diversified funds under the 1940 Act. The Fixed-Income Funds are
subject to the following diversification requirements:
o As a fundamental policy, no Fixed-Income Fund may own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of the total assets of each
Fixed-Income Fund, no Fund will purchase a security of any issuer (other
than cash items and U.S. government securities, as defined in the 1940 Act)
if such purchase would cause the Fund's holdings of that issuer to amount
to more than 5% of that Fund's total assets.
o No Fund will invest more than 25% of its total assets in a single issuer
(other than U.S. government securities).
INDUSTRY CONCENTRATION
As a fundamental policy, no Fixed-Income Fund will invest 25% or more of its
total assets in any particular industry (excluding U.S. government securities
and municipal obligations issued by governments or their subdivisions because
the issuers of those securities are not considered a part of any industry).
PORTFOLIO TURNOVER
Each Fixed-Income Fund generally intends to purchase securities for long-term
investment rather than short-term gains. However, short-term transactions may
result from liquidity needs, securities having reached a price or yield
objective, changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time of the initial
investment decision. Changes are made in a Fixed-Income Fund's portfolio
whenever its portfolio manager believes such changes are desirable. Portfolio
turnover rates are generally not a factor in making buy and sell decisions.
To a limited extent, a Fixed-Income Fund may purchase securities in anticipation
of relatively short-term price gains. A Fixed-Income Fund may also sell one
security and simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or securities prices.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups and other transaction costs and may also result in
taxable capital gains. Certain tax rules may restrict the Fixed-Income Funds'
ability to engage in short-term trading if a security has been held for less
than three months.
ILLIQUID INVESTMENTS
Each Fixed-Income Fund may invest up to 15% of its net assets in illiquid
investments, including restricted securities or private placements that are not
deemed to be liquid by Janus Capital. An illiquid investment is a security or
other position that cannot be disposed of quickly in the normal course of
business. Some securities cannot be sold to the U.S. public because of their
terms or because of SEC regulations. Janus Capital will follow guidelines
established by the Funds' Trustees in making liquidity determinations for Rule
144A securities and certain other securities, including privately placed
commercial paper and municipal lease obligations.
BORROWING AND LENDING
Each Fixed-Income Fund may borrow money and lend securities or other assets, as
follows:
o Each Fixed-Income Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.
o Each Fixed-Income Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
10
<PAGE>
o As a fundamental policy, each Fixed-Income Fund may lend securities or
other assets if, as a result, no more than 25% of its total assets would be
lent to other parties.
Each Fixed-Income Fund intends to seek permission from the SEC to borrow money
from or lend money to each other and other funds that permit such transactions
and for which Janus Capital serves as investment adviser. All such borrowing and
lending will be subject to the above percentage limits. There is no assurance
that such permission will be granted.
ADDITIONAL RISK FACTORS
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the United
States, but many foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. A Fixed-Income Fund may buy the local currency when it buys
a foreign currency denominated security and sell the local currency when it
sells the security. As long as a Fund holds a foreign security, its value
will be affected by the value of the local currency relative to the U.S.
dollar. When a Fund sells a foreign security, its value may be worth less
in U.S. dollars even though the security increases in value in its home
country. U.S. dollar denominated securities of foreign issuers may also be
affected by currency risk.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a
company or that the government may impose taxes or limits on the removal of
a Fixed-Income Fund's assets from that country. The Fixed-Income Funds may
invest in emerging market countries. Emerging market countries involve
greater risks such as immature economic structures, national policies
restricting investments by foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers.
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
FUTURES, OPTIONS AND
OTHER DERIVATIVE INSTRUMENTS
Each Fixed-Income Fund may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts ("futures
contracts") and may invest in options on securities, financial indices and
foreign currencies ("options"), forward contracts and interest rate swaps and
swap-related products (collectively "derivative instruments"). The Fixed-Income
Funds intend to use most derivative instruments primarily to hedge the value of
their portfolios against potential adverse movements in securities prices,
foreign currency markets or interest rates. To a limited extent, the
Fixed-Income Funds may also use derivative instruments for non-hedging purposes
such as seeking to increase income or otherwise seeking to enhance return.
Please refer to Appendix A to this Prospectus and the SAI for a more detailed
discussion of these instruments.
The use of derivative instruments exposes the Fixed-Income Funds to additional
investment risks and transaction costs. Risks inherent in the use of derivative
instruments include:
o the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
11
<PAGE>
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than a Fixed-Income
Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); and
o particularly in the case of privately-negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave a
Fixed-Income Fund worse off than if it had not entered into the position.
Although the Fixed-Income Funds believe the use of derivative instruments will
benefit the Funds, a Fund's performance could be worse than if the Fund had not
used such instruments if a portfolio manager's judgement proves incorrect.
When a Fixed-Income Fund invests in a derivative instrument, it may be required
to segregate cash and other liquid assets or certain portfolio securities with
its custodian to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish the Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
HIGH-YIELD/HIGH-RISK SECURITIES
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies (Standard & Poor's and
Moody's). Please refer to Appendix B for a description of rating categories.
The value of lower quality securities generally is more dependent on the ability
of the issuer to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
issuer is highly leveraged. In the event of a default, a Fixed-Income Fund would
experience a reduction of its income and could expect a decline in the market
value of the defaulted securities.
The market for lower quality securities is generally less liquid than the market
for higher quality securities. Adverse publicity and investor perceptions as
well as new or proposed laws may also have a greater negative impact on the
market for lower quality securities. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a market as rated
securities. Sovereign debt of foreign governments is generally rated by country.
Because these ratings do not take into account individual factors relevant to
each issue and may not be updated regularly, Janus Capital may treat such
securities as unrated debt.
The market prices of high-yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically. In addition, zero coupon, pay-in-kind and delayed interest bonds
often do not pay interest until maturity. However, the Fixed-Income Funds must
recognize a computed amount of interest income and pay dividends to shareholders
even though they have received no cash. In some instances, the Fixed-Income
Funds may have to sell securities to have sufficient cash to pay the dividends.
SHORT SALES
Each Fixed-Income Fund may engage in "short sales against the box," which
involves selling a security that a Fund owns (or has the right to obtain
securities equivalent in kind and amount to the securities sold short) for
delivery at a specified date in the future, to hedge against anticipated
declines in the market price of portfolio securities or to defer an unrealized
gain. If the value of the securities sold short increases prior to the scheduled
delivery date, a Fund loses the opportunity to participate in the gain.
SPECIAL SITUATIONS
Each Fixed-Income Fund may invest in "special situations" from time to time. A
special situation arises when, in the opinion of a Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
See Appendix A for risks associated with certain other investments.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
12
<PAGE>
THE MONEY MARKET FUNDS IN DETAIL
INVESTMENT OBJECTIVES
The investment objective of each of Janus Money Market Fund and Janus Government
Money Market Fund is to seek maximum current income to the extent consistent
with stability of capital. The investment objective of Janus Tax-Exempt Money
Market Fund is to seek maximum current income that is exempt from federal income
taxes to the extent consistent with stability of capital. There can be no
assurance that a Fund will achieve its investment objective or that the Shares
will be able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Money Market Funds will invest only in eligible high quality, short-term
money market instruments that present minimal credit risks, as determined by
Janus Capital, pursuant to procedures adopted by the Trustees. Each Money Market
Fund may invest only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the 1940 Act) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Money Market Fund will not invest
more than 5% of its total assets in the securities of any one issuer. A
guarantor is not considered an issuer for the purpose of this limit provided
that the value of all securities held by a Money Market Fund that are issued or
guaranteed by that institution does not exceed 10% of the Money Market Fund's
total assets. Until pending amendments to Rule 2a-7 become effective, up to 25%
of Janus Tax-Exempt Money Market Fund's total assets may be invested without
regard to the foregoing limitations. A Money Market Fund may not invest more
than 25% of its total assets in any one industry, except that this limit does
not apply to U.S. Government Securities, bank obligations or municipal
securities. To ensure adequate liquidity, no Money Market Fund may invest more
than 10% of its net assets in illiquid investments, including repurchase
agreements maturing in more than seven days (unless subject to a demand feature)
and certain time deposits that are subject to early withdrawal penalties and
mature in more than seven days. Because the Money Market Funds are typically
used as a cash management vehicle, they intend to maintain a high degree of
liquidity. Janus Capital determines and monitors the liquidity of portfolio
securities under the supervision of the Trustees.
RATINGS
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Money
Market Fund, except Janus Tax-Exempt Money Market Fund, will invest at least 95%
of its total assets in securities in the highest rating category (as determined
pursuant to Rule 2a-7). Descriptions of the rating categories of Standard &
Poor's, Moody's, and certain other NRSROs are contained in Appendix B. A further
description of the Money Market Funds' investment policies is included in the
Money Market Funds' SAI.
Although each Money Market Fund only invests in high quality money market
instruments, an investment in a Money Market Fund is subject to risk even if all
securities in a Money Market Fund's portfolio are paid in full at maturity. All
money market instruments, including U.S. Government Securities, can change in
value as a result of changes in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund pursues its objective by investing primarily in high
quality debt obligations and obligations of financial institutions. The Fund may
also invest in U.S. Government Securities (as defined below) and municipal
securities, although the Fund expects to invest in such securities to a lesser
degree.
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates' current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by a guarantee of a third
party or solely by the unsecured promise of the issuer to make payments when
due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption. Pursuant to Section 4(2) of the 1933 Act or Rule 144A
adopted under the 1933 Act, however, some of these securities are eligible for
resale to institutional investors, and accordingly, Janus Capital may determine
that a liquid market exists for such a security pursuant to guidelines adopted
by the Trustees.
OBLIGATIONS OF FINANCIAL INSTITUTIONS
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations) having total assets in excess of one billion dollars and
U.S. branches of foreign banks having total assets in excess of ten billion
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
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dollars. The Fund may also invest in Eurodollar and Yankee bank obligations as
discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Fixed time deposits, which
are payable at a stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Fund but may be subject to early
withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
EURODOLLAR OR YANKEE OBLIGATIONS
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. GOVERNMENT SECURITIES
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
MUNICIPAL SECURITIES
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. GOVERNMENT SECURITIES
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the credit-worthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of the value of its net assets in securities whose interest is federally
taxable. Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (See "Taxable Investments").
MUNICIPAL SECURITIES
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial and
commercial facilities. The Fund may also invest in high quality participation
interests in municipal securities. A more detailed description of various types
of municipal securities is contained in Appendix B in the Money Market Funds'
SAI.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
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issuing entity and a security is backed only by the assets and revenues of the
issuing entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development bond backed only
by the assets and revenues of the non-governmental issuer, the non-governmental
issuer will be deemed to be the sole issuer of the bond.
At times, the Fund may invest more than 25% of the value of its total assets in
tax-exempt securities that are related in such a way that an economic, business,
or political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists, that as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
PARTICIPATION INTERESTS
The Money Market Funds may invest in participation interests in any type of
security in which the Money Market Funds may invest. A participation interest
gives a Money Market Fund an undivided interest in the underlying securities in
the proportion that the Money Market Fund's participation interest bears to the
total principal amount of the underlying securities. Participation interests
usually carry a demand feature, as described below, backed by a letter of credit
or guarantee of the institution that issued the interests permitting the holder
to tender them back to the institution.
DEMAND FEATURES
The Money Market Funds may invest in securities that are subject to puts and
stand-by commitments ("demand features"). Demand features give the Money Market
Funds the right to resell securities at specified periods prior to their
maturity dates to the seller or to some third party at an agreed-upon price or
yield. Securities with demand features may involve certain expenses and risks,
including the inability of the issuer of the instrument to pay for the
securities at the time the instrument is exercised, non-marketability of the
instrument and differences between the maturity of the underlying security and
the maturity of the instrument. Securities may cost more with demand features
than without them. Demand features can serve three purposes: to shorten the
maturity of a variable or floating rate security, to enhance the instrument's
credit quality and to provide a source of liquidity. Demand features are often
issued by third party financial institutions, generally domestic and foreign
banks. Accordingly, the credit quality and liquidity of the Money Market Funds'
investments may be dependent in part on the credit quality of the banks
supporting the Money Market Funds' investments. This will result in exposure to
risks pertaining to the banking industry, including the foreign banking
industry. Brokerage firms and insurance companies also provide certain liquidity
and credit support. A substantial portion of the Janus Tax-Exempt Money Market
Fund's portfolio in particular may consist of securities backed by banks and
other financial institutions, and thus adverse changes in the credit quality of
these institutions could cause losses to the Fund and affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The securities in which the Money Market Funds invest may have variable or
floating rates of interest. These securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with reference
to some interest rate index or market interest rate. Securities with ultimate
maturities of greater than 397 days may be purchased only pursuant to Rule 2a-7.
Under that Rule, only those long-term instruments that have demand features
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
15
<PAGE>
which comply with certain requirements and certain variable rate U.S. Government
Securities may be purchased. Similar to fixed rate debt instruments, variable
and floating rate instruments are subject to changes in value based on changes
in market interest rates or changes in the issuer's or guarantor's
creditworthiness. The rate of interest on securities purchased by a Money Market
Fund may be tied to short-term Treasury or other government securities or
indices on securities that are permissible investments of the Money Market
Funds, as well as other money market rates of interest. The Money Market Funds
will not purchase securities whose values are tied to interest rates or indicies
that are not appropriate for the duration and volatility standards of a money
market fund.
MORTGAGE- AND
ASSET-BACKED SECURITIES
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
REPURCHASE AGREEMENTS
Each Money Market Fund may seek additional income by entering into
collateralized repurchase agreements. Repurchase agreements are transactions in
which a Money Market Fund purchases securities and simultaneously commits to
resell those securities to the seller at an agreed-upon price on an agreed-upon
future date. The resale price reflects a market rate of interest that is not
related to the coupon rate or maturity of the purchased securities. If the
seller of the securities underlying a repurchase agreement fails to pay the
agreed resale price on the agreed delivery date, a Money Market Fund may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
REVERSE REPURCHASE AGREEMENTS
Each Money Market Fund may enter into reverse repurchase agreements. Reverse
repurchase agreements are transactions in which a Money Market Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. This technique will be
used only for temporary or emergency purposes, such as meeting redemption
requests, or to earn additional income on portfolio securities.
DELAYED DELIVERY SECURITIES
Each Money Market Fund may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
from the time of purchase but no interest on the securities accrues to a Money
Market Fund until delivery and payment for the securities take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Forward commitments will be entered into only when
a Money Market Fund has the intention of taking possession of the securities,
but a Money Market Fund may sell the securities before the settlement date if
deemed advisable.
BORROWING AND LENDING
Each Money Market Fund may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets. A Money Market Fund may not mortgage or
pledge securities except to secure permitted borrowings. As a fundamental
policy, a Money Market Fund will not lend securities or other assets if, as a
result, more than 25% of its total assets would be lent to other parties;
however, the Money Market Funds do not currently intend to engage in securities
lending. Each Money Market Fund intends to seek permission from the SEC to
borrow money from or lend money to other funds that permit such transactions and
are advised by Janus Capital. There is no assurance that such permission will be
granted.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
16
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SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also explains in detail the wide
array of services and features you can establish on your account. These services
and features may be modified or discontinued without shareholder approval or
prior notice.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00
a.m.-10:00 p.m., and Saturday: 10:00 a.m.-7:00 p.m., New York time.
- --------------------------------------------------------------------------------
MINIMUM INVESTMENTS*
To open a new account ............................. $2,500
To open a new retirement or
UGMA/UTMA account ................................. $500
To open a new account with
an Automatic Investment Program ................... $500**
To add to any type of an account .................... $100
**The Funds reserve the right to change the amount of these minimums from time
to time or to waive them in whole or in part for certain types of accounts.
**There is a $100 minimum for each subsequent investment.
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TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds for the first time, you will need to establish
an account. You can establish the following types of accounts by completing the
New Account Application. To request an application, call 1-800-525-3713.
o Individual or Joint Ownership. Individual accounts are owned by one person.
Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA or
UTMA account, you must include the minor's Social Security number on the
application.
o Trust. An established trust can open an account. The names of each trustee,
the name of the trust and the date of the trust agreement must be included
on the application.
o Business Accounts. Corporations and partnerships may also open an account.
The application must be signed by an authorized officer of the corporation
or a general partner of the partnership.
RETIREMENT ACCOUNTS
If you are eligible, you may set up your account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from a retirement plan are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 59 1/2.
Investors Fiduciary Trust Company serves as custodian for the retirement plans
offered by the Funds. There is an annual $12 fee per account to maintain your
retirement account. The maximum annual fee is $24 per taxpayer identification
number. You may pay the fee by check or have it automatically deducted from your
account (usually in December).
The following plans require a special application. For an application and more
details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account: An IRA allows individuals under age 70 1/2
with earned income to contribute up to the lesser of $2,000 or 100% of
compensation annually. Please refer to the Janus Funds IRA booklet for
complete information regarding IRAs.
o Simplified Employee Pension Plan ("SEP"): This plan allows small business
owners (including sole proprietors) to make tax-deductible contributions
for themselves and any eligible employee(s). A SEP requires an IRA (a
SEP-IRA) to be set up for each SEP.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their employees
and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or other
qualifying, tax-exempt organizations may be eligible to participate in a
Section 403(b)(7) Plan.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
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HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to provide your
Social Security or taxpayer identification number on the application. Make your
check payable to Janus Funds. Send all items to one of the following addresses:
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
For Overnight Carrier
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the next NAV
calculated after your order is received and accepted. Please note the following:
o Cash, credit cards, third party checks and credit card checks will not be
accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on U.S. banks and made payable to Janus Funds.
o If a check does not clear your bank, the Funds reserve the right to cancel
the purchase.
o If the Funds are unable to debit your predesignated bank account on the day
of purchase, they may make additional attempts or cancel the purchase.
o The Funds reserve the right to reject any specific purchase request.
If your purchase is cancelled, you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the cancelled purchase. The Funds (or their agents) have the
authority to redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
Once you have opened your Janus account, the minimum amount for an additional
investment is $100. You may add to your account at any time through any of the
following options:
BY MAIL
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and conveniently
through an electronic transfer of money. When you make an additional purchase by
telephone, Janus will automatically debit your predesignated bank account for
the desired amount. To establish the telephone purchase option on your new
account, complete the "Telephone Purchase of Shares Option" section on the
application and attach a "voided" check or deposit slip from your bank account.
If your account is already established, call 1-800-525-3713 to request the
appropriate form. This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account to your Janus
account. Call 1-800-525-3713 to receive wiring instructions.
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o AUTOMATIC MONTHLY
INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will be
electronically transferred from your bank account to your Fund account. To
establish this option, complete the "Automatic Monthly Investment Program"
section on the application and attach a "voided" check or deposit slip from
your bank account. If your Fund account is already established, call
1-800-525-3713 to request the appropriate form.
o PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you may have
all or a portion of your paycheck ($100 minimum) invested directly into
your Fund account. To obtain information on establishing this option, call
1-800-525-3713.
o SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money ($100 minimum)
you would like automatically exchanged from one Janus account to another on
any day of the month. For more information on how to establish this option,
call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into any
other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions for written
requests on page 20.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
18
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BY TELEPHONE
All accounts are automatically eligible for the telephone exchange option. To
exchange shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus Electronic
Telephone Service (JETS(R)) line at 1-800-525-6125.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of each non-Money Market Fund during a
calendar year (exclusive of Systematic Exchanges) free of charge. There is
currently no limit on exchanges out of the Money Market Funds.
o Exchanges between accounts will be accepted only if the registrations are
identical.
o If the shares you are exchanging are held in certificate form, you must
return the certificate to your Fund prior to making any exchanges.
o Be sure that you read the prospectus for the Fund into which you are
exchanging.
o The Funds reserve the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Funds may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are believed to be detrimental to the
Funds.
o An exchange represents the sale of shares from one Fund and the purchase of
shares of another Fund, which may produce a taxable gain or loss in a
non-tax deferred account. Because the Money Market Funds seek to maintain a
stable net asset value per share, it is not anticipated that a sale of
Shares of the Money Market Funds will produce a taxable gain or loss.
QUICK ADDRESS AND TELEPHONE REFERENCE
MAILING ADDRESS
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
JANUS INTERNET ADDRESS
http://www.JanusFunds.com
JANUS INVESTOR SERVICES 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and
Fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS QUOTELINE(R) 1-800-525-0024
For automated daily quotes on Fund share prices, yields and total returns.
JANUS LITERATURE LINE 1-800-525-8983
To request a prospectus, shareholder reports or marketing materials.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. If the
shares are held in certificate form, the certificate must be returned with or
before your redemption request. Your transaction will be processed at the next
NAV calculated after your order is received and accepted.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests on page 20.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing. This option enables you
to redeem up to $100,000 daily from your account by simply calling
1-800-525-3713 by 4:00 p.m. New York time.
SYSTEMATIC REDEMPTION OPTION
Systematic Redemption Options allow you to redeem a specific dollar amount from
your account on a regular basis. For more information or to request the
appropriate form, please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o By Check
Redemption proceeds will be sent to the shareholder(s) of record at the
address of record within seven days after receipt of a valid redemption
request.
o ELECTRONIC TRANSFER
If you have established this option, your redemption proceeds can be
electronically transferred to your predesignated bank account on the second
bank business day after receipt of your redemption request. To establish
this option, call 1-800-525-3713. There is no fee for this option.
o BY WIRE
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on the
next bank business day after receipt of your redemption request. There is
no limitation on redemptions by wire; however, there is an $8 fee for each
wire and your bank may charge an additional fee to receive the wire. If you
would like to establish this option on an existing account, please call
1-800-525-3713 to request the appropriate form. Wire redemptions are not
available for retirement accounts.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
19
<PAGE>
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FIXED-INCOME FUNDS MAY DELAY THE
PAYMENT OF YOUR REDEMPTION PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE
TO ALLOW THE PURCHASE TO CLEAR. Unless you provide alternate instructions, your
proceeds will be invested in Janus Money Market Fund - Investor Shares during
the 15 day hold period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your request should
be sent to one of the addresses listed on page 18 and must include the following
information: o the name of the Fund(s) o the account number(s) o the amount of
money or number of shares being redeemed o the name(s) on the account o the
signature(s) of all registered account owners o your daytime telephone number
SIGNATURE REQUIREMENTS
BASED ON ACCOUNT TYPE
o Individual, Joint Tenants, Tenants in Common: Written instructions must be
signed by each shareholder, exactly as the names appear in the account
registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in his/
her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed by an
authorized individual in his/her capacity as it appears in the account
registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified copy
of the corporate resolution authorizing the signer to act must accompany
the request.
o Trust: Written instructions must be signed by the trustee(s). If the name
of the current trustee(s) does not appear in the account registration, a
certificate of incumbency dated within 60 days must also be submitted.
o IRA: Written instructions must be signed by the account owner. If you do
not want federal income tax withheld from your redemption, you must state
that you elect not to have such withholding apply. In addition, your
instructions must state whether the distribution is normal (after age 59
1/2) or premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to the 10%
additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. A Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by the
close of the regular trading session of the NYSE. The Money Market Funds reserve
the right to require purchase, redemption and exchange requests and payments
prior to this time on days when the bond market closes before the NYSE.
For the Fixed-Income Funds, securities are valued at market value or, if a
market quotation is not readily available, at their fair value determined in
good faith under procedures established by and under the supervision of the
Trustees. Short-term instruments maturing within 60 days are valued at amortized
cost, which approximates market value.
For the Money Market Funds, portfolio securities are valued at their amortized
cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity (or such other date as
permitted by Rule 2a-7) of any discount or premium. If fluctuating interest
rates cause the market value of a Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Trustees will
consider whether any action, such as adjusting the Share's NAV to reflect
current market conditions, should be initiated to prevent any material dilutive
effect on shareholders.
See your Fund's SAI for more detailed information.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable: o The redemption exceeds
$100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been changed within
10 days of the redemption request.
o You would like the check mailed to an address other than the address of
record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. FOR
MORE INFORMATION PERTAINING TO SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A
SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers, and member
firms of a national securities exchange. Call your financial institution to see
if they have the ability to guarantee a signature. A SIGNATURE GUARANTEE MAY NOT
BE PROVIDED BY A NOTARY PUBLIC.
If you live outside the United States, a foreign bank properly authorized to do
business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
20
<PAGE>
SHAREHOLDER SERVICES
AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE
SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder Money Market Fund checks, to exchange your shares or
to purchase shares. JETS can be accessed by calling 1-800-525-6125. Calls on
JETS are limited to seven minutes.
JANUS WEB SITE
Janus maintains a Web site located at http://www.JanusFunds.com. You can access
information such as your account balance and the Funds' NAVs through the Web
site. In addition, you may request and/ or download a Janus funds prospectus.
CHECK WRITING PRIVILEGE
Check writing privileges are available for all three Money Market Funds.
Checkbooks will be issued to shareholders who have completed a Signature Draft
Card, which is sent in the new account welcome package or by calling
1-800-525-3713. (There is no checkwriting privilege for retirement accounts.)
Your checkbook will be mailed approximately 10 days after the check writing
privilege is requested. Checks may be written for any amount over but not less
than $250 per check. Purchases made by check or the Automatic Monthly Investment
Program may not be redeemed by a redemption check until the 15-day hold period
has passed. All checks written on the account must be signed by all account
holders unless otherwise specified on the original application or the subsequent
Signature Draft Card. The Funds reserve the right to terminate or modify the
check writing privilege at any time.
ACCOUNT MINIMUMS
Minimum account sizes are noted on page 17. An account established on or before
February 18, 1996 is required to meet the minimum balances in effect when the
account was established ($1,000 for regular accounts and $250 for retirement and
UGMA/UTMA accounts). An active Automatic Monthly Investment (AMI) on any such
account exempted it from any minimum initial investment requirement and
continues to do so. In addition, an active AMI on these accounts may continue at
$50 per month, provided there is no interruption in the AMI program. All other
subsequent investments must meet the $100 required minimum.
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 minimum balance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
on page 17 or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. This policy does not
apply to accounts that fall below the minimums solely as a result of market
value fluctuations. It is expected that accounts will be valued in September.
The $10 fee will be assessed on the second Friday of September of each year. You
will receive notice before we charge the $10 fee or close your account so that
you may increase your account balance to the required minimum.
TRANSACTIONS THROUGH
PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other employee benefit plans (a
"Processing Organization"). Processing Organizations may charge you a fee for
this service and may require different minimum initial and subsequent
investments than the Funds. The Processing Organization may also impose other
charges or restrictions different from those applicable to shareholders who
invest in the Funds directly. The Processing Organization, rather than its
customers, may be the shareholder of record of your shares. The Funds are not
responsible for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations may receive
compensation from Janus Capital or its affiliates and certain Processing
Organizations may receive compensation from the Funds for shareholder
recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Funds for
any penalty that the IRS may impose.
SHARE CERTIFICATES
(FIXED-INCOME FUNDS ONLY)
Most shareholders choose not to hold their shares in certificate form because
account transactions such as exchanges and redemptions cannot be completed until
the certificate has been returned to the Funds. The Fixed-Income Funds will
issue share certificates upon written request only. Share certificates will not
be issued until the shares have been held for at least 15 days and will not be
issued for accounts that do not meet the minimum investment
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
21
<PAGE>
requirements. Share certificates cannot be issued for retirement accounts. In
addition, if the certificate is lost, there may be a replacement charge.
Share certificates are not available for the Money Market Funds in order to
maintain the general liquidity that is representative of a money market fund and
to help facilitate transactions in shareholder accounts.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise believed to be detrimental
to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and their agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Funds by telephone during periods of unusual
market activity. If you are unable to reach a representative by telephone,
please consider sending written instructions, stopping by a Service Center or,
in the case of purchases and exchanges, calling
the JETS line.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or send a written
request signed by all account owners. Include the name of your Fund(s), the
account number(s), the name(s) on the account and both the old and new
addresses. Certain options may be suspended for
10 days following an address change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a new
account. In some cases, legal documentation may be required. For more
information, call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will receive
quarterly confirmations of all transactions and dividends. The Funds will send
you a confirmation statement after every non-systematic transaction. Tax
information regarding the tax status of income dividends and capital gains
distributions will be mailed to shareholders on or before January 31st of each
year. Account tax information will also be sent to the IRS.
Financial reports for the Funds, which include a list of the Funds' portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such reports will be mailed to all accounts in the
same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
22
<PAGE>
MANAGEMENT OF THE FUNDS
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objectives and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to each of the Funds and is responsible for the day-to-day
management of the investment portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to certain series of the Trust
in 1970 and currently serves as investment adviser to all of the Janus funds, as
well as adviser or subadviser to other mutual funds and individual, corporate,
charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of the
outstanding voting stock of Janus Capital, most of which it acquired in 1984.
KCSI is a publicly traded holding company whose primary subsidiaries are engaged
in transportation, information processing and financial services. Thomas H.
Bailey, President and Chairman of the Board of Janus Capital, owns approximately
12% of its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning each
Fund's investments.
Janus Capital also furnishes certain administrative, compliance and accounting
services for the Funds, and may be reimbursed by the Fixed-Income Funds for its
costs in providing those services. In addition, Janus Capital employees serve as
officers of the Trust and Janus Capital provides office space for the Funds and
pays the salaries, fees and expenses of all Fund officers and those Trustees who
are affiliated with Janus Capital. The Funds pay all of their expenses not
assumed by Janus Capital, including auditing fees and independent Trustees' fees
and expenses. (Janus Capital provides these services to the Money Market Funds
pursuant to an Administration Agreement as described below.)
ADMINISTRATOR
Each of the Money Market Funds has entered into an Administration Agreement with
Janus Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Money Market Funds, pays the costs of
printing reports and prospectuses for existing shareholders, provides office
space for the Money Market Funds and pays the salaries, fees and expenses of
Fund officers and of those Trustees who are affiliated with Janus Capital.
Administrative services provided by Janus Capital under the Agreements include
custody and transfer agency services.
INVESTMENT PERSONNEL
Sharon S. Pichler is Executive Vice President and portfolio manager of Janus
Money Market Fund, Janus Government Money Market Fund and Janus Tax-Exempt Money
Market Fund, each of which she has managed since inception. She holds a Bachelor
of Arts in Economics from Michigan State University and a Master of Business
Administration from the University of Texas at San Antonio. Ms. Pichler is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Sandy R. Rufenacht is Executive Vice President and portfolio manager of Janus
Short-Term Bond Fund, which he has managed since January 1996. Since June 1996
he has served as Executive Vice President and co-manager of Janus High-Yield
Fund and Janus Flexible Income Fund. Mr. Rufenacht joined Janus Capital in 1990
and gained experience as a trader and research analyst before assuming
management of these funds. He holds a Bachelor of Arts in Business from the
University of Northern Colorado.
- --------------------------------------------------------------------------------
Ronald V. Speaker is Executive Vice President and co-manager of Janus Flexible
Income Fund, which he has managed since December 1991 and Janus High-Yield Fund
which he has managed since inception. He previously managed Janus Short-Term
Bond Fund and Janus Federal Tax-Exempt Fund from their inceptions through
December 1995. He holds a Bachelor of Arts in Finance from the University of
Colorado and is a Chartered Financial Analyst.
- --------------------------------------------------------------------------------
Darrell W. Watters is Executive Vice President and portfolio manager of Janus
Federal Tax-Exempt Fund, which he has managed since January 1996. Mr. Watters
joined Janus Capital in 1993 as a municipal bond trader. He holds a Bachelor of
Arts in Economics from Colorado State University.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
23
<PAGE>
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
FIXED-INCOME FUNDS
Each Fund pays Janus Capital a management fee which is accrued daily and paid
monthly. The advisory agreement with each Fund spells out the management fee and
other expenses that the Funds must pay. Each of the Funds is subject to the
following management fee schedule (expressed as an annual rate):
<TABLE>
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund First $300 Million .65 1.00*
Over $300 Million .55
- ------------------------------------------------------------------------------------------------------------------------------------
Janus High-Yield Fund First $300 Million .75 1.00*
Over $300 Million .65
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund First $300 Million .60 .65*
Over $300 Million .55
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Short-Term Bond Fund First $300 Million .65 .65*
Over $300 Million .55
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Janus Capital will waive certain fees and expenses to the extent that
total expenses exceed the stated limits. Janus Capital may modify or
terminate such waivers at any time upon 90 days' notice to the Trustees.
You will be notified of any changes in these limits.
Each Fixed-Income Fund incurs expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing fees,
printing and mailing costs of sending reports and other information to existing
shareholders, and independent Trustees' fees and expenses. The Annual Operating
Expenses table on page 3 lists the management fees and total operating expenses
of each Fund for the most recent fiscal year.
MONEY MARKET FUNDS
Each of the Money Market Funds has agreed to compensate Janus Capital for its
advisory services by the monthly payment of a fee at the annual rate of 0.20% of
the value of the average daily net assets of each Money Market Fund. However,
Janus Capital has agreed to waive a portion of its fee and accordingly, the
advisory fee of each Money Market Fund will be calculated at the annual rate of
0.10% of the value of each Money Market Fund's average daily net assets. Janus
Capital may modify or terminate such waiver at any time upon 90 days' notice to
the Trustees. You will be notified of any change in this limit.
Janus Capital is paid a fee, calculated daily and paid monthly, at the annual
rate of 0.50% of the value of the average daily net assets of each Money Market
Fund attributable to Shares for services rendered pursuant to the Administration
Agreements.
PERSONAL INVESTING
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Funds or Janus
Capital's other advisory clients. See the SAI for more detailed information.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for a Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for a Fund i) to the Fund or ii) to other persons
on behalf of the Fund for services provided to the Fund for which it would be
obligated to pay. Janus Capital may also consider sales of shares of a Fund as a
factor in the selection of broker-dealers. The Funds' Trustees have authorized
Janus Capital to place portfolio transactions on an agency basis with a
broker-dealer affiliated with Janus Capital. When transactions for a Fund are
effected with that broker-dealer, the commissions payable by the Fund are
credited against certain Fund operating expenses serving to reduce those
expenses. The SAI further explains the selection of broker-dealers.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
24
<PAGE>
OTHER SERVICE PROVIDERS
The following parties provide the Funds with other services.
CUSTODIAN FOR THE
FIXED-INCOME FUNDS
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
CUSTODIAN FOR THE
MONEY MARKET FUNDS
United Missouri Bank, N.A.
P.O. Box 419226
Kansas City, Missouri 64141-6226
TRANSFER AGENT
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
DISTRIBUTOR
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206-4928
Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital.
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
As of the date of this Prospectus, the Trust offers 19 separate series. Each of
the Money Market Funds currently offer three classes of shares. This prospectus
only describes the Investor Shares of the Money Market Funds. Institutional
Shares of the Money Market Funds are available only to investors meeting the
minimum investment requirement of $250,000. Service Shares of the Money Market
Funds are available only to banks and other financial institutions that meet
minimum investment requirements in connection with trust accounts, cash
management programs and similar programs. Because the expenses of each class may
differ, the performance of each class is expected to differ. If you would like
additional information, please call 1-800-525-3713. This Prospectus describes
seven series of the Trust; the other series are offered by separate
prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific Fund or for the Trust as a whole for
purposes such as electing or removing Trustees, terminating or reorganizing the
Trust, changing fundamental policies, or for any other purpose requiring a
shareholder vote under the 1940 Act. Separate votes are taken by each Fund only
if a matter affects or requires the vote of only that Fund or that Fund's
interest in the matter differs from the interest of other portfolios of the
Trust. As a shareholder, you are entitled to one vote for each share that you
own.
SIZE OF FUNDS
The Funds have no present plans to limit their size. However, any Fund may
discontinue sales of its shares if management believes that continued sales may
adversely affect the Fund's ability to achieve its investment objective. If
sales of a Fund are discontinued, it is expected that existing shareholders of
that Fund would be permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions, absent highly unusual circumstances.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve any Fund's investment objective by
investing all of that Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to that Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the existing Fund. The Trust's shareholders of record on April 30,
1992, and the initial shareholder(s) of all Funds created after April 30, 1992,
have voted to vest authority to use this investment structure in the sole
discretion of the Trustees. No further approval of the shareholders of the Funds
is required. You will receive at least 30 days' prior notice of any such
investment. Such investment would be made only if the Trustees determine it to
be in the best interests of a Fund and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although management of the Funds believe the Trustees will not
approve an arrangement that is likely to result in higher costs, no assurance is
given that costs will be materially reduced if this option is implemented.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
25
<PAGE>
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
TO AVOID TAXATION, THE INTERNAL REVENUE CODE REQUIRES EACH FUND TO DISTRIBUTE
NET INCOME AND ANY NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. A FUND'S
INCOME FROM DIVIDENDS AND INTEREST AND ANY NET REALIZED SHORT-TERM CAPITAL GAINS
ARE PAID TO SHAREHOLDERS AS ORDINARY INCOME DIVIDENDS. NET REALIZED LONG-TERM
GAINS, IF ANY, ARE PAID TO SHAREHOLDERS AS CAPITAL GAINS DISTRIBUTIONS.
- --------------------------------------------------------------------------------
THE FIXED-INCOME FUNDS
While distributions for the Fixed-Income Funds are paid monthly, the income
dividends for these Funds are declared daily, Saturdays, Sundays and holidays
included, and are generally paid as of the last business day of each month. If a
month begins on a Saturday, Sunday or holiday, dividends for those days are paid
at the end of the preceding month. An investor will begin accruing income
dividends the day after a purchase is effective. If shares are redeemed, the
investor will receive all dividends accrued through the day of the redemption.
Capital gains, if any, are declared and paid in December.
HOW DISTRIBUTIONS
AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of a distribution
of a Fund, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in each Fund's daily NAV. The
share price of a Fund drops by the amount of the distribution, net of any
subsequent market fluctuations. As an example, assume that on December 31, Janus
Flexible Income Fund declared a dividend in the amount of $0.25 per share. If
Janus Flexible Income Fund's share price was $10.00 on December 30, the Fund's
share price on December 31 would be $9.75, barring market fluctuations.
Shareholders should be aware that distributions from a taxable mutual fund are a
taxable event and not a value-enhancing event. Capital gains distributions, if
any, for Janus Federal Tax-Exempt Fund will be taxable.
"BUYING A DIVIDEND"
If you purchase shares of a Fund just before the distribution, you will pay the
full price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is referred to as "buying a dividend." In the above
example, if you bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as a dividend and
your shares would now be worth $9.75 per share. Unless your account is set up as
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the dividends.
THE MONEY MARKET FUNDS
For the Money Market Funds, dividends representing substantially all of the net
investment income and any net realized gains on sales of securities are declared
daily, Saturdays, Sundays and holidays included, and distributed on the last
business day of each month. If a month begins on a Saturday, Sunday or holiday,
dividends for those days are declared at the end of the preceding month and
distributed on the first business day of the month.
Shares of the Money Market Funds purchased by wire on a day on which the Funds
calculate their net asset value and the Federal Reserve Banks are open ("bank
business day") will receive that day's dividend if the purchase is effected
prior to 3:00 p.m. (New York time) for the Janus Money Market and Janus
Government Money Market Funds and 12:00 p.m. (New York time) for Janus
Tax-Exempt Money Market Fund. Otherwise, such Shares begin to accrue dividends
on the following bank business day. Orders for purchase accompanied by a check
or other negotiable bank draft will be accepted and effected as of 4:00 p.m.
(New York time) on the business day of receipt and such Shares will begin to
accrue dividends on the first bank business day following receipt of the order.
Redemption orders effected on any particular day will generally receive
dividends declared through the day of redemption. However, redemptions made by
wire which are received prior to 3:00 p.m. (New York time) for the Janus Money
Market and Janus Government Money Market Funds and 12:00 p.m. (New York time)
for Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that
day. Proceeds of such a redemption will normally be sent to the predesignated
account on that day, and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. (12:00 p.m. for
Janus Tax-Exempt Money Market Fund) will be processed on that day and receive
that day's dividend, but will not be wired until the following bank business
day.
The Funds reserve the right to require purchase and redemption requests and
payments prior to these times on days when the bond market closes before 4:00
p.m.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want to
receive your distributions. You may change your distribution option at any time
by writing or calling 1-800-525-3713. The Funds offer the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital
gains distributions in additional shares. This option is assigned
automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest And Cash Option (the Fixed-Income Funds only). You may receive
either your income dividends or capital gains distributions in cash and
reinvest the other in additional shares.
4. Redirect Option. You may direct your dividends or capital gains
distributions (dividends in the case of the Money Market Funds) to purchase
shares of another Janus fund.
The Funds reserve the right to reinvest into your account undeliverable and
uncashed dividend and distribution checks that remain outstanding for six months
in shares of the applicable Fund at the NAV next computed after the check is
cancelled. Subsequent distributions may also be reinvested.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
26
<PAGE>
- --------------------------------------------------------------------------------
TAXES
As with any investment, you should consider the tax consequences of investing in
the Funds. The following discussion does not apply to tax-deferred retirement
accounts, nor is it a complete analysis of the federal tax implications of
investing in the Funds. You may wish to consult your own tax adviser.
Additionally, state or local taxes may apply to your investment, depending upon
the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Janus Federal Tax-Exempt Fund and Janus Tax-Exempt Money Market Fund anticipate
that substantially all their income dividends will be exempt from federal income
tax, although either Fund may occasionally earn income on taxable investments
and dividends attributable to that income would be taxable. In addition,
interest from certain private activity bonds is a preference item for purposes
of the alternative minimum tax, and to the extent a Fund earns such income,
shareholders subject to the alternative minimum tax must include that income as
a preference item. Distributions from capital gains, if any, are subject to
federal tax. The Funds will advise shareholders of the percentage of dividends,
if any, subject to any federal tax.
Dividends and distributions for all of the other Funds are subject to federal
income tax, regardless of whether the distribution is made in cash or reinvested
in additional shares of a Fund. In certain states, a portion of the dividends
and distributions (depending on the sources of a Fund's income) may be exempt
from state and local taxes. Information regarding the tax status of income
dividends and capital gains distributions will be mailed to shareholders on or
before January 31st of each year.
TAXATION OF THE FUNDS
Dividends, interest and some capital gains received by a Fixed-Income Fund on
foreign securities may be subject to tax withholding or other foreign taxes. Any
foreign taxes paid by a Fund will be treated as an expense to the particular
Fund or passed through to shareholders as a foreign tax credit, depending on
particular facts and circumstances. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes.
The Funds do not expect to pay any federal income or excise taxes because they
intend to meet certain requirements of the Internal Revenue Code. It is
important that the Funds meet these requirements so that any earnings on your
investment will not be taxed twice.
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used to
describe a Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Funds measure performance in terms of yield.
Yield shows the rate of income a Fund earns on its investments as a percentage
of the Fund's share price. It is calculated by dividing a Fund's net investment
income for a 30-day period (7-day period for the Money Market Funds) by the
average number of shares entitled to receive dividends and dividing the result
by the Fund's NAV per share at the end of such period. Yield does not include
changes in NAV.
Yields are calculated according to standardized SEC formulas and may not equal
the income on an investor's account. Yield is usually quoted on an annualized
basis. An annualized yield represents the amount you would earn if you remained
in a Fund for a year and that Fund continued to have the same yield for the
entire year.
Effective yield is similar to yield in that it is calculated over the same time
frame, but instead the net investment income is compounded and then annualized.
Due to the compounding effect, the effective yield will normally be higher than
the yield.
Tax-equivalent yield or total return (for Janus Federal Tax-Exempt Fund and
Janus Tax-Exempt Money Market Fund) shows the before-tax yield or total return
that an investor would have to earn to equal the Funds' tax-free yield or total
return. It is calculated by dividing a Fund's tax-free yield or total return by
the result of one minus a stated federal tax rate.
Cumulative total return represents the actual rate of return on an investment
for a specified period. The Financial Highlights tables beginning on page 4 show
total return for a single fiscal period. Cumulative total return is generally
quoted for more than one year (e.g., the life of the Fund). A cumulative total
return does not show interim fluctuations in the value of an investment.
Average annual total return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual returns for more
than one year tend to smooth out variations in a Fund's return and are not the
same as actual annual results.
THE FUNDS IMPOSE NO SALES OR OTHER CHARGES THAT WOULD AFFECT YIELD OR TOTAL
RETURN COMPUTATIONS. FUND PERFORMANCE FIGURES ARE BASED UPON HISTORICAL RESULTS
AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET
ASSET VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
27
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fixed-Income Funds may invest. The
Fixed-Income Funds may invest in these instruments to the extent permitted by
their investment objectives and policies. The Fixed-Income Funds are not limited
by this discussion and may invest in any other types of instruments not
precluded by the policies discussed elsewhere in this Prospectus. Please refer
to the SAI for a more detailed discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Certificates of Participation ("COPs") are certificates representing an interest
in a pool of securities. Holders are entitled to a proportionate interest in the
underlying securities. Municipal lease obligations are often sold in the form of
COPs. See "Municipal lease obligations" below.
Commercial paper is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Funds may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
Common stock represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
Convertible securities are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
Fixed-income securities are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk securities are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard & Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Industrial development bonds are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a private
issuer and may involve greater credit risk. See "Municipal securities" below.
Mortgage- and asset-backed securities are shares in a pool of mortgages or other
debt. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying mortgages or
other debt may be refinanced or paid off prior to their maturities during
periods of declining interest rates. In that case, a portfolio manager may have
to reinvest the proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Municipal lease obligations are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not normally
associated with general obligation bonds and other revenue bonds. For example,
their interest may become taxable if the lease is assigned and the holders may
incur losses if the issuer does not appropriate funds for the lease payments on
an annual basis, which may result in termination of the lease and possible
default.
Municipal securities are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the full
faith and credit (i.e., the borrowing and taxing power) of a municipality or a
revenue obligation paid out of the revenues of a designated project, facility or
revenue source.
Passive foreign investment companies (PFICs) are any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Funds to
recognize income associated with a PFIC prior to the actual receipt of any such
income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
Preferred stock is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
28
<PAGE>
Repurchase agreements involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, a Fund will bear the risk of market value fluctuations until the security
can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique may be used to provide cash to satisfy unusually high redemption
requests, to earn additional income on portfolio securities, such as Treasury
bills or notes, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by a Fund from a dealer that give
the Fund the option to sell a security to the dealer at a specified price.
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from the face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
Strip bonds are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
Tender option bonds are generally long-term securities that are coupled with an
option to tender the securities to a bank, broker-dealer or other financial
institution at periodic intervals and receive the face value of the bond. This
type of security is commonly used as a means of enhancing the security's
liquidity.
U.S. government securities include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
Warrants are securities, typically issued with preferred stock or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery at some time in the future -
i.e., beyond normal settlement. The Funds do not earn interest on such
securities until settlement and bear the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
II. FUTURES, OPTIONS
AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Funds may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. They may also enter into forward contracts to
purchase or sell securities or other financial indices.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
29
<PAGE>
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Funds may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Funds may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e. their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/ structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. A Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Inverse floaters are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For example,
upon reset the interest rate payable on a security may go down when the
underlying index has risen. Certain inverse floaters may have an interest rate
reset mechanism that multiplies the effects of change in the underlying index.
Such mechanism may increase the volatility of the security's market value.
Options are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Funds may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
30
<PAGE>
APPENDIX B
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of the major
credit ratings agencies. Credit ratings evaluate only the safety of principal
and interest payments, not the market value risk of lower quality securities.
Credit rating agencies may fail to change credit ratings to reflect subsequent
events on a timely basis. Although the adviser considers security ratings when
making investment decisions, it also performs its own investment analysis and
does not rely solely on the ratings assigned by credit agencies.
STANDARD & POOR'S RATINGS SERVICES
Bond Rating Explanation
- --------------------------------------------------------------------------------
Investment Grade
AAA Highest rating; extremely strong capacity to pay
principal and interest.
AA High quality; very strong capacity to pay
principal and interest.
A Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects
of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, Predominantly speculative with respect to the
CCC, CC, C issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of
speculation. Quality and protective
characteristics outweighed by large uncertainties
or major risk exposure to adverse conditions.
D In default.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC.
Investment Grade
Aaa Highest quality, smallest degree of investment
risk.
Aa High quality; together with Aaa bonds, they
compose the high-grade bond group.
A Upper-medium grade obligations; many favorable
investment attributes.
Baa Medium-grade obligations; neither highly protected
nor poorly secured. Interest and principal appear
adequate for the present but certain protective
elements may be lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba More uncertain, with speculative elements.
Protection of interest and principal payments not
well safeguarded during good and bad times.
B Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other
contract terms over time.
Caa Poor standing, may be in default; elements of
danger with respect to principal or interest
payments.
Ca Speculative in a high degree; could be in default
or have other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever
attaining investment standing.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless the
portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended October 31, 1996, the percentage of securities
holdings for Janus Flexible Income Fund and Janus High-Yield Fund by rating
category based upon a weighted monthly average was:
<TABLE>
Bonds - S&P Rating Janus Flexible Income Fund Bonds - S&P Rating Janus High-Yield Fund
[TO BE FILED BY AMENDMENT] [TO BE FILED BY AMENDMENT]
<S> <C> <C> <C>
AAA % AAA %
AA % AA %
A % A %
BBB % BBB %
BB % BB %
B % B %
CCC % CCC %
CC % CC %
C % C %
Preferred Stock % Preferred Stock %
Cash and Options % Cash and Options %
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100% TOTAL 100%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
No other Fund held 5% or more of its assets in bonds rated below investment
grade for the fiscal period ended October 31, 1996.
JANUS INCOME FUNDS COMBINED PROSPECTUS February 17, 1997
31
<PAGE>
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<PAGE>
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<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
THE FUND AT A GLANCE
Brief description of the Fund 1
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
The Fund's annual operating expenses 1
Financial Highlights-a summary
of financial data 2
- --------------------------------------------------------------------------------
THE FUND IN DETAIL
Investment Objective 3
General Portfolio Policies 4
Additional Risk Factors 5
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
An Explanation of
Performance Terms 6
- --------------------------------------------------------------------------------
SHAREHOLDER'S MANUAL
Types of Account Ownership 7
How to Open Your Janus Account 8
How to Purchase Shares 8
How to Exchange Shares 9
How to Redeem Shares 9
Shareholder Services
and Account Policies 10
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
Investment Adviser and
Portfolio Manager 12
Management Expenses 12
Portfolio Transactions 13
Other Service Providers 13
Other Information 13
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
Distributions 14
Taxes 14
- --------------------------------------------------------------------------------
APPENDIX A
Glossary of Investment Terms 15
[LOGO]
JANUS VENTURE FUND
100 Fillmore Street
Denver, CO 80206-4928
1-800-525-3713
http://www.JanusFunds.com
February 17, 1997
Janus Venture Fund (the "Fund") is a no-load, diversified mutual fund that seeks
capital appreciation. The Fund normally invests at least 50% of its equity
assets in securities of small-sized companies.
THE FUND HAS DISCONTINUED PUBLIC SALES OF ITS SHARES TO NEW INVESTORS, BUT
SHAREHOLDERS WHO MAINTAIN OPEN FUND ACCOUNTS ARE STILL ABLE TO MAKE INVESTMENTS
IN THE FUND AND REINVEST ANY DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. CURRENT
SHAREHOLDERS MAY ALSO OPEN ADDITIONAL FUND ACCOUNTS UNDER CERTAIN CONDITIONS. IF
A FUND ACCOUNT IS CLOSED, HOWEVER, ADDITIONAL INVESTMENTS IN THE FUND MAY NOT BE
POSSIBLE. For complete information on how to purchase, exchange and sell shares,
please see the Shareholder's Manual beginning on page 7. The Fund may resume
sale of its shares to new investors in the future, although it has no current
intention to do so.
The Fund is a portfolio of Janus Investment Fund (the "Trust"), which is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Fund that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Fund is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated February 17, 1997, is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Fund at the address or phone number listed above. The SEC maintains a
Web site located at http://www.sec.gov. that contains the SAI, material
incorporated by reference, and other information regarding the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
<PAGE>
THE FUND
AT A GLANCE
INVESTMENT OBJECTIVE:
The Fund seeks capital appreciation.
PRIMARY HOLDINGS:
A diversified fund that invests primarily in common stocks with an emphasis on
securities of small-sized companies.
SHAREHOLDER'S
INVESTMENT HORIZON:
The Fund is designed for long-term investors who seek capital appreciation and
who can tolerate the greater risks associated with investments in foreign and
domestic common stocks. The Fund is not designed as a short-term trading vehicle
and should not be relied upon for short-term financial needs.
FUND ADVISER:
Janus Capital Corporation ("Janus Capital") serves as the Fund's investment
adviser. Janus Capital has been in the investment advisory business for over 26
years and currently manages approximately $45 billion in assets.
FUND MANAGER:
James P. Goff
FUND INCEPTION:
April 30, 1985
EXPENSE INFORMATION
The tables and example below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Fund. Shareholder Transaction Expenses are fees charged directly
to your individual account when you buy, sell or exchange shares. The table
below shows that you pay no such fees. Annual Fund Operating Expenses are paid
out of the Fund's assets and include fees for portfolio management, maintenance
of shareholder accounts, shareholder servicing, accounting and other services.
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fees* None
Exchange fee None
* There is an $8 service fee for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fee .68%
Other Expenses .21%
- --------------------------------------------------------------------------------
Total Fund Operating Expenses .89%
- --------------------------------------------------------------------------------
(1) The information in the table above is based on expenses before expense
offset arrangements for the fiscal year ended October 31, 1996.
EXAMPLE
- --------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Assume you invest $1,000, the Fund
returns 5% annually and its expense
ratio remains as listed above.
This example shows the operating
expenses that you would indirectly
bear as an investor in the Fund. $9 $28 $49 $110
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
1
<PAGE>
FINANCIAL HIGHLIGHTS
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Fund's financial statements since October 1, 1990. Their report is included
in the Fund's Annual Report, which is incorporated by reference into the SAI.
Expense and income ratios and portfolio turnover rates have been annualized for
periods of less than one year. Total returns for periods of less than one year
are not annualized.
<TABLE>
1996
[TO BE FILED BY
AMENDMENT] 1995 1994 1993 1992(1) 1992(2) 1991(2) 1990(2) 1989(2) 1988(2) 1987(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value,
beginning of period $52.86 $53.25 $47.74 $45.96 $45.05 $37.90 $36.97 $28.11 $34.63 $30.78
- ------------------------------------------------------------------------------------------------------------------------------------
Income from
investment operations:
2. Net investment income 0.05 0.11 0.66 0.17 0.36 0.44 0.28 0.33 1.50 0.12
3. Net gains or (losses)
on securities
(both realized and unrealized) 9.49 4.40 6.72 1.61 4.23 7.71 3.44 10.05 (3.70) 6.25
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment
operations 9.54 4.51 7.38 1.78 4.59 8.15 3.72 10.38 (2.20) 6.37
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net
investment income) (0.03) (0.53) (1.16) -- (0.25) (0.11) (0.44) (1.52) (0.15) (0.19)
6. Distributions (from
capital gains) (2.84) (4.37) (0.71) -- (3.43) (0.89) (2.35) -- (4.17) (2.33)
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (2.87) (4.90) (1.87) -- (3.68) (1.00) (2.79) (1.52) (4.32) (2.52)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value,
end of period $59.53 $52.86 $53.25 $47.74 $45.96 $45.05 $37.90 $36.97 $28.11 $34.63
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 19.24% 9.23% 15.76% 3.87% 9.90% 22.28% 10.46% 38.73% (4.56%) 22.76%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period
(in millions) $1,753 $1,550 $1,837 $1,545 $1,510 $893 $256 $58 $34 $46
11. Average net assets
for the period
(in millions) $1,613 $1,563 $1,793 $1,496 $1,382 $427 $127 $40 $35 $37
12. Ratio of gross expenses
to average net assets 0.92% N/A N/A N/A N/A N/A N/A N/A N/A N/A
13. Ratio of net expenses
to average net assets 0.91% 0.96% 0.97% 1.07% 1.00% 1.04% 1.16% 1.28% 1.41% 1.44%
14. Ratio of net investment income
to average net assets 0.29% 0.27% 1.29% 1.32% 1.20% 2.10% 1.24% 1.10% 5.11% 0.40%
15. Portfolio turnover rate 113% 114% 139% 124% 166% 167% 184% 219% 299% 250%
16. Average commission rate $ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
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</TABLE>
(1) Fiscal period from August 1, 1992 to October 31, 1992.
(2) The Fund's prior fiscal year ended on July 31st of each year.
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
This section is designed to help you better understand the information
summarized in the Financial Highlights table. The table contains important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Fund's Annual
Report contains additional information about the Fund's performance, including a
comparison to an appropriate securities index. For a copy of the Annual Report,
call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of the Fund. It is
computed by adding the value of all of the Fund's investments and other assets,
subtracting any liabilities and dividing the result by the number of shares
outstanding. The difference between line 1 and line 8 in the Financial
Highlights table represents the change in value of a Fund share over the fiscal
period, but not its total return.
Net investment income is the per share amount of dividends and interest income
earned on securities held by the Fund, less Fund expenses. Dividends (from net
investment income) is the per share amount that the Fund paid from net
investment income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities the Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) is the
per share amount that the Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purpose of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. THE FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLE.
Ratio of net expenses to average net assets is the total of the Fund's operating
expenses divided by its average net assets for the stated period. Ratio of gross
expenses to average net assets does not reflect reductions in expenses through
the use of brokerage commissions and uninvested cash balances earning interest
with the Fund's custodian.
Ratio of net investment income to average net assets is the Fund's net
investment income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of the Fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of the Fund's portfolio securities.
Average commission rate is the total of the Fund's agency commissions paid on
equity securities trades divided by the number of shares purchased.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
2
<PAGE>
THE FUND IN DETAIL
This section takes a closer look at the Fund's investment objective, policies
and the securities in which it invests. Please carefully review the "Additional
Risk Factors" section of this Prospectus for a more detailed discussion of the
risks associated with certain investment techniques and refer to Appendix A for
a more detailed description of investment terms used throughout this Prospectus.
You should carefully consider your own investment goals, time horizon and risk
tolerance before investing in the Fund.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including the Fund's investment objective, are not
fundamental and may be changed by the Fund's Trustees without a shareholder
vote. You will be notified of any such changes that are material. If there is a
material change in the Fund's objective or policies, you should consider whether
the Fund remains an appropriate investment for you.
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund pursues
its objective by normally investing at least 50% of its equity assets in
securities issued by small-sized companies. Small-sized companies are those who
have market capitalizations of less than $1 billion or annual gross revenues of
less than $500 million. Companies whose capitalization or revenues fall outside
these ranges after the Fund's initial purchase continue to be considered
small-sized for the purposes of this policy. Subject to the above policy, the
Fund may also invest in larger companies.
TYPES OF INVESTMENTS
The Fund invests primarily in common stocks with an emphasis on securities of
small-sized companies. The Fund may also invest in larger companies with strong
growth potential or relatively well-known and large companies with potential for
capital appreciation. The Fund may invest to a lesser degree in other types of
securities including preferred stocks, warrants, convertible securities and debt
securities. The Fund may invest up to 25% of its assets in mortgage- and
asset-backed securities, up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities, and without limit in indexed/structured securities. The
Fund will invest less than 35% of its assets in high-yield/high-risk securities.
The Fund may also purchase high-grade commercial paper; certificates of deposit;
and repurchase agreements. Such securities may offer growth potential because of
anticipated changes in interest rates, credit standing, currency relationships
or other factors. The Fund may also invest in short-term debt securities,
including money market funds managed by Janus Capital, as a means of receiving a
return on idle cash.
When the Fund's portfolio manager believes that market conditions are not
favorable for profitable investing or when the portfolio manager is otherwise
unable to locate favorable investment opportunities, the Fund's investments may
be hedged to a greater degree and/or its cash or similar investments may
increase. In other words, the Fund does not always stay fully invested in stocks
and bonds. Cash or similar investments are a residual - they represent the
assets that remain after the portfolio manager has committed available assets to
desirable investment opportunities. When the Fund's cash position increases, it
might not participate in stock market advances or declines to the extent that it
would if it remained more fully invested in common stocks.
The Fund may invest without limit in foreign equity and debt securities. The
Fund may invest directly in foreign securities denominated in a foreign currency
and not publicly traded in the United States. Other ways of investing in foreign
securities include depositary receipts or shares, and passive foreign investment
companies. The Fund may use options, futures and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to enhance return.
See "Additional Risk Factors" on page 5. The Fund may purchase securities on a
when-issued, delayed delivery or forward commitment basis.
THE FOLLOWING QUESTIONS ARE DESIGNED TO HELP YOU BETTER UNDERSTAND AN INVESTMENT
IN THE FUND.
HOW ARE COMMON STOCKS SELECTED?
The Fund may invest substantially all of its assets in common stocks to the
extent its portfolio manager believes that the relevant market environment
favors profitable investing in those securities. The portfolio manager generally
takes a "bottom up" approach to building the portfolio. In other words, he seeks
to identify individual companies with earnings growth potential that may not be
recognized by the market at large. Although themes may emerge in the Fund,
securities are generally selected without regard to any defined industry sector
or other similarly defined selection procedure. Realization of income is not a
significant investment consideration. Any income realized on the Fund's
investments will be incidental to its objective.
- --------------------------------------------------------------------------------
ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio manager seeks companies that meet his selection
criteria regardless of country of organization or place of principal business
activity. Foreign securities are generally selected on a stock-by-stock basis
without regard to any defined allocation among countries or geographic regions.
However, certain factors such as expected levels of inflation, government
policies influencing business conditions, the outlook for currency
relationships, and prospects for economic growth among countries, regions or
geographic areas may warrant greater consideration in selecting foreign
securities. See "Additional Risk Factors" on page 5.
- --------------------------------------------------------------------------------
WHAT IS THE MAIN RISK OF INVESTING IN A COMMON STOCK FUND?
The fundamental risk associated with any common stock fund is the risk that the
value of the stocks it holds might decrease. Stock values may fluctuate in
response to the activities of an individual company or in response to general
market and/or economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term risks than other
investment choices. Smaller or newer issuers, such as those in which the Fund
invests, are more likely to realize more substantial growth as well as suffer
more significant losses than larger or more established issuers. Investments in
such companies can be both more volatile and more speculative. See "Additional
Risk Factors" on page 5.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
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<PAGE>
WHAT IS MEANT BY "MARKET CAPITALIZATION"?
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. As noted
previously, market capitalization and annual gross revenues are important
investment criteria for the Fund.
- --------------------------------------------------------------------------------
HOW DOES THE FUND TRY TO REDUCE RISK?
Diversification of the Fund's assets reduces the effect of any single holding on
its overall portfolio value. The Fund may also use futures, options and other
derivative instruments to protect its portfolio from movements in securities
prices and interest rates. The Fund may use a variety of currency hedging
techniques, including forward currency contracts, to manage exchange rate risk.
See "Additional Risk Factors" on page 5. To the extent that the Fund holds a
larger cash position, it might not participate in market declines to the same
extent as if it had remained more fully invested in common stocks.
GENERAL PORTFOLIO POLICIES
In investing its portfolio assets, the Fund will follow the general policies
listed below. The percentage limitations included in these policies and
elsewhere in this Prospectus apply only at the time of purchase of the security.
For example, if the Fund exceeds a limit as a result of market fluctuations or
the sale of other securities, it will not be required to dispose of any
securities.
DIVERSIFICATION
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. The Fund qualifies as a
diversified fund under the 1940 Act and is subject to the following
requirements:
o As a fundamental policy, the Fund may not own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of its total assets, the Fund
will not purchase a security of any issuer (other than cash items and U.S.
government securities, as defined in the 1940 Act) if such purchase would
cause the Fund's holdings of that issuer to amount to more than 5% of the
Fund's total assets.
o The Fund will invest no more than 25% of its total assets in a single
issuer (other than U.S. government securities).
INDUSTRY CONCENTRATION
As a fundamental policy, the Fund will not invest 25% or more of its total
assets in any particular industry (excluding U.S. government securities).
PORTFOLIO TURNOVER
The Fund generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective, changes
in interest rates or the credit standing of an issuer, or by reason of economic
or other developments not foreseen at the time of the investment decision.
Changes are made in the Fund's portfolio whenever its portfolio manager believes
such changes are desirable. Portfolio turnover rates are generally not a factor
in making buy and sell decisions.
To a limited extent, the Fund may purchase securities in anticipation of
relatively short-term price gains. The Fund may also sell one security and
simultaneously purchase the same or a comparable security to take advantage of
short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. Certain tax rules may restrict the Fund's ability to engage in short-term
trading if the security has been held for less than three months.
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments,
including restricted securities or private placements that are not deemed to be
liquid by Janus Capital. An illiquid investment is a security or other position
that cannot be disposed of quickly in the normal course of business. Some
securities cannot be sold to the U.S. public because of their terms or because
of SEC regulations. Janus Capital will follow guidelines established by the
Fund's Trustees in making liquidity determinations for Rule 144A securities and
certain other securities, including privately placed commercial paper.
BORROWING AND LENDING
The Fund may borrow money and lend securities or other assets, as follows:
o The Fund may borrow money for temporary or emergency purposes in amounts up
to 25% of its total assets.
o The Fund may mortgage or pledge securities as security for borrowings in
amounts up to 15% of its net assets.
o As a fundamental policy, the Fund may lend securities or other assets if,
as a result, no more than 25% of its total assets would be lent to other
parties.
The Fund intends to seek permission from the SEC to borrow money from or lend
money to other funds that permit such transactions and for which Janus Capital
serves as investment adviser. All such borrowing and lending will be subject to
the above limits. There is no assurance that such permission will be granted.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
4
<PAGE>
ADDITIONAL RISK FACTORS
INVESTMENTS IN SMALLER COMPANIES
SMALLER OR NEWER COMPANIES MAY SUFFER MORE SIGNIFICANT LOSSES AS WELL AS REALIZE
MORE SUBSTANTIAL GROWTH THAN LARGER OR MORE ESTABLISHED ISSUERS.
The Fund may invest in companies that have relatively small revenues, have a
small share of the market for their products or services, or have limited
geographic or product markets. Small companies may lack depth of management,
they may be unable to generate internally funds necessary for growth or
potential development or to generate such funds through external financing on
favorable terms, or they may be developing or marketing new products or services
for which markets are not yet established and may never become established. In
addition, such companies may be insignificant factors in their industries and
may become subject to intense competition from larger companies. Securities of
small companies held by the Fund may have limited trading markets that may be
subject to wide price fluctuations. Investments in such companies tend to be
more volatile and somewhat more speculative.
SPECIAL SITUATIONS
The Fund may invest in "special situations" from time to time. A special
situation arises when, in the opinion of the Fund's portfolio manager, the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development with respect to that issuer. Developments creating a
special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
FOREIGN SECURITIES
INVESTMENTS IN FOREIGN SECURITIES, INCLUDING THOSE OF FOREIGN GOVERNMENTS,
INVOLVE GREATER RISKS THAN INVESTING IN COMPARABLE DOMESTIC SECURITIES.
Securities of some foreign companies and governments may be traded in the United
States, but most foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. The Fund may buy the local currency when it buys a foreign
currency denominated security and sell the local currency when it sells the
security. As long as the Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar.
When the Fund sells a foreign security, its value may be worth less in U.S.
dollars even though the security increases in value in its home country.
U.S. dollar denominated securities of foreign issuers may also be affected
by currency risk.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a
company or that the government may impose taxes or limits on the removal of
the Fund's assets from that country. The Fund may invest in emerging market
countries. Emerging market countries involve greater risks such as immature
economic structures, national policies restricting investments by
foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers.
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
FUTURES, OPTIONS AND
OTHER DERIVATIVE INSTRUMENTS
The Fund may enter into futures contracts on securities, financial indices and
foreign currencies and options on such contracts ("futures contracts") and may
invest in options on securities, financial indices and foreign currencies
("options"), forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Fund intends to use most derivative
instruments primarily to hedge the value of its portfolio against potential
adverse movements in securities prices, foreign currency markets or interest
rates. To a limited extent, the Fund may also use derivative instruments for
non-hedging purposes such as seeking to increase the Fund's income or otherwise
seeking to enhance return. Please refer to Appendix A to this Prospectus and the
SAI for a more detailed discussion of these instruments.
The use of derivative instruments exposes the Fund to additional investment
risks and transaction costs. Risks inherent in the use of derivative instruments
include:
JANUS VENTURE FUND PROSPECTUS February 17, 1997
5
<PAGE>
o the risk that interest rates, securities prices and currency markets will
not move in the direction that the portfolio manager anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's
initial investment in that instrument (in some cases, the potential loss is
unlimited); and
o particularly in the case of privately negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave
the Fund worse off than if it had not entered into the position.
Although the Fund believes the use of derivative instruments will benefit the
Fund, the Fund's performance could be worse than if the Fund had not used such
instruments if the portfolio manager's judgement proves incorrect.
When the Fund invests in a derivative instrument, it may be required to
segregate cash and other liquid assets or certain portfolio securities with its
custodian to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish the Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
HIGH-YIELD/HIGH-RISK SECURITIES
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies such as Standard & Poor's
Ratings Services ("Standard & Poor's") and Moody's Investors Service, Inc.
("Moody's").
The value of lower quality securities generally is more dependent on the ability
of the company to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. In addition, companies issuing high-yield securities may be
more vulnerable to real or perceived economic changes, political changes or
other developments adverse to the company and lower quality securities may have
less liquid markets than higher quality securities. Investments in companies
issuing high-yield securities are considered to be more speculative than higher
quality investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. The market for lower quality securities is generally less liquid
than the market for higher quality bonds. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a greater negative
impact on the market for lower quality securities.
Please refer to the SAI for a description of bond rating categories.
SHORT SALES
The Fund may each engage in "short sales against the box," which involves
selling a security that the Fund owns (or has the right to obtain securities
equivalent in kind and amount to the securities sold short) for delivery at a
specified date in the future, to hedge against anticipated declines in the
market price of portfolio securities or to defer an unrealized gain. If the
value of the securities sold short increases prior to the scheduled delivery
date, the Fund loses the opportunity to participate in the gain.
See Appendix A for risks associated with certain other investments.
- --------------------------------------------------------------------------------
PERFORMANCE TERMS
This section will help you understand various terms that are commonly used to
describe the Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Fund generally measures performance in terms of total
return.
Cumulative total return represents the actual rate of return on an investment
for a specified period. The Financial Highlights table shows total return for a
single fiscal period. Cumulative total return is generally quoted for more than
one year (e.g., the life of the Fund). A cumulative total return does not show
interim fluctuations in the value of an investment.
Average annual total return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual returns for more
than one year tend to smooth out variations in the Fund's return and are not the
same as actual annual results.
THE FUND IMPOSES NO SALES OR OTHER CHARGES THAT WOULD AFFECT TOTAL RETURN
COMPUTATIONS. FUND PERFORMANCE FIGURES ARE BASED UPON HISTORICAL RESULTS AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. INVESTMENT RETURNS AND NET ASSET
VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
6
<PAGE>
SHAREHOLDER'S MANUAL
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also explains in detail the wide
array of services and features you can establish on your account. These services
and features may be modified or discontinued without shareholder approval or
prior notice.
- --------------------------------------------------------------------------------
Although the Fund has discontinued public sales of its shares to new investors,
shareholders who maintain open accounts will be able to continue to purchase
shares and reinvest any dividends and capital gains distributions in additional
shares. In addition, the Fund will continue to accept new accounts which are
opened under taxpayer identification numbers that are identical to those for
existing Fund accounts.
Once a Fund account is closed, it may not be reopened. An account may be
considered closed and subject to redemption by the Fund in the circumstances
discussed under "Involuntary Redemptions" on page 11.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00
a.m.-10:00 p.m., and Saturday: 10:00 a.m.-7:00 p.m., New York time.
- --------------------------------------------------------------------------------
MINIMUM INVESTMENTS*
To open a new account ............................ $2,500
To open a new retirement or
UGMA/UTMA account ................................ $500
To open a new account with
an Automatic Investment Program .................. $500**
To add to any type of an account ................... $100
*The Fund reserves the right to change the amount of these minimums from time
to time or to waive them in whole or in part for certain types of accounts.
**There is a $100 minimum for each subsequent investment.
- --------------------------------------------------------------------------------
TYPES OF ACCOUNT OWNERSHIP
As discussed above, the Fund will accept new accounts opened under taxpayer
identification numbers identical to those on current Fund accounts. You can
establish the following types of accounts by completing the New Account
Application. To request an application, call 1-800-525-3713.
o Individual or Joint Ownership. Individual accounts are owned by one person.
Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/ UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA or
UTMA account, you must include the minor's Social Security number on the
application.
o Trust. An established trust can open an account. The names of each trustee,
the name of the trust and the date of the trust agreement must be included
on the application.
o Business Accounts. Corporations and partnerships may also open an account.
The application must be signed by an authorized officer of the corporation
or a general partner of the partnership.
RETIREMENT ACCOUNTS
If you are eligible, you may set up your account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from retirement plans are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 59 1/2.
Investors Fiduciary Trust Company serves as custodian for the retirement plans
offered by the Fund. There is an annual $12 fee per account to maintain your
retirement account. The maximum annual fee is $24 per taxpayer identification
number. You may pay the fee by check or have it automatically deducted from your
account (usually in December).
The following plans require a special application. For an application and more
details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account: An IRA allows individuals under the age of
70 1/2 with earned income to contribute up to the lesser of $2,000 or 100%
of compensation annually. Please refer to the Janus Funds IRA booklet for
complete information regarding IRAs.
o Simplified Employee Pension Plan ("SEP"): This plan allows small business
owners (including sole proprietors) to make tax-deductible contributions
for themselves and any eligible employee(s). A SEP requires an IRA (a
SEP-IRA) to be set up for each SEP participant.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their employees
and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or other
qualifying, tax-exempt organizations may be eligible to participate in a
Section 403(b)(7) Plan.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
7
<PAGE>
HOW TO OPEN YOUR JANUS ACCOUNT
If you are a current Fund shareholder and want to open another Fund account,
complete and sign the appropriate application. Please be sure to provide your
Social Security or taxpayer identification number on the application. Make your
check payable to Janus Funds. Send all items to one of following addresses:
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
For Overnight Carrier
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
INVESTOR SERVICE CENTERS
Janus Funds offers two Investor Service Centers for those individuals who would
like to conduct their investing in person. Our representatives will be happy to
assist you at either of the following locations:
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the next NAV
calculated after your order is received and accepted. Please note the following:
o Cash, credit cards, third party checks and credit card checks will not be
accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on a U.S. bank and made payable to Janus Funds.
o If a check does not clear your bank, the Fund reserves the right to cancel
the purchase.
o If the Fund is unable to debit your predesignated bank account on the day
of purchase, it may make additional attempts or cancel the purchase.
o The Fund reserves the right to reject any specific purchase request.
If your purchase is cancelled you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the cancelled purchase. The Fund (or its agents) has the
authority to redeem shares in your account(s) to cover any such losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR AN ADDITIONAL
INVESTMENT IS $100. You may add to your account at any time through any of the
following options:
BY MAIL
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and conveniently
through an electronic transfer of money. When you make an additional purchase by
telephone, Janus will automatically debit your predesignated bank account for
the desired amount. To establish the telephone purchase option on your new
account, complete the "Telephone Purchase of Shares Option" section on the
application and attach a "voided" check or deposit slip from your bank account.
If your account is already established, call 1-800-525-3713 to request the
appropriate form. This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account to your Janus
account. Call 1-800-525-3713 to receive wiring instructions.
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o AUTOMATIC MONTHLY
INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will be
electronically transferred from your bank account to your Fund account. To
establish this option, complete the "Automatic Monthly Investment Program"
section on the application and attach a "voided" check or deposit slip from
your bank account. If your Fund account is already established, call
1-800-525-3713 to request the appropriate form.
o PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you may have
all or a portion of your paycheck ($100 minimum) invested directly into
your Fund account. To obtain information on establishing this option, call
1-800-525-3713.
o SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money ($100 minimum)
you would like automatically exchanged from one Janus account to another on
any day of the month. For more information on how to establish this option,
call 1-800-525-3713.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
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HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into any
other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions for written
requests on page 10.
BY TELEPHONE
All accounts are automatically eligible for the telephone exchange option. To
exchange shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus Electronic
Telephone Service (JETS(R)) line at 1-800-525-6125.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
EXCHANGE POLICIES
o Except for Systematic Exchanges, new accounts established by exchange must
meet the $2,500 minimum, or be for the total account value if less than
$2,500.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of the Fund during a calendar year
(exclusive of Systematic Exchanges) free of charge.
o Exchanges between accounts will be accepted only if the registrations are
identical.
o If the shares you are exchanging are held in certificate form, you must
return the certificate to the Fund prior to making any exchanges.
o Be sure to read the prospectus for the fund into which you are exchanging.
o The Fund reserves the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Fund may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are believed to be detrimental to the
Fund.
o An exchange represents the sale of shares from one fund and the purchase of
shares of another fund, which may produce a taxable gain or loss in a
non-tax deferred account.
QUICK ADDRESS AND TELEPHONE REFERENCE
MAILING ADDRESS
Janus Funds
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus Funds
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811
JANUS INTERNET ADDRESS
http://www.JanusFunds.com
JANUS INVESTOR SERVICES 1-800-525-3713
To speak to a service representative
JETS(R) 1-800-525-6125
For 24-hour access to account and
Fund information.
TDD 1-800-525-0056
A telecommunications device for our hearing-
and speech-impaired shareholders.
JANUS QUOTELINE(R) 1-800-525-0024
For automated daily quotes on Fund share
prices, yields and total returns.
JANUS LITERATURE LINE 1-800-525-8983
To request a prospectus, shareholder
reports or marketing materials.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares. REMEMBER
THAT THE FUND IS CLOSED TO NEW INVESTORS AND IF A TOTAL REDEMPTION IS MADE
ADDITIONAL INVESTMENTS IN YOUR FUND ACCOUNT MIGHT NOT BE POSSIBLE.
If the shares are held in certificate form, the certificate must be returned
with or before your redemption request. Your transaction will be processed at
the next NAV calculated after your order is received and accepted.
IN WRITING
To request a redemption in writing, please follow the instructions for written
requests noted on page 10.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing. This option enables you
to redeem up to $100,000 daily from your account by simply calling
1-800-525-3713 by 4:00 p.m. New York time.
SYSTEMATIC REDEMPTION OPTION
Systematic Redemption Options allow you to redeem a specific dollar amount from
your Fund account on a regular basis. For more information or to request the
appropriate form, please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o BY CHECK
Redemption proceeds will be sent to the shareholder(s) of record at the
address of record within seven days after receipt of a valid redemption
request.
o ELECTRONIC TRANSFER
If you have established this option, your redemption proceeds can be
electronically transferred to your predesignated bank account on the second
business day after receipt of your redemption request. To establish this
option, call 1-800-525-3713. There is no fee for this option.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
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o BY WIRE
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on the
next business day after receipt of your redemption request. There is no
limitation on redemptions by wire; however, there is an $8 fee for each
wire and your bank may charge an additional fee to receive the wire. If you
would like to establish this option on an existing account, please call
1-800-525-3713 to request the appropriate form. Wire redemptions are not
available for retirement accounts.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE OR THROUGH THE
AUTOMATIC MONTHLY INVESTMENT PROGRAM, THE FUND MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR. Unless you provide alternate instructions, your proceeds will
be invested in Janus Money Market Fund - Investor Shares during the 15 day hold
period.
WRITTEN INSTRUCTIONS
To redeem all or part of your shares in writing, your request should be sent to
one of the addresses listed on page 8 and must include the following
information:
o the name of the Fund
o the account number
o the amount of money or number of shares being redeemed
o the name(s) on the account registration
o the signature(s) of all registered account owners
o your daytime telephone number
o SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
o Individual, Joint Tenants, Tenants in Common: Written instructions must be
signed by each shareholder, exactly as the names appear in the account
registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in
his/her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed by an
authorized individual in his/her capacity as it appears on the account
registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified copy
of the corporate resolution authorizing the signer to act must accompany
the request.
o Trust: Written instructions must be signed by the trustee(s). If the
name(s) of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days must also be
submitted.
o IRA: Written instructions must be signed by the account owner. If you do
not want federal income tax withheld from your redemption, you must state
that you elect not to have such withholding apply. In addition, your
instructions must state whether the distribution is normal (after age 59
1/2) or premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to the 10%
additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. The Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by the
close of the regular trading session of the NYSE. Securities are valued at
market value or, if a market quotation is not readily available, at their fair
value determined in good faith under procedures established by and under the
supervision of the Trustees. Short-term instruments maturing within 60 days are
valued at amortized cost, which approximates market value. See the SAI for more
detailed information.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable:
o The redemption exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been changed within
10 days of the redemption request.
o You would like the check mailed to an address other than the address of
record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. FOR
MORE INFORMATION PERTAINING TO SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A
SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers, and member
firms of a national securities exchange. Call your financial institution to see
if they have the ability to guarantee a signature. A SIGNATURE GUARANTEE MAY NOT
BE PROVIDED BY A NOTARY PUBLIC.
If you live outside the United States, a foreign bank properly authorized to do
business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
SHAREHOLDER SERVICES
AND ACCOUNT POLICIES
JANUS ELECTRONIC TELEPHONE
SERVICE (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder money market fund checks, to exchange your
JANUS VENTURE FUND PROSPECTUS February 17, 1997
10
<PAGE>
shares or to purchase shares. JETS can be accessed by calling 1-800-525-6125.
Calls on JETS are limited to seven minutes.
JANUS WEB SITE
Janus maintains a Web site located at http://www.JanusFunds.com. You can access
information such as your account balance and the Fund's NAV through the Web
site. In addition, you may request and/or download a Janus funds prospectus.
ACCOUNT MINIMUMS
Minimum account sizes are noted on page 7. An account established on or before
February 18, 1996 is required to meet the minimum balances in effect when the
account was established ($1,000 for regular accounts and $250 for retirement and
UGMA/UTMA accounts). An active Automatic Monthly Investment (AMI) on any such
account exempted it from any minimum initial investment requirement and
continues to do so. In addition, an active AMI on these accounts may continue at
$50 per month, provided there is no interruption in the AMI program. All other
subsequent investments must meet the $100 required minimum.
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 minimum balance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
on page 7 or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. This policy does not
apply to accounts that fall below the minimums solely as a result of market
value fluctuations. It is expected that accounts will be valued in September.
The $10 fee will be assessed on the second Friday of September of each year. You
will receive notice before we charge the $10 fee or close your account so that
you may increase your account balance to the required minimum.
TRANSACTIONS THROUGH
PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other employee benefit plans (a
"Processing Organization"). Processing Organizations may charge you a fee for
this service and may require different minimum initial and subsequent
investments than the Fund. A Processing Organization may also impose other
charges or restrictions different from those applicable to shareholders who
invest in the Fund directly. The Processing Organization, rather than its
customer, may be the shareholder of record of your shares. The Fund is not
responsible for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations may receive
compensation from Janus Capital or its affiliates and certain Processing
Organizations may receive compensation from the Fund for shareholder
recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On your application or other appropriate form, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Fund to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Fund for
any penalty that the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate form because
account transactions such as exchanges and redemptions cannot be completed until
the certificate has been returned to the Fund. The Fund will issue share
certificates upon written request only. Share certificates will not be issued
until the shares have been held for at least 15 days and will not be issued for
accounts that do not meet the minimum investment requirements. Share
certificates cannot be issued for retirement accounts. In addition, if the
certificate is lost, there may be a replacement charge.
INVOLUNTARY REDEMPTIONS
The Fund reserves the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise believed to be detrimental
to the Fund.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Fund and its agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Fund by telephone during periods of unusual
market activity. If you are unable to reach a representative by telephone,
please consider sending written instructions, stopping by a Service Center, or
in the case of purchases and exchanges, calling the JETS line.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily suspend telephone
transactions or other shareholder services.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or send a written
request signed by all account owners. Include the name of the Fund, the account
number(s), the name(s) on the account and both the old and new addresses.
Certain options may be suspended for 10 days following an address change unless
a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a new
account. In some cases, legal documentation may be required. For more
information call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will receive
quarterly confirmations of all transactions. (Dividend information will be
distributed annually.) The Fund will send you a confirmation statement after
every non-systematic transaction. Tax information regarding the tax status of
income dividends and capital gains distributions will be mailed to shareholders
on or before January 31st of each year. Account tax information will also be
sent to the IRS.
Financial reports for the Fund, which include a list of the Fund's portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such reports will be mailed to all accounts in the
same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
11
<PAGE>
MANAGEMENT OF THE FUND
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to the Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Fund to the officers of the
Trust and meet at least quarterly to review the Fund's investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to the Fund and is responsible for the day-to-day management
of its investment portfolio and other business affairs.
Janus Capital began serving as investment adviser to certain series of the Trust
in 1970 and currently serves as investment adviser to all of the Janus funds, as
well as adviser or subadviser to other mutual funds and individual, corporate,
charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of the
outstanding voting stock of Janus Capital, most of which it acquired in 1984.
KCSI is a publicly traded holding company whose primary subsidiaries are engaged
in transportation, information processing and financial services. Thomas H.
Bailey, President and Chairman of the Board of Janus Capital, owns approximately
12% of its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning the
Fund's investments. Janus Capital also furnishes certain administrative,
compliance and accounting services for the Fund, and may be reimbursed by the
Fund for its costs in providing those services. In addition, Janus Capital
employees serve as officers of the Trust and Janus Capital provides office space
for the Fund and pays the salaries, fees and expenses of all Fund officers and
those Trustees who are affiliated with Janus Capital.
PORTFOLIO MANAGER
James P. Goff is Executive Vice President and portfolio manager of the Fund. Mr.
Goff joined Janus Capital in 1988. He has managed Janus Enterprise Fund since
its inception in September 1992 and co-managed the Fund from December 1993 to
December 1996. Effective January 1, 1997, he became sole portfolio manager of
the Fund. He holds a Bachelor of Arts in Economics from Yale University and is a
Chartered Financial Analyst.
- --------------------------------------------------------------------------------
PERSONAL INVESTING
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Fund or Janus
Capital's other advisory clients. See the SAI for more detailed information.
BREAKDOWN OF MANAGEMENT EXPENSES
The Fund pays Janus Capital a management fee which is accrued daily and paid
monthly. The advisory agreement with the Fund spells out the management fee and
other expenses that the Fund must pay. The Fund's management fee schedule
(expressed as an annual rate) is set out in the chart below.
Average Daily Net Annual Rate
Assets of Fund Percentage (%)
- --------------------------------------------------------------------------------
First $ 30 Million 1.00
Next $270 Million .75
Next $200 Million .70
Over $500 Million .65
- --------------------------------------------------------------------------------
The actual management fee paid by the Fund for the fiscal year ended October 31,
1996 was .68% of the value of the Fund's average daily net assets. The Fund
incurs expenses not assumed by Janus Capital, including transfer agent and
custodian fees and expenses, legal and auditing fees, printing and mailing costs
of sending reports and other information to existing shareholders, and
independent Trustees' fees and expenses.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
12
<PAGE>
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of the Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for the Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for the Fund i) to the Fund or ii) to other
persons on behalf of the Fund for services provided to the Fund for which it
would be obligated to pay. Janus Capital may also consider sales of shares of
the Fund as a factor in the selection of broker-dealers. The Fund's Trustees
have authorized Janus Capital to place portfolio transactions on an agency basis
with a broker-dealer affiliated with Janus Capital. When transactions for the
Fund are effected with that broker-dealer, the commissions payable by the Fund
are credited against certain Fund operating expenses. The SAI further explains
the selection of broker-dealers.
OTHER SERVICE PROVIDERS
The following parties provide the Fund with administrative and other services.
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
TRANSFER AGENT
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
DISTRIBUTOR
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206-4928
Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital.
OTHER INFORMATION
ORGANIZATION
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
As of the date of this Prospectus, the Trust offers 19 separate series, three of
which currently offer three classes of shares. The Fund became a series of the
Trust on August 7, 1992. It was previously known as Janus Venture Fund, Inc., a
Maryland corporation. All references in this Prospectus to the Fund prior to the
above date are to its predecessor entity and all references after such date are
to the series of the Trust.
The Trust currently offers the other 18 series by other prospectuses.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called specifically for the Fund or for the Trust as a whole for
purposes such as electing or removing Trustees, terminating or reorganizing the
Trust, changing fundamental policies, or for any other purpose requiring a
shareholder vote under the 1940 Act. Separate votes are taken by the Fund only
if a matter affects or requires the vote of just the Fund or that Fund's
interest in the matter differs from the interest of other portfolios of the
Trust. As a shareholder, you are entitled to one vote for each share that you
own.
SIZE OF THE FUND
The Fund has discontinued sales of its shares because its management believes
that a substantial increase in size may adversely affect the Fund's ability to
achieve its investment objective by reducing its flexibility in making
investments and in effecting portfolio changes. Although sales to new investors
have been discontinued, existing shareholders are permitted to continue to
purchase shares and to reinvest any dividends or capital gains distributions.
See the Shareholder's Manual beginning on page 7.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve the Fund's investment objective by
investing all of the Fund's assets in another investment company having the same
investment objective and substantially the same investment policies and
restrictions as those applicable to the Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the Fund. The Fund's shareholders of record on April 30, 1992, and the
initial shareholder(s) of all series of the Trust created after April 30, 1992,
voted to vest authority to use this investment structure in the sole discretion
of the Trustees. No further approval of the shareholders of the Fund is
required. You will receive at least 30 days' prior notice of any such
investment. Such investment would be made only if the Trustees determine it to
be in the best interests of the Fund and its shareholders. In making that
determination the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although management of the Fund believes that the Trustees will
not approve an arrangement that is likely to result in higher costs, no
assurance is given that costs will be materially reduced if this option is
implemented.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
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<PAGE>
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
TO AVOID TAXATION, THE INTERNAL REVENUE CODE REQUIRES THE FUND TO DISTRIBUTE NET
INCOME AND ANY NET GAINS REALIZED BY ITS INVESTMENTS ANNUALLY. THE FUND'S INCOME
FROM DIVIDENDS AND INTEREST AND ANY NET REALIZED SHORT-TERM CAPITAL GAINS ARE
PAID TO SHAREHOLDERS AS ORDINARY INCOME DIVIDENDS. NET REALIZED LONG-TERM GAINS
ARE PAID TO SHAREHOLDERS AS CAPITAL GAINS DISTRIBUTIONS.
HOW DISTRIBUTIONS AFFECT
THE FUND'S NAV
Distributions are paid to shareholders as of the record date of the distribution
of the Fund, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in the Fund's daily NAV. The
share price of the Fund drops by the amount of the distribution, net of any
subsequent market fluctuations. As an example, assume that on December 31, the
Fund declared a dividend in the amount of $0.25 per share. If the Fund's share
price was $10.00 on December 30, the Fund's share price on December 31 would be
$9.75, barring market fluctuations. Shareholders should be aware that
distributions from a taxable mutual fund are a taxable event and not a
value-enhancing event.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before the distribution, you will pay
the full price for the shares and receive a portion of the purchase price back
as a taxable distribution. This is referred to as "buying a dividend." In the
above example, if you bought shares on December 30, you would have paid $10.00
per share. On December 31, the Fund would pay you $0.25 per share as a dividend
and your shares would now be worth $9.75 per share. Unless your account is set
up as a tax-deferred account, dividends paid to you would be included in your
gross income for tax purposes, even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want to
receive your distributions. You may change your distribution option at any time
by writing or calling 1-800-525-3713. The Fund offers the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital
gains distributions in additional shares. This option is assigned
automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest And Cash Option. You may receive either your income dividends or
capital gains distributions in cash and reinvest the other in additional
shares.
4. Redirect Option. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Fund reserves the right to reinvest into your account undeliverable and
uncashed dividend and distribution checks that remain outstanding for six months
in shares of the Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
- --------------------------------------------------------------------------------
TAXES
As with any investment, you should consider the tax consequences of investing in
the Fund. The following discussion does not apply to tax-deferred retirement
accounts, nor is it a complete analysis of the federal tax implications of
investing in the Fund. You may wish to consult your own tax adviser.
Additionally, state or local taxes may apply to your investment, depending upon
the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions by the Fund are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of the Fund. In certain states, a portion of the dividends and
distributions (depending on the source of the Fund's income) may be exempt from
state and local taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on or before
January 31st of each year.
TAXATION OF THE FUND
Dividends, interest and some capital gains, received by the Fund on foreign
securities may be subject to tax withholding or other foreign taxes. Any foreign
taxes paid by the Fund will be treated as an expense to the Fund or passed
through to shareholders as a foreign tax credit, depending on particular facts
and circumstances. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes.
The Fund does not expect to pay any federal income or excise taxes because it
intends to meet certain requirements of the Internal Revenue Code. It is
important that the Fund meet these requirements so that any earnings on your
investment will not be taxed twice.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
14
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fund may invest. The Fund may
invest in these instruments to the extent permitted by its investment objective
and policies. The Fund is not limited by this discussion and may invest in any
other types of instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed discussion of
certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Commercial paper is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Fund may purchase commercial paper
issued under Section 4(2) of the Securities Act of 1933.
Common stock represents a share of ownership in a company, and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stocks are not fixed but are declared at the discretion of the issuer's board of
directors.
Convertible securities are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
Fixed-income securities are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk securities are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard & Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Mortgage- and asset-backed securities are shares in a pool of mortgages or other
debt. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying mortgages or
other debt may be refinanced or paid off prior to their maturities during
periods of declining interest rates. In that case, the portfolio manager may
have to reinvest the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Passive foreign investment companies (PFICs) are any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Fund to
recognize income associated with a PFIC prior to the actual receipt of any such
income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
Preferred stock is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
Repurchase agreements involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, the Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used to provide cash to satisfy unusually heavy redemption
requests, to earn additional income on portfolio securities, such as Treasury
bills or notes, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by the Fund from a dealer that
give the Fund the option to sell a security to the dealer at a specified price.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
15
<PAGE>
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from their face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
Strip bonds are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
U.S. government securities include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
Warrants are securities, typically issued with preferred stocks or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery at some time in the future -
i.e., beyond normal settlement. The Fund does not earn interest on such
securities until settlement and bears the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay interest at regular
intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities of comparable maturity.
II. FUTURES, OPTIONS
AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. It may also enter into forward contracts to
purchase or sell securities or other financial indices.
Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Fund may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Fund may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e., their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/structured securities may have return characteristics
similar to direct investments in the underlying instrument and may be more
volatile than the underlying instrument. The Fund bears the market risk of an
investment in the underlying instrument, as well as the credit risk of the
issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Options are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Fund may purchase and write put and call options on securities,
securities indices and foreign currencies.
JANUS VENTURE FUND PROSPECTUS February 17, 1997
16
<PAGE>
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<PAGE>
[LOGO]
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
Institutional Shares
100 Fillmore Street
Denver, CO 80206-4928
(800) 29JANUS
February 17, 1997
Janus Money Market Fund, Janus Government Money Market Fund, and Janus
Tax-Exempt Money Market Fund (individually, a "Fund" and, collectively, the
"Funds") are designed for investors who seek maximum current income consistent
with stability of capital. This prospectus offers a separate class of shares of
each Fund (collectively, the "Shares") exclusively to institutional and
individual clients meeting minimum investment requirements. Each Fund is a
separate series of Janus Investment Fund (the "Trust"), an open-end management
investment company.
Each Fund invests exclusively in high quality money market instruments. AN
INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
The Shares are offered with no sales charges, commissions, redemption fees, Rule
12b-1 fees or deferred sales charges. The minimum initial investment is
$250,000. There is no minimum amount required for subsequent investments. For
complete details on how to purchase, redeem and exchange Shares, please see the
Shareholder's Guide beginning at page 10.
This prospectus contains information about the Shares that prospective investors
should consider before investing and should be read carefully and retained for
future reference. Additional information about the Shares is contained in the
Statement of Additional Information ("SAI") dated February 17, 1997, which is
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. The SAI is available upon request and without
charge by writing or calling the Funds at the address or telephone number shown
above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
CONTENTS
- --------------------------------------------------------------------------------
FEE TABLE
........................................................................ 2
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
....................................................................... 3
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES,
POLICIES AND TECHNIQUES
........................................................................ 4
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
........................................................................ 7
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
........................................................................ 8
- --------------------------------------------------------------------------------
PERFORMANCE
........................................................................ 9
- --------------------------------------------------------------------------------
MISCELLANEOUS INFORMATION
........................................................................ 9
- --------------------------------------------------------------------------------
SHAREHOLDER'S GUIDE
How to Open an Account ...................................................... 10
Purchasing Shares ........................................................... 10
How to Exchange Shares ...................................................... 11
How to Redeem Shares ........................................................ 11
Special Shareholder Services
and Other Information .................................................... 12
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
1
<PAGE>
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES (Applicable to each Fund)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
ANNUAL OPERATING EXPENSES*
(Expressed as a percentage of average net assets)
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
Management Fee Other Expenses Total Operating Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund - Institutional Shares .10% .05% .15%
Janus Government Money Market Fund - Institutional Shares .10% .05% .15%
Janus Tax-Exempt Money Market Fund - Institutional Shares .10% .05% .15%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The information in the table above is based on expenses for the fiscal period
ended October 31, 1996, net of fee waivers from the investment adviser. Without
such waivers, the Management Fee, Other Expenses and Total Operating Expenses
would have been .20%, .15% and .35%, respectively. Janus Capital may modify or
terminate the waivers at any time upon 90 days' notice to the Trustees. See
"Investment Adviser and Administrator" for a more detailed discussion of the
fees.
EXAMPLE
You would indirectly pay the following expenses on a $1,000 investment, assuming
expense ratios remain as listed above and assuming a 5% annual return, with or
without redemption at the end of each period:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund - Institutional Shares $2 $5 $8 $19
Janus Government Money Market Fund - Institutional Shares $2 $5 $8 $19
Janus Tax-Exempt Money Market Fund - Institutional Shares $2 $5 $8 $19
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXPENSES IN THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED AMOUNT.
The purpose of the preceding table and example is to assist the investor in
understanding the various costs and expenses that an investor in each Fund will
bear directly or indirectly. These expenses are described in greater detail
under "Investment Adviser and Administrator."
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
2
<PAGE>
FINANCIAL HIGHLIGHTS
The information below is for fiscal periods ending October 31 of each year. The
accounting firm of Price Waterhouse LLP has audited the Funds' financial
statements and their report is included in the Funds' Annual Report, which is
incorporated by reference into the SAI. Expense and income ratios have been
annualized while total returns have not been annualized.
<TABLE>
Janus Janus
Janus Government Tax-Exempt
Money Market Money Market Money Market
Fund Fund Fund
1996 1995(1) 1996 1995(1) 1996 1995(1)
[TO BE FILED BY [TO BE FILED BY [TO BE FILED BY
Institutional Shares AMENDMENT] AMENDMENT] AMENDMENT]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Net asset value, beginning of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income .03 .03 .02
3. Net gains or (losses) on securities
(both realized and unrealized) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations .03 .03 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income) (.03) (.03) (.02)
6. Distributions (from capital gains) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (.03) (.03) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
9. Total return 3.25% 3.20% 2.09%
- ------------------------------------------------------------------------------------------------------------------------------------
10. Average net assets for the period (millions) $202 $25 $1
11. Net assets, end of period (in thousands) $304,952 $44,164 $11,192
12. Ratio of expenses to average net assets 0.15%(2) 0.15%(2) 0.15%(2)
13. Ratio of net investment income
to average net assets 5.86% 5.75% 3.82%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Period from April 14, 1995 (inception) through October 31, 1995.
(2) The ratio was .35% before voluntary reduction of fees.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
3
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES
Unless otherwise stated, the investment objectives and policies set forth in
this Prospectus are not fundamental and may be changed by the Trustees of the
Trust (the "Trustees") without shareholder approval. Shareholders will be
notified of material changes in investment objectives or policies. If there is a
change in the investment objective or policies of any Fund, shareholders should
consider whether that Fund remains an appropriate investment in light of their
then current financial position and needs. The Funds are subject to additional
investment policies and restrictions described in the SAI, some of which are
fundamental and may not be changed without shareholder approval.
INVESTMENT OBJECTIVES
The investment objective of Janus Money Market Fund and Janus Government Money
Market Fund is to seek maximum current income to the extent consistent with
stability of capital. The investment objective of Janus Tax-Exempt Money Market
Fund is to seek maximum current income that is exempt from federal income taxes
to the extent consistent with stability of capital. There can be no assurance
that a Fund will achieve its investment objective or that the Shares will be
able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Funds will invest only in eligible high quality, short-term money market
instruments that present minimal credit risks, as determined by Janus Capital
Corporation, the Funds' investment adviser ("Janus Capital"), pursuant to
procedures adopted by the Trustees. Each Fund may invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act")) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Fund will not invest more than 5%
of its total assets in the securities of any one issuer. A guarantor is not
considered an issuer for the purpose of this limit, provided that the value of
all securities held by a Fund that are issued or guaranteed by that institution
does not exceed 10% of the Fund's total assets. Until pending amendments to Rule
2a-7 become effective, up to 25% of Janus Tax-Exempt Money Market Fund's total
assets may be invested without regard to the foregoing limitations. A Fund may
not invest more than 25% of its total assets in any one industry, except that
this limit does not apply to U.S. Government Securities, bank obligations or
municipal securities. To ensure adequate liquidity, no Fund may invest more than
10% of its net assets in illiquid investments, including repurchase agreements
maturing in more than seven days (unless subject to a demand feature) and
certain time deposits that are subject to early withdrawal penalties and mature
in more than seven days. Because the Funds are typically used as a cash
management vehicle, they intend to maintain a high degree of liquidity. Janus
Capital determines and monitors the liquidity of portfolio securities under the
supervision of the Trustees.
RATINGS
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Fund,
except Janus Tax-Exempt Money Market Fund, will invest at least 95% of its total
assets in securities in the highest rating category (as determined pursuant to
Rule 2a-7). Descriptions of the rating categories of Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., and certain other NRSROs are
contained in the SAI, as is a further description of the Funds' investment
policies.
Although each Fund only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in its portfolio
are paid in full at maturity. All money market instruments, including U.S.
Government Securities, can change in value as a result of changes in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations.
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund pursues its objective by investing primarily in high
quality debt obligations and obligations of financial institutions. The Fund may
also invest in U.S. Government Securities (as defined below) and municipal
securities, although the Fund expects to invest in such securities to a lesser
degree.
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates', current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by the guarantee of a
third party or solely by the unsecured promise of the issuer to make payments
when due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption. Pursuant to Section 4(2) of the 1933 Act or Rule 144A
adopted under the 1933 Act, however, some of these securities are eligible for
resale to institutional investors, and accordingly, Janus Capital may determine
that a liquid market exists for such a security pursuant to guidelines adopted
by the Trustees.
OBLIGATIONS OF FINANCIAL INSTITUTIONS
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations)
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
4
<PAGE>
having total assets in excess of one billion dollars and U.S. branches of
foreign banks having total assets in excess of ten billion dollars. The Fund may
also invest in Eurodollar and Yankee bank obligations as discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Fixed time deposits, which
are payable at a stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Fund but may be subject to early
withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
EURODOLLAR OR YANKEE OBLIGATIONS
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. GOVERNMENT SECURITIES
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
MUNICIPAL SECURITIES
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. GOVERNMENT SECURITIES
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of the value of its net assets in securities whose interest is federally
taxable. Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/ reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (see "Taxable Investments").
MUNICIPAL SECURITIES
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial and
commercial facilities. The Fund may also invest in high quality participation
interests in municipal securities. A more detailed description of various types
of municipal securities is contained in Appendix B in the SAI.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
5
<PAGE>
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and a security is backed only by the assets and revenues of the
issuing entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development bond backed only
by the assets and revenues of the non-governmental issuer, the non-governmental
issuer will be deemed to be the sole issuer of the bond.
At times, the Fund may invest more than 25% of the value of its total assets in
tax-exempt securities that are related in such a way that an economic, business,
or political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists that, as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
PARTICIPATION INTERESTS
The Funds may invest in participation interests in any type of security in which
the Funds may invest. A participation interest gives a Fund an undivided
interest in the underlying securities in the proportion that the Fund's
participation interest bears to the total principal amount of the underlying
securities. Participation interests usually carry a demand feature, as described
below, backed by a letter of credit or guarantee of the institution that issued
the interests permitting the holder to tender them back to the institution.
DEMAND FEATURES
The Funds may invest in securities that are subject to puts and stand-by
commitments ("demand features"). Demand features give the Fund the right to
resell securities at specified periods prior to their maturity dates to the
seller or to some third party at an agreed-upon price or yield. Securities with
demand features may involve certain expenses and risks, including the inability
of the issuer of the instrument to pay for the securities at the time the
instrument is exercised, non-marketability of the instrument and differences
between the maturity of the underlying security and the maturity of the
instrument. Securities may cost more with demand features than without them.
Demand features can serve three purposes: to shorten the maturity of a variable
or floating rate security, to enhance the instrument's credit quality and to
provide a source of liquidity. Demand features are often issued by third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Funds' investments may be dependent in part
on the credit quality of the banks supporting the Funds' investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. Brokerage firms and insurance companies also provide
certain liquidity and credit support. A substantial portion of the Janus
Tax-Exempt Money Market Fund's portfolio in particular may consist of securities
backed by banks and other financial institutions, and thus adverse changes in
the credit quality of these institutions could cause losses to the Fund and
affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The securities in which the Funds invest may have variable or floating rates of
interest. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. Securities with ultimate maturities of greater
than 397 days may be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which comply with certain
requirements and certain variable rate U.S. Government Securities may be
purchased. Similar to fixed rate debt instruments, variable and floating rate
instruments are subject to changes in value based on changes in market interest
rates or changes in the issuer's or guarantor's creditworthiness. The rate of
interest on securities purchased by a Fund may be tied to short-term Treasury
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
6
<PAGE>
or other government securities or indices on securities that are permissible
investments of the Funds, as well as other money market rates of interest. The
Funds will not purchase securities whose values are tied to interest rates or
indices that are not appropriate for the duration and volatility standards of a
money market fund.
MORTGAGE- AND
ASSET-BACKED SECURITIES
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
REPURCHASE AGREEMENTS
Each Fund may seek additional income by entering into collateralized repurchase
agreements. Repurchase agreements are transactions in which a Fund purchases
securities and simultaneously commits to resell those securities to the seller
at an agreed-upon price on an agreed-upon future date. The resale price reflects
a market rate of interest that is not related to the coupon rate or maturity of
the purchased securities. If the seller of the securities underlying a
repurchase agreement fails to pay the agreed resale price on the agreed delivery
date, a Fund may incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so.
REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which a Fund sells a security and simultaneously
commits to repurchase that security from the buyer at an agreed upon price on an
agreed upon future date. This technique will be used only for temporary or
emergency purposes, such as meeting redemption requests, or to earn additional
income on portfolio securities.
DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery basis.
Securities so purchased are subject to market price fluctuation from the time of
purchase but no interest on the securities accrues to a Fund until delivery and
payment for the securities take place. Accordingly, the value of the securities
on the delivery date may be more or less than the purchase price. Forward
commitments will be entered into only when a Fund has the intention of taking
possession of the securities, but a Fund may sell the securities before the
settlement date if deemed advisable.
BORROWING AND LENDING
Each Fund may borrow money for temporary or emergency purposes in amounts up to
25% of its total assets. A Fund may not mortgage or pledge securities except to
secure permitted borrowings. As a fundamental policy, a Fund will not lend
securities or other assets if, as a result, more than 25% of its total assets
would be lent to other parties; however, the Funds do not currently intend to
engage in securities lending. Each Fund intends to seek permission from the SEC
to borrow money from or lend money to other funds that permit such transactions
and are advised by Janus Capital. There is no assurance that such permission
will be granted.
INVESTMENT ADVISER AND ADMINISTRATOR
INVESTMENT ADVISER
Each Fund has a separate Investment Advisory Agreement with Janus Capital, 100
Fillmore Street, Denver, Colorado 80206-4923. Janus Capital has served as
investment adviser to Janus Fund since 1970 and currently serves as investment
adviser to all of the Janus funds, as well as adviser or subadviser to other
mutual funds and individual, corporate, charitable and retirement accounts.
Kansas City Southern Industries, Inc., a publicly traded holding company whose
primary subsidiaries are engaged in transportation, information processing and
financial services ("KCSI"), owns approximately 83% of the outstanding voting
stock of Janus Capital. Thomas H. Bailey, the President and Chairman of the
Board of Janus Capital, owns approximately 12% of its voting stock and, by
agreement with KCSI, selects a majority of Janus Capital's Board.
Pursuant to the Investment Advisory Agreements, Janus Capital furnishes
continuous advice and recommendations concerning each Fund's investments. Each
of the Funds has agreed to compensate Janus Capital for its advisory services by
the monthly payment of a fee at the annual rate of 0.20% of the value of the
average daily net assets of each Fund. Janus Capital has agreed to waive a
portion of its fee and accordingly, the advisory fee of each Fund will be
calculated at the annual rate of 0.10% of the value of each Fund's average daily
net assets. Janus Capital may modify or terminate the waiver at any time upon 90
days' notice to the Trustees.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
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ADMINISTRATOR
Each of the Funds has also entered into an Administration Agreement with Janus
Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Funds, pays the costs of printing
reports and prospectuses for existing shareholders, provides office space for
the Funds and pays the salaries, fees and expenses of all Fund officers and of
those Trustees who are affiliated with Janus Capital. Administrative services
provided by Janus Capital under the Administration Agreements include custody
and transfer agency services. Janus Capital is paid an administration fee,
calculated daily and paid monthly, at the annual rate of 0.15% of the value of
the average daily net assets of each Fund attributable to Shares for services
rendered pursuant to the Administration Agreements. Janus Capital has agreed to
waive a portion of its fee and accordingly, the administration fee paid by the
Shares will be calculated at the annual rate of 0.05% of the value of each
Fund's average daily net assets attributable to the Shares. Janus Capital may
modify or terminate this waiver upon 90 days' notice to the Trustees.
Each Fund pays all of its expenses not assumed by Janus Capital, including
auditing fees and independent Trustees' fees and expenses.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by brokers
and dealers selected by Janus Capital. Broker-dealers are selected on the basis
of their ability to obtain best price and execution for the Funds' transactions
and recognizing brokerage, research and other services provided to the Fund and
to Janus Capital. Janus Capital may also consider payments made by brokers
effecting transactions for a Fund i) to the Fund or ii) to other persons on
behalf of the Fund for services provided to the Fund for which it would be
obligated to pay. The Funds' Trustees have also authorized the Funds to place
portfolio transactions on an agency basis with a broker-dealer that is
affiliated with Janus Capital. Agency trades, if any, that are placed with such
affiliated party serve to reduce certain expenses of the Funds. The SAI further
explains the selection of broker-dealers.
PERSONAL INVESTING
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Funds and
Janus Capital's other advisory clients. See the SAI for more detailed
information.
DISTRIBUTIONS AND TAXES
Dividends representing substantially all of the net investment income and any
net realized gains on sales of securities are declared daily, Saturdays, Sundays
and holidays included, and distributed on the last business day of each month.
If a month begins on a Saturday, Sunday or holiday, dividends for those days are
declared at the end of the preceding month and distributed on the first business
day of the month. Distributions will be reinvested in Shares of a Fund or wired
to a predesignated bank account at the election of the shareholder. If no
election is made, all distributions will be reinvested in additional Shares of a
Fund.
Shares purchased by wire on a day on which the Funds calculate their net asset
value and the Federal Reserve Banks are open ("bank business day") will receive
that day's dividend if the purchase is effected prior to 3:00 p.m. (New York
time) for the Janus Money Market and Janus Government Money Market Funds and
12:00 p.m. (New York time) for the Janus Tax-Exempt Money Market Fund.
Otherwise, such Shares begin to accrue dividends on the first bank business day
following receipt of the order.
Redemption orders effected on any particular day will generally receive
dividends declared through the day of redemption. However, redemptions made by
wire which are received prior to 3:00 p.m. (New York time) for the Janus Money
Market and Janus Government Money Market Funds and 12:00 p.m. (New York time)
for Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that
day. Proceeds of such a redemption will normally be sent to the predesignated
account on that day and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. (12:00 p.m. for
Janus Tax-Exempt Money Market Fund) will be processed on that day and receive
that day's dividend, but will not be wired until the following bank business
day.
The Funds reserve the right to require purchase and redemption requests prior to
these times on days when the bond market closes before 4:00 p.m. (New York
time).
Distributions for all of the Funds (except Janus Tax-Exempt Money Market Fund)
are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full information regarding the tax
status of income dividends and any capital gains distributions will be mailed to
shareholders for tax purposes on or before January 31st of each year. Because
the Funds are money market funds, they do not anticipate making any capital
gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially all income
dividends it pays will be exempt from federal income tax. However, dividends
attributable to interest on taxable investments, together with distributions
from any net realized capital gains, are taxable. In addition, interest on
certain private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent that the Fund
earns such income, shareholders who are subject to the alternative minimum tax
must include such income as a preference item. The Fund will advise shareholders
of the percentage of dividends, if any, subject to the alternative minimum tax.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
8
<PAGE>
Dividends and capital gains distributions may also be subject to state and local
taxes. In certain states some portion of dividends and distributions (depending
on the sources of the Fund's net income) of Janus Tax-Exempt Money Market Fund
may be exempt from state and local taxes. Shareholders should consult their own
tax advisor regarding exemption from any applicable state and local tax, as well
as the tax treatment of any dividends or distributions from the Shares.
The Funds intend to comply with provisions of the Internal Revenue Code
applicable to investment companies, and thus it is not expected that any of the
Funds will be required to pay any federal income or excise taxes. The SAI
further explains the Funds' tax status.
PERFORMANCE
The Shares may measure performance in several ways, including "yield,"
"effective yield," and "tax equivalent yield" (for Janus Tax-Exempt Money Market
Fund only). Yield is a way of showing the rate of income the Shares earn on
investments as a percentage of the Share price. Yield represents the income,
less expenses generated by an investment, in the Shares over a seven-day period
expressed as an annual percentage rate. Effective yield is similar in that it is
calculated over the same time frame, but instead the net investment income is
compounded and then annualized. Due to the compounding effect, the effective
yield will normally be higher than the yield.
Shares of Janus Tax-Exempt Money Market Fund may also quote tax-equivalent
yield, which shows the taxable yield an investor would have to earn before taxes
to equal such Shares' tax-free yield. A tax-equivalent yield is calculated by
dividing such Shares' tax-exempt yield by the result of one minus a stated
federal tax rate. Only that portion of the Fund's income that is tax-exempt is
adjusted in this calculation.
Performance figures are based upon historical results and are not intended to
indicate future performance.
MISCELLANEOUS INFORMATION
ORGANIZATION
Each Fund is an open-end management investment company registered under the 1940
Act as a series of the Trust, which was created on February 11, 1986. Each Fund
currently offers three classes of shares by separate prospectuses. The Shares
offered by this Prospectus are available only to institutional clients,
including corporations, foundations and trusts, and individuals meeting certain
initial investment requirements. A second class of shares of each Fund, Service
Shares, are available only through Financial Institutions that meet minimum
investment requirements in connection with trust accounts, cash management
programs and similar programs. A third class of shares of each Fund, Investor
Shares, are available to the general public. Because the expenses of each class
may differ, the performance of each class is expected to differ. If you would
like additional information, please call Janus Extended Services at
1-800-29JANUS.
PRINCIPAL SHAREHOLDERS
As of January 20, 1997, the following individuals and/or corporations owned more
than 25% of the Shares of the following Funds: [INFORMATION TO BE FILED BY
AMENDMENT] Thus, these shareholders may have power to control any vote of the
Shares of the Fund.
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
VOTING RIGHTS
The Trust is not required to hold annual shareholder meetings. However, special
meetings may be called for a specific class of shares, a specific Fund, or for
the Trust as a whole, for purposes such as electing or removing Trustees,
terminating or reorganizing the Trust, changing fundamental policies or voting
on matters when required by the 1940 Act. Separate votes are taken by a separate
Fund (or a separate class of shares) only if a matter affects or requires the
vote of just that Fund (or those shares). Shareholders are entitled to cast one
vote for each Share they own.
CUSTODIAN, TRANSFER AGENT
AND DISTRIBUTOR
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri 64141-6226,
is the custodian of the Funds' assets. The custodian holds each Fund's assets in
safekeeping and collects and remits the income thereon subject to the
instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado 80217-3375, a
wholly-owned subsidiary of Janus Capital, provides transfer agency and
shareholder services for the Funds.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado 80206-4928, a
wholly-owned subsidiary of Janus Capital, is a distributor of the Shares.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
9
<PAGE>
SHAREHOLDER'S GUIDE
HOW TO OPEN AN ACCOUNT
ESTABLISHING YOUR ACCOUNT
The Application enclosed with this Prospectus describes the options available to
you as an institutional shareholder of the Funds. After reviewing the
Application carefully, complete, sign and forward it to:
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4928
Attn: Extended Services Attn: Extended Services
Do not include any purchase money with the Application. All purchases of Shares
should be effected by wire transfer. See "Purchasing Shares." The Funds reserve
the right to suspend the offering of the Shares for a period of time and to
reject any specific purchase request.
You may set up your account for Investment Retirement Plan rollovers (in excess
of $250,000) under a tax-sheltered retirement plan. A retirement plan allows you
to shelter your investment income from current income taxes. A contribution to
these plans may also be tax deductible. Distributions from a retirement plan are
generally subject to income tax and may be subject to an additional tax if
withdrawn prior to age 59 1/2.
Investors Fiduciary Trust Company serves as custodian for the retirement plans
offered by the Funds. There is an annual $12 fee per account to maintain your
retirement account. The maximum annual fee is $24 per taxpayer identification
number. You may pay the fee by check or have it automatically deducted from your
account (usually in December).
Please refer to the Janus Funds IRA booklet for complete information regarding
IRAs. You will need a special application to be enrolled in the plan. For an
application and more details, call 1-800-525-3713.
TAXPAYER IDENTIFICATION NUMBERS
On the application or other appropriate form, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition, to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Funds for
any penalty that the IRS may impose.
DISTRIBUTION OPTIONS
Shareholders have the option of having their dividends and distributions
automatically reinvested in Shares of a Fund or wired to a predesignated bank
account. If no election is made, all dividends and distributions will be
reinvested in additional Shares.
PURCHASING SHARES
You must establish a Fund account and receive an account number before making
purchases by wire. Requests to purchase Janus Money Market Fund and Janus
Government Money Market Fund received before 3:00 p.m. (New York time) on a
business day will receive dividends declared on the purchase date. Requests to
purchase Janus Tax-Exempt Money Market Fund must be received before 12:00 p.m.
(New York time) on a business day in order to receive the dividend declared on
the day of purchase. In addition, the Funds' transfer agent must receive payment
in federal funds by 4:00 p.m. (New York time). The Funds reserve the right to
require purchase requests and payments prior to these times on days when the
bond market closes before 4:00 p.m. (New York time). Purchase orders received
after these times will receive the dividend declared the following day.
WIRE INSTRUCTIONS:
Request your bank to transmit immediately available funds by wire for purchase
of Shares to the Funds' custodian bank as follows:
United Missouri Bank, N.A., Kansas City, Missouri
ABA # 101000695
BNF = Janus Money Market Funds Account # 9870610000
For credit to: Name of Shareholder: ____________________________________________
Shareholder Account No.: ______________________________________________________
Name of Fund(s): ______________________________________________________________
Complete information regarding your account must be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Please contact the Janus Extended Services Team at 1-800-29JANUS when you intend
to make a wire purchase.
The Funds do not charge any fees for transactions by wire in Shares of the
Funds.
Once you have established a Fund account, you may purchase Shares for such
account or open additional accounts with other Funds at any time. The Funds
reserve the right to suspend the offering of Shares for a period of time and to
reject any specific purchase request. If you have any questions, please call
1-800-29JANUS.
MINIMUM INVESTMENT
The minimum initial investment in the Shares is $250,000. The Funds may, in
their discretion, waive this minimum under certain circumstances but, in such
event, the minimum must be reached within 90 days of opening the account.
Shareholders who do not maintain the $250,000 minimum will be given the option
of exchanging into Investor Shares or having their Shares redeemed.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
10
<PAGE>
NET ASSET VALUE
The net asset value ("NAV") of the Shares is determined at the close of the
regular trading session of the New York Stock Exchange (normally 4:00 p.m., New
York time) each day that both the Exchange and the New York Federal Reserve Bank
are open. NAV per share is determined by dividing the total value of the
securities and other assets, less liabilities, by the total number of Shares
outstanding. Portfolio securities are valued at their amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity (or such other date as permitted by
Rule 2a-7) of any discount or premium. If fluctuating interest rates cause the
market value of a portfolio to deviate more than 1/2 of 1% from the value
determined on the basis of amortized cost, the Trustees will consider whether
any action, such as adjusting the Share's NAV to reflect current market
conditions, should be initiated to prevent any material dilutive effect on
shareholders.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to maintain the
general liquidity that is representative of a money market fund and to help
facilitate transactions in shareholder accounts.
HOW TO EXCHANGE SHARES
The Janus funds include several funds with a variety of investment objectives.
You may exchange your Shares for shares of any other Janus fund that is
available to the public and registered in your state of residence. There are
certain procedures which should be followed to effect the transfer of the entire
or partial balance in your Shares to one of the other Janus funds. The Funds
reserve the right to reject any exchange request and to modify or terminate the
exchange privilege at any time. For example, the Funds may reject exchanges from
accounts engaged in excessive trading (including market timing transactions)
that are detrimental to the Funds. If you would like more information regarding
this option, please call the Janus Extended Services Team at 1-800-29JANUS.
HOW TO REDEEM SHARES
PARTIAL OR COMPLETE REDEMPTIONS
You may redeem all or a portion of your Shares on any business day. Your Shares
will be redeemed at the NAV next calculated after your Fund has received your
redemption request in good order and meeting all the requirements of this
Prospectus. Proceeds of such redemption generally will be wired to your
predesignated bank account as of the day of redemption, or, if that day is a
bank holiday, on the next bank business day.
IN WRITING
To redeem all or part of your Shares in writing, send a letter of instruction to
the following address:
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Funds Janus Funds
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4928
Attn: Extended Services Attn: Extended Services
The letter should be on company letterhead (in the case of institutional
clients) and should specify the name of the Fund, the number of Shares or
dollars being redeemed, the account number, appropriate wiring instructions, the
name(s) on the account, your name and your daytime telephone number. The letter
must be signed by an authorized person whose signature is on file with the Fund.
For IRA shareholders, written instructions must be signed by the account owner.
If you do not want federal income tax withheld from your redemption, you must
state that you elect not to have such withholding apply. In addition, your
instructions must state whether the distribution is normal (after age 59 1/2) or
premature (before age 59 1/2) and, if premature, whether any exceptions such as
death or disability apply with regard to the 10% additional tax on early
distributions.
BY TELEPHONE
Shares may be redeemed by telephone. If a request for a redemption is received
by 3:00 p.m. (New York time) for Janus Money Market Fund and Janus Government
Money Market Fund and by 12:00 p.m. (New York time) for Janus Tax-Exempt Money
Market Fund, Shares will be redeemed and the redemption amount wired in federal
funds to the shareholder's predesignated bank account that day. After 3:00 p.m.
(12:00 p.m. for Janus Tax-Exempt Money Market Fund), a redemption request will
be processed at that day's NAV and will include that day's dividends, but
generally will not be wired until the next bank business day. The Funds reserve
the right to require redemption requests prior to these times on days when the
bond market closes before 4:00 p.m. (New York time). There is no fee for
redemptions by wire.
BY A FUND
Your account may be terminated by your Fund if, due to the transfer or
redemption of Shares, the value of the remaining Shares in your account falls
below the minimum investment required to open a new account, or if you engage in
illegal or other conduct detrimental to the Funds. In the case of insufficient
account size, your Fund will notify you that you have 60 days to increase your
account to the minimum required before redeeming your account.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
11
<PAGE>
SPECIAL SHAREHOLDER SERVICES AND OTHER INFORMATION
PORTFOLIO INFORMATION
You may call 1-800-29JANUS by TouchTone(TM) telephone for access to certain
information regarding your account, including current yield and dividend rate
information, Monday through Friday from 7:00 a.m. to 10:00 p.m. (New York time).
TELEPHONE INSTRUCTIONS
You may initiate many transactions by telephone. The Funds and their agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
ACCOUNT ADDRESS AND NAME CHANGES
To change the address on your account, you may call 1-800-29JANUS or send a
written request signed by all registered owners of your account. Please include
the name of the Fund(s), the account number(s), the name(s) on the account and
both the old and new addresses. Within the first 10 days of an address change,
redemptions by institutional clients are permissible only if the redemption
proceeds are wired to a pre-designated bank account or you provide the Funds
with appropriate corporate resolutions changing wire instructions. Please call
1-800-29JANUS for additional information.
To change the name on an account, the Shares must be transferred to a new
account. Such a change generally requires written instructions with the
guaranteed signatures of all registered owners, as well as an Application and
supporting legal documentation, if applicable. Please call 1-800-29JANUS for
additional information.
STATEMENTS AND REPORTS
Each shareholder will receive daily confirmations of purchases and redemptions
made in the Funds. On the last day of each month, the shareholder will receive a
statement reporting all purchases and redemptions made during that month, and
dividends paid during the month.
Twice each year you will receive the financial statements of the Funds,
including a statement listing portfolio securities. To reduce expenses, only one
copy of most reports (such as the Funds' Annual Report) may be mailed to all
accounts with the same tax identification number. Please call 1-800-29JANUS if
you need additional reports sent each time.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may temporarily suspend telephone transactions and
other shareholder services described in this Prospectus upon reasonable notice
or to the extent that any circumstance reasonably beyond the control of the
Funds or their agents materially hampers the provision of such services.
JANUS INSTITUTIONAL MONEY MARKET FUNDS PROSPECTUS February 17, 1997
12
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CONTENTS
- --------------------------------------------------------------------------------
FEE TABLE
........................................................................ 1
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
........................................................................ 2
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES,
POLICIES AND TECHNIQUES
........................................................................ 2
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
........................................................................ 5
- --------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
........................................................................ 6
- --------------------------------------------------------------------------------
PERFORMANCE
........................................................................ 7
- --------------------------------------------------------------------------------
MISCELLANEOUS INFORMATION
........................................................................ 8
- --------------------------------------------------------------------------------
SHAREHOLDER'S GUIDE
Purchases ................................................................... 9
Redemptions ................................................................. 9
Shareholder Communications .................................................. 9
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JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
Service Shares
100 Fillmore Street
Denver, CO 80206-4923
February 17, 1997
Janus Money Market Fund, Janus Government Money Market Fund, and Janus
Tax-Exempt Money Market Fund (individually, a "Fund" and, collectively, the
"Funds") are designed for investors who seek maximum current income consistent
with stability of capital. This prospectus offers a separate class of shares of
each Fund (collectively, the "Shares") exclusively through banks and other
financial institutions ("Financial Institutions") in connection with trust
accounts, cash management programs and similar programs provided to their
customers. Each Fund is a separate series of Janus Investment Fund (the
"Trust"), an open-end management investment company.
Each Fund invests exclusively in high quality money market instruments. AN
INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
The Shares are offered with no sales charges, commissions, redemption fees, Rule
12b-1 fees or deferred sales charges. There is a $250,000 initial investment
minimum by each Financial Institution. The Financial Institution may aggregate
investments by all of its customers to achieve this minimum. There is no minimum
amount required for subsequent investments. For complete details on how to
purchase, redeem and exchange Shares, please see the Shareholder's Guide
beginning at page 9.
This prospectus contains information about the Shares that prospective investors
should consider before investing and should be read carefully and retained for
future reference. Additional information about the Shares is contained in the
Statement of Additional Information ("SAI") dated February 17, 1997, which is
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. The SAI is available upon request and without
charge by writing or calling your Financial Institution.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY STATE OR
OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN
SUCH STATE OR OTHER JURISDICTION.
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FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES (Applicable to each Fund)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
ANNUAL OPERATING EXPENSES(1)
(Expressed as a percentage of average net assets)
<TABLE>
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Management Other Total Operating
Fee(1) Expenses(1,2) Expenses(1)
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<S> <C> <C> <C>
Janus Money Market Fund - Service Shares 0.10% 0.30% 0.40%
Janus Government Money Market Fund - Service Shares 0.10% 0.30% 0.40%
Janus Tax-Exempt Money Market Fund - Service Shares 0.10% 0.30% 0.40%
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</TABLE>
(1) The fees and expenses in the table above are based on the estimated fees
and expenses that the Service Shares of the Funds expect to incur in their
initial fiscal year, net of fee waivers from the investment adviser.
Without such waivers, the Management Fee, Other Expenses and Total
Operating Expenses for Service Shares are estimated to be 0.20%, 0.40% and
0.60%, respectively. Janus Capital may modify or terminate the waivers at
any time upon 90 days' notice to the Trustees. See "Investment Adviser and
Administrator" for a more detailed discussion of the fees.
(2) A portion of the administration fee included in "other expense" may be used
to compensate Financial Institutions for providing administrative services
to their customers who invest in the Shares. See "Administrator" for more
details. Certain Financial Institutions may charge additional fees directly
to their customers for other services. Consult your Financial Institution
to determine whether it charges any additional fees.
EXAMPLE
You would indirectly pay the following expenses on a $1,000 investment, assuming
expense ratios remain as listed above and assuming a 5% annual return, with or
without redemption at the end of each period:
<TABLE>
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1 Year 3 Years
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<S> <C> <C>
Janus Money Market Fund - Service Shares $4 $13
Janus Government Money Market Fund - Service Shares $4 $13
Janus Tax-Exempt Money Market Fund - Service Shares $4 $13
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</TABLE>
THE EXPENSES IN THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED AMOUNT.
The purpose of the preceding table and example is to assist the investor in
understanding the various costs and expenses that an investor in each Fund will
bear directly or indirectly. These expenses are described in greater detail
under "Investment Adviser and Administrator."
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
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FINANCIAL HIGHLIGHTS
No Financial Highlights are presented for the Shares because the Shares did not
commence operations until November 22, 1996.
INVESTMENT OBJECTIVES, POLICIES AND TECHNIQUES
Unless otherwise stated, the investment objectives and policies set forth in
this Prospectus are not fundamental and may be changed by the Trustees of the
Trust (the "Trustees") without shareholder approval. Shareholders will be
notified of material changes in investment objectives or policies. If there is a
change in the investment objective or policies of any Fund, shareholders should
consider whether that Fund remains an appropriate investment in light of their
then current financial position and needs. The Funds are subject to additional
investment policies and restrictions described in the SAI, some of which are
fundamental and may not be changed without shareholder approval.
INVESTMENT OBJECTIVES
The investment objective of Janus Money Market Fund and Janus Government Money
Market Fund is to seek maximum current income to the extent consistent with
stability of capital. The investment objective of Janus Tax-Exempt Money Market
Fund is to seek maximum current income that is exempt from federal income taxes
to the extent consistent with stability of capital. There can be no assurance
that a Fund will achieve its investment objective or that the Shares will be
able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Funds will invest only in eligible high quality, short-term money market
instruments that present minimal credit risks, as determined by Janus Capital
Corporation, the Funds' investment adviser ("Janus Capital"), pursuant to
procedures adopted by the Trustees. Each Fund may invest only in U.S.
dollar-denominated instruments that have a remaining maturity of 397 days or
less (as calculated pursuant to Rule 2a-7 under the Investment Company Act of
1940 ("1940 Act")) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Fund will not invest more than 5%
of its total assets in the securities of any one issuer. A guarantor is not
considered an issuer for the purpose of this limit, provided that the value of
all securities held by a Fund that are issued or guaranteed by that institution
does not exceed 10% of the Fund's total assets. Until pending amendments to Rule
2a-7 become effective, up to 25% of Janus Tax-Exempt Money Market Fund's total
assets may be invested without regard to the foregoing limitations. A Fund may
not invest more than 25% of its total assets in any one industry, except that
this limit does not apply to U.S. Government Securities, bank obligations or
municipal securities. To ensure adequate liquidity, no Fund may invest more than
10% of its net assets in illiquid investments, including repurchase agreements
maturing in more than seven days (unless subject to a demand feature) and
certain time deposits that are subject to early withdrawal penalties and mature
in more than seven days. Because the Funds are typically used as a cash
management vehicle, they intend to maintain a high degree of liquidity. Janus
Capital determines and monitors the liquidity of portfolio securities under the
supervision of the Trustees.
RATINGS
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Fund,
except Janus Tax-Exempt Money Market Fund, will invest at least 95% of its total
assets in securities in the highest rating category (as determined pursuant to
Rule 2a-7). Descriptions of the rating categories of Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., and certain other NRSROs are
contained in the SAI, as is a further description of the Funds' investment
policies.
Although each Fund only invests in high quality money market instruments, an
investment in a Fund is subject to risk even if all securities in its portfolio
are paid in full at maturity. All money market instruments, including U.S.
Government Securities, can change in value as a result of changes in interest
rates, the issuer's actual or perceived creditworthiness or the issuer's ability
to meet its obligations.
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund pursues its objective by investing primarily in high
quality debt obligations and obligations of financial institutions. The Fund may
also invest in U.S. Government Securities (as defined below) and municipal
securities, although the Fund expects to invest in such securities to a lesser
degree.
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates', current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by the guarantee of a
third party or solely by the unsecured promise of the issuer to make payments
when due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption. Pursuant to Section 4(2) of the 1933 Act or Rule 144A
adopted under the 1933 Act, however, some of these securities are eligible for
resale to institutional investors, and accordingly, Janus Capital may determine
that a liquid market exists for such a security pursuant to guidelines adopted
by the Trustees.
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
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OBLIGATIONS OF FINANCIAL INSTITUTIONS
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations) having total assets in excess of one billion dollars and
U.S. branches of foreign banks having total assets in excess of ten billion
dollars. The Fund may also invest in Eurodollar and Yankee bank obligations as
discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Fixed time deposits, which
are payable at a stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Fund but may be subject to early
withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
EURODOLLAR OR YANKEE OBLIGATIONS
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. GOVERNMENT SECURITIES
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
MUNICIPAL SECURITIES
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. GOVERNMENT SECURITIES
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of the value of its net assets in securities whose interest is federally
taxable. Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (see "Taxable Investments").
MUNICIPAL SECURITIES
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
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to provide funding for various privately operated industrial and commercial
facilities. The Fund may also invest in high quality participation interests in
municipal securities. A more detailed description of various types of municipal
securities is contained in Appendix B in the SAI.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
issuing entity and a security is backed only by the assets and revenues of the
issuing entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development bond backed only
by the assets and revenues of the non-governmental issuer, the non-governmental
issuer will be deemed to be the sole issuer of the bond.
At times, the Fund may invest more than 25% of the value of its total assets in
tax-exempt securities that are related in such a way that an economic, business,
or political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists that, as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
PARTICIPATION INTERESTS
The Funds may invest in participation interests in any type of security in which
the Funds may invest. A participation interest gives a Fund an undivided
interest in the underlying securities in the proportion that the Fund's
participation interest bears to the total principal amount of the underlying
securities. Participation interests usually carry a demand feature, as described
below, backed by a letter of credit or guarantee of the institution that issued
the interests permitting the holder to tender them back to the institution.
DEMAND FEATURES
The Funds may invest in securities that are subject to puts and stand-by
commitments ("demand features"). Demand features give the Fund the right to
resell securities at specified periods prior to their maturity dates to the
seller or to some third party at an agreed-upon price or yield. Securities with
demand features may involve certain expenses and risks, including the inability
of the issuer of the instrument to pay for the securities at the time the
instrument is exercised, non-marketability of the instrument and differences
between the maturity of the underlying security and the maturity of the
instrument. Securities may cost more with demand features than without them.
Demand features can serve three purposes: to shorten the maturity of a variable
or floating rate security, to enhance the instrument's credit quality and to
provide a source of liquidity. Demand features are often issued by third party
financial institutions, generally domestic and foreign banks. Accordingly, the
credit quality and liquidity of the Funds' investments may be dependent in part
on the credit quality of the banks supporting the Funds' investments. This will
result in exposure to risks pertaining to the banking industry, including the
foreign banking industry. Brokerage firms and insurance companies also provide
certain liquidity and credit support. A substantial portion of the Janus
Tax-Exempt Money Market Fund's portfolio in particular may consist of securities
backed by banks and other financial institutions, and thus adverse changes in
the credit quality of these institutions could cause losses to the Fund and
affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The securities in which the Funds invest may have variable or floating rates of
interest. These securities pay interest
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
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at rates that are adjusted periodically according to a specified formula,
usually with reference to some interest rate index or market interest rate.
Securities with ultimate maturities of greater than 397 days may be purchased
only pursuant to Rule 2a-7. Under that Rule, only those long-term instruments
that have demand features which comply with certain requirements and certain
variable rate U.S. Government Securities may be purchased. Similar to fixed rate
debt instruments, variable and floating rate instruments are subject to changes
in value based on changes in market interest rates or changes in the issuer's or
guarantor's creditworthiness. The rate of interest on securities purchased by a
Fund may be tied to short-term Treasury or other government securities or
indices on securities that are permissible investments of the Funds, as well as
other money market rates of interest. The Funds will not purchase securities
whose values are tied to interest rates or indices that are not appropriate for
the duration and volatility standards of a money market fund.
MORTGAGE- AND
ASSET-BACKED SECURITIES
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
REPURCHASE AGREEMENTS
Each Fund may seek additional income by entering into collateralized repurchase
agreements. Repurchase agreements are transactions in which a Fund purchases
securities and simultaneously commits to resell those securities to the seller
at an agreed-upon price on an agreed-upon future date. The resale price reflects
a market rate of interest that is not related to the coupon rate or maturity of
the purchased securities. If the seller of the securities underlying a
repurchase agreement fails to pay the agreed resale price on the agreed delivery
date, a Fund may incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so.
REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which a Fund sells a security and simultaneously
commits to repurchase that security from the buyer at an agreed upon price on an
agreed upon future date. This technique will be used only for temporary or
emergency purposes, such as meeting redemption requests, or to earn additional
income on portfolio securities.
DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery basis.
Securities so purchased are subject to market price fluctuation from the time of
purchase but no interest on the securities accrues to a Fund until delivery and
payment for the securities take place. Accordingly, the value of the securities
on the delivery date may be more or less than the purchase price. Forward
commitments will be entered into only when a Fund has the intention of taking
possession of the securities, but a Fund may sell the securities before the
settlement date if deemed advisable.
BORROWING AND LENDING
Each Fund may borrow money for temporary or emergency purposes in amounts up to
25% of its total assets. A Fund may not mortgage or pledge securities except to
secure permitted borrowings. As a fundamental policy, a Fund will not lend
securities or other assets if, as a result, more than 25% of its total assets
would be lent to other parties; however, the Funds do not currently intend to
engage in securities lending. Each Fund intends to seek permission from the SEC
to borrow money from or lend money to other funds that permit such transactions
and are advised by Janus Capital. There is no assurance that such permission
will be granted.
INVESTMENT ADVISER AND ADMINISTRATOR
INVESTMENT ADVISER
Each Fund has a separate Investment Advisory Agreement with Janus Capital, 100
Fillmore Street, Denver, Colorado 80206-4923. Janus Capital has served as
investment adviser to Janus Fund since 1970 and currently serves as investment
adviser to all of the Janus funds, as well as adviser or subadviser to other
mutual funds and individual, corporate, charitable and retirement accounts.
Kansas City Southern Industries, Inc., a publicly traded holding company whose
primary subsidiaries are engaged in transportation, information processing and
financial services ("KCSI"), owns approximately 83% of the outstanding voting
stock of Janus Capital. Thomas H. Bailey, the President and Chairman of the
Board of Janus Capital, owns approximately 12% of its voting stock and, by
agreement with KCSI, selects a majority of Janus Capital's Board.
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
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Pursuant to the Investment Advisory Agreements, Janus Capital furnishes
continuous advice and recommendations concerning each Fund's investments. Each
of the Funds has agreed to compensate Janus Capital for its advisory services by
the monthly payment of a fee at the annual rate of 0.20% of the value of the
average daily net assets of each Fund. Janus Capital has agreed to waive a
portion of its fee and accordingly, the advisory fee of each Fund will be
calculated at the annual rate of 0.10% of the value of each Fund's average daily
net assets. Janus Capital may modify or terminate the waiver at any time upon 90
days' notice to the Trustees.
ADMINISTRATOR
Each of the Funds has also entered into an Administration Agreement with Janus
Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Funds, pays the costs of printing
reports and prospectuses for existing shareholders, provides office space for
the Funds and pays the salaries, fees and expenses of all Fund officers and of
those Trustees who are affiliated with Janus Capital. Administrative services
provided by Janus Capital under the Administration Agreements include custody
and transfer agency services. Janus Capital is paid an administration fee,
calculated daily and paid monthly, at the annual rate of 0.40% of the value of
the average daily net assets of each Fund attributable to Shares for services
rendered pursuant to the Administration Agreements. Janus Capital has agreed to
waive a portion of its fee and accordingly, the administration fee paid by the
Shares will be calculated at the annual rate of 0.30% of the value of each
Fund's average daily net assets attributable to the Shares. Janus Capital may
modify or terminate this waiver at any time upon 90 days' notice to the
Trustees.
Each Fund pays all of its expenses not assumed by Janus Capital, including
auditing fees and independent Trustees' fees and expenses.
Janus Capital may use all or a portion of its administration fee to compensate
Financial Institutions for providing administrative services to their customers
who invest in the Shares. The types of services that the Financial Institutions
would provide include serving as the sole shareholder of record, shareholder
recordkeeping, processing and aggregating purchase and redemption transactions,
providing periodic statements, forwarding shareholder reports and other
materials, providing tax information, and providing other similar services that
the Funds would have to perform if they were dealing directly with the
beneficial owners, rather than the Financial Institutions, as shareholders of
record.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by brokers
and dealers selected by Janus Capital. Broker-dealers are selected on the basis
of their ability to obtain best price and execution for the Funds' transactions
and recognizing brokerage, research and other services provided to the Fund and
to Janus Capital. Janus Capital may also consider payments made by brokers
effecting transactions for a Fund i) to the Fund or ii) to other persons on
behalf of the Fund for services provided to the Fund for which it would be
obligated to pay. The Funds' Trustees have also authorized the Funds to place
portfolio transactions on an agency basis with a broker-dealer that is
affiliated with Janus Capital. Agency trades, if any, that are placed with such
affiliated party serve to reduce certain expenses of the Funds. The SAI further
explains the selection of broker-dealers.
PERSONAL INVESTING
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Funds and
Janus Capital's other advisory clients. See the SAI for more detailed
information.
DISTRIBUTIONS AND TAXES
Dividends representing substantially all of the net investment income and any
net realized gains on sales of securities are declared daily, Saturdays, Sundays
and holidays included, and distributed on the last business day of each month.
If a month begins on a Saturday, Sunday or holiday, dividends for those days are
declared at the end of the preceding month and distributed on the first business
day of the month. Distributions will be reinvested in Shares of a Fund unless
otherwise elected by the shareholder pursuant to the options offered by the
Financial Institution.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market Fund)
are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
6
<PAGE>
information regarding the tax status of income dividends and any capital gains
distributions will be mailed to Financial Institutions who will forward the
information to their customers for tax purposes on or before January 31st of
each year. Because the Funds are money market funds, they do not anticipate
making any capital gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially all income
dividends it pays will be exempt from federal income tax. However, dividends
attributable to interest on taxable investments, together with distributions
from any net realized capital gains, are taxable. In addition, interest on
certain private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent that the Fund
earns such income, shareholders who are subject to the alternative minimum tax
must include such income as a preference item. The Fund will advise shareholders
of the percentage of dividends, if any, subject to the alternative minimum tax.
Dividends and capital gains distributions may also be subject to state and local
taxes. In certain states some portion of dividends and distributions (depending
on the sources of the Fund's net income) of Janus Tax-Exempt Money Market Fund
may be exempt from state and local taxes. Shareholders should consult their own
tax advisor regarding exemption from any applicable state and local tax, as well
as the tax treatment of any dividends or distributions from the Shares.
The Funds intend to comply with provisions of the Internal Revenue Code
applicable to investment companies, and thus it is not expected that any of the
Funds will be required to pay any federal income or excise taxes. The SAI
further explains the Funds' tax status.
PERFORMANCE
The Shares may measure performance in several ways, including "yield,"
"effective yield," and "tax equivalent yield" (for Janus Tax-Exempt Money Market
Fund only). Yield is a way of showing the rate of income the Shares earn on
investments as a percentage of the Share price. Yield represents the income,
less expenses generated by an investment, in the Shares over a seven-day period
expressed as an annual percentage rate. Effective yield is similar in that it is
calculated over the same time frame, but instead the net investment income is
compounded and then annualized. Due to the compounding effect, the effective
yield will normally be higher than the yield.
Shares of Janus Tax-Exempt Money Market Fund may also quote tax-equivalent
yield, which shows the taxable yield an investor would have to earn before taxes
to equal such Shares' tax-free yield. A tax-equivalent yield is calculated by
dividing such Shares' tax-exempt yield by the result of one minus a stated
federal tax rate. Only that portion of the Fund's income that is tax-exempt is
adjusted in this calculation.
Performance figures are based upon historical results and are not intended to
indicate future performance.
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
7
<PAGE>
MISCELLANEOUS INFORMATION
ORGANIZATION
Each Fund is an open-end management investment company registered under the 1940
Act as a series of the Trust, which was created on February 11, 1986. Each Fund
currently offers three classes of shares by separate prospectuses. The Shares
offered by this Prospectus are available only through Financial Institutions
that meet minimum investment requirements in connection with trust accounts,
cash management programs and similar programs provided to their customers. A
second class of shares, Institutional Shares of each Fund, are available only to
institutional clients, including corporations, foundations and trusts, and
individuals meeting certain initial investment requirements. A third class of
shares, Investor Shares of each Fund, are available to the general public.
Because the expenses of each class may differ, the performance of each class is
expected to differ. If you would like additional information, please call
1-800-29JANUS.
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objective and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
VOTING RIGHTS
The Trust is not required to hold annual shareholder meetings. However, special
meetings may be called for a specific class of shares, a specific Fund, or for
the Trust as a whole, for purposes such as electing or removing Trustees,
terminating or reorganizing the Trust, changing fundamental policies or voting
on matters when required by the 1940 Act. Separate votes are taken by a separate
Fund (or a separate class of shares) only if a matter affects or requires the
vote of just that Fund (or those shares). Shareholders are entitled to cast one
vote for each Share they own.
CUSTODIAN, TRANSFER AGENT
AND DISTRIBUTOR
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri 64141-6226,
is the custodian of the Funds' assets. The custodian holds each Fund's assets in
safekeeping and collects and remits the income thereon subject to the
instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado 80217-3375, a
wholly-owned subsidiary of Janus Capital, provides transfer agency and
shareholder services for the Funds.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado 80206-4928, a
wholly-owned subsidiary of Janus Capital, is a distributor of the Shares.
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
8
<PAGE>
SHAREHOLDER'S GUIDE
INVESTORS MAY NOT PURCHASE OR REDEEM SHARES OF THE FUNDS DIRECTLY. SHARES MAY BE
PURCHASED OR REDEEMED ONLY THROUGH FINANCIAL INSTITUTIONS IN CONNECTION WITH
TRUST ACCOUNTS, CASH MANAGEMENT PROGRAMS AND SIMILAR PROGRAMS. YOUR FINANCIAL
INSTITUTION WILL PROVIDE YOU WITH INSTRUCTIONS ON PURCHASING OR REDEEMING
SHARES.
The Financial Institutions are responsible for promptly transmitting purchase,
redemption and other requests to the Funds under the arrangements made between
the Financial Institutions and their customers. The Funds are not responsible
for the failure of any Financial Institution to carry out its obligations to its
customers.
PURCHASES
Purchases of Fund Shares may be made only through omnibus accounts of Financial
Institutions in connection with trust accounts, cash management programs and
similar programs. Your Financial Institution will provide you with instructions
on purchasing Shares. The Financial Institutions may impose charges and
restrictions different from those imposed by the Funds. The Financial
Institutions may also require different minimum initial and subsequent
investments than required by the Funds.
All investments in the Funds are credited to a participating Financial
Institution's omnibus account upon acceptance of the investment by a Fund.
Investments will be processed at the NAV next determined after an order is
received and accepted by a Fund.
Each Fund reserves the right to reject any specific purchase order. Purchase
orders may be refused if, in Janus Capital's opinion, they are of a size that
would disrupt the management of a Fund. Any Fund may discontinue sales of its
Shares if management believes that a substantial further increase may adversely
affect that Fund's ability to achieve its investment objective. In such event,
however, it is anticipated that existing Financial Institution customers in that
Fund would be permitted to continue to authorize investment in such Fund and to
reinvest any dividends or capital gains distributions.
MINIMUM INVESTMENT
There is a $250,000 initial aggregate investment minimum by each Financial
Institution. The Funds may, in their discretion, waive this minimum under
certain circumstances but, in such event, the minimum must be reached within 90
days of opening the account. Financial Institutions who do not maintain the
$250,000 minimum will be given the option of requesting their customers to
exchange into Investor Shares if the required minimum investment for Investor
Shares is met or having their customers' Shares redeemed.
NET ASSET VALUE
The net asset value ("NAV") of the Shares is determined at the close of the
regular trading session of the New York Stock Exchange (normally 4:00 p.m., New
York time) each day that both the Exchange and the New York Federal Reserve Bank
are open. NAV per share is determined by dividing the total value of the
securities and other assets, less liabilities, by the total number of Shares
outstanding. Portfolio securities are valued at their amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity (or such other date as permitted by
Rule 2a-7) of any discount or premium. If fluctuating interest rates cause the
market value of a portfolio to deviate more than 1/2 of 1% from the value
determined on the basis of amortized cost, the Trustees will consider whether
any action, such as adjusting the Share's NAV to reflect current market
conditions, should be initiated to prevent any material dilutive effect on
shareholders.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to maintain the
general liquidity that is representative of a money market fund and to help
facilitate transactions in shareholder accounts.
REDEMPTIONS
Redemptions, like purchases, may be effected only through the accounts of
participating Financial Institutions. Your Financial Institution will provide
you with instructions on redeeming shares.
Shares of any Fund may be redeemed on any business day. Redemptions are
processed at the NAV next calculated after receipt and acceptance of the
redemption order by the Fund. Redemption proceeds will normally be wired to the
participating Financial Institution the business day following receipt of the
redemption order, but in no event later than seven days after receipt of such
order.
SHAREHOLDER COMMUNICATIONS
Shareholders will receive annual and semiannual reports including the financial
statements of the Funds that they have authorized for investment from their
Financial Institution. Each report will show the investments owned by each Fund
and the market values thereof, as well as other information about the Funds and
their operations. The Trust's fiscal year ends October 31.
JANUS MONEY MARKET FUNDS - SERVICE SHARES PROSPECTUS February 17, 1997
9
<PAGE>
[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
- --------------------------------------------------------------------------------
Statement of Additional Information
February 17, 1997
- --------------------------------------------------------------------------------
GROWTH FUNDS FIXED-INCOME FUNDS
Janus Fund Janus Flexible Income Fund
Janus Enterprise Fund Janus High-Yield Fund
Janus Equity Income Fund Janus Federal Tax-Exempt Fund
Janus Mercury Fund Janus Short-Term Bond Fund
Janus Olympus Fund
Janus Overseas Fund
Janus Twenty Fund
Janus Worldwide Fund
COMBINATION FUNDS
Janus Balanced Fund
Janus Growth and Income Fund
This Statement of Additional Information ("SAI") pertains to the funds
listed above, each of which is a separate series of Janus Investment Fund, a
Massachusetts business trust (the "Trust"). Each of these series of the Trust
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies (individually, a "Fund" and
collectively, the "Funds"). Each Fund is managed separately by Janus Capital
Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus of each Fund dated February 17, 1997, which are incorporated by
reference into this SAI and may be obtained from the Trust at the above phone
number or address. This SAI contains additional and more detailed information
about the Funds' operations and activities than the Prospectuses.
<PAGE>
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies, Restrictions and Techniques .................. 3
Investment Objectives .......................................... 3
Portfolio Policies ............................................. 4
Investment Restrictions Applicable to All Funds ................ 4
Investment Policies Applicable to Certain Funds ................ 5
Types of Securities and Investment Techniques .................. 6
Illiquid Investments ......................................... 6
Zero Coupon, Pay-In-Kind and Step Coupon Securities .......... 6
Pass-Through Securities ...................................... 6
Investment Company Securities ................................ 7
Depositary Receipts .......................................... 7
Municipal Obligations ........................................ 8
Other Income-Producing Securities ............................ 8
Repurchase and Reverse Repurchase Agreements ................. 8
High-Yield/High-Risk Securities .............................. 8
Futures, Options and Other Derivative Instruments ............ 9
Investment Adviser ................................................ 15
Custodian, Transfer Agent and Certain Affiliations ................ 17
Portfolio Transactions and Brokerage .............................. 18
Officers and Trustees ............................................. 20
Purchase of Shares ................................................ 23
Net Asset Value Determination .................................. 23
Reinvestment of Dividends and Distributions .................... 24
Redemption of Shares .............................................. 24
Shareholder Accounts .............................................. 24
Telephone Transactions ......................................... 24
Systematic Redemptions ......................................... 25
Retirement Plans .................................................. 25
Income Dividends, Capital Gains Distributions and Tax Status ...... 25
Principal Shareholders ............................................ 26
Miscellaneous Information ......................................... 26
Shares of the Trust ............................................ 27
Voting Rights .................................................. 27
Independent Accountants ........................................ 27
Registration Statement ......................................... 27
Performance Information ........................................... 27
Financial Statements .............................................. 29
Appendix A ........................................................ 30
Explanation of Ratings Categories .............................. 30
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2
<PAGE>
INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
Each Fund's investment objective is discussed in the Prospectus and
summarized below. There is no assurance that the Funds will achieve their
respective objectives. The investment objectives of the Funds are not
fundamental and may be changed by the Trustees without shareholder approval.
INVESTMENT OBJECTIVES
Janus Fund is a diversified fund that seeks long-term growth of capital in
a manner consistent with the preservation of capital by investing primarily in
common stocks of issuers of any size. Generally, this Fund emphasizes issuers
with larger market capitalizations.
Janus Enterprise Fund is a nondiversified fund that seeks long-term growth
of capital by investing primarily in common stocks. The Fund intends to normally
invest at least 50% of its equity assets in securities issued by medium-sized
companies (as defined in the Prospectus).
Janus Equity Income Fund is a diversified fund that seeks current income
and long-term growth of capital by investing primarily in income-producing
equity securities.
Janus Mercury Fund is a diversified fund that seeks long-term growth of
capital by investing in common stocks of issuers of any size, including larger,
well-established companies and/or smaller, emerging growth companies.
Janus Olympus Fund is a nondiversified fund that seeks long-term growth of
capital by investing primarily in common stocks of issuers of any size,
including larger, well-established companies and/or smaller, emerging growth
companies.
Janus Overseas Fund is a diversified fund that seeks long-term growth of
capital by investing primarily in common stocks of foreign issuers of any size.
The Fund normally invests at least 65% of its total assets in issuers from at
least five different countries excluding the United States.
Janus Twenty Fund is a nondiversified fund that seeks long-term growth of
capital. Under normal conditions, this Fund concentrates its investments in a
core position of 20-30 common stocks.
Janus Worldwide Fund is a diversified fund that seeks long-term growth of
capital in a manner consistent with the preservation of capital by investing in
common stocks of foreign and domestic issuers of any size. Janus Worldwide Fund
normally invests in issuers from at least five different countries including the
United States.
Janus Balanced Fund is a diversified fund that seeks long-term capital
growth, consistent with preservation of capital and balanced by current income.
Janus Balanced Fund normally invests 40-60% of its assets in securities selected
primarily for growth potential and 40-60% of its assets in securities selected
for their income potential.
Janus Growth and Income Fund is a diversified fund that seeks both
long-term capital growth and current income. Janus Growth and Income Fund places
a stronger emphasis on the growth objective and normally invests up to 75% of
its assets in equity securities selected primarily for their growth potential
and at least 25% of its assets in securities that have income potential. In
unusual circumstances, the Fund may reduce the growth component of its portfolio
to 25% of its assets.
Janus Flexible Income Fund is a diversified fund that seeks to maximize
total return consistent with preservation of capital. Total return is expected
to result from a combination of current income and capital appreciation,
although income will normally be the dominant component of total return. Janus
Flexible Income Fund invests in all types of income-producing securities. This
Fund may have substantial holdings of debt securities rated below investment
grade.
Janus High-Yield Fund is a diversified fund that seeks high current income
as its primary objective and capital appreciation as its secondary objective
when consistent with the primary objective by investing in high-yield/high-risk
fixed-income securities. The Fund emphasizes investments in high-yield corporate
debt securities ("junk bonds") and may invest all of its assets in such
securities.
Janus Federal Tax-Exempt Fund is a diversified fund that seeks as high a
level of current income exempt from federal income tax as is consistent with
preservation of capital. It will normally invest at least 80% of its net assets
in securities whose income is not subject to federal income tax.
Janus Short-Term Bond Fund is a diversified fund that seeks as high a level
of current income as is consistent with the preservation of capital by investing
primarily in short- and intermediate-term fixed-income securities. It will
normally maintain an average weighted effective maturity not to exceed three
years.
3
<PAGE>
PORTFOLIO POLICIES
The Funds' Prospectuses discuss the types of securities in which the Funds
will invest, portfolio policies of the Funds and the investment techniques of
the Funds. The Prospectuses include a discussion of portfolio turnover policies.
Portfolio turnover is calculated by dividing total purchases or sales, whichever
is less, by the average monthly value of a Fund's portfolio securities. The
following table summarizes the portfolio turnover rates for the fiscal periods
indicated. The information below is for fiscal years ended October 31.
<TABLE>
1996
Fund Name [TO BE FILED BY AMENDMENT] 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Fund ___% 118%
Janus Enterprise Fund ___% 194%
Janus Equity Income Fund ___% N/A
Janus Mercury Fund ___% 201%
Janus Olympus Fund ___% N/A
Janus Overseas Fund ___% 188%
Janus Twenty Fund ___% 147%
Janus Worldwide Fund ___% 142%
Janus Balanced Fund ___% 185%
Janus Growth and Income Fund ___% 195%
Janus Flexible Income Fund ___% 250%
Janus High-Yield Fund ___% N/A
Janus Federal Tax-Exempt Fund ___% 164%
Janus Short-Term Bond Fund ___% 337%
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</TABLE>
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, the Funds are subject to certain
fundamental policies and restrictions that may not be changed without
shareholder approval. Shareholder approval means approval by the lesser of (i)
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund if a matter affects just that Fund), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities of the Trust (or a particular Fund) are present or
represented by proxy. As fundamental policies, each of the Funds may not:
(1) Own more than 10% of the outstanding voting securities of any one
issuer and, as to fifty percent (50%) of the value of the total assets for Janus
Twenty Fund, Janus Enterprise Fund and Janus Olympus Fund and as to seventy-five
percent (75%) of the value of the total assets of the other Funds, purchase the
securities of any one issuer (except cash items and "government securities" as
defined under the Investment Company Act of 1940, as amended (the "1940 Act")),
if immediately after and as a result of such purchase, the value of the holdings
of a Fund in the securities of such issuer exceeds 5% of the value of such
Fund's total assets. With respect to the other 50% of the value of their total
assets, Janus Twenty Fund, Janus Enterprise Fund and Janus Olympus Fund may
invest in the securities of as few as two issuers.
(2) Invest 25% or more of the value of their respective total assets in any
particular industry (other than U.S. government securities); provided, however,
that for Janus Federal Tax-Exempt Fund this limitation does not apply to
municipal obligations. For the purposes of this limitation only, industrial
development bonds issued by nongovernmental users shall not be deemed to be
municipal obligations. Industrial development bonds shall be classified
according to the industry of the entity that has the ultimate responsibility for
the payment of principal and interest on the obligation.
(3) Invest directly in real estate or interests in real estate; however,
the Funds may own debt or equity securities issued by companies engaged in those
businesses.
(4) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the Funds from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more than 25%
of a Fund's total assets would be lent to other parties (but this limitation
does not apply to purchases of commercial paper, debt securities or repurchase
agreements).
(6) Act as an underwriter of securities issued by others, except to the
extent that a Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of such Fund.
As a fundamental policy, each Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as such Fund.
4
<PAGE>
The Trustees have adopted additional investment restrictions for the Funds.
These restrictions are operating policies of the Funds and may be changed by the
Trustees without shareholder approval. The additional investment restrictions
adopted by the Trustees to date include the following:
(a) A Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions will exceed 5% of the fair market value of a Fund's
net assets, after taking into account unrealized profits and unrealized losses
on any such contracts it has entered into; and (ii) enter into any futures
contracts if the aggregate amount of such Fund's commitments under outstanding
futures contracts positions would exceed the market value of its total assets.
(b) The Funds do not currently intend to sell securities short, unless they
own or have the right to obtain securities equivalent in kind and amount to the
securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary for
the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps and forward
contracts shall not be deemed to constitute purchasing securities on margin.
(d) A Fund may not mortgage or pledge any securities owned or held by such
Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection
with such contracts.
(e) The Funds may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of their
respective total assets (including the amount borrowed) less liabilities (other
than borrowings). If borrowings exceed 25% of the value of a Fund's total assets
by reason of a decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, deposits of assets
to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
(f) The Funds do not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of their respective
net assets would be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The Trustees, or the Funds' investment
adviser acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"),
or any successor to such rule, Section 4(2) commercial paper and municipal lease
obligations. Accordingly, such securities may not be subject to the foregoing
limitation.
(g) The Funds may not invest in companies for the purpose of exercising
control of management.
For the purposes of these investment restrictions, the identification of
the issuer of a municipal obligation depends on the terms and conditions of the
security. When assets and revenues of a political subdivision are separate from
those of the government that created the subdivision and the security is backed
only by the assets and revenues of the subdivision, the subdivision is deemed to
be the sole issuer. Similarly, in the case of an industrial development bond, if
the bond is backed only by assets and revenues of a nongovernmental user, then
the nongovernmental user would be deemed to be the sole issuer. If, however, in
either case, the creating government or some other entity guarantees the
security, the guarantee would be considered a separate security that would be
treated as an issue of the guaranteeing entity.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that Bloomberg L.P. classifications are so broad
that the primary economic characteristics in a single class are materially
different, the Funds may further classify issuers in accordance with industry
classifications as published by the Securities and Exchange Commission ("SEC").
INVESTMENT POLICIES APPLICABLE TO CERTAIN FUNDS
Janus Balanced Fund. As an operational policy, at least 25% of the assets
of Janus Balanced Fund normally will be invested in fixed-income senior
securities, which include debt securities and preferred stock.
Janus Flexible Income Fund. As a fundamental policy, this Fund may not
purchase a non-income-producing security if, after such purchase, less than 80%
of the Fund's total assets would be invested in income-producing securities.
Income-producing securities include securities that make periodic interest
payments as well as those that make interest payments on a deferred basis or pay
interest only at maturity (e.g., Treasury bills or zero coupon bonds).
5
<PAGE>
Janus Federal Tax-Exempt Fund. As a fundamental policy, this Fund will
normally invest at least 80% of its net assets in securities whose income is not
subject to federal income taxes, including the alternative minimum tax.
Janus Short-Term Bond Fund. As an operational policy, this Fund will not
invest in any debt security that, at the time of purchase, causes its portfolio
of debt securities to have a dollar-weighted average, then remaining effective
term to maturity of three years or more. The portfolio manager may consider
estimated prepayment dates or call dates of certain securities in computing the
portfolio's effective maturity.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees of the Funds
have authorized Janus Capital to make liquidity determinations with respect to
its securities, including Rule 144A Securities, commercial paper and municipal
lease obligations. Under the guidelines established by the Trustees, Janus
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; 2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by a nationally recognized statistical
rating organization ("NRSRO"). With respect to municipal lease obligations,
Janus Capital will also consider factors unique to municipal lease obligations
including the general creditworthiness of the municipality, the importance of
the property covered by the lease obligation and the likelihood that the
marketability of the obligation will be maintained throughout the time the
obligation is held by a Fund. A foreign security that may be freely traded on or
through the facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security subject to these
procedures.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
Each Fund may invest up to 10% (without limit for Janus High-Yield Fund) of
its assets in zero coupon, pay-in-kind and step coupon securities. Zero coupon
bonds are issued and traded at a discount from their face value. They do not
entitle the holder to any periodic payment of interest prior to maturity. Step
coupon bonds trade at a discount from their face value and pay coupon interest.
The coupon rate is low for an initial period and then increases to a higher
coupon rate thereafter. The discount from the face amount or par value depends
on the time remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer.
Pay-in-kind bonds normally give the issuer an option to pay cash at a coupon
payment date or give the holder of the security a similar bond with the same
coupon rate and a face value equal to the amount of the coupon payment that
would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), a Fund must distribute
its investment company taxable income, including the original issue discount
accrued on zero coupon or step coupon bonds. Because a Fund will not receive
cash payments on a current basis in respect of accrued original-issue discount
on zero coupon bonds or step coupon bonds during the period before interest
payments begin, in some years that Fund may have to distribute cash obtained
from other sources in order to satisfy the distribution requirements under the
Code. A Fund might obtain such cash from selling other portfolio holdings which
might cause that Fund to incur capital gains or losses on the sale.
Additionally, these actions are likely to reduce the assets to which Fund
expenses could be allocated and to reduce the rate of return for that Fund. In
some circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might otherwise
make it undesirable for a Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
PASS-THROUGH SECURITIES
The Funds may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests.
A pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and
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principal payments to the intermediary which are passed through to purchasers,
such as the Funds. The most common type of pass-through securities are
mortgage-backed securities. Government National Mortgage Association ("GNMA")
Certificates are mortgage-backed securities that evidence an undivided interest
in a pool of mortgage loans. GNMA Certificates differ from bonds in that
principal is paid back monthly by the borrowers over the term of the loan rather
than returned in a lump sum at maturity. A Fund will generally purchase
"modified pass-through" GNMA Certificates, which entitle the holder to receive a
share of all interest and principal payments paid and owned on the mortgage
pool, net of fees paid to the "issuer" and GNMA, regardless of whether or not
the mortgagor actually makes the payment. GNMA Certificates are backed as to the
timely payment of principal and interest by the full faith and credit of the
U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest but it is not guaranteed by the full faith and credit of
the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Funds), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. A portfolio manager will consider
estimated prepayment rates in calculating the average weighted maturity of a
Fund. A borrower is more likely to prepay a mortgage that bears a relatively
high rate of interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by a Fund might be converted to
cash and that Fund will be forced to accept lower interest rates when that cash
is used to purchase additional securities in the mortgage-backed securities
sector or in other investment sectors. Additionally, prepayments during such
periods will limit a Fund's ability to participate in as large a market gain as
may be experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and interest
and principal payments ultimately depend upon payment of the underlying loans by
individuals. Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales agreements
that may be created when a municipality enters into an installment purchase
contract or lease with a vendor. Such securities may be secured by the assets
purchased or leased by the municipality; however, if the municipality stops
making payments, there generally will be no recourse against the vendor. The
market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
INVESTMENT COMPANY SECURITIES
From time to time, a Fund may invest in securities of other investment
companies, including money market funds managed by Janus Capital. The Funds'
investments in such money market funds are subject to the terms of an exemptive
order obtained by the Janus funds which currently provides that each Fund will
limit its aggregate investment in a Janus money market fund to the greater of
(i) 5% of the investing Fund's total assets or (ii) $2.5 million. The Funds are
subject to the provisions of Section 12(d)(1) of the 1940 Act, which currently
limits each Fund's investment in other investment companies to no more than 10%
of the investing Fund's assets.
DEPOSITARY RECEIPTS
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depositary of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Funds may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other
similar instruments representing securities of foreign companies. EDRs are
receipts issued by a European financial institution evidencing an arrangement
similar to that of ADRs. EDRs, in bearer form, are designed for use in European
securities markets.
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MUNICIPAL OBLIGATIONS
The Funds may invest in municipal obligations issued by states, territories
and possessions of the United States and the District of Columbia. Janus Federal
Tax-Exempt Fund may, at times, invest more than 25% of the value of its assets
in industrial development bonds, a type of revenue bond which, although issued
by a public authority, may be backed only by the credit and security of a
private issuer, thus presenting a greater credit risk.
The value of municipal obligations can be affected by changes in their
actual or perceived credit quality. The credit quality of municipal obligations
can be affected by among other things, the financial condition of the issuer or
guarantor, the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the revenue bond project or general borrowing purpose,
political or economic developments in the region where the security is issued,
and the liquidity of the security. Because municipal securities are generally
traded over-the-counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The liquidity of
some municipal obligations may be enhanced by demand features, which would
enable a Fund to demand payment on short notice from the issuer or a financial
intermediary.
OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Funds may purchase
include, but are not limited to, the following types of securities:
Variable and floating rate obligations. These types of securities are
relatively long-term instruments that often carry demand features permitting the
holder to demand payment of principal at any time or at specified intervals
prior to maturity.
Standby commitments. These instruments, which are similar to a put, give a
Fund the option to obligate a broker, dealer or bank to repurchase a security
held by that Fund at a specified price.
Tender option bonds. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker, dealer
or bank) to grant the holders of such securities the option to tender the
securities to the institution at periodic intervals.
Inverse floaters. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. The
Funds will not invest more than 5% of their respective assets in inverse
floaters.
The Funds will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of their portfolios.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon incremental amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or "collateral." A Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause a
Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, a Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days will be subject to the 15% limit on illiquid investments. While
it is not possible to eliminate all risks from these transactions, it is the
policy of the Funds to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Janus Capital.
A Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities, or to earn additional
income on portfolio securities, such as Treasury bills or notes. In a reverse
repurchase agreement, a Fund sells a portfolio security to another party, such
as a bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase agreement
is outstanding, a Fund will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The
Funds will enter into reverse repurchase agreements only with parties that Janus
Capital deems creditworthy.
HIGH-YIELD/HIGH-RISK SECURITIES
Janus Flexible Income Fund and Janus High-Yield Fund may invest without
limit in corporate debt securities that are rated below investment grade (e.g.,
securities rated BB or lower by Standard & Poor's Ratings Services ("Standard &
Poor's") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")). No
other Fund intends to invest 35% or more of its net assets in such
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securities. Lower rated bonds involve a higher degree of credit risk, which is
the risk that the issuer will not make interest or principal payments when due.
In the event of an unanticipated default, a Fund would experience a reduction in
its income, and could expect a decline in the market value of the securities so
affected.
Each Fund may also invest in unrated debt securities of foreign and
domestic issuers. Unrated debt, while not necessarily of lower quality than
rated securities, may not have as broad a market. Because of the size and
perceived demand of the issue, among other factors, certain municipalities may
not incur the costs of obtaining a rating. A Fund's portfolio manager will
analyze the creditworthiness of the issuer, as well as any financial institution
or other party responsible for payments on the security, in determining whether
to purchase unrated municipal bonds. Unrated debt securities will be included in
the 35% limit of each Fund unless its portfolio manager deems such securities to
be the equivalent of investment grade securities.
Subject to the above limits, each Fund may purchase defaulted securities
only when their portfolio managers believe, based upon their analysis of the
financial condition, results of operations and economic outlook of an issuer,
that there is potential for resumption of income payments and that the
securities offer an unusual opportunity for capital appreciation.
Notwithstanding the respective portfolio manager's belief as to the resumption
of income, however, the purchase of any security on which payment of interest or
dividends is suspended involves a high degree of risk. Such risk includes, among
other things, the following:
Financial and Market Risks. Investments in securities that are in default
involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. Issuers of defaulted securities may
have substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain information about the
condition of such issuers. The market prices of such securities also are subject
to abrupt and erratic movements and above average price volatility, and the
spread between the bid and asked prices of such securities may be greater than
normally expected.
Disposition of Portfolio Securities. Although these Funds generally will
purchase securities for which their portfolio managers expect an active market
to be maintained, defaulted securities may be less actively traded than other
securities and it may be difficult to dispose of substantial holdings of such
securities at prevailing market prices. The Funds will limit holdings of any
such securities to amounts that the portfolio managers believe could be readily
sold, and holdings of such securities would, in any event, be limited so as not
to limit the Funds' ability to readily dispose of securities to meet
redemptions.
Other. Defaulted securities require active monitoring and may, at times,
require participation in bankruptcy or receivership proceedings on behalf of the
Funds.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Futures Contracts. The Funds may enter into contracts for the purchase or
sale for future delivery of fixed-income securities, foreign currencies or
contracts based on financial indices, including indices of U.S. government
securities, foreign government securities, equity or fixed-income securities.
U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures commission
merchant ("FCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain other liquid assets by the Funds' custodian for the benefit of the FCM.
Initial margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments for the benefit of
the FCM to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. In the event of
the bankruptcy of the FCM that holds margin on behalf of a Fund, that Fund may
be entitled to return of margin owed to such Fund only in proportion to the
amount received by the FCM's other customers. Janus Capital will attempt to
minimize the risk by careful monitoring of the creditworthiness of the FCMs with
which the Funds do business and by depositing margin payments in a segregated
account with the Funds' custodian.
The Funds intend to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the CFTC
and the National Futures Association, which regulate trading in the futures
markets. The Funds will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. To the extent
that the Funds hold positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of a Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
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Although a Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to that Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days. However, because
a Fund's cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position remains open,
such Fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
A Fund's primary purpose in entering into futures contracts is to protect
that Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, that Fund could enter into a futures contract
to purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against that Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent a Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
such Fund's obligations with respect to the futures contracts will consist of
other liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by that Fund with respect to the futures contracts.
Conversely, if a Fund holds stocks and seeks to protect itself from a decrease
in stock prices, the Fund might sell stock index futures contracts, thereby
hoping to offset the potential decline in the value of its portfolio securities
by a corresponding increase in the value of the futures contract position. A
Fund could protect against a decline in stock prices by selling portfolio
securities and investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without having to sell
portfolio securities.
If a Fund owns Treasury bonds and the portfolio manager expects interest
rates to increase, that Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as that Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the value of the Treasury bonds would decline, but the value of
that Fund's interest rate futures contract will increase, thereby keeping the
net asset value of that Fund from declining as much as it may have otherwise.
If, on the other hand, a portfolio manager expects interest rates to decline,
that Fund may take a long position in interest rate futures contracts in
anticipation of later closing out the futures position and purchasing the bonds.
Although a Fund can accomplish similar results by buying securities with long
maturities and selling securities with short maturities, given the greater
liquidity of the futures market than the cash market, it may be possible to
accomplish the same result more easily and more quickly by using futures
contracts as an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by a portfolio manager
still may not result in a successful use of futures.
Futures contracts entail risks. Although the Funds believe that use of such
contracts will benefit the Funds, a Fund's overall performance could be worse
than if such Fund had not entered into futures contracts if the portfolio
manager's investment judgement proves incorrect. For example, if a Fund has
hedged against the effects of a possible decrease in prices of securities held
in its portfolio and prices increase instead, that Fund will lose part or all of
the benefit of the increased value of these securities because of offsetting
losses in its futures positions. In addition, if a Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
Fund will not match exactly such Fund's current or potential investments. A Fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests -
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities - which involves a risk that the
futures position will not correlate precisely with the performance of such
Fund's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions also may
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts.
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A Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in a Fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
result in losses that are not offset by the gains in that Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, a Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such Fund's access to other assets held to cover its futures positions
also could be impaired.
Options on Futures Contracts. The Funds may buy and write put and call
options on futures contracts. An option on a future gives a Fund the right (but
not the obligation) to buy or sell a futures contract at a specified price on or
before a specified date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures' price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in that Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, a Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which that Fund is
considering buying. If a call or put option a Fund has written is exercised,
such Fund will incur a loss which will be reduced by the amount of the premium
it received. Depending on the degree of correlation between the change in the
value of its portfolio securities and changes in the value of the futures
positions, a Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Contracts. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Funds may enter
into forward contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial instruments. Forward
contracts generally are traded in an interbank market conducted directly between
traders (usually large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the Funds' principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). A Fund may
enter into forward currency contracts with stated contract values of up to the
value of that Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). A Fund will exchange foreign currencies for
U.S. dollars and for other foreign currencies in the normal course of business
and may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge"). A
Fund also may hedge some or all of its investments denominated in a foreign
currency or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar by entering into forward
currency contracts to sell an amount of that currency (or a proxy currency whose
performance is expected to replicate or exceed the performance of that currency
relative to the U.S. dollar) approximating the value
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of some or all of its portfolio securities denominated in that currency
("position hedge") or by participating in options or futures contracts with
respect to the currency. A Fund also may enter into a forward currency contract
with respect to a currency where the Fund is considering the purchase or sale of
investments denominated in that currency but has not yet selected the specific
investments ("anticipatory hedge"). In any of these circumstances a Fund may,
alternatively, enter into a forward currency contract to purchase or sell one
foreign currency for a second currency that is expected to perform more
favorably relative to the U.S. dollar if the portfolio manager believes there is
a reasonable degree of correlation between movements in the two currencies
("cross-hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on a Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting a Fund's currency exposure from one foreign
currency to another removes that Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
such Fund if its portfolio manager's projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may result in
poorer overall performance for a Fund than if it had not entered into such
contracts.
The Funds will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in or whose value is tied to, the
currency underlying the forward contract or the currency being hedged. To the
extent that a Fund is not able to cover its forward currency positions with
underlying portfolio securities, the Funds' custodian will segregate cash or
other liquid assets having a value equal to the aggregate amount of such Fund's
commitments under forward contracts entered into with respect to position
hedges, cross-hedges and anticipatory hedges. If the value of the securities
used to cover a position or the value of segregated assets declines, a Fund will
find alternative cover or segregate additional cash or liquid assets on a daily
basis so that the value of the covered and segregated assets will be equal to
the amount of such Fund's commitments with respect to such contracts. As an
alternative to segregating assets, a Fund may buy call options permitting such
Fund to buy the amount of foreign currency being hedged by a forward sale
contract or a Fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contacts. In such event,
the Funds' ability to utilize forward contracts may be restricted. In addition,
a Fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge Fund
assets.
Options on Foreign Currencies. The Funds may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Fund may buy put options on
the foreign currency. If the value of the currency declines, such Fund will have
the right to sell such currency for a fixed amount in U.S. dollars, thereby
offsetting, in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects of
the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to a Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, a Fund could sustain losses on transactions in foreign
currency options that would require such Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
The Funds may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, a Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, a Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow that Fund to hedge the increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and a Fund would be required to
buy or sell the underlying currency at a loss which may not be offset by the
amount of the premium. Through the writing of options on foreign currencies, a
Fund also may lose all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
The Funds may write covered call options on foreign currencies. A call
option written on a foreign currency by a Fund is "covered" if that Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that
12
<PAGE>
foreign currency without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other foreign currencies held in its portfolio. A call option is
also covered if a Fund has a call on the same foreign currency in the same
principal amount as the call written if the exercise price of the call held (i)
is equal to or less than the exercise price of the call written or (ii) is
greater than the exercise price of the call written, if the difference is
maintained by such Fund in cash or other liquid assets in a segregated account
with the Funds' custodian.
The Funds also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
a Fund owns or has the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which are entered into
for cross-hedging purposes are not covered. However, in such circumstances, a
Fund will collateralize the option by segregating cash or other liquid assets in
an amount not less than the value of the underlying foreign currency in U.S.
dollars marked-to-market daily.
Options on Securities. In an effort to increase current income and to
reduce fluctuations in net asset value, the Funds may write covered put and call
options and buy put and call options on securities that are traded on United
States and foreign securities exchanges and over-the-counter. The Funds may
write and buy options on the same types of securities that the Funds may
purchase directly.
A put option written by a Fund is "covered" if that Fund (i) segregates
cash not available for investment or other liquid assets with a value equal to
the exercise price of the put with the Funds' custodian or (ii) holds a put on
the same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by a Fund is "covered" if that Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Funds'
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if a Fund holds a call on
the same security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the exercise price
of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by that Fund in cash and other liquid
assets in a segregated account with its custodian.
The Funds also may write call options that are not covered for
cross-hedging purposes. A Fund collateralizes its obligation under a written
call option for cross-hedging purposes by segregating cash or other liquid
assets in an amount not less than the market value of the underlying security,
marked-to-market daily. A Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its portfolio manager believes
that writing the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit a Fund to write another put
option to the extent that the exercise price is secured by other liquid assets.
Effecting a closing transaction also will permit a Fund to use the cash or
proceeds from the concurrent sale of any securities subject to the option for
other investments. If a Fund desires to sell a particular security from its
portfolio on which it has written a call option, such Fund will effect a closing
transaction prior to or concurrent with the sale of the security.
A Fund will realize a profit from a closing transaction if the price of the
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option. A Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received
13
<PAGE>
from writing the option or the price received from a sale transaction is less
than the premium paid to buy the option. Because increases in the market of a
call option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by a Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
A Fund may write options in connection with buy-and-write transactions. In
other words, a Fund may buy a security and then write a call option against that
security. The exercise price of such call will depend upon the expected price
movement of the underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current value of the underlying security at the time the option is written.
Buy-and-write transactions using in-the-money call options may be used when it
is expected that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write transactions using
at-the-money call options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately during the option
period. Buy-and-write transactions using out-of-the-money call options may be
used when it is expected that the premiums received from writing the call option
plus the appreciation in the market price of the underlying security up to the
exercise price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the difference between that
Fund's purchase price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines, the amount of
such decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, a Fund may elect to close the position or take
delivery of the security at the exercise price and that Fund's return will be
the premium received from the put options minus the amount by which the market
price of the security is below the exercise price.
A Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, a Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
A Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that Fund.
Eurodollar Instruments. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. A Fund might use Eurodollar futures contracts and options thereon to
hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
Swaps and Swap-Related Products. A Fund may enter into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with a Fund receiving or paying, as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid assets having
an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a Fund enters
into an interest rate swap on other than a net basis, it would maintain a
segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A Fund will not enter into any interest
rate swap, cap or floor transaction
14
<PAGE>
unless the unsecured senior debt or the claims-paying ability of the other party
thereto is rated in one of the three highest rating categories of at least one
NRSRO at the time of entering into such transaction. Janus Capital will monitor
the creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, a Fund will have contractual
remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Janus Capital has determined that, as
a result, the swap market has become relatively liquid. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by a Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets by a Fund or its counterparty
to collateralize obligations under the swap. Under the documentation currently
used in those markets, the risk of loss with respect to interest rate swaps is
limited to the net amount of the payments that a Fund is contractually obligated
to make. If the other party to an interest rate swap that is not collateralized
defaults, a Fund would risk the loss of the net amount of the payments that it
contractually is entitled to receive. A Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregation requirement described
above.
Additional Risks of Options on Foreign Currencies, Forward Contracts and
Foreign Instruments. Unlike transactions entered into by the Funds in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, an option writer and a buyer or
seller of futures or forward contracts could lose amounts substantially in
excess of any premium received or initial margin or collateral posted due to the
potential additional margin and collateral requirements associated with such
positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting a Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
INVESTMENT ADVISER
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments, provide office space for
the Funds, and pay the salaries, fees and expenses of
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<PAGE>
all Fund officers and of those Trustees who are affiliated with Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which perform recordkeeping or other services with respect to
shareholder accounts. The minimum aggregate size required for eligibility for
such payments, and the factors in selecting the broker-dealer firms and
institutions to which they will be made, are determined from time to time by
Janus Capital. Janus Capital is also authorized to perform the management and
administrative services necessary for the operation of the Funds.
The Funds pay custodian and transfer agent fees and expenses, brokerage
commissions and dealer spreads and other expenses in connection with the
execution of portfolio transactions, legal and accounting expenses, interest and
taxes, registration fees, expenses of shareholders' meetings and reports to
shareholders, fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Funds' Prospectuses and
SAI to current shareholders, and other costs of complying with applicable laws
regulating the sale of Fund shares. Pursuant to the Advisory Agreements, Janus
Capital furnishes certain other services, including net asset value
determination and fund accounting, recordkeeping, and blue sky registration and
monitoring services, for which the Funds may reimburse Janus Capital for its
costs.
Janus Fund, Janus Enterprise Fund, Janus Equity Income Fund, Janus Mercury
Fund, Janus Olympus Fund, Janus Overseas Fund, Janus Twenty Fund, Janus
Worldwide Fund, Janus Balanced Fund and Janus Growth and Income Fund have each
agreed to compensate Janus Capital for its services by the monthly payment of a
fee at the annual rate of 1% of the first $30 million of the average daily net
assets of each Fund, .75% of the next $270 million of the average daily net
assets of each Fund, .70% of the next $200 million of the average daily net
assets of each Fund and .65% of the average daily net assets of each Fund in
excess of $500 million.
Janus High Yield Fund has agreed to compensate Janus Capital for its
services by the monthly payment of a fee at the annual rate of .75% of the first
$300 million of average daily net assets of the Fund and .65% of the average
daily net assets in excess of $300 million. Janus Flexible Income Fund and Janus
Short-Term Bond Fund have each agreed to compensate Janus Capital for its
services by the monthly payment of a fee at the annual rate of .65% of the first
$300 million of the average daily net assets of the Fund, plus .55% of the
average daily net assets of the Fund in excess of $300 million. Janus Federal
Tax-Exempt Fund has agreed to compensate Janus Capital for its services by the
monthly payment of a fee at the annual rate of .60% of the first $300 million of
average daily net assets of the Fund and .55% of the average daily net assets in
excess of $300 million. Janus Capital has agreed to waive the advisory fee
payable by any of these Funds in an amount equal to the amount, if any, that
such Fund's normal operating expenses chargeable to its income account in any
fiscal year, including the investment advisory fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, exceed 1% of the
average daily net assets for a fiscal year for Janus Flexible Income Fund and
Janus High-Yield Fund and .65% of the average daily net assets for a fiscal year
for Janus Short-Term Bond Fund and Janus Federal Tax-Exempt Fund.
The following table summarizes the advisory fees paid by the Funds and any
advisory fee waivers for the last three fiscal periods of each Fund. The
information below is for fiscal years ended October 31.
<TABLE>
1996
[TO BE FILED BY AMENDMENT] 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Name Advisory Fees Waiver Advisory Fees Waiver Advisory Fees Waiver
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Fund $69,101,695 -- $61,177,249 --
Janus Enterprise Fund $3,078,635 -- $2,094,593 --
Janus Equity Income Fund (3) N/A N/A N/A N/A
Janus Mercury Fund $7,719,633 -- $1,992,568 --
Janus Olympus Fund (4) N/A N/A N/A N/A
Janus Overseas Fund $657,146 -- $169,279(1) --
Janus Twenty Fund $18,127,825 -- $20,307,767 --
Janus Worldwide Fund $11,013,534 -- $8,562,262 --
Janus Balanced Fund $879,437 -- $722,711 --
Janus Growth and Income Fund $3,703,827 -- $3,720,739 --
Janus Flexible Income Fund $2,775,005 -- $2,659,291 --
Janus High-Yield Fund (4) N/A N/A N/A N/A
Janus Federal Tax-Exempt Fund $175,910(2) $175,910 $170,306(2) $170,306
Janus Short-Term Bond Fund $307,992 $268,791 $387,295 $300,929
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) May 2, 1994 (inception) to October 31, 1994.
(2) Fee waiver by Janus Capital exceeded the advisory fee.
(3) June 28, 1996 (inception) to October 31, 1996.
(4) December 29, 1995 (inception) to October 31, 1996.
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<PAGE>
The Advisory Agreement for each of the Funds (except Janus Equity Income
Fund) was restated on May 21, 1996. The Advisory Agreement for Janus Equity
Income Fund became effective on March 12, 1996. Each Advisory Agreement will
continue in effect until June 16, 1997, and thereafter from year to year so long
as such continuance is approved annually by a majority of the Funds' Trustees
who are not parties to the Advisory Agreements or interested persons of any such
party, and by either a majority of the outstanding voting shares or the Trustees
of the Funds. Each Advisory Agreement i) may be terminated without the payment
of any penalty by any Fund or Janus Capital on 60 days' written notice; ii)
terminates automatically in the event of its assignment; and iii) generally, may
not be amended without the approval by vote of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
policies and is managed accordingly by a particular portfolio manager or team of
portfolio managers. As a result, from time to time two or more different managed
accounts may pursue divergent investment strategies with respect to investments
or categories of investments.
As indicated in the Prospectuses, Janus Capital does not permit portfolio
managers to purchase and sell securities for their own accounts except under the
limited exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital and the Funds.
The policy requires investment personnel and officers of Janus Capital, inside
directors of Janus Capital and the Funds and other designated persons deemed to
have access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction then known to be under consideration for or to
have been effected on behalf of any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with KCSI, selects a
majority of Janus Capital's Board.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
State Street Bank and Trust Company ("State Street"), P.O. Box 0351,
Boston, Massachusetts 02117-0351 is the custodian of the domestic securities and
cash of the Fund. State Street and the foreign subcustodians selected by it and
approved by the Trustees, have custody of the assets of the Funds held outside
the U.S. and cash incidental thereto. The custodian and subcustodians hold the
Funds' assets in safekeeping and collect and remit the income thereon, subject
to the instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
For transfer agency and other services, Janus Service receives a fee calculated
at an annual rate of .16% of average net assets of each Fund and, in addition,
$4 per open shareholder account for all of the Funds except Janus Fund. In
addition, the Funds pay DST Systems, Inc. ("DST"), a subsidiary of KCSI, license
fees at the rate of $2.56 per shareholder account for the growth and combination
funds and $6.98 per shareholder account for the fixed-income funds for the use
of DST's shareholder accounting system. The Funds pay DST for the use of their
portfolio and fund accounting system a base fee paid monthly between $250 to
$1,250 per month based on the number of Janus funds utilizing the system and an
asset charge of $1 per million dollars of net assets (not to exceed $500 per
month). In addition, the Funds pay DST postage and forms costs of a DST
affiliate incurred in mailing Fund shareholder transaction confirmations.
17
<PAGE>
The Trustees have authorized the Funds to use another affiliate of DST as
introducing broker for certain Fund portfolio transactions as a means to reduce
Fund expenses through a credit against the charges of DST and its affiliates
with regard to commissions earned by such affiliate. See "Portfolio Transactions
and Brokerage."
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. The Funds may trade foreign
securities in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on foreign stock
exchanges, brokers' commissions are frequently fixed and are often higher than
in the United States, where commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to a Fund or to a third
party service provider to the Fund to pay Fund expenses; and research products
or services provided. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer with whom
it has negotiated a commission that is in excess of the commission another
broker or dealer would have charged for effecting that transaction if Janus
Capital determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research provided by such broker
or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of Janus Capital. Research may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist Janus Capital in carrying out its responsibilities.
Research received from brokers or dealers is supplemental to Janus Capital's own
research efforts. Most brokers and dealers used by Janus Capital provide
research and other services described above.
For the year ended October 31, 1996, the total brokerage commissions paid
by the Funds to brokers and dealers in transactions identified for execution
primarily on the basis of research and other services provided to the Funds are
summarized below:
<TABLE>
[TO BE FILED BY AMENDMENT]
Fund Name Commissions Transactions % of Total Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund $ $ %
Janus Enterprise Fund $ $ %
Janus Equity Income Fund $ $ %
Janus Mercury Fund $ $ %
Janus Olympus Fund $ $ %
Janus Overseas Fund $ $ %
Janus Twenty Fund $ $ %
Janus Worldwide Fund $ $ %
Janus Balanced Fund $ $ %
Janus Growth and Income Fund $ $ %
Janus Flexible Income Fund(1) $ $ %
Janus High-Yield Fund(1) $ $ %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Most of the securities transactions for this Fund involved dealers acting as
principal.
Note: Funds that are not included in the table did not pay any commissions
related to research for the stated period.
18
<PAGE>
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers regarding the
placement of securities transactions because of the research services they
provide. It does, however, have an internal procedure for allocating
transactions in a manner consistent with its execution policy to brokers that it
has identified as providing superior executions and research, research-related
products or services which benefit its advisory clients, including the Funds.
Research products and services incidental to effecting securities transactions
furnished by brokers or dealers may be used in servicing any or all of Janus
Capital's clients and such research may not necessarily be used by Janus Capital
in connection with the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a Fund i) to the Fund or ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be obligated to pay.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
The Funds' Trustees have authorized Janus Capital to place transactions
with DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of
DST. Janus Capital may do so if it reasonably believes that the quality of the
transaction and the associated commission are fair and reasonable and if,
overall, the associated transaction costs, net of any credits described above
under "Custodian, Transfer Agent and Certain Affiliations," are lower than those
that would otherwise be incurred.
The following table lists the total amount of brokerage commissions paid by
each Fund for the fiscal periods ending on October 31st of each year:
<TABLE>
1996
[TO BE FILED BY
Fund Name AMENDMENT] 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund $ $26,219,202 $18,108,124
Janus Enterprise Fund $ $ 2,084,312 $ 1,249,083
Janus Equity Income Fund $ (2) -- --
Janus Mercury Fund $ $ 5,712,916 $ 1,221,654
Janus Olympus Fund $ (3) -- --
Janus Overseas Fund $ $ 568,384 $ 27,846(1)
Janus Twenty Fund $ $ 7,647,982 $ 5,747,164
Janus Worldwide Fund $ $ 7,493,192 $ 1,125,206
Janus Balanced Fund $ $ 305,855 $ 198,976
Janus Growth and Income Fund $ $ 1,498,178 $ 1,013,550
Janus Flexible Income Fund $ $ 35,138 $ 31,399
Janus High-Yield Fund $ (3) -- --
Janus Short-Term Bond Fund $ $ 6,548 --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) May 2, 1994 (inception) to October 31, 1994.
(2) June 28, 1996 (inception) to October 31, 1996.
(3) December 29, 1995 (inception) to October 31, 1996.
Note: Funds that are not included in the table did not pay brokerage commissions
because securities transactions for such Funds involved dealers acting as
principals.
19
<PAGE>
Included in such brokerage commissions are the following amounts paid to
DSTS, which served to reduce each Fund's out-of-pocket expenses as follows:
<TABLE>
Commission
Paid through DSTS
for the Period Ended Reduction % of Total % of Total
Fund Name October 31, 1996* of Expenses* Commissions+ Transactions+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $ $ % %
Janus Enterprise Fund $ (1) $ % %
Janus Equity Income Fund $ $ % %
Janus Mercury Fund $ $ % %
Janus Olympus Fund $ (2) $ % %
Janus Overseas Fund $ $ % %
Janus Twenty Fund $ $ % %
Janus Worldwide Fund $ $ % %
Janus Balanced Fund $ $ % %
Janus Growth and Income Fund $ $ % %
Janus High-Yield Fund $ (2) $ % %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) June 28, 1996 (inception) to October 31, 1996.
(2) December 29, 1995 (inception) to October 31, 1996.
<TABLE>
Commission Commission
Paid through DSTS Paid through DSTS
for the Period Ended Reduction for the Period Ended Reduction
Fund Name October 31, 1995* of Expenses* October 31, 1994* of Expenses*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $1,125,368 $844,026 $1,067,073 $800,305
Janus Enterprise Fund $ 96,932 $ 72,699 $ 116,527 $ 87,395
Janus Equity Income Fund -- -- -- --
Janus Mercury Fund $ 171,777 $128,833 $ 30,019 $ 22,514
Janus Olympus Fund -- -- -- --
Janus Overseas Fund $ 2,783 $ 2,087 $ 1,800(1) $ 1,350(1)
Janus Twenty Fund $ 378,575 $283,931 $ 510,874 $383,156
Janus Worldwide Fund $ 164,193 $123,145 $ 57,164 $ 42,873
Janus Balanced Fund $ 9,143 $ 6,857 $ 18,725 $ 14,043
Janus Growth and Income Fund $ 98,373 $ 73,780 $ 15,604 $ 11,703
Janus High-Yield Fund -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
+ Differences in the percentage of total commissions versus the percentage of
total transactions is due, in part, to variations among share prices and number
of shares traded, while average price per share commission rates were
substantially the same.
(1) May 2, 1994 (inception) to October 31, 1994.
(2) June 28, 1996 (inception) to October 31, 1996.
(3) December 29, 1995 (inception) to October 31, 1996.
Note: Funds that did not execute trades with DSTS during the stated periods are
not included in the table.
As of October 31, 1996, certain Funds owned securities of their regular
broker-dealers (or parents), as shown below:
<TABLE>
Fund Name Name of Broker-Dealer Value of Securities Owned
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[TO BE FILED BY AMENDMENT]
</TABLE>
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years. In August 1992, Janus Venture Fund, Inc. and Janus Twenty Fund, Inc.
(both separate Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of Janus Flexible Income Fund series)
were reorganized into separate series of the Trust. In general, all references
to Trust offices in this section include comparable offices with the respective
predecessor funds, unless a Trust office was filled subsequent to the
reorganization.
20
<PAGE>
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4928
Trustee, Chairman and President of Janus Aspen Series. Chairman, Chief
Executive Officer, Director and President of Janus Capital. Chairman and
Director of IDEX Management, Inc., Largo, Florida (50% subsidiary of Janus
Capital and investment adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund.
Thomas F. Marsico* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Twenty Fund and
Janus Growth and Income Fund. Vice President of Janus Capital.
James P. Goff* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Enterprise Fund and
Janus Venture Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly, securities analyst at Janus Capital
(1988 to 1992).
Warren B. Lammert* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Mercury Fund. Vice
President of Janus Capital. Formerly, Executive Vice President and
Portfolio Manager of Janus Venture Fund (December 1993-December 1996) and
Janus Balanced Fund (September 1992-December 1993). Formerly, securities
analyst at Janus Capital (1990 to 1992).
Ronald V. Speaker* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Co-Manager of Janus Flexible Income Fund and
Janus High-Yield Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly, Portfolio Manager of Janus Short-Term
Bond Fund (September 1992-December 1995) and Janus Federal Tax-Exempt Fund
(May 1993-December 1995). Formerly, securities analyst and research
associate at Janus Capital (1986 to 1992).
Helen Young Hayes* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Worldwide Fund and
Janus Overseas Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly securities analyst at Janus Capital
(1987 to 1993).
Blaine P. Rollins* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Balanced Fund and
Janus Equity Income Fund. Assistant Portfolio Manager of Janus Fund.
Executive Vice President of Janus Aspen Series. Formerly, fixed-income
trader and equity securities analyst at Janus Capital (1990-1995).
Sandy R. Rufenacht* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Short-Term Bond
Fund and Executive Vice President and Co-Manager of Janus Flexible Income
Fund and Janus High-Yield Fund. Executive Vice President of Janus Aspen
Series. Formerly senior accountant, fixed-income trader and fixed-income
research analyst at Janus Capital (1990-1995).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
21
<PAGE>
Scott W. Schoelzel* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Olympus Fund. Vice
President of Janus Capital. From 1991 to 1993, a Portfolio Manager with
Founders Asset Management, Denver, Colorado.
Darrell W. Watters* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Federal Tax-Exempt
Fund. Executive Vice President of Janus Aspen Series. Formerly, municipal
bond trader and research analyst at Janus Capital (1993-1995).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4928
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4928
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance, Treasurer and Chief Financial Officer of Janus
Service, Janus Distributors and Janus Capital. Director of IDEX and Janus
Distributors. Director, Treasurer and Vice President of Finance of Janus
Capital International Ltd. Formerly (1979 to 1992), with the accounting
firm of Price Waterhouse LLP, Denver, Colorado. Formerly (1992-1996),
Treasurer of Janus Investment Fund and Janus Aspen Series.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4928
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital.
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4928
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc., Boston,
Massachusetts (mutual fund administration services).
John W. Shepardson# - Trustee
P.O. Box 9591
Denver, CO 80209
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
22
<PAGE>
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Agreement and Declaration of Trust
("Declaration of Trust"), Massachusetts law or the 1940 Act.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement from the Funds or the Janus Funds.
<TABLE>
Aggregate Compensation
from the Funds for fiscal year Total Compensation from the
ended October 31, 1996 Janus Funds for calendar year
Name of Person, Position [TO BE FILED BY AMENDMENT] ended December 31, 1996**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* -- --
James P. Craig, III, Trustee* -- --
John W. Shepardson, Trustee $ $
William D. Stewart, Trustee $ $
Gary O. Loo, Trustee $ $
Dennis B. Mullen, Trustee $ $
Martin H. Waldinger, Trustee $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1996, Janus Funds consisted of two registered investment
companies comprised of a total of 29 funds.
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares of the Funds are sold at the net asset value per share as
determined at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") next occurring after a purchase order is received and
accepted by a Fund. The Shareholder's Manual Section of the Prospectus contains
detailed information about the purchase of shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund shares is
determined once each day on which the NYSE is open, at the close of its regular
trading session (normally 4:00 p.m., New York time, Monday through Friday). The
NAV of Fund shares is not determined on days the NYSE is closed (generally, New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas). The per share NAV of each Fund is determined
by dividing the total value of a Fund's securities and other assets, less
liabilities, by the total number of shares outstanding. In determining NAV,
securities listed on an exchange, the NASDAQ National Market and foreign markets
are valued at the closing prices on such markets, or if such price is lacking
for the trading period immediately preceding the time of determination, such
securities are valued at their current bid price. Municipal securities held by
the Funds are traded primarily in the over-the-counter market. Valuations of
such securities are furnished by one or more pricing services employed by the
Funds and are based upon a computerized matrix system or appraisals obtained by
a pricing service, in each case in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers. Other
securities that are traded on the over-the-counter market are valued at their
closing bid prices. Foreign securities and currencies are converted to U.S.
dollars using
23
<PAGE>
the exchange rate in effect at the close of the NYSE. Each Fund will determine
the market value of individual securities held by it, by using prices provided
by one or more professional pricing services which may provide market prices to
other funds, or, as needed, by obtaining market quotations from independent
broker-dealers. Short-term securities maturing within 60 days are valued on the
amortized cost basis. Securities for which quotations are not readily available,
and other assets, are valued at fair values determined in good faith under
procedures established by and under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in Japanese markets on certain Saturdays
and in various foreign markets on days which are not business days in New York
and on which a Fund's NAV is not calculated. A Fund calculates its NAV per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of the NYSE once on each day on which the NYSE is open. Such
calculation may not take place contemporaneously with the determination of the
prices of the foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on a Fund's shares are reinvested automatically in additional shares of
that Fund at the NAV determined on the first business day following the record
date. Checks for cash dividends and distributions and confirmations of
reinvestments are usually mailed to shareholders within ten days after the
record date. Any election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account Application
form or by phone) will apply to dividends and distributions the record dates of
which fall on or after the date that a Fund receives such notice. Investors
receiving cash distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of shares are set forth in the Shareholder's
Manual section of the Prospectuses. Shares normally will be redeemed for cash,
although each Fund retains the right to redeem its shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the NAV of
that Fund during any 90-day period for any one shareholder. Should redemptions
by any shareholder exceed such limitation, a Fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "Purchase
of Shares - Net Asset Value Determination" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Funds to redeem its shares may be suspended, or
the date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends, (2) the SEC permits such suspension and so orders, or (3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectuses. Applications
for specific types of accounts may be obtained by calling the Funds at
1-800-525-3713 or writing to the Funds at P.O. Box 173375, Denver, Colorado
80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectuses, shareholders may initiate a number of
transactions by telephone. The Funds, their transfer agent and their distributor
disclaim responsibility for the authenticity of instructions received by
telephone. Such entities will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
among others, requiring personal identification prior to acting upon telephone
instructions, providing written confirmation of the transactions and tape
recording telephone conversations.
24
<PAGE>
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectuses, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic redemption option. The payments
will be made from the proceeds of periodic redemptions of shares in the account
at the NAV. Depending on the size or frequency of the disbursements requested,
and the fluctuation in value of a Fund's portfolio, redemptions for the purpose
of making such disbursements may reduce or even exhaust the shareholder's
account. Either an investor or their Fund, by written notice to the other, may
terminate the investor's systematic redemption option without penalty at any
time.
Information about requirements to establish a systematic redemption option
may be obtained by writing or calling the Funds at the address or phone number
shown above.
RETIREMENT PLANS
The Funds offer several different types of tax-deferred retirement plans
that an investor may establish to invest in Fund shares, depending on rules
prescribed by the Code. The Individual Retirement Account ("IRA") may be used by
most individuals who have taxable compensation. Simplified Employee Pensions
("SEPs") and Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including corporations,
partnerships and sole proprietors, for the benefit of business owners and their
employees. In addition, the Funds offer a Section 403(b)(7) Plan for employees
of educational organizations and other qualifying tax-exempt organizations.
Investors should consult their tax advisor or legal counsel before selecting a
retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans and Section
403(b)(7) Plans are subject to specific contribution limitations. Generally,
such contributions may be invested at the direction of the participant. The
investment is then held by Investors Fiduciary Trust Company as custodian. Each
participant's account is charged an annual fee of $12. There is a maximum annual
fee of $24 per taxpayer identification number.
Distributions from retirement plans generally are subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
591/2. Several exceptions to the general rule may apply. Additionally,
shareholders generally must start withdrawing retirement plan assets no later
than April 1 of the year after they reach age 701/2. Exceptions may apply so
please consult your tax advisor. Several methods exist to determine the amount
of the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Funds at 1-800-525-3713 or write to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an
IRA, SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until
the appropriate forms to establish any such plan have been completed.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
It is a policy of the Funds to make distributions of substantially all of
their investment income and any net realized capital gains. Janus Fund, Janus
Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Overseas Fund,
Janus Twenty Fund and Janus Worldwide Fund declare and make annual distributions
of income (if any); Janus Equity Income Fund, Janus Balanced Fund and Janus
Growth and Income Fund declare and make quarterly distributions of income and
Janus Flexible Income Fund, Janus High-Yield Fund, Janus Federal Tax-Exempt Fund
and Janus Short-Term Bond Fund declare dividends daily and make monthly
distributions of income. If a month begins on a Saturday, Sunday or holiday,
dividends for daily dividend Funds for those days are declared at the end of the
preceding month. Janus Federal Tax-Exempt Fund will use the "average annual
method" to determine the designated percentage of each distribution that is
tax-exempt. Under this method, the percentage of income designated as tax-exempt
is based on the percentage of tax-exempt income earned for each annual period,
and may be substantially different from the Fund's income that was tax-exempt
during any monthly period. Any capital gains realized during each fiscal year
ended October 31, as defined by the Code, are normally declared and payable to
shareholders in December. The Funds intend to qualify as regulated investment
companies by satisfying certain requirements prescribed by Subchapter M of the
Code.
The Funds may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS. In order to
avoid taxes and interest that must be paid by the Funds if these instruments are
profitable, the Funds may make various elections permitted by the tax laws.
However, these elections could require that the Funds recognize taxable income,
which in turn must be distributed, before the securities are sold and before
cash is received to pay the distributions.
Some foreign securities purchased by the Funds may be subject to foreign
taxes which could reduce the yield on such securities. The amount of such
foreign taxes is expected to be insignificant. Accordingly, the Funds do not
intend to make the election permitted under section 853 of the Code to pass
through such taxes to shareholders as a foreign tax credit as this
25
<PAGE>
would increase the taxable income reported to shareholders and require
shareholders to take the credit on their tax returns, complicating the
preparation of such returns. As a result, any foreign taxes paid or accrued will
represent an expense to each Fund which will reduce its investment company
taxable income.
PRINCIPAL SHAREHOLDERS
As of January 20, 1997, the officers and Trustees of the Funds as a group
owned less than 1% of the outstanding shares of each of the Funds. In addition,
as of January 20, 1997, Charles Schwab & Co., Inc. ("Schwab"), 101 Montgomery
Street, San Francisco, CA 94104-4122, and National Financial Services Co.,
("National Financial"), P.O. Box 3908, Church Street Station, New York, NY
10008-3908, owned of record 5% or more of the outstanding shares of the Funds,
as shown below.
<TABLE>
[INFORMATION TO BE FILED BY AMENDMENT]
Fund Name Held by Schwab Held by National Financial
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Fund % %
Janus Enterprise Fund % %
Janus Equity Income Fund % %
Janus Mercury Fund % %
Janus Olympus Fund % %
Janus Overseas Fund % %
Janus Twenty Fund % %
Janus Worldwide Fund % %
Janus Balanced Fund % %
Janus Growth and Income Fund % %
Janus Flexible Income Fund % %
Janus High-Yield Fund % %
Janus Federal Tax-Exempt Fund % %
Janus Short-Term Bond Fund % %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
According to information provided by Schwab, this ownership is by nominee
only and does not represent beneficial ownership of such shares, because they
have no investment discretion or voting power with respect to such shares. To
the knowledge of the Funds, no other person owned more than 5% of the
outstanding shares of any Fund as of the above date.
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts business trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
offers 19 separate series, 5 of which are offered by other prospectuses. On June
16, 1986, the Trust assumed all the assets and liabilities of its predecessor
corporation, Janus Fund, Inc., which was incorporated under the laws of Maryland
on September 18, 1968. All references in this SAI to Janus Fund and all
financial and other information about Janus Fund prior to June 16, 1986, are to
the former Janus Fund, Inc.; all references after June 16, 1986 are to the Janus
Fund series of the Trust.
On August 7, 1992, in a tax-free reorganization, the Trust assumed all the
assets and liabilities of i) the Janus Flexible Income Fund series of Janus
Income Series, a separate Massachusetts business trust created on May 28, 1986;
and ii) Janus Twenty Fund, Inc., a Maryland corporation originally incorporated
as Janus Value Fund in 1984. Shareholders received shares of the series of the
Trust equal both in number and net asset value to their shares of the respective
predecessor entity. In connection with the reorganization, Janus Flexible Income
Fund changed its fiscal year end from December 31 to October 31. All references
in this SAI to Janus Flexible Income Fund and Janus Twenty Fund, and all
financial and other information about such Funds prior to August 7, 1992, are to
the respective predecessor entities; all references after August 7, 1992, are to
the respective series of the Trust.
Janus Worldwide Fund and Janus Growth and Income Fund were added to the
Trust as separate series on April 29, 1991. Janus Enterprise Fund, Janus
Balanced Fund and Janus Short-Term Bond Fund were added to the Trust as separate
series on August 27, 1992. Janus Mercury Fund and Janus Federal Tax-Exempt Fund
were added to the Trust as separate series on April 20, 1993. Janus Overseas
Fund was added to the Trust as a separate series on April 14, 1994. Janus
Olympus Fund and Janus High-Yield Fund were added to the Trust as separate
series on November 28, 1995. Janus Equity Income Fund was added to the Trust as
a separate series on May 29, 1996.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
26
<PAGE>
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Funds and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Funds or the
Trustees. The Declaration of Trust also provides for indemnification from the
assets of the Funds for all losses and expenses of any Fund shareholder held
liable for the obligations of their Fund. Thus, the risk of a shareholder
incurring a financial loss on account of its liability as a shareholder of one
of the Funds is limited to circumstances in which their Fund would be unable to
meet its obligations. The possibility that these circumstances would occur is
remote. The Trustees intend to conduct the operations of the Funds to avoid, to
the extent possible, liability of shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
Shares of each Fund may be transferred by endorsement or stock power as is
customary, but a Fund is not bound to recognize any transfer until it is
recorded on its books.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992, with the exception of Mr. Craig who was appointed by the Trustees as
of June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, retirement,
resignation, bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held, unless
otherwise required by the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize their Fund, to amend the Declaration of Trust, to bring
certain derivative actions and on any other matters on which a shareholder vote
is required by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or the
Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series of the
Trust will vote separately only with respect to those matters that affect only
that series or if a portfolio's interest in the matter differs from the
interests of other portfolios of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
securities to which this SAI relates. If further information is desired with
respect to the Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
PERFORMANCE INFORMATION
The Prospectus contains a brief description of how performance is
calculated.
Quotations of average annual total return for a Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in such Fund over periods of 1, 5, and 10 years (up to the life of
the Fund). These are the annual total rates of return that would equate the
initial amount invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula: P(1 + T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual total return, n =
the number of years and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an annual
basis, and assume that all dividends and distributions are reinvested when paid.
27
<PAGE>
The average annual total return of each Fund, computed as of October 31,
1996, is shown in the table below:
<TABLE>
[TO BE FILED BY AMENDMENT]
Date Number Average Annual Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
Available of Months One Five Ten Life of
Fund Name for Sale in Lifetime Year Years Years Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund 2/5/70 321 % % % %
Janus Enterprise Fund 9/1/92 50 % N/A N/A %
Janus Equity Income Fund 6/28/96 4 % N/A N/A %
Janus Mercury Fund 5/3/93 42 % N/A N/A %
Janus Olympus Fund 12/29/95 10 % N/A N/A %
Janus Overseas Fund 5/2/94 30 % N/A N/A %
Janus Twenty Fund 5/2/85 138 % % % %
Janus Worldwide Fund 5/15/91 65.5 % % N/A %
Janus Balanced Fund 9/1/92 50 % N/A N/A %
Janus Growth and Income Fund 5/15/91 65.5 % % N/A %
Janus Flexible Income Fund 7/2/87 112 % % N/A %
Janus High-Yield Fund 12/29/95 10 % N/A N/A %
Janus Federal Tax-Exempt Fund 5/3/93 42 % N/A N/A %
Janus Short-Term Bond Fund 9/1/92 50 % N/A N/A %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Quotations of a Fund's yield are based on the investment income per share
earned during a particular 30-day period (including dividends, if any, and
interest), less expenses accrued during the period ("net investment income"),
and are computed by dividing net investment income by the net asset value per
share on the last day of the period, according to the following formula:
YIELD = 2 [(a-b + 1)6 - 1]
cd
where a = dividend and interest income
b = expenses accrued for the period
c = average daily number of shares outstanding during the period
that were entitled to receive dividends
d = maximum net asset value per share on the last day of the
period
The tax-equivalent yield used for Janus Federal Tax-Exempt Fund is the rate
that an investor would have to earn from a fully taxable investment after taxes
to equal the Fund's tax-free yield. Tax-equivalent yields are calculated by
dividing a Fund's yield by the result of one minus a stated federal or combined
federal and state tax rate. If only a portion of a Funds' yield is tax-exempt,
only that portion is adjusted in the calculation. Janus Federal Tax-Exempt Fund
may invest a portion of its assets in obligations that are subject to federal
income tax. When the Fund invests in these obligations, its tax-equivalent yield
will be lower.
The yield for the 30-day period ending October 31, 1996, for the
Fixed-Income Funds is shown below:
[TO BE FILED BY AMENDMENT]
Janus Flexible Income Fund %
Janus High-Yield Fund %
Janus Federal Tax-Exempt Fund %
Janus Short-Term Bond Fund %
From time to time in advertisements or sales material, the Funds may
discuss their performance ratings or other information as published by
recognized mutual fund statistical rating services, including, but not limited
to, Lipper Analytical Services, Inc., Ibbotson Associates, Micropal or
Morningstar or by publications of general interest such as Forbes or Money. The
Funds may also compare their performance to that of other selected mutual funds,
mutual fund averages or recognized stock market indicators, including, but not
limited to, the Standard & Poor's 500 Composite Stock Price Index, the Standard
& Poor's 400 Midcap Index, the Dow Jones Industrial Average, the Lehman Brothers
Government/Corporate Bond Index, the Lehman Brothers Government/ Corporate 1-3
Year Bond Index, the Lehman Brothers Long Government/Corporate Bond Index, the
Lehman Brothers Intermediate Government Bond Index, the Lehman Brothers
Municipal Bond Index, the Russell 2000 Index and the NASDAQ composite. In
addition, the Funds may compare their total return or yield to the yield on U.S.
Treasury obligations and to the percentage change in the Consumer Price Index.
Janus Worldwide Fund and Janus Overseas Fund may also compare their performance
to the record of global market indicators, such as the Morgan Stanley
International World Index or Morgan Stanley Capital International Europe,
Australasia, Far East Index (EAFE Index). Such performance ratings or
comparisons may be made with funds that may have different investment
restrictions, objectives, policies or techniques than the Funds and such other
funds or market indicators may be comprised of securities that differ
significantly from the Funds' investments.
28
<PAGE>
FINANCIAL STATEMENTS
The following audited financial statements for the period ended October 31,
1996 are hereby incorporated into this SAI by reference to the Funds' Annual
Reports dated October 31, 1996. Copies of such reports accompany this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS:
Schedules of Investments as of October 31, 1996
Statements of Operations for the period ended October 31, 1996
Statements of Assets and Liabilities as of October 31, 1996
Statements of Changes in Net Assets for the periods ended October 31, 1996
and 1995
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Reports that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
29
<PAGE>
APPENDIX A
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of the major
credit ratings agencies. Credit ratings evaluate only the safety of principal
and interest payments, not the market value risk of lower quality securities.
Credit rating agencies may fail to change credit ratings to reflect subsequent
events on a timely basis. Although the adviser considers security ratings when
making investment decisions, it also performs its own investment analysis and
does not rely solely on the ratings assigned by credit agencies.
STANDARD & POOR'S RATINGS SERVICES
Bond Rating Explanation
- --------------------------------------------------------------------------------
Investment Grade
AAA Highest rating; extremely strong capacity to pay
principal and interest.
AA High quality; very strong capacity to pay
principal and interest.
A Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects
of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, Predominantly speculative with respect to the
CCC, CC, C issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of
speculation. Quality and protective
characteristics outweighed by large uncertainties
or major risk exposure to adverse conditions.
D In default.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC.
Investment Grade
Aaa Highest quality, smallest degree of investment
risk.
Aa High quality; together with Aaa bonds, they
compose the high-grade bond group.
A Upper-medium grade obligations; many favorable
investment attributes.
Baa Medium-grade obligations; neither highly protected
nor poorly secured. Interest and principal appear
adequate for the present but certain protective
elements may be lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba More uncertain, with speculative elements.
Protection of interest and principal payments not
well safeguarded during good and bad times.
B Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other
contract terms over time.
Caa Poor standing, may be in default; elements of
danger with respect to principal or interest
payments.
Ca Speculative in a high degree; could be in default
or have other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever
attaining investment standing.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless the
portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
30
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<PAGE>
[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
- --------------------------------------------------------------------------------
Statement of Additional Information
February 17, 1997
- --------------------------------------------------------------------------------
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Investor Shares
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectus for the Investor
Shares (the "Shares") of Janus Money Market Fund, Janus Government Money Market
Fund and Janus Tax-Exempt Money Market Fund (individually, a "Fund" and,
collectively, the "Funds"). The Funds are each a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Each Fund
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies, and is managed separately
by Janus Capital Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus dated February 17, 1997, which is incorporated by reference into this
SAI and may be obtained from the Trust at the above phone number or address.
This SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectus.
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies and Restrictions .............................. 3
Types of Securities and Investment Techniques ..................... 4
Performance Data .................................................. 7
Determination of Net Asset Value .................................. 8
Investment Adviser and Administrator .............................. 8
Custodian, Transfer Agent and Certain Affiliations ................ 9
Portfolio Transactions and Brokerage .............................. 10
Officers and Trustees ............................................. 10
Purchase of Shares ................................................ 12
Redemption of Shares .............................................. 13
Shareholder Accounts .............................................. 13
Retirement Plans .................................................. 13
Dividends and Tax Status .......................................... 14
Principal Shareholders ............................................ 14
Miscellaneous Information ......................................... 14
Shares of the Trust ............................................ 15
Voting Rights .................................................. 15
Independent Accountants ........................................ 15
Registration Statement ......................................... 15
Financial Statements .............................................. 16
Appendix A - Description of Securities Ratings .................... 17
Appendix B - Description of Municipal Securities .................. 19
- -------------------------------------------------------------------------------
2
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of each of Janus
Money Market Fund and Janus Government Money Market Fund is to seek maximum
current income to the extent consistent with stability of capital. The
investment objective of Janus Tax-Exempt Money Market Fund is to seek maximum
current income that is exempt from federal income taxes to the extent consistent
with stability of capital. There can be no assurance that a Fund will achieve
its investment objective or maintain a stable net asset value of $1.00 per
share. The investment objectives of the Funds are not fundamental and may be
changed by the Trustees of the Trust (the "Trustees") without shareholder
approval.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, each Fund has adopted certain fundamental
investment restrictions that cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund or particular
class of Shares if a matter affects just that Fund or that class of Shares), or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of Shares) are present or represented by proxy.
As used in the restrictions set forth below and as used elsewhere in this
SAI, the term "U.S. Government Securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act
defines U.S. Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S. Government
Securities may also include repurchase agreements collaterized and municipal
securities escrowed with or refunded with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a security
other than a U.S. Government Security, if, as a result, more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
the Fund would own more than 10% of the outstanding voting securities of any
single issuer. (As noted in the Prospectus, the Funds are also currently subject
to the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the value of a
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that: (i)
there is no limit on investments in U.S. Government Securities or in obligations
of domestic commercial banks (including U.S. branches of foreign banks subject
to regulations under U.S. laws applicable to domestic banks and, to the extent
that its parent is unconditionally liable for the obligation, foreign branches
of U.S. banks); (ii) this limitation shall not apply to a Fund's investments in
municipal securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies are classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry); and (v) utility companies are classified according to their services
(for example, gas, gas transmission, electric, and telephone are each considered
to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by others,
except to the extent that a Fund may be deemed an underwriter in connection with
the disposition of portfolio securities of such Fund.
(4) A Fund may not lend any security or make any other loan if, as a
result, more than 25% of a Fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial paper, debt
securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest therein,
except that the Fund may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes (not for
leveraging) in an amount not exceeding 25% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings). If
borrowings exceed 25% of the value of a Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation. Reverse
repurchase agreements or the segregation of assets in connection with such
agreements shall not be considered borrowing for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as that
Fund.
3
<PAGE>
Each Fund has adopted the following nonfundamental investment restrictions
that may be changed by the Trustees without shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase agreements
with respect to any securities if, as a result, more than 10% of the Fund's net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in other securities that are not
readily marketable ("illiquid securities"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the Trustees, may
determine that a readily available market exists for certain securities such as
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, Section 4(2) commercial paper and municipal
lease obligations. Accordingly, such securities may not be subject to the
foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short sales of
securities, except for short sales against the box and the use of short-term
credit necessary for the clearance of purchases and sales of portfolio
securities.
(3) A Fund may not pledge, mortgage, hypothecate or encumber any of its
assets except to secure permitted borrowings or in connection with permitted
short sales.
(4) A Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that such classifications are so broad that the
primary economic characteristics in a single class are materially different, the
Funds may further classify issuers in accordance with industry classifications
as published by the Securities and Exchange Commission.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
Each of the Funds may invest only in "eligible securities" as defined in
Rule 2a-7 adopted under the 1940 Act. Generally, an eligible security is a
security that (i) is denominated in U.S. dollars and has a remaining maturity of
397 days or less (as calculated pursuant to Rule 2a-7); (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO (the "Requisite NRSROs") or is unrated and of comparable quality to a
rated security, as determined by Janus Capital; and (iii) has been determined by
Janus Capital to present minimal credit risks pursuant to procedures approved by
the Trustees. In addition, the Funds will maintain a dollar-weighted average
portfolio maturity of 90 days or less. A description of the ratings of some
NRSROs appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of its total
assets in the securities of any one issuer other than U.S. Government
Securities, provided that in certain cases a Fund may invest more than 5% of its
assets in a single issuer for a period of up to three business days. Until
pending amendments to Rule 2a-7 become effective, up to 25% of Janus Tax-Exempt
Money Market Fund's assets may be invested without regard to the foregoing
limitations.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money Market
Fund) will invest at least 95% of its total assets in "first-tier" securities.
First-tier securities are eligible securities that are rated, or are issued by
an issuer with short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable quality to a
rated security. In addition, a Fund may invest in "second-tier" securities which
are eligible securities that are not first-tier securities. However, a Fund
(except for Janus Tax-Exempt Money Market Fund, in certain cases) may not invest
in a second-tier security if immediately after the acquisition thereof the Fund
would have invested more than (i) the greater of one percent of its total assets
or one million dollars in second-tier securities issued by that issuer, or (ii)
five percent of its total assets in second-tier securities.
The following discussion of types of securities in which the Funds may
invest supplements and should be read in conjunction with the Prospectus.
PARTICIPATION INTERESTS
Each Fund may purchase participation interests in loans or securities in
which the Funds may invest directly. Participation interests are generally
sponsored or issued by banks or other financial institutions. A participation
interest gives a Fund an undivided interest in the underlying loans or
securities in the proportion that the Fund's interest bears to the total
principal amount of the underlying loans or securities. Participation interests,
which may have fixed, floating or variable rates, may carry a demand feature
backed by a letter of credit or guarantee of a bank or institution permitting
the holder to tender them back to the bank or other institution. For certain
participation interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's participation
interest. The Funds intend to exercise any demand rights they may have upon
default under the terms of the loan or security, to provide liquidity or to
maintain or improve the quality of the Funds' investment portfolio. A Fund will
only purchase participation interests that Janus Capital determines present
minimal credit risks.
4
<PAGE>
VARIABLE AND FLOATING RATE NOTES
Janus Money Market Fund also may purchase variable and floating rate demand
notes of corporations and other entities, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
the outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid investment.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities, which represent an
interest in a pool of mortgages made by lenders such as commercial banks,
savings and loan institutions, mortgage bankers, mortgage brokers and savings
banks. Mortgage-backed securities may be issued by governmental or
government-related entities or by non-governmental entities such as banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from other forms of
debt securities which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. In
contrast, mortgage-backed securities provide periodic payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Although mortgage-backed securities are issued with stated maturities of up to
forty years, unscheduled or early payments of principal and interest on the
underlying mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for average life. The
volume of prepayments of principal on a pool of mortgages underlying a
particular security will influence the yield of that security, and the principal
returned to a Fund may be reinvested in instruments whose yield may be higher or
lower than that which might have been obtained had the prepayments not occurred.
When interest rates are declining, prepayments usually increase, with the result
that reinvestment of principal prepayments will be at a lower rate than the rate
applicable to the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are issued by
agencies or instrumentalities of the U.S. government. The Government National
Mortgage Association ("GNMA") is the principal federal government guarantor of
mortgage-backed securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA Certificates are
debt securities which represent an interest in one mortgage or a pool of
mortgages which are insured by the Federal Housing Administration or the Farmers
Home Administration or are guaranteed by the Veterans Administration. The Funds
may also invest in pools of conventional mortgages which are issued or
guaranteed by agencies of the U.S. government. GNMA pass-through securities are
considered to be riskless with respect to default in that (i) the underlying
mortgage loan portfolio is comprised entirely of government-backed loans and
(ii) the timely payment of both principal and interest on the securities is
guaranteed by the full faith and credit of the U.S. government, regardless of
whether or not payments have been made on the underlying mortgages. GNMA
pass-through securities are, however, subject to the same market risk as
comparable debt securities. Therefore, the market value of a Fund's GNMA
securities can be expected to fluctuate in response to changes in prevailing
interest rate levels.
Residential mortgage loans are pooled also by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a privately managed, publicly chartered
agency created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. FHLMC issues
participation certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. The mortgage loans in FHLMC's portfolio are not U.S.
government backed; rather, the loans are either uninsured with loan-to-value
ratios of 80% or less, or privately insured if the loan-to-value ratio exceeds
80%. FHLMC guarantees the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee any aspect of
FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private shareholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks, commercial banks,
credit unions and mortgage bankers. FNMA guarantees the timely payment of
principal and interest on the pass-through securities issued by FNMA; the U.S.
government does not guarantee any aspect of the FNMA pass-through securities.
5
<PAGE>
The Funds may also invest in privately-issued mortgage-backed securities to
the extent permitted by their investment restrictions. Mortgage-backed
securities offered by private issuers include pass-through securities comprised
of pools of conventional residential mortgage loans; mortgage-backed bonds which
are considered to be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized mortgage
obligations ("CMOs") which are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA or by pools of conventional mortgages.
Asset-backed securities represent direct or indirect participations in, or
are secured by and payable from, assets other than mortgage-backed assets such
as motor vehicle installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables from revolving
credit agreements (credit cards). Asset-backed securities have yield
characteristics similar to those of mortgage-backed securities and, accordingly,
are subject to many of the same risks.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate. The
Funds will use the proceeds of reverse repurchase agreements only to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. In addition, interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery
basis. A Fund will enter into such transactions only when it has the intention
of actually acquiring the securities. To facilitate such acquisitions, the
Funds' custodian will segregate cash or high quality liquid assets in an amount
at least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities, sales of the segregated
securities or from other available sources of cash. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation. At the time a Fund makes the commitment to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction as a purchase and thereafter reflect the value of such
securities in determining its net asset value.
INVESTMENT COMPANY SECURITIES
From time to time, the Funds may invest in securities of other investment
companies. The Funds are subject to the provisions of Section 12(d)(1) of the
1940 Act, which currently limits each Fund's investment in other investment
companies to no more than 10% of the investing Fund's assets.
MUNICIPAL LEASES
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund may invest
in municipal leases. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. Leases and installment
purchase or conditional sales contracts (which normally provide for title to the
leased asset to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. The Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest is
backed by an unconditional, irrevocable letter of credit, or guarantee of a bank
or other entity that meets the criteria described in the Prospectus under
"Taxable Investments".
In evaluating municipal lease obligations, Janus Capital will consider such
factors as it deems appropriate, including: (a) whether the lease can be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer considered essential
by the municipality; (e) the legal recourse of the lease obligee in the event of
such a failure to appropriate funding; (f) whether the security is backed by a
credit enhancement
6
<PAGE>
such as insurance; and (g) any limitations which are imposed on the lease
obligor's ability to utilize substitute property or services other than those
covered by the lease obligation. If a lease is backed by an unconditional letter
of credit or other unconditional credit enhancement, then Janus Capital may
determine that a lease is an eligible security solely on the basis of its
evaluation of the credit enhancement.
Municipal leases, like other municipal debt obligations, are subject to the
risk of non-payment. The ability of issuers of municipal leases to make timely
lease payments may be adversely impacted in general economic downturns and as
relative governmental cost burdens are allocated and reallocated among federal,
state and local governmental units. Such non-payment would result in a reduction
of income to the Fund, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the net
asset value of the Fund.
PERFORMANCE DATA
A Fund may provide current annualized and effective annualized yield
quotations based on its daily dividends. These quotations may from time to time
be used in advertisements, shareholder reports or other communications to
shareholders. All performance information supplied by the Funds in advertising
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares' performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., CDC/Wiesenberger, IBC/Donoghue's Money
Fund Report or other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may also compare
their Shares' performance information with the performance of recognized stock,
bond and other indices, including but not limited to the Municipal Bond Buyers
Indices, the Salomon Brothers Bond Index, the Lehman Bond Index, the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. The Funds may refer to general
market performance over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers and financial
magazines. The Funds may also compare the Shares' yield to those of certain U.S.
Treasury obligations or other money market instruments.
Any current yield quotation of the Shares which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent, based on a specific seven calendar day
period. The Fund's current yield shall be calculated by (a) determining the net
change during a seven calendar day period in the value of a hypothetical account
having a balance of one share at the beginning of the period, (b) dividing the
net change by the value of the account at the beginning of the period to obtain
a base period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing). For this purpose, the net change in account value would reflect
the value of additional Shares purchased with dividends declared on the original
Share and dividends declared on both the original Share and any such additional
Shares, but would not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on portfolio
securities. In addition, the Shares may advertise effective yield quotations.
Effective yield quotations are calculated by adding 1 to the base period return,
raising the sum to a power equal to 365/7, and subtracting 1 from the result
(i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the rate an
investor would have to earn from a fully taxable investment in order to equal
such Shares' yield after taxes. Tax equivalent yields are calculated by dividing
Janus Tax-Exempt Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the Shares' yield is
tax-exempt, only that portion is adjusted in the calculation.
The Shares' current yield and effective yield for the seven day period
ended October 31, 1996 is shown below:
<TABLE>
[TO BE FILED BY AMENDMENT]
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund-Investor Shares % %
Janus Government Money Market Fund-Investor Shares % %
Janus Tax-Exempt Money Market Fund-Investor Shares* % %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Janus Tax-Exempt Money Market Fund Investor Shares' tax equivalent yield for
the seven day period ended October 31, 1996 was ___%.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Shares. Also, Processing Organizations may charge their customers direct
fees in connection with an investment in a Fund, which will have the effect of
reducing the Fund's net yield to those shareholders. The yield on a class of
Shares is not fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly,
7
<PAGE>
yield information may not necessarily be used to compare Shares with investment
alternatives which, like money market instruments or bank accounts, may provide
a fixed rate of interest. In addition, because investments in the Funds are not
insured or guaranteed, yield on the Shares may not necessarily be used to
compare the Shares with investment alternatives which are insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the Securities and Exchange Commission, the
Trustees have established procedures to stabilize each Fund's net asset value at
$1.00 per Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating interest
rates, based on available market rates, from the Fund's $1.00 amortized cost
price per Share. Should that deviation exceed 1/2 of 1%, the Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends and utilizing a net asset value per Share as
determined by using available market quotations. Each Fund i) will maintain a
dollar-weighted average portfolio maturity of 90 days or less; ii) will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than 397 days;
iii) will limit portfolio investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Janus Capital has determined present
minimal credit risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures. The Trust has
also established procedures to ensure that portfolio securities meet the Funds'
high quality criteria.
INVESTMENT ADVISER AND ADMINISTRATOR
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments. The Funds have each
agreed to compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the average daily net
assets of each Fund. However, Janus Capital has agreed to waive .10% of the
value of each Fund's average daily net assets of the advisory fee. Janus Capital
may modify or terminate the waiver at any time upon 90 days' notice to the
Trustees. In addition, the Funds pay brokerage commissions or dealer spreads and
other expenses in connection with the execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into an
Administration Agreement with Janus Capital. Under the terms of the
Administration Agreements, each of the Funds has agreed to compensate Janus
Capital for administrative services at the annual rate of .50% of the value of
the average daily net assets of the Shares for certain services, including
custody, transfer agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and Fund accounting,
recordkeeping, and blue sky registration and monitoring services, registration
fees, expenses of shareholders' meetings and reports to shareholders, costs of
preparing, printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs of complying
with applicable laws regulating the sale of Shares. Each Fund will pay those
expenses not assumed by Janus Capital, including interest and taxes, fees and
expenses of Trustees who are not affiliated with Janus Capital, audit fees and
expenses, and extraordinary costs.
The following table summarizes the advisory fees paid by the Funds for the
fiscal years ended October 31:
<TABLE>
1996 1995
[TO BE FILED BY AMENDMENT]
Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund $ $
Janus Government Money Market Fund $ $
Janus Tax-Exempt Money Market Fund $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes the administration fees paid by the Shares
for the fiscal years ended October 31:
<TABLE>
1996 1995(1)
[TO BE FILED BY AMENDMENT]
Administration Administration Administration Administration
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Investor Shares $164,715 $54,905
Janus Government Money Market Fund - Investor Shares $ 20,138 $ 6,712
Janus Tax-Exempt Money Market Fund - Investor Shares $ 907 $ 302
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)February 15, 1995 (inception) to October 31, 1995.
8
<PAGE>
The Advisory Agreements for each Fund became effective on December 9, 1994
and will continue in effect until June 16, 1997, and thereafter from year to
year so long as such continuance is approved annually by a majority of the
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the outstanding voting shares or the
Trustees of the Funds. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
is managed in accordance with that objective by a particular portfolio manager
or team of portfolio managers. As a result, from time to time two or more
different managed accounts may pursue divergent investment strategies with
respect to investments or categories of investments.
As indicated in the Prospectus, Janus Capital does not permit portfolio
managers to purchase and sell securities for their own accounts except under the
limited exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital and the Funds.
The policy requires investment personnel and officers of Janus Capital, inside
directors of Janus Capital and the Funds and other designated persons deemed to
have access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction then known to be under consideration for or to
have been effected on behalf of any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/ Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns 12% of
its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' custodian. The custodian holds the Funds' assets in
safekeeping and collects and remits the income thereon, subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
The Funds do not pay Janus Service a fee.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which were instrumental in the acquisition of shareholders for the
Funds or which performed services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital.
9
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In recognition of
the value of the foregoing factors, Janus Capital may place portfolio
transactions with a broker or dealer with whom it has negotiated a commission
that is in excess of the commission another broker or dealer would have charged
for effecting that transaction if Janus Capital determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research provided by such broker or dealer viewed in terms of
either that particular transaction or of the overall responsibilities of Janus
Capital. These research and other services may include, but are not limited to,
general economic and security market reviews, industry and company reviews,
evaluations of securities, recommendations as to the purchase and sale of
securities, and access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers is
supplemental to Janus Capital's own research efforts.
For the fiscal years ended October 31, 1996 and October 31, 1995, the total
brokerage commissions paid by the Funds are summarized below:
<TABLE>
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund $ $
Janus Government Money Market Fund $ $
Janus Tax-Exempt Money Market Fund $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Funds buy and sell securities in principal and agency transactions. The
Funds pay no commissions on principal transactions. The Funds engage in agency
transactions and pay commissions only when Janus Capital believes that the net
result of the transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Shares as
a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a Fund i) to the Fund or ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be obligated to pay.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4928
Trustee, Chairman and President of Janus Aspen Series. Chairman, Chief
Executive Officer, Director and President of Janus Capital. Chairman and
Director of IDEX Management, Inc., Largo, Florida (50% subsidiary of Janus
Capital and investment adviser to a group of mutual funds) ("IDEX").
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
10
<PAGE>
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund.
Sharon S. Pichler* - Executive Vice President and Portfolio Manager
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President of Janus Money Market Fund, Janus Tax-Exempt Money
Market Fund and Janus Government Money Market Fund. Vice President of Janus
Capital. Formerly, Assistant Vice President and Portfolio Manager at USAA
Investment Management Co. (1990-1994).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4928
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4928
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance, Treasurer and Chief Financial Officer of Janus
Service, Janus Distributors and Janus Capital. Director of IDEX and Janus
Distributors. Director, Treasurer and Vice President of Finance of Janus
Capital International Ltd. Formerly (1979 to 1992), with the accounting
firm of Price Waterhouse LLP, Denver, Colorado. Formerly (1992-1996),
Treasurer of Janus Investment Fund and Janus Aspen Series.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4928
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital.
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4928
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc., Boston
Massachusetts (mutual fund administration services).
John W. Shepardson# - Trustee
P.O. Box 9591
Denver, CO 80209
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
11
<PAGE>
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Declaration of Trust,
Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Craig, Shepardson,
Loo and Waldinger, monitors the compliance with policies and procedures adopted
particularly for money market funds.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement benefits from the Funds or the Janus
Funds.
<TABLE>
[TO BE FILED BY AMENDMENT]
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1996 ended December 31, 1996**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* $ $
James P. Craig, III, Trustee* $ $
John W. Shepardson, Trustee $ $
William D. Stewart, Trustee $ $
Gary O. Loo, Trustee $ $
Dennis B. Mullen, Trustee $ $
Martin H. Waldinger, Trustee $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1996, Janus Funds consisted of two registered investment
companies comprised of a total of 29 funds.
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock Exchange (the
"NYSE" or the "Exchange") next occurring after a purchase order is received and
accepted by a Fund. A Fund's net asset value is calculated each day that both
the NYSE and the New York Federal Reserve Bank are open. As stated in the
Prospectus, the Funds each seek to maintain a stable net asset value per share
of $1.00. The Shareholder's Manual Section of the Prospectus contains detailed
information about the purchase of Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on Shares are reinvested automatically in additional Shares of that Fund
at the NAV determined on the first business day following the record date.
Checks for cash dividends and distributions and confirmations of reinvestments
are usually mailed to shareholders within ten days after the record date. Any
election (which may be made on the New Account Application form or by phone)
will apply to dividends and distributions the record dates of which fall on or
after the date that a Fund receives such notice. Investors receiving cash
distributions and dividends may elect in writing or by phone to change back to
automatic reinvestment at any time.
12
<PAGE>
REDEMPTION OF SHARES
Procedures for redemption of Shares are set forth in the Shareholder's
Manual section of the Prospectus. Shares normally will be redeemed for cash,
although each Fund retains the right to redeem Shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to
redeem Shares solely in cash up to the lesser of $250,000 or 1% of the net asset
value of that Fund during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, their Fund will have the
option of redeeming the excess in cash or in kind. If Shares are redeemed in
kind, the redeeming shareholder might incur brokerage costs in converting the
assets to cash. The method of valuing securities used to make redemptions in
kind will be the same as the method of valuing portfolio securities described
under "Determination of Net Asset Value" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Funds to redeem Shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the Securities and Exchange Commission, or the NYSE
is closed except for holidays and weekends, (2) the Securities and Exchange
Commission permits such suspension and so orders, or (3) an emergency exists as
determined by the Securities and Exchange Commission so that disposal of
securities or determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectus. Applications for
specific types of accounts may be obtained by calling the Funds at
1-800-525-3713 or writing to the Funds at P.O. Box 173375, Denver, Colorado
80217-3375.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectus, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic redemption option. The payments
will be made from the proceeds of periodic redemptions of Shares in the account
at the net asset value. Depending on the size or frequency of the disbursements
requested, and the fluctuation in value of the Shares in the Fund's portfolio,
redemptions for the purpose of making such disbursements may reduce or even
exhaust the shareholder's account. Either an investor or their Fund, by written
notice to the other, may terminate the investor's systematic redemption option
without penalty at any time.
Information about requirements to establish a systematic redemption option
may be obtained by writing or calling the Funds at the address or phone number
shown above.
RETIREMENT PLANS
The Funds offer several different types of tax-deferred retirement plans
that an investor may establish to invest in Shares, depending on rules
prescribed by the Internal Revenue Code of 1986 and the regulations thereunder
(the "Code"). The Individual Retirement Account ("IRA") may be used by most
individuals who have taxable compensation. The Simplified Employee Pensions
("SEPs") and the Defined Contribution Plans may be used by most employers,
including corporations, partnerships and sole proprietors, for the benefit of
business owners and their employees. In addition, the Funds offer a Section
403(b)(7) Plan for employees of educational organizations and other qualifying
tax-exempt organizations. Investors should consult their tax advisor or legal
counsel before selecting a retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans (Profit Sharing
or Money Purchase Pension Plans) and Section 403(b)(7) Plans are subject to
specific contribution limitations. Generally, such contributions may be invested
at the direction of the participant. The investment is then held by Investors
Fiduciary Trust Company as custodian. Each participant's account is charged an
annual fee of $12. There is a maximum annual fee of $24 per taxpayer
identification number.
Distributions from retirement plans generally are subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
591/2. Several exceptions to the general rule may apply. Additionally,
shareholders generally must start withdrawing retirement plan assets no later
than April 1 of the year after they reach age 701/2. Exceptions may apply so
please consult your tax advisor. Several methods exist to determine the amount
of the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Funds at 1-800-525-3713 or write to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an
IRA, SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until
the appropriate forms to establish any such plan have been completed.
13
<PAGE>
DIVIDENDS AND TAX STATUS
Dividends representing substantially all of the net investment income and
any net realized gains on sales of securities are declared daily, Saturdays,
Sundays and holidays included, and distributed on the last business day of each
month. If a month begins on a Saturday, Sunday, or holiday, dividends for those
days are declared at the end of the preceding month and distributed on the first
business day of the month. A shareholder may receive dividends in cash or may
choose to have dividends automatically reinvested in a Fund's Shares. As
described in the Prospectus, Shares purchased by wire on a bank business day
will receive that day's dividend if the purchase is effected at or prior to 3:00
p.m. (New York time) for Janus Money Market Fund and Janus Government Money
Market Fund and 12:00 p.m. (New York time) for Janus Tax-Exempt Money Market
Fund. Otherwise, such Shares will begin to accrue dividends on the following
day. Orders for purchase accompanied by a check or other negotiable bank draft
will be accepted and effected as of 4:00 p.m. (New York time) on the day of
receipt and such Shares will begin to accrue dividends on the first bank
business day following receipt of the order. Requests for redemption of Shares
of a Fund will be redeemed at the next determined net asset value. If processed
by 4:00 p.m. (New York time) such redemption will generally include dividends
declared through the day of redemption. However, redemption requests made by
wire that are received prior to 3:00 p.m. (New York time) for Janus Money Market
Fund and Janus Government Money Market Fund and 12:00 p.m. (New York time) for
Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that day
and no dividend will be accrued for such day. Proceeds of such a redemption will
normally be sent to the predesignated bank account on that day, but that day's
dividend will not be received. If shares of a Fund were originally purchased by
check or through an Automated Clearing House transaction, the Fund may delay
transmittal of redemption proceeds up to 15 days in order to ensure that
purchase funds have been collected. Closing times for purchase and redemption of
Shares may be changed for days in which the bond market or the New York Stock
Exchange close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market
Fund) are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received in
cash or are reinvested in additional Shares. Full information regarding the tax
status of income dividends and any capital gains distributions will be mailed to
shareholders for tax purposes on or before January 31st of each year. As
described in detail in the Prospectus, Janus Tax-Exempt Money Market Fund
anticipates that substantially all income dividends it pays will be exempt from
federal income tax, although dividends attributable to interest on taxable
investments, together with distributions from any net realized short- or
long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Code.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability. If the
structure does not perform as intended, adverse tax or investment consequences
may result. Neither the Internal Revenue Service nor any other regulatory
authority has ruled definitively on certain legal issues presented by structured
securities. Future tax or other regulatory determinations could adversely affect
the value, liquidity, or tax treatment of the income received from these
securities or the nature and timing of distributions made by a portfolio.
PRINCIPAL SHAREHOLDERS
TO BE CONFIRMED
[As of January 20, 1997, the officers and Trustees of the Funds as a group
owned less than 1% of the outstanding shares of each of the Funds. To the
knowledge of the Funds, no other person owned more than 5% of the outstanding
Shares of any Fund as of the above date.]
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts business trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
consists of 19 separate series, three of which currently offer three classes of
shares. The Funds were added to the Trust as separate series on December 9,
1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Agreement and Declaration of Trust (the "Declaration of Trust") disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The Declaration of Trust
also provides for indemnification from the assets
14
<PAGE>
of the Funds for all losses and expenses of any Fund shareholder held liable for
the obligations of their Fund. Thus, the risk of a shareholder incurring a
financial loss on account of its liability as a shareholder of one of the Funds
is limited to circumstances in which their Fund would be unable to meet its
obligations. The possibility that these circumstances would occur is remote. The
Trustees intend to conduct the operations of the Funds to avoid, to the extent
possible, liability of shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
The Trust is authorized to issue multiple classes of shares for each Fund.
Currently, Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund each offer three classes of shares by separate
prospectuses. The Shares discussed in this SAI are offered to the general
public. A second class of shares, Service Shares, is offered through Financial
Institutions that meet minimum investment requirements in connection with trust
accounts, cash management programs and similar programs. A third class of
shares, Institutional Shares, is offered only to clients meeting certain minimum
investment criteria.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992 with the exception of Mr. Craig who was appointed by the Trustees as of
June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, retirement,
resignation, bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held, unless
otherwise required by the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize their Fund, to amend the Declaration of Trust, to bring
certain derivative actions and on any other matters on which a shareholder vote
is required by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or the
Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series or class of
the Trust will vote separately only with respect to those matters that affect
only that series or class or if the interest of the series or class in the
matter differs from the interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI relates. If further
information is desired with respect to the Funds or such securities, reference
is made to the Registration Statement and the exhibits filed as a part thereof.
15
<PAGE>
FINANCIAL STATEMENTS
The following audited financial statements of the Funds for the period
ended October 31, 1996 are hereby incorporated into this SAI by reference to the
Funds' Annual Report dated October 31, 1996. A copy of such report accompanies
this SAI.
[TO BE FILED BY AMENDMENT]
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1996
Statements of Operations for the period ended October 31, 1996
Statements of Assets and Liabilities as of October 31, 1996
Statements of Changes in Net Assets for the periods ended October 31, 1996
and 1995*
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
- --------------------------------------------------------------------------------
*Transactions in fund shares for the period February 15, 1995 to October 31,
1995.
16
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD AND POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS
The two highest ratings of Standard & Poor's Ratings Services ("S&P") for
municipal and corporate bonds are AAA and AA. Bonds rated AAA have the highest
rating assigned by S&P to a debt obligation. Capacity to pay interest and repay
principal is extremely strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated issues only in a
small degree. The AA rating may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within that rating category.
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are judged by
Moody's to be of the best quality. Bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa bonds are rated
lower than the best bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The generic rating
Aa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT-TERM MUNICIPAL LOANS
S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have a strong
capacity to pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service will be given a
plus (+) designation. Issues rated SP-2 have satisfactory capacity to pay
principal and interest with some vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/VMIG-1.
Moody's states that short-term municipal securities rated MIG-1/VMIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2 designation are
of high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES
Prime-1 and Prime-2 are the two highest ratings assigned by Moody's for
other short-term debt securities and commercial paper, and A-1 and A-2 are the
two highest ratings for commercial paper assigned by S&P. Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest classification
of Prime, while S&P uses the numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt obligations and have
many of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 by Moody's have a strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics displayed by issuers
rated Prime-1, but to a lesser degree. Issuers rated A-1 by S&P carry a strong
degree of safety regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) designation.
Issuers rated A-2 by S&P carry a satisfactory degree of safety regarding timely
repayment.
FITCH
F-1+ Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely
payment.
F-1 Very strong credit quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues
rated F-1+.
F-2 Good credit quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is
not as great as the F-1+ and F-1 ratings.
17
<PAGE>
DUFF & PHELPS INC.
Duff 1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or ready access to alternative sources
of funds, is clearly outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
Duff 1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
THOMSON BANKWATCH, INC.
TBW-1 The highest category; indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated TBW-1.
TBW-3 The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and
interest in a timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as non-investment
grade and therefore speculative.
IBCA, INC.
A1+ Obligations supported by the highest capacity for timely repayment.
Where issues possess a particularly strong credit feature, a rating of
A1+ is assigned.
A2 Obligations supported by a good capacity for timely repayment.
A3 Obligations supported by a satisfactory capacity for timely repayment.
B Obligations for which there is an uncertainty as to the capacity to
ensure timely repayment.
C Obligations for which there is a high risk of default or which are
currently in default.
18
<PAGE>
APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital needs
and usually have maturities of one year or less. They include the following:
1. Project Notes, which carry a U.S. government guarantee, are issued by
public bodies (called "local issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have maturities that range up to one
year from the date of issuance. Project Notes are backed by an agreement between
the local issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of financial
assistance programs for housing, redevelopment, and related needs (such as
low-income housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business taxes, and are payable
from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of receipt of other
types of revenues, such as Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction financing.
After successful completion and acceptance, many projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association ("Fannie Mae") or the Government National Mortgage
Association ("Ginnie Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of
longer term financing.
Municipal Bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds in recent years have come to include an increasingly wide
variety of types of municipal obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may consist of virtually any form of
state or local governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or redevelopment
authorities, and special districts, such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the revenues or net revenues derived
from a particular facility, group of facilities, or, in some cases, the proceeds
of a special excise or other specific revenue source. Revenue bonds are issued
to finance a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these bonds provide additional
security in the form of a debt service reserve fund to be used to make principal
and interest payments. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large volumes for
projects that are privately owned and operated (see 3 below).
Private Activity Bonds are considered municipal bonds if the interest paid
thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing and health. These bonds are
also used to finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations
and the pledge, if any, of real and personal property as security for such
payment.
While, at one time, the pertinent provisions of the Internal Revenue Code
permitted private activity bonds to bear tax-exempt interest in connection with
virtually any type of commercial or industrial project (subject to various
restrictions as to authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying projects under the
Code have become increasingly limited, particularly since the enactment of the
Tax Reform Act of 1986. Under current provisions of the
19
<PAGE>
Code, tax-exempt financing remains available, under prescribed conditions, for
certain privately owned and operated rental multi-family housing facilities,
nonprofit hospital and nursing home projects, airports, docks and wharves, mass
commuting facilities and solid waste disposal projects, among others, and for
the refunding (that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt bonds. In future
years, the types of projects qualifying under the Code for tax-exempt financing
are expected to become increasingly limited.
Because of terminology formerly used in the Internal Revenue Code,
virtually any form of private activity bond may still be referred to as an
"industrial development bond," but more and more frequently revenue bonds have
become classified according to the particular type of facility being financed,
such as hospital revenue bonds, nursing home revenue bonds, multi-family housing
revenues bonds, single family housing revenue bonds, industrial development
revenue bonds, solid waste resource recovery revenue bonds, and so on.
Other Municipal Obligations, incurred for a variety of financing purposes,
include: municipal leases, which may take the form of a lease or an installment
purchase or conditional sale contract, are issued by state and local governments
and authorities to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, telecommunications equipment and other capital
assets. Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase municipal
leases subject to a non-appropriation clause when the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether the interest is
or is not includible in the calculation of alternative minimum taxes imposed on
individuals, according to whether the costs of acquiring or carrying the bonds
are or are not deductible in part by banks and other financial institutions, and
according to other criteria relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code and related requirements
governing the issuance of tax-exempt bonds, industry practice has uniformly
required, as a condition to the issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally recognized bond counsel as to the
tax-exempt status of interest on the bonds.
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[LOGO]
JANUS VENTURE FUND
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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Statement of Additional Information
February 17, 1997
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Janus Venture Fund (the "Fund") is a no-load mutual fund that seeks capital
appreciation. The Fund normally invests at least 50% of its equity assets in
securities issued by small-sized companies. Small-sized companies are those who
have market capitalizations of less than $1 billion or annual gross revenues of
less than $500 million. Subject to this policy, the Fund may also invest in
larger issuers. Depending upon its portfolio manager's opinion of prevailing
market, financial and economic conditions, the Fund may at times hold
substantial positions in cash or interest-bearing securities.
The Fund is a separate series of Janus Investment Fund, a Massachusetts
business trust (the "Trust"). Each series of the Trust represents shares of
beneficial interest in a separate portfolio of securities and other assets with
its own objective and policies. The Fund is managed by Janus Capital Corporation
("Janus Capital").
THE FUND HAS DISCONTINUED PUBLIC SALES OF ITS SHARES TO NEW INVESTORS.
HOWEVER, SHAREHOLDERS WHO MAINTAIN OPEN FUND ACCOUNTS ARE PERMITTED TO CONTINUE
TO PURCHASE SHARES OF THE FUND AND TO REINVEST ANY DIVIDENDS AND/OR CAPITAL
GAINS DISTRIBUTIONS IN SHARES OF THE FUND. ONCE A SHAREHOLDER'S FUND ACCOUNT IS
CLOSED, IT MAY NOT BE POSSIBLE FOR THAT SHAREHOLDER TO PURCHASE ADDITIONAL FUND
SHARES. See the "Shareholder's Manual" section of the Prospectus for more
details. The Fund may resume sales of its shares at some future date, although
it has no present intention of doing so.
This Statement of Additional Information ("SAI") is not a Prospectus and
should be read in conjunction with the Fund's Prospectus dated February 17,
1997, which is incorporated by reference into this SAI and may be obtained from
the Trust at the above phone number or address. This SAI contains additional and
more detailed information about the Fund's operations and activities than the
Prospectus.
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JANUS VENTURE FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
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Investment Policies, Restrictions and Techniques .................. 3
Investment Objective ........................................... 3
Portfolio Policies ............................................. 3
Investment Restrictions ........................................ 3
Types of Securities and Investment Techniques .................. 4
Illiquid Securities .......................................... 4
Zero Coupon, Pay-In-Kind and Step Coupon Securities .......... 4
Pass-Through Securities ...................................... 5
Investment Company Securities ................................ 6
Depositary Receipts .......................................... 6
Municipal Obligations ........................................ 6
Other Income-Producing Securities ............................ 6
High-Yield/High-Risk Securities .............................. 6
Repurchase and Reverse Repurchase Agreements ................. 7
Futures, Options and Other Derivative Instruments ............ 7
Investment Adviser ................................................ 14
Custodian, Transfer Agent and Certain Affiliations ................ 15
Portfolio Transactions and Brokerage .............................. 16
Officers and Trustees ............................................. 17
Purchase of Shares ................................................ 19
Net Asset Value Determination .................................. 19
Reinvestment of Dividends and Distributions .................... 19
Redemption of Shares .............................................. 20
Shareholder Accounts .............................................. 20
Telephone Transactions ......................................... 20
Systematic Redemptions ......................................... 20
Retirement Plans .................................................. 20
Income Dividends, Capital Gains Distributions and Tax Status ...... 21
Principal Shareholders ............................................ 21
Miscellaneous Information ......................................... 21
Shares of the Trust ............................................ 22
Voting Rights .................................................. 22
Independent Accountants ........................................ 22
Registration Statement ......................................... 22
Performance Information ........................................... 22
Financial Statements .............................................. 23
Appendix A ........................................................ 24
Explanation of Rating Categories ............................... 24
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INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
INVESTMENT OBJECTIVE
As stated in the Prospectus, the Fund's investment objective is capital
appreciation. Realization of income is not a significant investment
consideration and any income realized on the Fund's investments therefore will
be incidental to the Fund's objective. There can be no assurance that the Fund
will, in fact, achieve its objective. The investment objective of the Fund is
not fundamental and may be changed by the Trustees without shareholder approval.
PORTFOLIO POLICIES
The Prospectus discusses the types of securities in which the Fund will
invest, portfolio policies of the Fund and the investment techniques of the
Fund. The Prospectus includes a discussion of portfolio turnover policies. The
Fund's portfolio turnover rates (total purchases or sales, whichever is less,
compared to average monthly value of portfolio securities) for the fiscal years
ended October 31, 1996 and October 31, 1995, were ___% and 113%, respectively.
INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the Fund is subject to certain fundamental
policies and restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or the Fund if a matter affects just
the Fund), or (ii) 67% or more of the voting securities present at a meeting if
the holders of more than 50% of the outstanding voting securities of the Trust
(or the Fund) are present or represented by proxy. As fundamental policies, the
Fund may not:
(1) Own more than 10% of the outstanding voting securities of any one
issuer and, as to seventy-five percent (75%) of the value of its total assets,
purchase the securities of any one issuer (except cash items and "government
securities" as defined under the Investment Company Act of 1940, as amended (the
"1940 Act")), if immediately after and as a result of such purchase, the value
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
value of the Fund's total assets.
(2) Invest 25% or more of the value of its total assets in any particular
industry (other than U.S. government securities).
(3) Invest directly in real estate or interests in real estate; however,
the Fund may own debt or equity securities issued by companies engaged in those
businesses.
(4) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the Fund from purchasing or selling options, futures, swaps
and forward contracts or from investing in securities or other instruments
backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more than 25%
of its total assets would be lent to other parties (but this limitation does not
apply to purchases of commercial paper, debt securities or repurchase
agreements).
(6) Act as an underwriter of securities issued by others, except to the
extent that the Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
As a fundamental policy, the Fund may, notwithstanding any other investment
policy or limitation (whether or not fundamental), invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies and
limitations as the Fund.
The Trustees have adopted additional investment restrictions for the Fund.
These restrictions are operating policies of the Fund and may be changed by the
Trustees without shareholder approval. The additional investment restrictions
adopted by the Trustees to date include the following:
(a) The Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in futures
contracts and related options that do not fall within the definition of bona
fide hedging transactions will exceed 5% of the fair market value of the Fund's
net assets, after taking into account unrealized profits and unrealized losses
on any such contracts it has entered into; and (ii) enter into any futures
contracts if the aggregate amount of the Fund's commitments under outstanding
futures contracts positions would exceed the market value of its total assets.
(b) The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to the
securities sold short without the payment of any additional consideration
therefor, and provided that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments and other deposits
in connection
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with transactions in futures, options, swaps and forward contracts shall not be
deemed to constitute purchasing securities on margin.
(d) The Fund may not mortgage or pledge any securities owned or held by the
Fund in amounts that exceed, in the aggregate, 15% of the Fund's net asset
value, provided that this limitation does not apply to reverse repurchase
agreements, deposits of assets to margin, guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in connection
with such contracts.
(e) The Fund may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 25% of the value of its
total assets (including the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 25% of the value of the Fund's total assets by
reason of a decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the 25% limitation.
This policy shall not prohibit reverse repurchase agreements, deposits of assets
to margin or guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such contracts.
(f) The Fund does not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net assets
would be invested in repurchase agreements not entitling the holder to payment
of principal and interest within seven days and in securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a
readily available market. The Trustees, or the Fund's investment adviser acting
pursuant to authority delegated by the Trustees, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to
such rule, Section 4(2) commercial paper and municipal lease obligations.
Accordingly, such securities may not be subject to the foregoing limitation.
(g) The Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Fund's restriction on investing in a particular
industry, the Fund will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that Bloomberg L.P. classifications are so broad
that the primary economic characteristics in a single class are materially
different, the Fund may further classify issuers in accordance with industry
classifications as published by the Securities and Exchange Commission ("SEC").
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees of the Fund
have authorized Janus Capital to make liquidity determinations with respect to
its securities, including Rule 144A Securities, commercial paper and municipal
lease obligations. Under the guidelines established by the Trustees, Janus
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; 2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by a Nationally Recognized Statistical
Rating Organization ("NRSRO"). A foreign security that may be freely traded on
or through the facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security subject to these
procedures.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
The Fund may invest up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities. Zero coupon bonds are issued and traded at a discount
from their face value. They do not entitle the holder to any periodic payment of
interest prior to maturity. Step coupon bonds trade at a discount from their
face value and pay coupon interest. The coupon rate is low for an initial period
and then increases to a higher coupon rate thereafter. The discount from the
face amount or par value depends on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer. Pay-in-kind bonds normally give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), the Fund must
distribute its investment company taxable income, including the original issue
discount accrued on zero coupon or step coupon bonds. Because the Fund will not
receive
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cash payments on a current basis in respect of accrued original-issue discount
on zero coupon bonds or step coupon bonds during the period before interest
payments begin, in some years the Fund may have to distribute cash obtained from
other sources in order to satisfy the distribution requirements under the Code.
The Fund might obtain such cash from selling other portfolio holdings which
might cause the Fund to incur capital gains or losses on the sale. Additionally,
these actions are likely to reduce the assets to which Fund expenses could be
allocated and to reduce the rate of return for the Fund. In some circumstances,
such sales might be necessary in order to satisfy cash distribution requirements
even though investment considerations might otherwise make it undesirable for
the Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
PASS-THROUGH SECURITIES
The Fund may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests.
A pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Fund. The most common type of
pass-through securities are mortgage-backed securities. Government National
Mortgage Association ("GNMA") Certificates are mortgage-backed securities that
evidence an undivided interest in a pool of mortgage loans. GNMA Certificates
differ from bonds in that principal is paid back monthly by the borrowers over
the term of the loan rather than returned in a lump sum at maturity. The Fund
will generally purchase "modified pass-through" GNMA Certificates, which entitle
the holder to receive a share of all interest and principal payments paid and
owned on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether or not the mortgagor actually makes the payment. GNMA
Certificates are backed as to the timely payment of principal and interest by
the full faith and credit of the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest but it is not guaranteed by the full faith and credit of
the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Fund), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. The Fund's portfolio manager will consider
estimated prepayment rates in calculating the average weighted maturity of the
Fund. A borrower is more likely to prepay a mortgage that bears a relatively
high rate of interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by the Fund might be converted
to cash and the Fund will be forced to accept lower interest rates when that
cash is used to purchase additional securities in the mortgage-backed securities
sector or in other investment sectors. Additionally, prepayments during such
periods will limit the Fund's ability to participate in as large a market gain
as may be experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor or guarantor of the security and interest
and principal payments ultimately depend upon payment of the underlying loans by
individuals. Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales agreements
that may be created when a municipality enters into an installment purchase
contract or lease with a vendor. Such securities may be secured by the assets
purchased or leased by the municipality; however, if the municipality stops
making payments, there generally will be no recourse against the vendor. The
market for tax-exempt asset-backed securities is still relatively new. These
obligations are likely to involve unscheduled prepayments of principal.
5
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INVESTMENT COMPANY SECURITIES
From time to time, the Fund may invest in securities of other investment
companies, including money market funds managed by Janus Capital. The Fund's
investments in such money market funds are subject to the terms of an exemptive
order obtained by the Janus funds which currently provides that the Fund will
limit its aggregate investment in a Janus money market fund to the greater of
(i) 5% of its total assets or (ii) $2.5 million. The Fund is subject to the
provisions of Section 12(d)(1) of the 1940 Act, which currently limits the
Fund's investment in other investment companies to no more than 10% of its
assets.
DEPOSITARY RECEIPTS
The Fund may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depositary of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Fund may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other
similar instruments representing securities of foreign companies. EDRs are
receipts issued by a European financial institution evidencing an arrangement
similar to that of ADRs. EDRs, in bearer form, are designed for use in European
securities markets.
MUNICIPAL OBLIGATIONS
The Fund may invest in municipal obligations issued by states, territories
and possessions of the United States and the District of Columbia. The value of
municipal obligations can be affected by changes in their actual or perceived
credit quality. The credit quality of municipal obligations can be affected by,
among other things, the financial condition of the issuer or guarantor, the
issuer's future borrowing plans and sources of revenue, the economic feasibility
of the revenue bond project or general borrowing purpose, political or economic
developments in the region where the security is issued, and the liquidity of
the security. Because municipal securities are generally traded
over-the-counter, the liquidity of a particular issue often depends on the
willingness of dealers to make a market in the security. The liquidity of some
municipal obligations may be enhanced by demand features, which would enable the
Fund to demand payment on short notice from the issuer or a financial
intermediary.
OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Fund may purchase
include, but are not limited to, the following types of securities:
Variable and floating rate obligations. These types of securities have
variable or floating rates of interest and, under certain limited circumstances,
may have varying principal amounts. Variable and floating rate securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate (the "underlying index"). See also "Inverse Floaters."
Standby commitments. These instruments, which are similar to a put, give
the Fund the option to obligate a broker, dealer or bank to repurchase a
security held by the Fund at a specified price.
Tender option bonds. Tender option bonds are generally long-term securities
that are coupled with the option to tender the securities to a bank,
broker-dealer or other financial institution at periodic intervals and receive
the face value of the bond. This type of security is commonly used as a means of
enhancing the security's liquidity.
Inverse floaters. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. Certain
inverse floaters may have an interest rate reset mechanism that multiplies the
effects of change in the underlying index. Such mechanism may increase the
volatility of the security's market value. Certain variable rate securities
(including certain mortgage-backed securities) pay interest at a rate that
varies inversely to prevailing short-term interest rates (sometimes referred to
as inverse floaters). For example, upon reset the interest rate payable on a
security may go down when the underlying index has risen. The Fund will not
invest more than 5% of its assets in inverse floaters.
The Fund will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of its portfolio.
HIGH-YIELD/HIGH-RISK SECURITIES
The Fund intends to invest less than 35% of its net assets in debt
securities that are rated below investment grade (e.g., securities rated BB or
lower by Standard & Poor's Ratings Services ("Standard & Poor's") or Ba or lower
by Moody's Investors Service, Inc. ("Moody's")). Lower rated bonds involve a
higher degree of credit risk, which is the risk that the issuer will not
6
<PAGE>
make interest or principal payments when due. In the event of an unanticipated
default, the Fund would experience a reduction in its income, and could expect a
decline in the market value of the securities so affected.
The Fund may also invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated
securities, may not have as broad a market. Sovereign debt of foreign
governments is generally rated by country. Because these ratings do not take
into account individual factors relevant to each issue and may not be updated
regularly, Janus Capital may treat such securities as unrated debt. Because of
the size and perceived demand of the issue, among other factors, certain
municipalities may not incur the costs of obtaining a rating. The Fund's
portfolio managers will analyze the credit- worthiness of the issuer, as well as
any financial institution or other party responsible for payments on the
security, in determining whether to purchase unrated municipal bonds. Unrated
debt securities will be included in the 35% limit unless the portfolio manager
deems such securities to be the equivalent of investment grade securities.
Subject to the above limits, the Fund may purchase defaulted securities
only when its portfolio manager believes, based upon his analysis of the
financial condition, results of operations and economic outlook of an issuer,
that there is potential for resumption of income payments and that the
securities offer an unusual opportunity for capital appreciation.
Notwithstanding the portfolio manager's belief as to the resumption of income,
however, the purchase of any security on which payment of interest or dividends
is suspended involves a high degree of risk. Such risk includes, among other
things, the following:
Financial and Market Risks. Investments in securities that are in default
involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. Issuers of defaulted securities may
have substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain information about the
condition of such issuers. The market prices of such securities also are subject
to abrupt and erratic movements and above average price volatility, and the
spread between the bid and asked prices of such securities may be greater than
normally expected.
Disposition of Portfolio Securities. Although the Fund generally will
purchase securities for which its portfolio manager expects an active market to
be maintained, defaulted securities may be less actively traded than other
securities and it may be difficult to dispose of substantial holdings of such
securities at prevailing market prices. The Fund will limit holdings of any such
securities to amounts that the portfolio manager believes could be readily sold,
and holdings of such securities would, in any event, be limited so as not to
limit the Fund's ability to readily dispose of securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at times,
require participation in bankruptcy or receivership proceedings on behalf of the
Fund.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, the Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed
upon incremental amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or "collateral." The Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause
the Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, the Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days will be subject to the 15% limit on illiquid investments. While
it is possible to eliminate all risks from these transactions, it is the policy
of the Fund to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Janus Capital.
The Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities. In a reverse repurchase
agreement, the Fund sells a portfolio security to another party, such as a bank
or broker-dealer, in return for cash and agrees to repurchase the instrument at
a particular price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The
Fund will enter into reverse repurchase agreements only with parties that Janus
Capital deems creditworthy.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Futures Contracts. The Fund may enter into contracts for the purchase or
sale for future delivery of fixed-income securities, foreign currencies or
contracts based on financial indices, including indices of U.S. government
securities, foreign government securities, equity or fixed-income securities.
U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures commission
merchant ("FCM"), or brokerage
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firm, which is a member of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain other liquid assets by the Fund's custodian for the benefit of the FCM.
Initial margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments for the benefit of
the FCM to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. In the event of
the bankruptcy of the FCM that holds margin on behalf of the Fund, the Fund may
be entitled to a return of margin owed to the Fund only in proportion to the
amount received by the FCM's other customers. Janus Capital will attempt to
minimize the risk by careful monitoring of the creditworthiness of the FCMs with
which the Fund does business and by depositing margin payments in a segregated
account with the Fund's custodian.
The Fund intends to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the CFTC
and the National Futures Association, which regulate trading in the futures
markets. The Fund will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC regulations. To the extent
that the Fund holds positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the fair market value of the Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
Although the Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to the Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days. However, because
the Fund's cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position remains open,
the Fund's return could be diminished due to the opportunity losses of foregoing
other potential investments.
The Fund's primary purpose in entering into futures contracts is to protect
the Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, the Fund could enter into a futures contract to
purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against the Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent the Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
the Fund's obligations with respect to the futures contracts will consist of
other liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by the Fund with respect to the futures contracts.
Conversely, if the Fund holds stocks and seeks to protect itself from a decrease
in stock prices, the Fund might sell stock index futures contracts, thereby
hoping to offset the potential decline in the value of its portfolio securities
by a corresponding increase in the value of the futures contract position. The
Fund could protect against a decline in stock prices by selling portfolio
securities and investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without having to sell
portfolio securities.
If the Fund owns Treasury bonds and the portfolio manager expects interest
rates to increase, the Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as the Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the value of the Treasury bonds would decline, but the value of the
Fund's interest rate futures contract will increase, thereby keeping the net
asset value of the Fund from declining as much as it may have otherwise. If, on
the other hand, the portfolio manager expects interest rates to decline, the
Fund may take a long position in interest rate futures contracts in anticipation
of later closing out the futures position and purchasing bonds. Although the
Fund can accomplish similar results by buying securities with long maturities
and selling securities with short maturities, given the greater liquidity of the
futures market than the cash market, it may be possible to accomplish the same
result more easily and more quickly by using futures contracts as an investment
tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements
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in the futures market are less onerous than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
the foregoing distortions, a correct forecast of general price trends by the
portfolio manager still may not result in a successful use of futures.
Futures contracts entail risks. Although the Fund believes that use of such
contracts will benefit the Fund, the Fund's overall performance could be worse
than if the Fund had not entered into futures contracts if the portfolio
manager's investment judgement proves incorrect. For example, if the Fund has
hedged against the effects of a possible decrease in prices of securities held
in its portfolio and prices increase instead, the Fund will lose part or all of
the benefit of the increased value of these securities because of offsetting
losses in its futures positions. In addition, if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to the Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to
the Fund will not match exactly the Fund's current or potential investments. The
Fund may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests -
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities which involves a risk that the
futures position will not correlate precisely with the performance of the Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with the
Fund's investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between the Fund's investments and its futures positions also may
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. The
Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in the Fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for the Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, the Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, the Fund's access to other assets held to cover its futures positions
also could be impaired.
Options on Futures Contracts. The Fund may buy and write put and call
options on futures contracts. An option on a future gives the Fund the right
(but not the obligation) to buy or sell a futures contract at a specified price
on or before a specified date. The purchase of a call option on a futures
contract is similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option compared to either
the price of the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less risky than
ownership of the futures contract or the underlying instrument. As with the
purchase of futures contracts, when the Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
future's price at the expiration of the option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, the Fund will retain the full amount of the option premium which provides
a partial hedge against any increase in the price of securities which the Fund
is considering buying. If a call or put option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between the change
in the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
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The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk the Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Contracts. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Fund may enter into
forward contracts to purchase and sell government securities, equity or income
securities, foreign currencies or other financial instruments. Forward contracts
generally are traded in an interbank market conducted directly between traders
(usually large commercial banks) and their customers. Unlike futures contracts,
which are standardized contracts, forward contracts can be specifically drawn to
meet the needs of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Fund's principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). The Fund may
enter into forward currency contracts with stated contract values of up to the
value of the Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). The Fund will exchange foreign currencies
for U.S. dollars and for other foreign currencies in the normal course of
business and may buy and sell currencies through forward currency contracts in
order to fix a price for securities it has agreed to buy or sell ("transaction
hedge"). The Fund also may hedge some or all of its investments denominated in a
foreign currency or exposed to foreign currency fluctuations against a decline
in the value of that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency (or a proxy
currency whose performance is expected to replicate or exceed the performance of
that currency relative to the U.S. dollar) approximating the value of some or
all of its portfolio securities denominated in that currency ("position hedge")
or by participating in options or futures contracts with respect to the
currency. The Fund also may enter into a forward currency contract with respect
to a currency where the Fund is considering the purchase or sale of investments
denominated in that currency but has not yet selected the specific investments
("anticipatory hedge"). In any of these circumstances the Fund may,
alternatively, enter into a forward currency contract to purchase or sell one
foreign currency for a second currency that is expected to perform more
favorably relative to the U.S. dollar if the portfolio manager believes there is
a reasonable degree of correlation between movements in the two currencies
("cross-hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on the Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting the Fund's currency exposure from one foreign
currency to another removes the Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
the Fund if its portfolio manager's projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may result in
poorer overall performance for the Fund than if it had not entered into such
contracts.
The Fund will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in or whose value its tied to, the
currency underlying the forward contract or the currency being hedged. To the
extent that the Fund is not able to cover its forward currency positions with
underlying portfolio securities, the Fund's custodian will segregate cash or
other liquid assets having a value equal to the aggregate amount of the Fund's
commitments under forward contracts entered into with respect to position
hedges, cross-hedges and anticipatory hedges. If the value of the securities
used to cover a position or the value of segregated assets declines, the Fund
will find alternative cover or segregate additional cash or liquid assets on a
daily basis so that the value of the covered and segregated assets will be equal
to the amount of the Fund's commitments with respect to such contracts. As an
alternative to segregating assets, the Fund may buy call options permitting the
Fund to buy the amount of foreign currency being hedged by a forward sale
contract or the Fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contacts. In such event,
the Fund's ability to utilize forward contracts may be restricted. In addition,
the Fund may not always be able to enter into forward contracts at attractive
prices and may be limited in its ability to use these contracts to hedge Fund
assets.
Options on Foreign Currencies. The Fund may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a
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foreign currency in which portfolio securities are denominated will reduce the
U.S. dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminutions in the
value of portfolio securities, the Fund may buy put options on the foreign
currency. If the value of the currency declines, the Fund will have the right to
sell such currency for a fixed amount in U.S. dollars, thereby offsetting, in
whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects of
the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to the Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, the Fund could sustain losses on transactions in foreign
currency options that would require the Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
The Fund may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, the Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, the Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge the increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and the Fund would be required
to buy or sell the underlying currency at a loss which may not be offset by the
amount of the premium. Through the writing of options on foreign currencies, the
Fund also may lose all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
The Fund may write covered call options on foreign currencies. A call
option written on a foreign currency by the Fund is "covered" if the Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currencies held in its portfolio. A
call option is also covered if the Fund has a call on the same foreign currency
in the same principal amount as the call written if the exercise price of the
call held (i) is equal to or less than the exercise price of the call written or
(ii) is greater than the exercise price of the call written, if the difference
is maintained by the Fund in cash or other liquid assets in a segregated account
with the Fund's custodian.
The Fund also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
the Fund owns or has the right to acquire and which is denominated in the
currency underlying the option. Call options on foreign currencies which are
entered into for cross-hedging purposes are not covered. However, in such
circumstances, the Fund will collateralize the option by segregating cash or
other liquid assets in an amount not less than the value of the underlying
foreign currency in U.S.
dollars marked-to-market daily.
Options on Securities. In an effort to increase current income and to
reduce fluctuations in net asset value, the Fund may write covered put and call
options and buy put and call options on securities that are traded on United
States and foreign securities exchanges and over-the-counter. The Fund may write
and buy options on the same types of securities that the Fund may purchase
directly.
A put option written by the Fund is "covered" if the Fund (i) segregates
cash not available for investment or other liquid assets with a value equal to
the exercise price of the put with the Fund's custodian or (ii) holds a put on
the same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by the Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if the Fund holds a call
on the same security and in the same principal amount as the call written and
the exercise price of the call held (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash and other liquid
assets in a segregated account with its custodian.
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The Fund also may write call options that are not covered for cross-hedging
purposes. The Fund collateralizes its obligation under a written call option for
cross-hedging purposes by segregating cash or other liquid assets in an amount
not less than the market value of the underlying security, marked-to-market
daily. The Fund would write a call option for cross-hedging purposes, instead of
writing a covered call option, when the premium to be received from the
cross-hedge transaction would exceed that which would be received from writing a
covered call option and its portfolio manager believes that writing the option
would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit the Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit the Fund to write another put
option to the extent that the exercise price is secured by other liquid assets.
Effecting a closing transaction also will permit the Fund to use the cash or
proceeds from the concurrent sale of any securities subject to the option for
other investments. If the Fund desires to sell a particular security from its
portfolio on which it has written a call option, the Fund will effect a closing
transaction prior to or concurrent with the sale of the security.
The Fund will realize a profit from a closing transaction if the price of
the purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option. The Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market of a call
option generally will reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If the
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
The Fund may write options in connection with buy-and-write transactions.
In other words, the Fund may buy a security and then write a call option against
that security. The exercise price of such call will depend upon the expected
price movement of the underlying security. The exercise price of a call option
may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using at-the-money call options may be used when it
is expected that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the premiums
received from writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. If the call options
are exercised in such transactions, the Fund's maximum gain will be the premium
received by it for writing the option, adjusted upwards or downwards by the
difference
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between the Fund's purchase price of the security and the exercise price. If the
options are not exercised and the price of the underlying security declines, the
amount of such decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put options minus the amount by which the market price
of the security is below the exercise price.
The Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, the Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
The Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by the Fund
upon exercise of the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to the Fund.
Eurodollar Instruments. The Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. The Fund might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
Swaps and Swap-Related Products. The Fund may enter into interest rate
swaps, caps and floors on either an asset-based or liability-based basis,
depending upon whether it is hedging its assets or its liabilities, and will
usually enter into interest rate swaps on a net basis (i.e., the two payment
streams are netted out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments). The net amount of the excess, if any,
of the Fund's obligations over its entitlement with respect to each interest
rate swap will be calculated on a daily basis and an amount of cash or other
liquid assets having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the Fund's custodian. If
the Fund enters into an interest rate swap on other than a net basis, it would
maintain a segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. The Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one NRSRO at the time of entering into
such transaction. Janus Capital will monitor the creditworthiness of all
counterparties on an ongoing basis. If there is a default by the other party to
such a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Janus Capital has determined that, as
a result, the swap market has become relatively liquid. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent the
Fund sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by the Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with respect to
interest rate swaps is limited to the net amount of the payments that the Fund
is contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to receive. The Fund
may buy and sell (i.e., write) caps and floors without limitation, subject to
the segregation requirement described above.
Additional Risks of Options on Foreign Currencies, Forward Contracts and
Foreign Instruments. Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, an option writer and a buyer or
seller of futures or forward contracts could lose amounts substantially in
excess of any premium
13
<PAGE>
received or initial margin or collateral posted due to the potential additional
margin and collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting the Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in the
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
INVESTMENT ADVISER
As stated in the Prospectus, the Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928. The
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Fund's investments, provide office space for
the Fund, and pay the salaries, fees and expenses of all Fund officers and of
those Trustees who are affiliated with Janus Capital. Janus Capital also may
make payments to selected broker-dealer firms or institutions which perform
recordkeeping or other services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital. Janus Capital is
also authorized to perform the management and administrative services necessary
for the operation of the Fund.
The Fund pays custodian and transfer agent fees and expenses, brokerage
commissions and dealer spreads and other expenses in connection with the
execution of portfolio transactions, legal and accounting expenses, interest and
taxes, registration fees, expenses of shareholders' meetings and reports to
shareholders, fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Fund's Prospectus and SAI
to current shareholders, and other costs of complying with applicable laws
regulating the sale of Fund shares. Pursuant to the Advisory Agreement, Janus
Capital furnishes certain other services, including net asset value
determination and Fund accounting, recordkeeping, and blue sky registration and
monitoring services, for which the Fund may reimburse Janus Capital for its
costs.
The Fund has agreed to compensate Janus Capital for its services by the
monthly payment of a fee at the annual rate of 1% of the first $30 million of
the Fund's average daily net assets, 0.75% of the next $270 million of the
Fund's average daily net assets, 0.70% of the next $200 million of the Fund's
average daily net assets, and 0.65% of the average daily net assets of the Fund
in excess of $500 million.
For the fiscal year ended October 31, 1996, the investment advisory fee was
$___ [TO BE FILED BY AMENDMENT]. For the fiscal years ended October 31, 1995 and
October 31, 1994, the Fund incurred investment advisory fees of $10,947,796 and
$10,631,388, respectively. Janus Capital did not waive any portion of its fee in
any of these years.
The Advisory Agreement was restated on May 21, 1996, and it will continue
in effect until June 16, 1997, and thereafter from year to year so long as such
continuance is approved annually by a majority of the Fund's Trustees who are
not parties to the Advisory Agreement or interested persons of any such party,
and by either a majority of the outstanding voting shares or the Trustees of the
Fund. The Advisory Agreement i) may be terminated without the payment of any
penalty by the Fund or Janus Capital on 60 days' written notice; ii) terminates
automatically in the event of its assignment; and iii) generally, may not be
amended without the approval by vote of a majority of the Trustees of the Fund,
including the Trustees who are not interested
14
<PAGE>
persons of the Fund or Janus Capital and, to the extent required by the 1940
Act, the vote of a majority of the outstanding voting securities of the Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Fund, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Fund and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating Funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
policies and is managed accordingly by a particular portfolio manager or team of
portfolio managers. As a result, from time to time two or more different managed
accounts may pursue divergent investment strategies with respect to investments
or categories of investments.
As indicated in the Prospectus, Janus Capital does not permit portfolio
managers to purchase and sell securities for their own accounts except under the
limited exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital and the Fund.
The policy requires investment personnel and officers of Janus Capital, inside
directors of Janus Capital and the Fund and other designated persons deemed to
have access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction known to be under consideration for or to have
been effected on behalf of any client account, including the Fund.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/ Trustees of Janus Capital
and the Fund to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with KCSI, selects a
majority of Janus Capital's Board.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
State Street Bank and Trust Company ("State Street"), P.O. Box 0351,
Boston, Massachusetts 02117-0351 is the custodian of the domestic securities and
cash of the Fund. State Street and the foreign subcustodians selected by it and
approved by the Trustees, have custody of the assets of the Fund held outside
the U.S. and cash incidental thereto. The custodian and subcustodians hold the
Fund's assets in safekeeping and collect and remit the income thereon, subject
to the instructions of the Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Fund's
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Fund.
For transfer agency and other services, Janus Service receives a fee calculated
at an annual rate of .16% of average net assets of the Fund. In addition, the
Fund pays DST Systems, Inc. ("DST"), a subsidiary of KCSI, license fees at the
rate of $2.56 per shareholder account for the use of DST's shareholder
accounting system. The Fund pays DST for the use of their portfolio and fund
accounting system a base fee paid monthly between $250 to $1,250 based on the
number of Janus funds utilizing the system and an asset charge of $1 per million
dollars of net assets (not to exceed $500 per month). In addition, the Fund pays
DST postage and forms costs of a DST affiliate incurred in mailing Fund
shareholder transaction confirmations.
The Trustees have authorized the Fund to use another affiliate of DST as
introducing broker for certain Fund portfolio transactions as a means to reduce
Fund expenses through a credit against the charges of DST and its affiliates
with regard to commissions earned by such affiliate. See "Portfolio Transactions
and Brokerage."
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Fund. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Fund in connection with the sale of its shares in all states
in which the shares are registered and in which Janus Distributors is qualified
as a broker-dealer. Under the Distribution Agreement, Janus Distributors
continuously offers the
15
<PAGE>
Fund's shares and accepts orders at net asset value. No sales charges are paid
by investors. Promotional expenses in connection with offers and sales of shares
are paid by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Fund and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions. The Fund may trade foreign
securities in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on foreign stock
exchanges, brokers' commissions are frequently fixed and are often higher than
in the United States, where commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to the Fund or to a third
party service provider to the Fund to pay Fund expenses; and research products
or services provided. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer with whom
it has negotiated a commission that is in excess of the commission another
broker or dealer would have charged for effecting that transaction if Janus
Capital determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research provided by such broker
or dealer viewed in terms of either that particular transaction or of the
overall responsibilities of Janus Capital. Research may include furnishing
advice, either directly or through publications or writings, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance evaluation
and technical measurement services and quotation services, and products and
other services (such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information and accessories
that deliver, process or otherwise utilize information, including the research
described above) that assist Janus Capital in carrying out its responsibilities.
Most brokers and dealers used by Janus Capital provide research and other
services described above. For the year ended October 31, 1996, the Fund paid
$______ of its total brokerage commissions to brokers and dealers in
transactions identified for execution primarily on the basis of research and
other services provided to the Fund on transactions of $______, which represents
___% of all transactions. Research received from brokers or dealers is
supplemental to Janus Capital's own research efforts.
Janus Capital may use research products and services in servicing other
accounts in addition to the Fund. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers regarding the
placement of securities transactions because of the research services they
provide. It does, however, have an internal procedure for allocating
transactions in a manner consistent with its execution policy to brokers that it
has identified as providing superior executions and research, research-related
products or services which benefit its advisory clients, including the Fund.
Research products and services incidental to effecting securities transactions
furnished by brokers or dealers may be used in servicing any or all of Janus
Capital's clients and such research may not necessarily be used by Janus Capital
in connection with the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for the Fund i) to the Fund or ii) to other persons on behalf of
the Fund for services provided to the Fund for which it would be obligated to
pay. In placing portfolio business with such broker-dealers, Janus Capital will
seek the best execution of each transaction.
When the Fund purchases or sells a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
16
<PAGE>
The Fund's Trustees have authorized Janus Capital to place transactions
with DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of
DST. Janus Capital may do so if it reasonably believes that the quality of the
transaction and the associated commission are fair and reasonable and if,
overall, the associated transaction costs, net of any credits described above
under "Custodian, Transfer Agent and Certain Affiliations," are lower than those
that would otherwise be incurred.
The total amount of brokerage commissions paid by the Fund during the
fiscal year ended October 31, 1996, was $______. For the fiscal years ended
October 31, 1995 and October 31, 1994, the Fund paid brokerage commissions of
$3,920,258 and $3,243,457, respectively. Included in the brokerage commissions
paid for the fiscal year ended October 31, 1996, was $______ paid through DSTS,
which served to reduce by $______ certain out-of-pocket expenses paid by the
Fund. Included in brokerage commissions paid for the fiscal years ended October
31, 1995 and October 31, 1994, was $143,719 and $116,255, respectively, paid
through DSTS which served to reduce by $107,789 and $87,191, respectively,
certain out-of-pocket expenses. Brokerage commissions paid through DSTS for the
1996 fiscal year represented ___% of the Fund's aggregate brokerage commissions
for such fiscal year, while ___% of the aggregate dollar amount of the Fund's
portfolio transactions involving a commission payment were executed through
DSTS. The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker. Differences in
the percentage of total commissions versus the percentage of total transactions
is due, in part, to variations among share prices and number of shares traded,
while average price per share commission rates were substantially the same.
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years. In August 1992, Janus Venture Fund, Inc. and Janus Twenty Fund, Inc.
(both separate Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of Janus Flexible Income Fund series)
were reorganized into separate series of the Trust. In general, all references
to Trust offices in this section include comparable offices with the respective
predecessor funds, unless a Trust office was filled subsequent to the
reorganization.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4928
Trustee, Chairman and President of Janus Aspen Series. Chairman, Chief
Executive Officer, Director and President of Janus Capital. Chairman and
Director of IDEX Management, Inc., Largo, Florida (50% subsidiary of Janus
Capital and investment adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund.
James P. Goff* - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President and Portfolio Manager of Janus Enterprise Fund and
Janus Venture Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly, securities analyst at Janus Capital
(1988 to 1992).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4928
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4928
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance, Treasurer and Chief Financial Officer of Janus
Service, Janus Distributors and Janus Capital. Director of IDEX and Janus
Distributors. Director, Treasurer and Vice President of Finance of Janus
Capital International Ltd. Formerly (1979 to 1992), with the accounting
firm of Price Waterhouse LLP, Denver, Colorado. Formerly (1992-1996),
Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
17
<PAGE>
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4928
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital.
Kelley Abbot Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4928
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc., Boston,
Massachusetts (mutual fund administration services).
John W. Shepardson# - Trustee
P.O. Box 9591
Denver, CO 80209
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments).
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
The Trustees are responsible for major decisions relating to the Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Fund by its officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Agreement and Declaration of Trust
("Declaration of Trust"), Massachusetts law or the 1940 Act.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
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<PAGE>
The following table shows the aggregate compensation paid to each Trustee
by the Fund described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement from the Fund or the Janus Funds.
<TABLE>
Aggregate Compensation
from the Fund for fiscal year Total Compensation from the
ended October 31,1996 Janus Funds for calendar year
Name of Person, Position [TO BE FILED BY AMENDMENT] ended December 31, 1996**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* $ $
James P. Craig, III, Trustee* $ $
John W. Shepardson, Trustee $ $
William D. Stewart, Trustee $ $
Gary O. Loo, Trustee $ $
Dennis B. Mullen, Trustee $ $
Martin H. Waldinger, Trustee $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1996, Janus Funds consisted of two registered investment
companies comprised of a total of 29 funds.
PURCHASE OF SHARES
The Fund has discontinued public sales of its shares to new investors. Only
shareholders who maintain open accounts are permitted to continue to make
investments in the Fund and to reinvest any dividends and capital gains
distributions. Once a Fund account is closed, additional investments in the Fund
may not be possible. The Shareholder's Manual section of the Prospectus contains
detailed information about the purchase of shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund shares is
determined once each day on which the New York Stock Exchange ("NYSE") is open,
at the close of its regular trading session (normally 4:00 p.m., New York time,
Monday through Friday). The NAV of Fund shares is not determined on days the
NYSE is closed (generally, New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas). The per
share NAV of the Fund is determined by dividing the total value of the Fund's
securities and other assets, less liabilities, by the total number of shares
outstanding. In determining NAV, securities listed on an exchange, the NASDAQ
National Market and foreign markets are valued at the closing prices on such
markets, or if such price is lacking for the trading period immediately
preceding the time of determination, such securities are valued at their current
bid price. Municipal securities held by the Fund are traded primarily in the
over-the-counter market. Valuations of such securities are furnished by one or
more pricing services employed by the Fund and are based upon a computerized
matrix system or appraisals obtained by a pricing service, in each case in
reliance upon information concerning market transactions and quotations from
recognized municipal securities dealers. Other securities that are traded on the
over-the-counter market are valued at their closing bid prices. Foreign
securities and currencies are converted to U.S. dollars using the exchange rate
in effect at the close of the NYSE. The Fund will determine the market value of
individual securities held by it, by using prices provided by one or more
professional pricing services which may provide market prices to other funds,
or, as needed, by obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on the amortized cost
basis. Securities for which quotations are not readily available, and other
assets, are valued at fair values determined in good faith under procedures
established by and under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in Japanese markets on certain Saturdays
and in various foreign markets on days which are not business days in New York
and on which the Fund's NAV is not calculated. The Fund calculates its NAV per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of the NYSE once on each day on which the NYSE is open. Such
calculation may not take place contemporaneously with the determination of the
prices of the foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions in cash, all income dividends and capital gains distributions,
if any, on the Fund's shares are reinvested automatically in additional shares
of the Fund at the NAV determined on the first business day following the record
date. Checks for cash dividends and distributions and confirmations of
reinvestments are usually mailed to shareholders within ten days after the
record date. Any election of the manner in which a
19
<PAGE>
shareholder wishes to receive dividends and distributions (which may be made on
the New Account Application form or by phone) will apply to dividends and
distributions the record dates of which fall on or after the date that the Fund
receives such notice. Investors receiving cash distributions and dividends may
elect in writing or by phone to change back to automatic reinvestment at any
time.
REDEMPTION OF SHARES
Procedures for redemption of shares are set forth in the Shareholder's
Manual section of the Prospectus. Shares normally will be redeemed for cash,
although the Fund retains the right to redeem its shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Fund is governed by Rule 18f-1 under the 1940 Act, which requires the Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the NAV of
the Fund during any 90-day period for any one shareholder. Should redemptions by
any shareholder exceed such limitation, the Fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions in kind will be
the same as the method of valuing portfolio securities described under "Purchase
of Shares - Net Asset Value Determination" and such valuation will be made as of
the same time the redemption price is determined.
The right to require the Fund to redeem its shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends, (2) the SEC permits such suspension and so orders, or (3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Prospectus. Applications for
specific types of accounts may be obtained by calling the Fund at 1-800-525-3713
or writing to the Fund at P.O. Box 173375, Denver, Colorado 80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number of
transactions by telephone. The Fund, its transfer agent and its distributor
disclaim responsibility for the authenticity of instructions received by
telephone. Such entities will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
among others, requiring personal identification prior to acting upon telephone
instructions, providing written confirmation of the transactions and tape
recording telephone conversations.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectus, if you
have a regular account or are eligible for normal distributions from a
retirement plan, you may establish a systematic redemption option. The payments
will be made from the proceeds of periodic redemptions of shares in the account
at the NAV. Depending on the size or frequency of the disbursements requested,
and the fluctuation in value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even exhaust the
shareholder's account. Either an investor or the Fund, by written notice to the
other, may terminate the investor's systematic redemption option without penalty
at any time.
Information about requirements to establish a systematic redemption option
may be obtained by writing or calling the Fund at the address or phone number
shown above.
RETIREMENT PLANS
The Fund offers several different types of tax-deferred retirement plans
that an investor may establish to invest in Fund shares, depending on rules
prescribed by the Code. The Individual Retirement Account ("IRA") may be used by
most individuals who have taxable compensation. Simplified Employee Pensions
("SEPs") and Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including corporations,
partnerships and sole proprietors, for the benefit of business owners and their
employees. In addition, the Fund offers a Section 403(b)(7) Plan for employees
of educational organizations and other qualifying tax-exempt organizations.
Investors should consult their tax advisor or legal counsel before selecting a
retirement plan.
Contributions under IRAs, SEPs, Defined Contribution Plans and Section
403(b)(7) Plans are subject to specific contribution limitations. Generally,
such contributions may be invested at the direction of the participant. The
investment is then held by Investors Fiduciary Trust Company as custodian. Each
participant's account is charged an annual fee of $12. There is a maximum annual
fee of $24 per taxpayer identification number.
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Distributions from retirement plans generally are subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
591/2. Several exceptions to the general rule may apply. Additionally,
shareholders generally must start withdrawing retirement plan assets no later
than April 1 of the year after they reach age 701/2. Exceptions may apply so
please consult your tax advisor. Several methods exist to determine the amount
of the minimum annual distribution. Shareholders should consult with their tax
advisor or legal counsel prior to receiving any distribution from any retirement
plan, in order to determine the income tax impact of any such distribution.
To receive additional information about IRAs, SEPs, Defined Contribution
Plans and Section 403(b)(7) Plans along with the necessary materials to
establish an account, please call the Fund at 1-800-525-3713 or write to the
Fund at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to an IRA,
SEP, Defined Contribution Plan or Section 403(b)(7) Plan can be made until the
appropriate forms to establish any such plan have been completed.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
It is a policy of the Fund to make distributions of substantially all of
its investment income and any net realized capital gains. Any capital gains
realized during each fiscal year of the Fund ended October 31, as defined by the
Code, are normally declared and payable to shareholders in December. The Fund
intends to qualify as a regulated investment company by satisfying certain
requirements prescribed by Subchapter M of the Code.
The Fund may purchase securities of certain foreign corporations considered
to be passive foreign investment companies by the IRS. In order to avoid taxes
and interest that must be paid by the Fund, if these instruments are profitable,
the Fund may make various elections permitted by the tax laws. However, these
elections could require that the Fund recognize taxable income, which in turn
must be distributed.
Some foreign securities purchased by the Fund may be subject to foreign
taxes which could reduce the yield on such securities. The amount of such
foreign taxes is expected to be insignificant. Accordingly, the Fund does not
intend to make the election permitted under section 853 of the Code to pass
through such taxes to shareholders as a foreign tax credit as this would
increase the taxable income reported to shareholders and require shareholders to
take the credit on their tax returns, complicating the preparation of such
returns. As a result, any foreign taxes paid or accrued will represent an
expense to the Fund which will reduce its investment company taxable income.
PRINCIPAL SHAREHOLDERS
[INFORMATION TO BE FILED BY AMENDMENT]
As of January 20, 1997, the officers and Trustees of the Fund as a group
owned less than 1% of the outstanding shares of the Fund. In addition, as of
January 20, 1997, Charles Schwab & Co., Inc. ("Schwab"), 101 Montgomery Street,
San Francisco, CA 94104-4122, and National Financial Services Co., ("National
Financial"), P.O. Box 3908, Church Street Station, New York, NY 10008-3908,
owned of record ___% and ___%, respectively, of the Fund's outstanding shares.
According to information provided by Schwab, this ownership is by nominee only
and does not represent beneficial ownership of such shares, because they have no
investment discretion or voting power with respect to such shares. To the
knowledge of the Fund, no other person owned more than 5% of the outstanding
shares of the Fund as of the above date.
MISCELLANEOUS INFORMATION
The Fund was originally organized in 1984 as a Maryland corporation. On
August 7, 1992, the Fund was reorganized from a Maryland corporation into Janus
Venture Fund, a separate series of the Trust. Pursuant to this reorganization,
the Trust assumed all the assets and liabilities of Janus Venture Fund, Inc.,
and shareholders received shares of Janus Venture Fund series of the Trust equal
both in number and net asset value to their shares of Janus Venture Fund, Inc.
All references in this SAI to the Fund and all financial and other information
about the Fund prior to August 7, 1992 are to the former Janus Venture Fund,
Inc.; all references after August 7, 1992, are to the Janus Venture Fund series
of the Trust. As the result of the reorganization, the fiscal year end of the
Fund changed from July 31 to October 31. As of the date of this SAI, the Trust
consists of 18 other series, which are offered by separate prospectuses.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Fund, the
Fund must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Fund could, under certain
circumstances, be held liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of this disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust also provides for indemnification from the assets of
the Fund for all losses and expenses of any Fund
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shareholder held liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring a financial loss on account of its liability as a
shareholder of the Fund is limited to circumstances in which the Fund would be
unable to meet its obligations. The possibility that these circumstances would
occur is remote. The Trustees intend to conduct the operations of the Fund to
avoid, to the extent possible, liability of shareholders for liabilities of the
Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of the Fund are fully paid and nonassessable when issued. All
shares of the Fund participate equally in dividends and other distributions by
the Fund, and in residual assets of the Fund in the event of liquidation. Shares
of the Fund have no preemptive, conversion or subscription rights. Shares of the
Fund may be transferred by endorsement or stock power as is customary, but the
Fund is not bound to recognize any transfer until it is recorded on its books.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders held on July
10, 1992, with the exception of Mr. Craig who was appointed by the Trustees as
of June 30, 1995. Under the Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his earlier death, retirement,
resignation, bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held, unless
otherwise required by the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize the Fund, to amend the Declaration of Trust, to bring
certain derivative actions and on any other matters on which a shareholder vote
is required by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or the
Trustees.
Each share of the Fund and of each other series of the Trust has one vote
(and fractional votes for fractional shares). Shares of all series of the Trust
have noncumulative voting rights, which means that the holders of more than 50%
of the shares of all series of the Trust voting for the election of Trustees can
elect 100% of the Trustees if they choose to do so and, in such event, the
holders of the remaining shares will not be able to elect any Trustees. The Fund
and each other series of the Trust will vote separately only with respect to
those matters that affect only that series or if a portfolio's interest in a
matter differs from the interests of other portfolios of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Fund, audit the Fund's annual financial
statements and prepare its tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
securities to which this SAI relates. If further information is desired with
respect to the Fund or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
PERFORMANCE INFORMATION
The Prospectus contains a brief description of how performance is
calculated.
Quotations of average annual total return for the Fund will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the Fund over periods of 1, 5, and 10 years (up to the life of the
Fund). These are the annual total rates of return that would equate the initial
amount invested to the ending redeemable value. These rates of return are
calculated pursuant to the following formula: P(1 + T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual total return, n =
the number of years and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an annual
basis, and assume that all dividends and distributions are reinvested when paid.
The Fund was made available for public sale on May 2, 1985. The one year,
five year, ten year and lifetime average annual total returns, computed as of
October 31, 1996, for each of those periods, are ___%, ___%, ___% and ___%,
respectively. [TO BE FILED BY AMENDMENT]
From time to time in advertisements or sales material, the Fund may discuss
its performance ratings or other information as published by recognized mutual
fund statistical rating services, including, but not limited to, Lipper
Analytical Services, Inc., Ibbotson Associates, Micropal or Morningstar or by
publications of general interest such as Forbes or Money. The Fund may also
compare its performance to that of other selected mutual funds, mutual fund
averages or recognized stock market indicators,
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including, but not limited to, the Standard & Poor's 500 Composite Stock Price
Index, the Standard & Poor's 400 Midcap Index, the Dow Jones Industrial Average,
the Russell 2000 Index and the NASDAQ composite. In addition, the Fund may
compare its total return to the yield on U.S. Treasury obligations and to the
percentage change in the Consumer Price Index. Such performance ratings or
comparisons may be made with funds that may have different investment
restrictions, objectives, policies or techniques than the Fund and such other
funds or market indicators may be comprised of securities that differ
significantly from the Fund's investments.
FINANCIAL STATEMENTS
The following audited financial statements for the period ended October 31,
1996 are hereby incorporated into this SAI by reference to the Fund's Annual
Report dated October 31, 1996. A copy of such report accompanies this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1996
Statement of Operations for the period ended October 31, 1996
Statement of Assets and Liabilities as of October 31, 1996
Statements of Changes in Net Assets for the periods ended October 31, 1996
and 1995
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
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APPENDIX A
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of the major
credit ratings agencies. Credit ratings evaluate only the safety of principal
and interest payments, not the market value risk of lower quality securities.
Credit rating agencies may fail to change credit ratings to reflect subsequent
events on a timely basis. Although the adviser considers security ratings when
making investment decisions, it also performs its own investment analysis and
does not rely solely on the ratings assigned by credit agencies.
STANDARD & POOR'S RATINGS SERVICES
Bond Rating Explanation
- --------------------------------------------------------------------------------
Investment Grade
AAA Highest rating; extremely strong capacity to pay
principal and interest.
AA High quality; very strong capacity to pay
principal and interest.
A Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects
of changing circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, Predominantly speculative with respect to the
CCC, CC, C issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of
speculation. Quality and protective
characteristics outweighed by large uncertainties
or major risk exposure to adverse conditions.
D In default.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC.
Investment Grade
Aaa Highest quality, smallest degree of investment
risk.
Aa High quality; together with Aaa bonds, they
compose the high-grade bond group.
A Upper-medium grade obligations; many favorable
investment attributes.
Baa Medium-grade obligations; neither highly protected
nor poorly secured. Interest and principal appear
adequate for the present but certain protective
elements may be lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba More uncertain, with speculative elements.
Protection of interest and principal payments not
well safeguarded during good and bad times.
B Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other
contract terms over time.
Caa Poor standing, may be in default; elements of
danger with respect to principal or interest
payments.
Ca Speculative in a high degree; could be in default
or have other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever
attaining investment standing.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless
the portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received ratings from more
than one agency are considered investment grade if at least one agency has rated
the security investment grade.
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[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4928
(800) 29JANUS
- --------------------------------------------------------------------------------
Statement of Additional Information
February 17, 1997
- --------------------------------------------------------------------------------
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Institutional Shares
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectus for the
Institutional Shares (the "Shares") of Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt Money Market Fund (individually, a "Fund"
and, collectively, the "Funds"). The Funds are each a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Each Fund
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies, and is managed separately
by Janus Capital Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus dated February 17, 1997, which is incorporated by reference into this
SAI and may be obtained from the Trust at the above phone number or address.
This SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectus.
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies and Restrictions .............................. 3
Types of Securities and Investment Techniques ..................... 4
Performance Data .................................................. 7
Determination of Net Asset Value .................................. 8
Investment Adviser and Administrator .............................. 8
Custodian, Transfer Agent and Certain Affiliations ................ 9
Portfolio Transactions and Brokerage .............................. 10
Officers and Trustees ............................................. 11
Purchase of Shares ................................................ 13
Redemption of Shares .............................................. 13
Retirement Plans .................................................. 13
Shareholder Accounts .............................................. 13
Dividends and Tax Status .......................................... 14
Principal Shareholders ............................................ 14
Miscellaneous Information ......................................... 14
Shares of the Trust ............................................ 15
Voting Rights .................................................. 15
Independent Accountants ........................................ 15
Registration Statement ......................................... 15
Financial Statements .............................................. 15
Appendix A - Description of Securities Ratings .................... 17
Appendix B - Description of Municipal Securities .................. 19
- --------------------------------------------------------------------------------
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INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of each of Janus
Money Market Fund and Janus Government Money Market Fund is to seek maximum
current income to the extent consistent with stability of capital. The
investment objective of Janus Tax-Exempt Money Market Fund is to seek maximum
current income that is exempt from federal income taxes to the extent consistent
with stability of capital. There can be no assurance that a Fund will achieve
its investment objective or maintain a stable net asset value of $1.00 per
share. The investment objectives of the Funds are not fundamental and may be
changed by the Trustees of the Trust (the "Trustees") without shareholder
approval.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, each Fund has adopted certain fundamental
investment restrictions that cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund or particular
class of Shares if a matter affects just that Fund or that class of Shares), or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of Shares) are present or represented by proxy.
As used in the restrictions set forth below and as used elsewhere in this
SAI, the term "U.S. Government Securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act
defines U.S. Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S. Government
Securities may also include repurchase agreements collateralized and municipal
securities escrowed with or refunded with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a security
other than a U.S. Government Security, if, as a result, more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
the Fund would own more than 10% of the outstanding voting securities of any
single issuer. (As noted in the Prospectus, the Funds are also currently subject
to the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the value of a
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that: (i)
there is no limit on investments in U.S. Government Securities or in obligations
of domestic commercial banks (including U.S. branches of foreign banks subject
to regulations under U.S. laws applicable to domestic banks and, to the extent
that its parent is unconditionally liable for the obligation, foreign branches
of U.S. banks); (ii) this limitation shall not apply to a Fund's investments in
municipal securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies are classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry); and (v) utility companies are classified according to their services
(for example, gas, gas transmission, electric, and telephone are each considered
to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by others,
except to the extent that a Fund may be deemed an underwriter in connection with
the disposition of portfolio securities of such Fund.
(4) A Fund may not lend any security or make any other loan if, as a
result, more than 25% of a Fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial paper, debt
securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest therein,
except that the Fund may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes (not for
leveraging) in an amount not exceeding 25% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings). If
borrowings exceed 25% of the value of a Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation. Reverse
repurchase agreements or the segregation of assets in connection with such
agreements shall not be considered borrowing for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as that
Fund.
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Each Fund has adopted the following nonfundamental investment restrictions
that may be changed by the Trustees without shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase agreements
with respect to any securities if, as a result, more than 10% of the Fund's net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in other securities that are not
readily marketable ("illiquid investments"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the Trustees, may
determine that a readily available market exists for certain securities such as
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, Section 4(2) commercial paper and municipal
lease obligations. Accordingly, such securities may not be subject to the
foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short sales of
securities, except for short sales against the box and the use of short-term
credit necessary for the clearance of purchases and sales of portfolio
securities.
(3) A Fund may not pledge, mortgage, hypothecate or encumber any of its
assets except to secure permitted borrowings or in connection with permitted
short sales.
(4) A Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that such classifications are so broad that the
primary economic characteristics in a single class are materially different, the
Funds may further classify issuers in accordance with industry classifications
as published by the Securities and Exchange Commission.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
Each of the Funds may invest only in "eligible securities" as defined in
Rule 2a-7 adopted under the 1940 Act. Generally, an eligible security is a
security that (i) is denominated in U.S. dollars and has a remaining maturity of
397 days or less (as calculated pursuant to Rule 2a-7); (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO (the "Requisite NRSROs") or is unrated and of comparable quality to a
rated security, as determined by Janus Capital; and (iii) has been determined by
Janus Capital to present minimal credit risks pursuant to procedures approved by
the Trustees. In addition, the Funds will maintain a dollar-weighted average
portfolio maturity of 90 days or less. A description of the ratings of some
NRSROs appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of its total
assets in the securities of any one issuer other than U.S. Government
Securities, provided that in certain cases a Fund may invest more than 5% of its
assets in a single issuer for a period of up to three business days. Until
pending amendments to Rule 2a-7 become effective, up to 25% of Janus Tax-Exempt
Money Market Fund's assets may be invested without regard to the foregoing
limitations.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money Market
Fund) will invest at least 95% of its total assets in "first-tier" securities.
First-tier securities are eligible securities that are rated, or are issued by
an issuer with short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable quality to a
rated security. In addition, a Fund may invest in "second-tier" securities which
are eligible securities that are not first-tier securities. However, a Fund
(except for Janus Tax-Exempt Money Market Fund, in certain cases) may not invest
in a second-tier security if immediately after the acquisition thereof the Fund
would have invested more than (i) the greater of one percent of its total assets
or one million dollars in second-tier securities issued by that issuer, or (ii)
five percent of its total assets in second-tier securities.
The following discussion of types of securities in which the Funds may
invest supplements and should be read in conjunction with the Prospectus.
PARTICIPATION INTERESTS
Each Fund may purchase participation interests in loans or securities in
which the Funds may invest directly. Participation interests are generally
sponsored or issued by banks or other financial institutions. A participation
interest gives a Fund an undivided interest in the underlying loans or
securities in the proportion that the Fund's interest bears to the total
principal amount of the underlying loans or securities. Participation interests,
which may have fixed, floating or variable rates, may carry a demand feature
backed by a letter of credit or guarantee of a bank or institution permitting
the holder to tender them back to the bank or other institution. For certain
participation interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's participation
interest. The Funds intend to exercise any demand rights they may have upon
default under the terms of the loan or security, to provide liquidity or to
maintain or improve the quality of the Funds' investment portfolio. A Fund will
only purchase participation interests that Janus Capital determines present
minimal credit risks.
4
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VARIABLE AND FLOATING RATE NOTES
Janus Money Market Fund also may purchase variable and floating rate demand
notes of corporations and other entities, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
the outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid investment.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities, which represent an
interest in a pool of mortgages made by lenders such as commercial banks,
savings and loan institutions, mortgage bankers, mortgage brokers and savings
banks. Mortgage-backed securities may be issued by governmental or
government-related entities or by non-governmental entities such as banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from other forms of
debt securities which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. In
contrast, mortgage-backed securities provide periodic payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Although mortgage-backed securities are issued with stated maturities of up to
forty years, unscheduled or early payments of principal and interest on the
underlying mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for average life. The
volume of prepayments of principal on a pool of mortgages underlying a
particular security will influence the yield of that security, and the principal
returned to a Fund may be reinvested in instruments whose yield may be higher or
lower than that which might have been obtained had the prepayments not occurred.
When interest rates are declining, prepayments usually increase, with the result
that reinvestment of principal prepayments will be at a lower rate than the rate
applicable to the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are issued by
agencies or instrumentalities of the U.S. government. The Government National
Mortgage Association ("GNMA") is the principal federal government guarantor of
mortgage-backed securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA Certificates are
debt securities which represent an interest in one mortgage or a pool of
mortgages which are insured by the Federal Housing Administration or the Farmers
Home Administration or are guaranteed by the Veterans Administration. The Funds
may also invest in pools of conventional mortgages which are issued or
guaranteed by agencies of the U.S. government. GNMA pass-through securities are
considered to be riskless with respect to default in that (i) the underlying
mortgage loan portfolio is comprised entirely of government-backed loans and
(ii) the timely payment of both principal and interest on the securities is
guaranteed by the full faith and credit of the U.S. government, regardless of
whether or not payments have been made on the underlying mortgages. GNMA
pass-through securities are, however, subject to the same market risk as
comparable debt securities. Therefore, the market value of a Fund's GNMA
securities can be expected to fluctuate in response to changes in prevailing
interest rate levels.
Residential mortgage loans are pooled also by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a privately managed, publicly chartered
agency created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. FHLMC issues
participation certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. The mortgage loans in FHLMC's portfolio are not U.S.
government backed; rather, the loans are either uninsured with loan-to-value
ratios of 80% or less, or privately insured if the loan-to-value ratio exceeds
80%. FHLMC guarantees the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee any aspect of
FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private shareholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks, commercial banks,
credit unions and mortgage bankers. FNMA guarantees the timely payment of
principal and interest on the pass-through securities issued by FNMA; the U.S.
government does not guarantee any aspect of the FNMA pass-through securities.
5
<PAGE>
The Funds may also invest in privately-issued mortgage-backed securities to
the extent permitted by their investment restrictions. Mortgage-backed
securities offered by private issuers include pass-through securities comprised
of pools of conventional residential mortgage loans; mortgage-backed bonds which
are considered to be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized mortgage
obligations ("CMOs") which are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA or by pools of conventional mortgages.
Asset-backed securities represent direct or indirect participations in, or
are secured by and payable from, assets other than mortgage-backed assets such
as motor vehicle installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables from revolving
credit agreements (credit cards). Asset-backed securities have yield
characteristics similar to those of mortgage-backed securities and, accordingly,
are subject to many of the same risks.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate. The
Funds will use the proceeds of reverse repurchase agreements only to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. In addition, interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery
basis. A Fund will enter into such transactions only when it has the intention
of actually acquiring the securities. To facilitate such acquisitions, the
Funds' custodian will segregate cash or high quality liquid assets in an amount
at least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities, sales of the segregated
securities or from other available sources of cash. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation. At the time a Fund makes the commitment to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction as a purchase and thereafter reflect the value of such
securities in determining its net asset value.
INVESTMENT COMPANY SECURITIES
From time to time, the Funds may invest in securities of other investment
companies. The Funds are subject to the provisions of Section 12(d)(1) of the
1940 Act, which currently limits each Fund's investment in other investment
companies to no more than 10% of the investing Fund's assets.
MUNICIPAL LEASES
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund may invest
in municipal leases. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. Leases and installment
purchase or conditional sale contracts (which normally provide for title to the
leased asset to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. A Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest is
backed by an unconditional irrevocable letter of credit, or guarantee of a bank
or other entity that meets the criteria described in the Prospectus under
"Taxable Investments."
In evaluating municipal lease obligations, Janus Capital will consider such
factors as it deems appropriate, including: (a) whether the lease can be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer considered essential
by the municipality; (e) the legal recourse of the
6
<PAGE>
lease obligee in the event of such a failure to appropriate funding; (f) whether
the security is backed by a credit enhancement such as insurance; and (g) any
limitations which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the lease
obligation. If a lease is backed by an unconditional letter of credit or other
unconditional credit enhancement, then Janus Capital may determine that a lease
is an eligible security solely on the basis of its evaluation of the credit
enhancement.
Municipal leases, like other municipal debt obligations, are subject to the
risk of non-payment. The ability of issuers of municipal leases to make timely
lease payments may be adversely impacted in general economic downturns and as
relative governmental cost burdens are allocated and reallocated among federal,
state and local governmental units. Such non-payment would result in a reduction
of income to the Funds, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the net
asset value of a Fund.
PERFORMANCE DATA
A Fund may provide current annualized and effective annualized yield
quotations based on its daily dividends. These quotations may from time to time
be used in advertisements, shareholder reports or other communications to
shareholders. All performance information supplied by the Funds in advertising
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares' performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., or CDC/Wiesenberger, IBC/Donoghue's
Money Fund Report or other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may also compare
their Shares' performance information with the performance of recognized stock,
bond and other indices, including but not limited to the Municipal Bond Buyers
Indices, the Salomon Brothers Bond Index, the Lehman Bond Index, the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. The Funds may refer to general
market performance over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers and financial
magazines. The Funds may also compare the Shares' yield to those of certain U.S.
Treasury obligations or other money market instruments.
Any current yield quotation of the Shares which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent, based on a specific seven calendar day
period. Current yield shall be calculated by (a) determining the net change
during a seven calendar day period in the value of a hypothetical account having
a balance of one Share at the beginning of the period, (b) dividing the net
change by the value of the account at the beginning of the period to obtain a
base period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing). For this purpose, the net change in account value will reflect the
value of additional Shares purchased with dividends declared on the original
Share and dividends declared on both the original Share and any such additional
Shares, but will not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on portfolio
securities. In addition, the Shares may advertise effective yield quotations.
Effective yield quotations are calculated by adding 1 to the base period return,
raising the sum to a power equal to 365/7, and subtracting 1 from the result
(i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the rate an
investor would have to earn from a fully taxable investment in order to equal
such Shares' yield after taxes. Tax equivalent yields are calculated by dividing
Janus Tax-Exempt Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the Shares' yield is
tax-exempt, only that portion is adjusted in the calculation.
The Shares' current yield and effective yield for the seven-day period
ended October 31, 1996 is shown below:
<TABLE>
[TO BE FILED BY AMENDMENT]
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Institutional Shares % %
Janus Government Money Market Fund - Institutional Shares % %
Janus Tax-Exempt Money Market Fund - Institutional Shares* % %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Janus Tax-Exempt Money Market Fund Institutional Shares' tax-equivalent yield
for the seven-day period ended October 31, 1996 was ___%.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Shares. Also, processing organizations or other institutions may charge
their customers direct fees in connection with an investment in a Fund, which
will have the effect of reducing the Fund's net yield
7
<PAGE>
to those shareholders. The yield on a class of Shares is not fixed or
guaranteed, and an investment in the Shares is not insured. Accordingly, yield
information may not necessarily be used to compare Shares with investment
alternatives which, like money market instruments or bank accounts, may provide
a fixed rate of interest. In addition, because investments in the Funds are not
insured or guaranteed, yield on the Shares may not necessarily be used to
compare the Shares with investment alternatives which are insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the Securities and Exchange Commission, the
Trustees have established procedures to stabilize each Fund's net asset value at
$1.00 per Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating interest
rates, based on available market rates, from the Fund's $1.00 amortized cost
price per Share. Should that deviation exceed 1/2 of 1%, the Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends and utilizing a net asset value per Share as
determined by using available market quotations. Each Fund i) will maintain a
dollar-weighted average portfolio maturity of 90 days or less; ii) will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than 397 days;
iii) will limit portfolio investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Janus Capital has determined present
minimal credit risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures. The Trust has
also established procedures to ensure that portfolio securities meet the Funds'
high quality criteria.
INVESTMENT ADVISER AND ADMINISTRATOR
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments. The Funds have each
agreed to compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the average daily net
assets of each Fund. However, Janus Capital has agreed to waive .10% of the
value of each Fund's average daily net assets of the advisory fee. Janus Capital
may modify or terminate the waiver at any time upon 90 days' notice to the
Trustees. In addition, the Funds pay brokerage commissions or dealer spreads and
other expenses in connection with the execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into an
Administration Agreement with Janus Capital. Under the terms of the
Administration Agreements, each of the Funds has agreed to compensate Janus
Capital for administrative services at the annual rate of .15% of the value of
the average daily net assets of the Shares for certain services, including
custody, transfer agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and fund accounting,
recordkeeping, and blue sky registration and monitoring services, registration
fees, expenses of shareholders' meetings and reports to shareholders, costs of
preparing, printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs of complying
with applicable laws regulating the sale of Shares. Each Fund will pay those
expenses not assumed by Janus Capital, including interest and taxes, fees and
expenses of Trustees who are not affiliated with Janus Capital, audit fees and
expenses, and extraordinary costs. Janus Capital has agreed to waive a portion
of the administration fee, and accordingly the effective rate for calculating
the administration fee payable by the Shares will be .05% for that period. Janus
Capital may modify or terminate the waiver at any time upon 90 days' notice to
the Trustees.
The following table summarizes the advisory fees paid by the Funds for the
fiscal years ended October 31:
<TABLE>
1996 1995
[TO BE FILED BY AMENDMENT]
Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund $ $
Janus Government Money Market Fund $ $
Janus Tax-Exempt Money Market Fund $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
The following table summarizes the administration fees paid by the Shares
for the fiscal years ended October 31:
<TABLE>
1996 1995(1)
[TO BE FILED BY AMENDMENT]
Administration Administration Administration Administration
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Institutional Shares $164,715 $54,905
Janus Government Money Market Fund -
Institutional Shares $ 20,138 $ 6,712
Janus Tax-Exempt Money Market Fund -
Institutional Shares $ 907 $ 302
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)April 14 (inception) to October 31, 1995.
The Advisory Agreements for each Fund became effective on December 9, 1994
and will continue in effect until June 16, 1997, and thereafter from year to
year so long as such continuance is approved annually by a majority of the
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the Funds' outstanding voting shares
or the Trustees. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
is managed in accordance with that objective by a particular portfolio manager
or team of portfolio managers. As a result, from time to time two or more
different managed accounts may pursue divergent investment strategies with
respect to investments or categories of investments.
As indicated in the Prospectus, Janus Capital does not permit portfolio
managers to purchase and sell securities for their own accounts except under the
limited exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital and the Funds.
The policy requires investment personnel and officers of Janus Capital, inside
directors of Janus Capital and the Funds and other designated persons deemed to
have access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction then known to be under consideration for or to
have been effected on behalf of any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with KCSI, selects a
majority of Janus Capital's Board.
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' custodian. The custodian holds the Funds' assets in
safekeeping and collects and remits the income thereon, subject to the
instructions of each Fund.
9
<PAGE>
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
The Funds do not pay Janus Service a fee.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which were instrumental in the acquisition of shareholders for the
Funds or which performed services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In recognition of
the value of the foregoing factors, Janus Capital may place portfolio
transactions with a broker or dealer with whom it has negotiated a commission
that is in excess of the commission another broker or dealer would have charged
for effecting that transaction if Janus Capital determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research provided by such broker or dealer viewed in terms of
either that particular transaction or of the overall responsibilities of Janus
Capital. These research and other services may include, but are not limited to,
general economic and security market reviews, industry and company reviews,
evaluations of securities, recommendations as to the purchase and sale of
securities and access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers is
supplemental to Janus Capital's own research efforts.
For the fiscal years ended October 31, 1996 and October 31, 1995, the total
brokerage commissions paid by the Funds are summarized below:
<TABLE>
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund $ $
Janus Government Money Market Fund $ $
Janus Tax-Exempt Money Market Fund $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Funds buy and sell securities in principal and agency transactions. The
Funds pay no commissions on principal transactions. The Funds engage in agency
transactions and pay commissions only when Janus Capital believes that the net
result of the transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Shares as
a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a Fund i) to the Fund or ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be obligated to pay.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
10
<PAGE>
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4928
Trustee, Chairman and President of Janus Aspen Series. Chairman, Chief
Executive Officer, Director and President of Janus Capital. Chairman and
Director of IDEX Management, Inc., Largo, Florida (50% subsidiary of Janus
Capital and investment adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund.
Sharon S. Pichler* - Executive Vice President and Portfolio Manager
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President of Janus Money Market Fund, Janus Tax-Exempt Money
Market Fund and Janus Government Money Market Fund. Vice President of Janus
Capital. Formerly, Assistant Vice President and Portfolio Manager at USAA
Investment Management Co. (1990-1994).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4928
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4928
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance, Treasurer and Chief Financial Officer of Janus
Service, Janus Distributors and Janus Capital. Director of IDEX and Janus
Distributors. Director, Treasurer and Vice President of Finance of Janus
Capital International Ltd. Formerly (1979 to 1992), with the accounting
firm of Price Waterhouse LLP, Denver, Colorado. Formerly (1992-1996),
Treasurer of Janus Investment Fund and Janus Aspen Series.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4928
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital.
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4928
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc., Boston
Massachusetts (mutual fund administration services).
John W. Shepardson# - Trustee
P.O. Box 9591
Denver, CO 80209
Trustee of Janus Aspen Series. Historian.
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
11
<PAGE>
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments).
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Declaration of Trust,
Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Craig, Shepardson,
Loo and Waldinger, monitors the compliance with policies and procedures adopted
particularly for money market funds.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement benefits from the Funds or the Janus
Funds.
<TABLE>
[TO BE FILED BY AMENDMENT]
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1996 ended December 31, 1996**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* $ $
James P. Craig, III, Trustee* $ $
John W. Shepardson, Trustee $ $
William D. Stewart, Trustee $ $
Gary O. Loo, Trustee $ $
Dennis B. Mullen, Trustee $ $
Martin H. Waldinger, Trustee $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1996, Janus Funds consisted of two registered investment
companies comprised of a total of 29 funds.
12
<PAGE>
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock Exchange (the
"NYSE" or the "Exchange") next occurring after a purchase order is received and
accepted by a Fund. A Fund's net asset value is calculated each day that both
the NYSE and the New York Federal Reserve Bank are open. As stated in the
Prospectus, the Funds each seek to maintain a stable net asset value per share
of $1.00. The Shareholder's Guide Section of the Prospectus contains detailed
information about the purchase of Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their dividends
and distributions via wire transfer, all income dividends and capital gains
distributions, if any, on Shares are reinvested automatically in additional
Shares of that Fund at the NAV determined on the first business day following
the record date. Any such election (which may be made on the Application or by
phone) will apply to dividends and distributions the record dates of which fall
on or after the date that a Fund receives such notice. Investors receiving
distributions and dividends via wire transfer may elect in writing or by phone
to change back to automatic reinvestment at any time.
REDEMPTION OF SHARES
Procedures for redemption of Shares are set forth in the Shareholder's
Guide section of the Prospectus. Shares normally will be redeemed for cash (via
wire), although each Fund retains the right to redeem Shares in kind under
unusual circumstances, in order to protect the interests of remaining
shareholders, by delivery of securities selected from its assets at its
discretion. However, the Funds are governed by Rule 18f-1 under the 1940 Act,
which requires each Fund to redeem Shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of that Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed such
limitation, their Fund will have the option of redeeming the excess in cash or
in kind. If Shares are redeemed in kind, the redeeming shareholder might incur
brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities described under "Determination of Net Asset Value"
and such valuation will be made as of the same time the redemption price is
determined.
The right to require the Funds to redeem Shares may be suspended, or the
date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the Securities and Exchange Commission, or the NYSE
is closed except for holidays and weekends, (2) the Securities and Exchange
Commission permits such suspension and so orders, or (3) an emergency exists as
determined by the Securities and Exchange Commission so that disposal of
securities or determination of NAV is not reasonably practicable.
RETIREMENT PLANS
The Funds offer tax-deferred retirement plans for rollover accounts in
excess of $250,000. The Individual Retirement Account ("IRA") may be used by
individuals who meet the above requirement.
Contributions under IRAs are subject to specific contribution limitations.
Generally, such contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary Trust Company as
custodian. Each participant's account is charged an annual fee of $12. There is
a maximum annual fee of $24 per taxpayer identification number.
Distributions from retirement plans generally are subject to ordinary
income tax and may be subject to an additional 10% tax if withdrawn prior to age
591/2. Several exceptions to the general rule may apply. Additionally,
shareholders generally must start withdrawing retirement plan assets no later
than April 1 of the year after they reach age 701/2. Several methods exist to
determine the amount of the minimum annual distribution. Shareholders should
consult with their tax advisor or legal counsel prior to receiving any
distribution from any retirement plan, in order to determine the income tax
impact of any such distribution.
To receive additional information about IRAs along with the necessary
materials to establish an account, please call the Funds at 1-800-525-3713 or
write the Funds at P.O. Box 173375, Denver, CO 80217-3375. No contribution to
any IRA can be made until the appropriate forms to establish any such plan have
been completed.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
is set forth in the Prospectus. Applications to open accounts may be obtained by
calling the Funds at 1-800-29JANUS or writing to the Funds at 100 Fillmore
Street, Denver, Colorado 80206-4928, Attention: Extended Services.
13
<PAGE>
DIVIDENDS AND TAX STATUS
Dividends representing substantially all of the net investment income and
any net realized gains on sales of securities are declared daily, Saturdays,
Sundays and holidays included, and distributed on the last business day of each
month. If a month begins on a Saturday, Sunday or holiday, dividends for those
days are declared at the end of the preceding month and distributed on the first
business day of the month. A shareholder may receive dividends via wire transfer
or may choose to have dividends automatically reinvested in a Fund's Shares. As
described in the Prospectus, Shares purchased by wire on a bank business day
will receive that day's dividend if the purchase is effected at or prior to 3:00
p.m. (New York time) for Janus Money Market Fund and Janus Government Money
Market Fund and 12:00 p.m. (New York time) for Janus Tax-Exempt Money Market
Fund. Otherwise, such Shares will begin to accrue dividends on the first bank
business day following receipt of the order. Requests for redemption of Shares
will be redeemed at the next determined net asset value. Redemption requests
made by wire that are received prior to 3:00 p.m. (New York time) for Janus
Money Market Fund and Janus Government Money Market Fund and 12:00 p.m. (New
York time) for Janus Tax-Exempt Money Market Fund will result in Shares being
redeemed that day. Proceeds of such a redemption will normally be sent to the
predesignated bank account on that day, but that day's dividend will not be
received. Closing times for purchase and redemption of Shares may be changed for
days in which the bond market or the New York Stock Exchange close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market
Fund) are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received
via wire transfer or are reinvested in additional Shares. Full information
regarding the tax status of income dividends and any capital gains distributions
will be mailed to shareholders for tax purposes on or before January 31st of
each year. As described in detail in the Prospectus, Janus Tax-Exempt Money
Market Fund anticipates that substantially all income dividends it pays will be
exempt from federal income tax, although dividends attributable to interest on
taxable investments, together with distributions from any net realized short- or
long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Internal Revenue Code of
1986.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability. If the
structure does not perform as intended, adverse tax or investment consequences
may result. Neither the Internal Revenue Service nor any other regulatory
authority has ruled definitively on certain legal issues presented by structured
securities. Future tax or other regulatory determinations could adversely affect
the value, liquidity, or tax treatment of the income received from these
securities or the nature and timing of distributions made by a portfolio.
PRINCIPAL SHAREHOLDERS
As of January 20, 1997, the Fund's officers and Trustees as a group owned
less than 1% of the outstanding Shares.
As of January 20, 1997, the following institutions owned more than 5% of
Shares:
<TABLE>
[INFORMATION TO BE FILED BY AMENDMENT]
Institution Address Ownership %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts Business Trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
consists of 19 separate series, three of which currently offer three classes of
Shares. The Funds were added to the Trust as separate series on December 9,
1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
14
<PAGE>
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Agreement and Declaration of Trust (the "Declaration of Trust") disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The Declaration of Trust
also provides for indemnification from the assets of the Funds for all losses
and expenses of any Fund shareholder held liable for the obligations of their
Fund. Thus, the risk of a shareholder incurring a financial loss on account of
its liability as a shareholder of one of the Funds is limited to circumstances
in which their Fund would be unable to meet its obligations. The possibility
that these circumstances would occur is remote. The Trustees intend to conduct
the operations of the Funds to avoid, to the extent possible, liability of
shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
The Trust is authorized to issue multiple classes of shares for each Fund.
Currently, Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund each offer three classes of shares by separate
prospectuses. The Shares discussed in this SAI are offered only to individual,
institutional and corporate clients and foundations and trusts meeting certain
minimum investment criteria. A second class of shares, Service Shares, is
offered through Financial Institutions that meet minimum investment requirements
in connection with trust accounts, cash management programs and similar
programs. A third class of shares, Investor Shares, is offered to the general
public.
VOTING RIGHTS
The present Trustees were elected at a meeting of the Trust's shareholders
held on July 10, 1992, with the exception of Mr. Craig who was appointed by the
Trustees as of June 30, 1995. Under the Declaration of Trust, each Trustee will
continue in office until the termination of the Trust or his earlier death,
retirement, resignation, bankruptcy, incapacity or removal. Vacancies will be
filled by a majority of the remaining Trustees, subject to the 1940 Act.
Therefore, no annual or regular meetings of shareholders normally will be held,
unless otherwise required by the Declaration of Trust or the 1940 Act. Subject
to the foregoing, shareholders have the power to vote to elect or remove
Trustees, to terminate or reorganize their Fund, to amend the Declaration of
Trust, to bring certain derivative actions and on any other matters on which a
shareholder vote is required by the 1940 Act, the Declaration of Trust, the
Trust's Bylaws or the Trustees.
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series or class of
the Trust will vote separately only with respect to those matters that affect
only that series or class or if the interest of the series or class in the
matter differs from the interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI relates. If further
information is desired with respect to the Funds or such securities, reference
is made to the Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The following audited financial statements of the Funds for the period
ended October 31, 1996 are hereby incorporated into this SAI by reference to the
Funds' Annual Report dated October 31, 1996. A copy of such report accompanies
this SAI.
15
<PAGE>
[TO BE FILED BY AMENDMENT]
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1996
Statements of Operations for the period ended October 31, 1996
Statements of Assets and Liabilities as of October 31, 1996
Statements of Changes in Net Assets for the periods ended October 31, 1996
and 1995*
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
- --------------------------------------------------------------------------------
*Transactions in fund shares for the period April 14, 1995 to October 31, 1995.
16
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS
The two highest ratings of Standard & Poor's Ratings Services ("S&P") for
municipal and corporate bonds are AAA and AA. Bonds rated AAA have the highest
rating assigned by S&P to a debt obligation. Capacity to pay interest and repay
principal is extremely strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated issues only in a
small degree. The AA rating may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within that rating category.
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are judged by
Moody's to be of the best quality. Bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa bonds are rated
lower than the best bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The generic rating
Aa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT TERM MUNICIPAL LOANS
S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have a strong
capacity to pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service will be given a
plus (+) designation. Issues rated SP-2 have satisfactory capacity to pay
principal and interest with some vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/VMIG-1.
Moody's states that short-term municipal securities rated MIG-1/VMIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2 designation are
of high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES
Prime-1 and Prime-2 are the two highest ratings assigned by Moody's for
other short-term debt securities and commercial paper, and A-1 and A-2 are the
two highest ratings for commercial paper assigned by S&P. Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest classification
of Prime, while S&P uses the numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt obligations and have
many of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 by Moody's have a strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics displayed by issuers
rated Prime-1, but to a lesser degree. Issuers rated A-1 by S&P carry a strong
degree of safety regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) designation.
Issuers rated A-2 by S&P carry a satisfactory degree of safety regarding timely
repayment.
FITCH
F-1+ - Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 - Very strong credit quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2 - Good credit quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 ratings.
17
<PAGE>
DUFF & PHELPS INC.
Duff 1+ - Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or ready access to alternative sources of
funds, is clearly outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
Duff 1 - Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
Duff 1- - High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
Duff 2 - Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
THOMSON BANKWATCH, INC.
TBW-1- The highest category; indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
TBW-2- The second highest category; while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated TBW-1.
TBW-3- The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest
in a timely fashion is considered adequate.
TBW-4- The lowest rating category; this rating is regarded as non-investment
grade and therefore speculative.
IBCA, INC.
A1+ - Obligations supported by the highest capacity for timely repayment. Where
issues possess a particularly strong credit feature, a rating of A1+ is
assigned.
A2 - Obligations supported by a good capacity for timely repayment.
A3 - Obligations supported by a satisfactory capacity for timely repayment.
B - Obligations for which there is an uncertainty as to the capacity to
ensure timely repayment.
C - Obligations for which there is a high risk of default or which are
currently in default.
18
<PAGE>
APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital needs
and usually have maturities of one year or less. They include the following:
1. Project Notes, which carry a U.S. government guarantee, are issued by
public bodies (called "local issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have maturities that range up to one
year from the date of issuance. Project Notes are backed by an agreement between
the local issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of financial
assistance programs for housing, redevelopment, and related needs (such as
low-income housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business taxes, and are payable
from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of receipt of other
types of revenues, such as Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction financing.
After successful completion and acceptance, many projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association ("Fannie Mae") or the Government National Mortgage
Association ("Ginnie Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer term financing.
Municipal Bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds in recent years have come to include an increasingly wide
variety of types of municipal obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may consist of virtually any form of
state or local governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or redevelopment
authorities, and special districts, such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the revenues or net revenues derived
from a particular facility, group of facilities, or, in some cases, the proceeds
of a special excise or other specific revenue source. Revenue bonds are issued
to finance a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these bonds provide additional
security in the form of a debt service reserve fund to be used to make principal
and interest payments. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large volumes for
projects that are privately owned and operated (see 3 below).
3. Private Activity Bonds are considered municipal bonds if the interest
paid thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing and health. These bonds are
also used to finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations
and the pledge, if any, of real and personal property as security for such
payment.
While, at one time, the pertinent provisions of the Internal Revenue Code
permitted private activity bonds to bear tax-exempt interest in connection with
virtually any type of commercial or industrial project (subject to various
restrictions as to authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying projects under the
Code
19
<PAGE>
have become increasingly limited, particularly since the enactment of the Tax
Reform Act of 1986. Under current provisions of the Code, tax-exempt financing
remains available, under prescribed conditions, for certain privately owned and
operated rental multi-family housing facilities, nonprofit hospital and nursing
home projects, airports, docks and wharves, mass commuting facilities and solid
waste disposal projects, among others, and for the refunding (that is, the
tax-exempt refinancing) of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing are expected to
become increasingly limited.
Because of terminology formerly used in the Internal Revenue Code,
virtually any form of private activity bond may still be referred to as an
"industrial development bond," but more and more frequently revenue bonds have
become classified according to the particular type of facility being financed,
such as hospital revenue bonds, nursing home revenue bonds, multi-family housing
revenue bonds, single family housing revenue bonds, industrial development
revenue bonds, solid waste resource recovery revenue bonds, and so on.
Other Municipal Obligations, incurred for a variety of financing purposes,
include: municipal leases, which may take the form of a lease or an installment
purchase or conditional sale contract, are issued by state and local governments
and authorities to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, telecommunications equipment and other capital
assets. Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase municipal
leases subject to a non-appropriation clause when the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether the interest is
or is not includible in the calculation of alternative minimum taxes imposed on
individuals, according to whether the costs of acquiring or carrying the bonds
are or are not deductible in part by banks and other financial institutions, and
according to other criteria relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code and related requirements
governing the issuance of tax-exempt bonds, industry practice has uniformly
required, as a condition to the issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally recognized bond counsel as to the
tax-exempt status of interest on the bonds.
20
<PAGE>
[LOGO]
JANUS INVESTMENT FUND
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Statement of Additional Information
February 17, 1997
- --------------------------------------------------------------------------------
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Service Shares
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectus for the Service
Shares (the "Shares") of Janus Money Market Fund, Janus Government Money Market
Fund and Janus Tax-Exempt Money Market Fund (individually, a "Fund" and,
collectively, the "Funds"). The Funds are each a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Each Fund
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies, and is managed separately
by Janus Capital Corporation ("Janus Capital").
This SAI is not a Prospectus and should be read in conjunction with the
Prospectus dated February 17, 1997, which is incorporated by reference into this
SAI and may be obtained from the Trust at the above phone number or address.
This SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectus.
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Investment Policies and Restrictions .............................. 3
Types of Securities and Investment Techniques ..................... 4
Performance Data .................................................. 7
Determination of Net Asset Value .................................. 8
Investment Adviser and Administrator .............................. 8
Custodian, Transfer Agent and Certain Affiliations ................ 10
Portfolio Transactions and Brokerage .............................. 10
Officers and Trustees ............................................. 11
Purchase of Shares ................................................ 13
Redemptions of Shares ............................................. 13
Shareholder Accounts .............................................. 13
Dividends and Tax Status .......................................... 13
Principal Shareholders ............................................ 14
Miscellaneous Information ......................................... 14
Shares of the Trust ............................................ 14
Voting Rights .................................................. 14
Independent Accountants ........................................ 15
Registration Statement ......................................... 15
Financial Statements .............................................. 15
Appendix A - Description of Securities Ratings .................... 16
Appendix B - Description of Municipal Securities .................. 18
- --------------------------------------------------------------------------------
2
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
As discussed in the Prospectus, the investment objective of each of Janus
Money Market Fund and Janus Government Money Market Fund is to seek maximum
current income to the extent consistent with stability of capital. The
investment objective of Janus Tax-Exempt Money Market Fund is to seek maximum
current income that is exempt from federal income taxes to the extent consistent
with stability of capital. There can be no assurance that a Fund will achieve
its investment objective or maintain a stable net asset value of $1.00 per
share. The investment objectives of the Funds are not fundamental and may be
changed by the Trustees of the Trust (the "Trustees") without shareholder
approval.
INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
As indicated in the Prospectus, each Fund has adopted certain fundamental
investment restrictions that cannot be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund or particular
class of Shares if a matter affects just that Fund or that class of Shares), or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of Shares) are present or represented by proxy.
As used in the restrictions set forth below and as used elsewhere in this
SAI, the term "U.S. Government Securities" shall have the meaning set forth in
the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act
defines U.S. Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S. Government
Securities may also include repurchase agreements collateralized and municipal
securities escrowed with or refunded with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a security
other than a U.S. Government Security, if, as a result, more than 5% of the
Fund's total assets would be invested in the securities of a single issuer or
the Fund would own more than 10% of the outstanding voting securities of any
single issuer. (As noted in the Prospectus, the Funds are also currently subject
to the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the value of a
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in the same industry; provided that: (i)
there is no limit on investments in U.S. Government Securities or in obligations
of domestic commercial banks (including U.S. branches of foreign banks subject
to regulations under U.S. laws applicable to domestic banks and, to the extent
that its parent is unconditionally liable for the obligation, foreign branches
of U.S. banks); (ii) this limitation shall not apply to a Fund's investments in
municipal securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies are classified
according to the end users of their services (for example, automobile finance,
bank finance and diversified finance are each considered to be a separate
industry); and (v) utility companies are classified according to their services
(for example, gas, gas transmission, electric, and telephone are each considered
to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by others,
except to the extent that a Fund may be deemed an underwriter in connection with
the disposition of portfolio securities of such Fund.
(4) A Fund may not lend any security or make any other loan if, as a
result, more than 25% of a Fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial paper, debt
securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest therein,
except that the Fund may invest in debt obligations secured by real estate or
interests therein or securities issued by companies that invest in real estate
or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes (not for
leveraging) in an amount not exceeding 25% of the value of its total assets
(including the amount borrowed) less liabilities (other than borrowings). If
borrowings exceed 25% of the value of a Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation. Reverse
repurchase agreements or the segregation of assets in connection with such
agreements shall not be considered borrowing for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and restrictions as that
Fund.
Each Fund has adopted the following nonfundamental investment restrictions
that may be changed by the Trustees without shareholder approval:
3
<PAGE>
(1) A Fund may not invest in securities or enter into repurchase agreements
with respect to any securities if, as a result, more than 10% of the Fund's net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal within seven days and in other securities that are not
readily marketable ("illiquid investments"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the Trustees, may
determine that a readily available market exists for certain securities such as
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, Section 4(2) commercial paper and municipal
lease obligations. Accordingly, such securities may not be subject to the
foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short sales of
securities, except for short sales against the box and the use of short-term
credit necessary for the clearance of purchases and sales of portfolio
securities.
(3) A Fund may not pledge, mortgage, hypothecate or encumber any of its
assets except to secure permitted borrowings or in connection with permitted
short sales.
(4) A Fund may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that such classifications are so broad that the
primary economic characteristics in a single class are materially different, the
Funds may further classify issuers in accordance with industry classifications
as published by the Securities and Exchange Commission.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
Each of the Funds may invest only in "eligible securities" as defined in
Rule 2a-7 adopted under the 1940 Act. Generally, an eligible security is a
security that (i) is denominated in U.S. dollars and has a remaining maturity of
397 days or less (as calculated pursuant to Rule 2a-7); (ii) is rated, or is
issued by an issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally recognized statistical
rating organizations ("NRSROs") or, if only one NRSRO has issued a rating, by
that NRSRO (the "Requisite NRSROs") or is unrated and of comparable quality to a
rated security, as determined by Janus Capital; and (iii) has been determined by
Janus Capital to present minimal credit risks pursuant to procedures approved by
the Trustees. In addition, the Funds will maintain a dollar-weighted average
portfolio maturity of 90 days or less. A description of the ratings of some
NRSROs appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of its total
assets in the securities of any one issuer other than U.S. Government
Securities, provided that in certain cases a Fund may invest more than 5% of its
assets in a single issuer for a period of up to three business days. Until
pending amendments to Rule 2a-7 become effective, up to 25% of Janus Tax-Exempt
Money Market Fund's assets may be invested without regard to the foregoing
limitations.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money Market
Fund) will invest at least 95% of its total assets in "first-tier" securities.
First-tier securities are eligible securities that are rated, or are issued by
an issuer with short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable quality to a
rated security. In addition, a Fund may invest in "second-tier" securities which
are eligible securities that are not first-tier securities. However, a Fund
(except for Janus Tax-Exempt Money Market Fund, in certain cases) may not invest
in a second-tier security if immediately after the acquisition thereof the Fund
would have invested more than (i) the greater of one percent of its total assets
or one million dollars in second-tier securities issued by that issuer, or (ii)
five percent of its total assets in second-tier securities.
The following discussion of types of securities in which the Funds may
invest supplements and should be read in conjunction with the Prospectus.
PARTICIPATION INTERESTS
Each Fund may purchase participation interests in loans or securities in
which the Funds may invest directly. Participation interests are generally
sponsored or issued by banks or other financial institutions. A participation
interest gives a Fund an undivided interest in the underlying loans or
securities in the proportion that the Fund's interest bears to the total
principal amount of the underlying loans or securities. Participation interests,
which may have fixed, floating or variable rates, may carry a demand feature
backed by a letter of credit or guarantee of a bank or institution permitting
the holder to tender them back to the bank or other institution. For certain
participation interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's participation
interest. The Funds intend to exercise any demand rights they may have upon
default under the terms of the loan or security, to provide liquidity or to
maintain or improve the quality of the Funds' investment portfolio. A Fund will
only purchase participation interests that Janus Capital determines present
minimal credit risks.
4
<PAGE>
VARIABLE AND FLOATING RATE NOTES
Janus Money Market Fund also may purchase variable and floating rate demand
notes of corporations and other entities, which are unsecured obligations
redeemable upon not more than 30 days' notice. These obligations include master
demand notes that permit investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements with the issuer of the instrument. The
issuer of these obligations often has the right, after a given period, to prepay
the outstanding principal amount of the obligations upon a specified number of
days' notice. These obligations generally are not traded, nor generally is there
an established secondary market for these obligations. To the extent a demand
note does not have a seven day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid investment.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities, which represent an
interest in a pool of mortgages made by lenders such as commercial banks,
savings and loan institutions, mortgage bankers, mortgage brokers and savings
banks. Mortgage-backed securities may be issued by governmental or
government-related entities or by non-governmental entities such as banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from other forms of
debt securities which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. In
contrast, mortgage-backed securities provide periodic payments which consist of
interest and, in most cases, principal. In effect, these payments are a
"pass-through" of the periodic payments and optional prepayments made by the
individual borrowers on their mortgage loans, net of any fees paid to the issuer
or guarantor of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting from the sale of
the underlying residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary widely, it
is not possible to predict accurately the average life of a particular security.
Although mortgage-backed securities are issued with stated maturities of up to
forty years, unscheduled or early payments of principal and interest on the
underlying mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for average life. The
volume of prepayments of principal on a pool of mortgages underlying a
particular security will influence the yield of that security, and the principal
returned to a Fund may be reinvested in instruments whose yield may be higher or
lower than that which might have been obtained had the prepayments not occurred.
When interest rates are declining, prepayments usually increase, with the result
that reinvestment of principal prepayments will be at a lower rate than the rate
applicable to the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are issued by
agencies or instrumentalities of the U.S. government. The Government National
Mortgage Association ("GNMA") is the principal federal government guarantor of
mortgage-backed securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA Certificates are
debt securities which represent an interest in one mortgage or a pool of
mortgages which are insured by the Federal Housing Administration or the Farmers
Home Administration or are guaranteed by the Veterans Administration. The Funds
may also invest in pools of conventional mortgages which are issued or
guaranteed by agencies of the U.S. government. GNMA pass-through securities are
considered to be riskless with respect to default in that (i) the underlying
mortgage loan portfolio is comprised entirely of government-backed loans and
(ii) the timely payment of both principal and interest on the securities is
guaranteed by the full faith and credit of the U.S. government, regardless of
whether or not payments have been made on the underlying mortgages. GNMA
pass-through securities are, however, subject to the same market risk as
comparable debt securities. Therefore, the market value of a Fund's GNMA
securities can be expected to fluctuate in response to changes in prevailing
interest rate levels.
Residential mortgage loans are pooled also by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a privately managed, publicly chartered
agency created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. FHLMC issues
participation certificates ("PCs") which represent interests in mortgages from
FHLMC's national portfolio. The mortgage loans in FHLMC's portfolio are not U.S.
government backed; rather, the loans are either uninsured with loan-to-value
ratios of 80% or less, or privately insured if the loan-to-value ratio exceeds
80%. FHLMC guarantees the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee any aspect of
FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private shareholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks, commercial banks,
credit unions and mortgage bankers. FNMA guarantees the timely payment of
principal and interest on the pass-through securities issued by FNMA; the U.S.
government does not guarantee any aspect of the FNMA pass-through securities.
5
<PAGE>
The Funds may also invest in privately-issued mortgage-backed securities to
the extent permitted by their investment restrictions. Mortgage-backed
securities offered by private issuers include pass-through securities comprised
of pools of conventional residential mortgage loans; mortgage-backed bonds which
are considered to be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized mortgage
obligations ("CMOs") which are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA or by pools of conventional mortgages.
Asset-backed securities represent direct or indirect participations in, or
are secured by and payable from, assets other than mortgage-backed assets such
as motor vehicle installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables from revolving
credit agreements (credit cards). Asset-backed securities have yield
characteristics similar to those of mortgage-backed securities and, accordingly,
are subject to many of the same risks.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed upon price on an agreed upon future date. The resale price in a
reverse repurchase agreement reflects a market rate of interest that is not
related to the coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based upon the prevailing overnight repurchase rate. The
Funds will use the proceeds of reverse repurchase agreements only to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to recover for
the term of the reverse repurchase agreement all or most of the cash invested in
the portfolio securities sold and to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. In addition, interest costs on the money
received in a reverse repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Each Fund may purchase securities on a when-issued or delayed delivery
basis. A Fund will enter into such transactions only when it has the intention
of actually acquiring the securities. To facilitate such acquisitions, the
Funds' custodian will segregate cash or high quality liquid assets in an amount
at least equal to such commitments. On delivery dates for such transactions, the
Fund will meet its obligations from maturities, sales of the segregated
securities or from other available sources of cash. If a Fund chooses to dispose
of the right to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation, incur a gain
or loss due to market fluctuation. At the time a Fund makes the commitment to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction as a purchase and thereafter reflect the value of such
securities in determining its net asset value.
INVESTMENT COMPANY SECURITIES
From time to time, the Funds may invest in securities of other investment
companies. The Funds are subject to the provisions of Section 12(d)(1) of the
1940 Act, which currently limits each Fund's investment in other investment
companies to no more than 10% of the investing Fund's assets.
MUNICIPAL LEASES
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund may invest
in municipal leases. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. Leases and installment
purchase or conditional sale contracts (which normally provide for title to the
leased asset to pass eventually to the government issuer) have evolved as a
means for governmental issuers to acquire property and equipment without meeting
the constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. A Fund will only purchase municipal leases subject to a
non-appropriation clause when the payment of principal and accrued interest is
backed by an unconditional irrevocable letter of credit, or guarantee of a bank
or other entity that meets the criteria described in the Prospectus under
"Taxable Investments."
In evaluating municipal lease obligations, Janus Capital will consider such
factors as it deems appropriate, including: (a) whether the lease can be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer considered essential
by the municipality; (e) the legal recourse of the
6
<PAGE>
lease obligee in the event of such a failure to appropriate funding; (f) whether
the security is backed by a credit enhancement such as insurance; and (g) any
limitations which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the lease
obligation. If a lease is backed by an unconditional letter of credit or other
unconditional credit enhancement, then Janus Capital may determine that a lease
is an eligible security solely on the basis of its evaluation of the credit
enhancement.
Municipal leases, like other municipal debt obligations, are subject to the
risk of non-payment. The ability of issuers of municipal leases to make timely
lease payments may be adversely impacted in general economic downturns and as
relative governmental cost burdens are allocated and reallocated among federal,
state and local governmental units. Such non-payment would result in a reduction
of income to the Funds, and could result in a reduction in the value of the
municipal lease experiencing non-payment and a potential decrease in the net
asset value of a Fund.
PERFORMANCE DATA
A Fund may provide current annualized and effective annualized yield
quotations based on its daily dividends. These quotations may from time to time
be used in advertisements, shareholder reports or other communications to
shareholders. All performance information supplied by the Funds in advertising
is historical and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares' performance
information with data published by independent evaluators such as Morningstar,
Inc., Lipper Analytical Services, Inc., or CDC/Wiesenberger, IBC/Donoghue's
Money Fund Report or other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may also compare
their Shares' performance information with the performance of recognized stock,
bond and other indices, including but not limited to the Municipal Bond Buyers
Indices, the Salomon Brothers Bond Index, the Lehman Bond Index, the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index as
published by the U.S. Department of Commerce. The Funds may refer to general
market performance over past time periods such as those published by Ibbotson
Associates (for instance, its "Stocks, Bonds, Bills and Inflation Yearbook").
The Funds may also refer in such materials to mutual fund performance rankings
and other data published by Fund Tracking Companies. Performance advertising may
also refer to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers and financial
magazines. The Funds may also compare the Shares' yield to those of certain U.S.
Treasury obligations or other money market instruments.
Any current yield quotation of the Shares which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent, based on a specific seven calendar day
period. Current yield shall be calculated by (a) determining the net change
during a seven calendar day period in the value of a hypothetical account having
a balance of one Share at the beginning of the period, (b) dividing the net
change by the value of the account at the beginning of the period to obtain a
base period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing). For this purpose, the net change in account value will reflect the
value of additional Shares purchased with dividends declared on the original
Share and dividends declared on both the original Share and any such additional
Shares, but will not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on portfolio
securities. In addition, the Shares may advertise effective yield quotations.
Effective yield quotations are calculated by adding 1 to the base period return,
raising the sum to a power equal to 365/7, and subtracting 1 from the result
(i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the rate an
investor would have to earn from a fully taxable investment in order to equal
such Shares' yield after taxes. Tax equivalent yields are calculated by dividing
Janus Tax-Exempt Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the Shares' yield is
tax-exempt, only that portion is adjusted in the calculation.
7
<PAGE>
The current yield and effective yield for the Investor Shares and
Institutional Shares of the Funds for the seven day period ended October 31,
1996 are shown below. The Service Shares had not yet commenced operations as of
October 31, 1996. The performance of the Service Shares is expected to differ
from that of the classes listed below because the Service Shares are subject to
different fees and expenses.
<TABLE>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund
Investor Shares 5.01% 5.14%
Institutional Shares 5.41% 5.56%
Janus Government Money Market Fund
Investor Shares 4.90% 5.02%
Institutional Shares 5.29% 5.43%
Janus Tax-Exempt Money Market Fund*
Investor Shares 3.25% 3.30%
Institutional Shares 3.70% 3.77%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Janus Tax-Exempt Money Market Fund tax equivalent yield for the seven day
period ended October 31, 1996 was 4.51% for the Investor Shares and 5.14% for
the Institutional Shares.
Although published yield information is useful to investors in reviewing a
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Shares. Also, Financial Institutions may charge their customers direct fees
in connection with an investment in a Fund, which will have the effect of
reducing the Fund's net yield to those shareholders. The yield on a class of
Shares is not fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly, yield information may not necessarily be used to compare
Shares with investment alternatives which, like money market instruments or bank
accounts, may provide a fixed rate of interest. In addition, because investments
in the Funds are not insured or guaranteed, yield on the Shares may not
necessarily be used to compare the Shares with investment alternatives which are
insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the Securities and Exchange Commission, the
Trustees have established procedures to stabilize each Fund's net asset value at
$1.00 per Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating interest
rates, based on available market rates, from the Fund's $1.00 amortized cost
price per Share. Should that deviation exceed 1/2 of 1%, the Trustees will
consider whether any action should be initiated to eliminate or reduce material
dilution or other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends and utilizing a net asset value per Share as
determined by using available market quotations. Each Fund i) will maintain a
dollar-weighted average portfolio maturity of 90 days or less; ii) will not
purchase any instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater than 397 days;
iii) will limit portfolio investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that Janus Capital has determined present
minimal credit risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures. The Trust has
also established procedures to ensure that portfolio securities meet the Funds'
high quality criteria.
INVESTMENT ADVISER AND ADMINISTRATOR
As stated in the Prospectus, each Fund has an Investment Advisory Agreement
with Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928. Each
Advisory Agreement provides that Janus Capital will furnish continuous advice
and recommendations concerning the Funds' investments. The Funds have each
agreed to compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the average daily net
assets of each Fund. However, Janus Capital has agreed to waive .10% of the
value of each Fund's average daily net assets of the advisory fee. Janus Capital
may modify or terminate the waiver at any time upon 90 days' notice to the
Trustees. In addition, the Funds pay brokerage commissions or dealer spreads and
other expenses in connection with the execution of portfolio transactions.
The following table summarizes the advisory fees paid by the Funds for the
fiscal years ended October 31:
<TABLE>
1996 1995
Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund $3,101,530 $1,550,765 $874,302 $437,151
Janus Government Money Market Fund $ 330,914 $ 165,457 $151,606 $ 75,803
Janus Tax-Exempt Money Market Fund $ 140,898 $ 70,449 $ 82,622 $ 41,311
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
On behalf of the Shares, each of the Funds has also entered into an
Administration Agreement with Janus Capital. Under the terms of the
Administration Agreements, each of the Funds has agreed to compensate Janus
Capital for administrative services at the annual rate of .40% of the value of
the average daily net assets of the Shares for certain services, including
custody, transfer agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and fund accounting,
recordkeeping, and blue sky registration and monitoring services, registration
fees, expenses of shareholders' meetings and reports to shareholders, costs of
preparing, printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs of complying
with applicable laws regulating the sale of Shares. Each Fund will pay those
expenses not assumed by Janus Capital, including interest and taxes, fees and
expenses of Trustees who are not affiliated with Janus Capital, audit fees and
expenses, and extraordinary costs. Janus Capital has agreed to waive a portion
of the administration fee, and accordingly the effective rate for calculating
the administration fee payable by the Shares will be .30% for that period. Janus
Capital may terminate the waiver at any time upon 90 days' notice to the
Trustees.
Janus Capital may use all or a portion of its administration fee to
compensate Financial Institutions for providing administrative services to their
customers who invest in the Shares. The types of services that the Financial
Institutions would provide include serving as the sole shareholder of record,
shareholder recordkeeping, processing and aggregating purchase and redemption
transactions, providing periodic statements, forwarding shareholder reports and
other materials, and providing other similar services that the Funds would have
to perform if they were dealing directly with the beneficial owners, rather than
the Financial Institutions, as shareholders of record.
The Advisory Agreements for each Fund became effective on December 9, 1994
and will continue in effect until June 16, 1997, and thereafter from year to
year so long as such continuance is approved annually by a majority of the
Trustees who are not parties to the Advisory Agreements or interested persons of
any such party, and by either a majority of the Funds' outstanding voting shares
or the Trustees. Each Advisory Agreement i) may be terminated without the
payment of any penalty by any Fund or Janus Capital on 60 days' written notice;
ii) terminates automatically in the event of its assignment; and iii) generally,
may not be amended without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested persons of that
Fund or Janus Capital and, to the extent required by the 1940 Act, the vote of a
majority of the outstanding voting securities of that Fund.
Janus Capital also performs investment advisory services for other mutual
funds, and for individual, charitable, corporate and retirement accounts.
Investment decisions for each account managed by Janus Capital, including the
Funds, are made independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in the
purchase or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for an
account. Pursuant to an exemptive order granted by the SEC, the Funds and other
funds advised by Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint trading accounts
are invested in money market instruments and the proceeds are allocated to the
participating funds on a pro rata basis.
Each account managed by Janus Capital has its own investment objective and
is managed in accordance with that objective by a particular portfolio manager
or team of portfolio managers. As a result, from time to time two or more
different managed accounts may pursue divergent investment strategies with
respect to investments or categories of investments.
As indicated in the Prospectus, Janus Capital does not permit portfolio
managers to purchase and sell securities for their own accounts except under the
limited exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital and the Funds.
The policy requires investment personnel and officers of Janus Capital, inside
directors of Janus Capital and the Funds and other designated persons deemed to
have access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal transaction
would be contrary to the provisions of the policy or would be deemed to
adversely affect any transaction then known to be under consideration for or to
have been effected on behalf of any client account, including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects investment personnel, officers and directors/ Trustees of Janus Capital
and the Funds to various trading restrictions and reporting obligations. All
reportable transactions are reviewed for compliance with Janus Capital's policy.
Those persons also may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the policy are administered by and subject to exceptions
authorized by Janus Capital.
Kansas City Southern Industries, Inc., a publicly traded holding company
whose primary subsidiaries are engaged in transportation, information processing
and financial services ("KCSI"), owns approximately 83% of Janus Capital. Thomas
H. Bailey, the President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with KCSI, selects a
majority of Janus Capital's Board.
9
<PAGE>
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
United Missouri Bank, N.A., P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' custodian. The custodian holds the Funds' assets in
safekeeping and collects and remits the income thereon, subject to the
instructions of each Fund.
Janus Service Corporation ("Janus Service"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Service provides certain other
administrative, recordkeeping and shareholder relations services to the Funds.
The Funds do not pay Janus Service a fee.
Janus Distributors, Inc. ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. Janus Distributors acts
as the agent of the Funds in connection with the sale of their shares in all
states in which the shares are registered and in which Janus Distributors is
qualified as a broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts orders at net
asset value. No sales charges are paid by investors. Promotional expenses in
connection with offers and sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer firms or
institutions which were instrumental in the acquisition of shareholders for the
Funds or which performed services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which they will
be made, are determined from time to time by Janus Capital.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Decisions as to the assignment of portfolio business for the Funds and
negotiation of its commission rates are made by Janus Capital whose policy is to
obtain the "best execution" (prompt and reliable execution at the most favorable
security price) of all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In recognition of
the value of the foregoing factors, Janus Capital may place portfolio
transactions with a broker or dealer with whom it has negotiated a commission
that is in excess of the commission another broker or dealer would have charged
for effecting that transaction if Janus Capital determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research provided by such broker or dealer viewed in terms of
either that particular transaction or of the overall responsibilities of Janus
Capital. These research and other services may include, but are not limited to,
general economic and security market reviews, industry and company reviews,
evaluations of securities, recommendations as to the purchase and sale of
securities and access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers is
supplemental to Janus Capital's own research efforts.
For the fiscal years ended October 31, 1996 and October 31, 1995, the total
brokerage commissions paid by the Funds are summarized below:
<TABLE>
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund $ $
Janus Government Money Market Fund $ $
Janus Tax-Exempt Money Market Fund $ $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Funds buy and sell securities in principal and agency transactions. The
Funds pay no commissions on principal transactions. The Funds engage in agency
transactions and pay commissions only when Janus Capital believes that the net
result of the transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing other
accounts in addition to the Funds. If Janus Capital determines that any research
product or service has a mixed use, such that it also serves functions that do
not assist in the investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that portion of the
product or service that Janus Capital determines will assist it in the
investment decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus Capital.
10
<PAGE>
Janus Capital may consider sales of Shares by a broker-dealer or the
recommendation of a broker-dealer to its customers that they purchase Shares as
a factor in the selection of broker-dealers to execute Fund portfolio
transactions. Janus Capital may also consider payments made by brokers effecting
transactions for a Fund i) to the Fund or ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be obligated to pay.
In placing portfolio business with such broker-dealers, Janus Capital will seek
the best execution of each transaction.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without the
use of a broker, except in those circumstances where in the opinion of Janus
Capital better prices and executions will be achieved through the use of a
broker.
OFFICERS AND TRUSTEES
The following are the names of the Trustees and officers of the Trust,
together with a brief description of their principal occupations during the last
five years.
Thomas H. Bailey*# - Trustee, Chairman and President
100 Fillmore Street
Denver, CO 80206-4928
Trustee, Chairman and President of Janus Aspen Series. Chairman, Chief
Executive Officer, Director and President of Janus Capital. Chairman and
Director of IDEX Management, Inc., Largo, Florida (50% subsidiary of Janus
Capital and investment adviser to a group of mutual funds) ("IDEX").
James P. Craig, III*# - Trustee and Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice President and Director of Janus Capital. Executive
Vice President and Portfolio Manager of Janus Fund.
Sharon S. Pichler* - Executive Vice President and Portfolio Manager
100 Fillmore Street
Denver, CO 80206-4928
Executive Vice President of Janus Money Market Fund, Janus Tax-Exempt Money
Market Fund and Janus Government Money Market Fund. Vice President of Janus
Capital. Formerly, Assistant Vice President and Portfolio Manager at USAA
Investment Management Co. (1990-1994).
David C. Tucker* - Vice President and General Counsel
100 Fillmore Street
Denver, CO 80206-4928
Vice President and General Counsel of Janus Aspen Series. Vice President,
Secretary and General Counsel of Janus Capital. Vice President, General
Counsel and Director of Janus Service and Janus Distributors. Director,
Vice President and Secretary of Janus Capital International Ltd.
Steven R. Goodbarn* - Vice President and Chief Financial Officer
100 Fillmore Street
Denver, CO 80206-4928
Vice President and Chief Financial Officer of Janus Aspen Series. Vice
President of Finance, Treasurer and Chief Financial Officer of Janus
Service, Janus Distributors and Janus Capital. Director of IDEX and Janus
Distributors. Director, Treasurer and Vice President of Finance of Janus
Capital International Ltd. Formerly (1979 to 1992), with the accounting
firm of Price Waterhouse LLP, Denver, Colorado. Formerly (1992-1996),
Treasurer of Janus Investment Fund and Janus Aspen Series.
Glenn P. O'Flaherty* - Treasurer and Chief Accounting Officer
100 Fillmore Street
Denver, CO 80206-4928
Treasurer and Chief Accounting Officer of Janus Aspen Series. Director of
Fund Accounting of Janus Capital.
Kelley Abbott Howes* - Secretary
100 Fillmore Street
Denver, CO 80206-4928
Secretary of Janus Aspen Series. Associate Counsel of Janus Capital.
Formerly (1990 to 1994), with The Boston Company Advisors, Inc., Boston
Massachusetts (mutual fund administration services).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
11
<PAGE>
John W. Shepardson# - Trustee
P.O. Box 9591
Denver, CO 80209
Trustee of Janus Aspen Series. Historian.
William D. Stewart# - Trustee
5330 Sterling Drive
Boulder, CO 80302
Trustee of Janus Aspen Series. President of HPS Corporation, Boulder,
Colorado (manufacturer of vacuum fittings and valves).
Gary O. Loo - Trustee
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
Trustee of Janus Aspen Series. President and a Director of High Valley
Group, Inc., Colorado Springs, Colorado (investments).
Dennis B. Mullen - Trustee
1601 114th Avenue, SE
Alderwood Building, Suite 130
Bellevue, WA 98004
Trustee of Janus Aspen Series. President and Chief Executive Officer of BC
Northwest, L.P., a franchise of Boston Chicken, Inc., Bellevue, Washington
(restaurant chain). Formerly (1982 to 1993), Chairman, President and Chief
Executive Officer of Famous Restaurants, Inc., Scottsdale, Arizona
(restaurant chain).
Martin H. Waldinger - Trustee
4940 Sandshore Court
San Diego, CA 92130
Trustee of Janus Aspen Series. Private Consultant and Director of Run
Technologies, Inc., a software development firm, San Carlos, California.
Formerly (1989 to 1993), President and Chief Executive Officer of
Bridgecliff Management Services, Campbell, California (a condominium
association management company).
- --------------------------------------------------------------------------------
* Interested person of the Trust and of Janus Capital.
# Member of the Trust's Executive Committee.
The Trustees are responsible for major decisions relating to each Fund's
objective, policies and techniques. The Trustees also supervise the operation of
the Funds by their officers and review the investment decisions of the officers
although they do not actively participate on a regular basis in making such
decisions.
The Executive Committee of the Trustees shall have and may exercise all the
powers and authority of the Board except for matters requiring action by the
whole Board pursuant to the Trust's Bylaws or Declaration of Trust,
Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Craig, Shepardson,
Loo and Waldinger, monitors the compliance with policies and procedures adopted
particularly for money market funds.
The following table shows the aggregate compensation paid to each Trustee
by the Funds described in this SAI and all funds advised and sponsored by Janus
Capital (collectively, the "Janus Funds") for the periods indicated. None of the
Trustees receive any pension or retirement benefits from the Funds or the Janus
Funds.
<TABLE>
Aggregate Compensation Total Compensation from the
from the Funds for fiscal year Janus Funds for calendar year
Name of Person, Position ended October 31, 1996 ended December 31, 1996**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman* -- --
James P. Craig, III, Trustee* -- --
John W. Shepardson, Trustee $70,000 $
William D. Stewart, Trustee $70,000 $
Gary O. Loo, Trustee $67,000 $
Dennis B. Mullen, Trustee $67,000 $
Martin H. Waldinger, Trustee $70,000 $
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1996, Janus Funds consisted of two registered investment
companies comprised of a total of 29 funds.
12
<PAGE>
PURCHASE OF SHARES
As stated in the Prospectus, Janus Distributors is a distributor of the
Funds' shares. Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock Exchange (the
"NYSE" or the "Exchange") next occurring after a purchase order is received and
accepted by a Fund. A Fund's net asset value is calculated each day that both
the NYSE and the New York Federal Reserve Bank are open. As stated in the
Prospectus, the Funds each seek to maintain a stable net asset value per share
of $1.00. The Shareholder's Guide Section of the Prospectus contains detailed
information about the purchase of Shares.
REDEMPTIONS OF SHARES
Redemptions, like purchases, may only be effected through the trust
accounts, cash management programs and similar programs of participating banks
and financial institutions. Shares normally will be redeemed for cash, although
each Fund retains the right to redeem its shares in kind under unusual
circumstances, in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its discretion. However, the
Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the NAV of
that Fund during any 90-day period for any one shareholder. Should redemptions
by any shareholder exceed such limitation, a Fund will have the option of
redeeming the excess in cash or in kind. If shares are redeemed in kind, the
redeeming shareholder generally will incur brokerage costs in converting the
assets to cash. The method of valuing securities used to make redemptions in
kind will be the same as the method of valuing portfolio securities described
under "Shares of the Trust" and such valuation will be made as of the same time
the redemption price is determined.
The right to require the Funds to redeem its shares may be suspended, or
the date of payment may be postponed, whenever (1) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed except for holidays
and weekends, (2) the SEC permits such suspension and so orders, or (3) an
emergency exists as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
SHAREHOLDER ACCOUNTS
Detailed information about the general procedures for shareholder accounts
is set forth in the Prospectus. Applications to open accounts may be obtained by
calling or writing your Financial Institution.
DIVIDENDS AND TAX STATUS
Dividends representing substantially all of the net investment income and
any net realized gains on sales of securities are declared daily, Saturdays,
Sundays and holidays included, and distributed on the last business day of each
month. If a month begins on a Saturday, Sunday or holiday, dividends for those
days are declared at the end of the preceding month and distributed on the first
business day of the month. A shareholder may receive dividends via wire transfer
or may choose to have dividends automatically reinvested in a Fund's Shares. As
described in the Prospectus, Shares purchased by wire on a bank business day
will receive that day's dividend if the purchase is effected at or prior to 3:00
p.m. (New York time) for Janus Money Market Fund and Janus Government Money
Market Fund and 12:00 p.m. (New York time) for Janus Tax-Exempt Money Market
Fund. Otherwise, such Shares will begin to accrue dividends on the first bank
business day following receipt of the order. Requests for redemption of Shares
will be redeemed at the next determined net asset value. Redemption requests
made by wire that are received prior to 3:00 p.m. (New York time) for Janus
Money Market Fund and Janus Government Money Market Fund and 12:00 p.m. (New
York time) for Janus Tax-Exempt Money Market Fund will result in Shares being
redeemed that day. Proceeds of such a redemption will normally be sent to the
predesignated bank account on that day, but that day's dividend will not be
received. Closing times for purchase and redemption of Shares may be changed for
days in which the bond market or the New York Stock Exchange close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money Market
Fund) are taxable income and are subject to federal income tax (except for
shareholders exempt from income tax), whether such distributions are received
via wire transfer or are reinvested in additional Shares. Full information
regarding the tax status of income dividends and any capital gains distributions
will be mailed to shareholders for tax purposes on or before January 31st of
each year. As described in detail in the Prospectus, Janus Tax-Exempt Money
Market Fund anticipates that substantially all income dividends it pays will be
exempt from federal income tax, although dividends attributable to interest on
taxable investments, together with distributions from any net realized short- or
long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Internal Revenue Code of
1986.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment
13
<PAGE>
features can be used to enhance price stability. If the structure does not
perform as intended, adverse tax or investment consequences may result. Neither
the Internal Revenue Service nor any other regulatory authority has ruled
definitively on certain legal issues presented by structured securities. Future
tax or other regulatory determinations could adversely affect the value,
liquidity, or tax treatment of the income received from these securities or the
nature and timing of distributions made by a portfolio.
PRINCIPAL SHAREHOLDERS
As of January 20, 1997, the Fund's officers and Trustees as a group owned
less than 1% of the outstanding Shares.
As of January 20, 1997, the following financial institutions owned more
than 5% of Shares:
<TABLE>
[INFORMATION TO BE FILED BY AMENDMENT]
Financial Institution Address Ownership %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
MISCELLANEOUS INFORMATION
Each Fund is a series of the Trust, a Massachusetts Business Trust that was
created on February 11, 1986. The Trust is an open-end management investment
company registered under the 1940 Act. As of the date of this SAI, the Trust
consists of 19 separate series, three of which currently offer three classes of
Shares. The Funds were added to the Trust as separate series on December 9,
1994.
Janus Capital reserves the right to the name "Janus." In the event that
Janus Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Agreement and Declaration of Trust (the "Declaration of Trust") disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The Declaration of Trust
also provides for indemnification from the assets of the Funds for all losses
and expenses of any Fund shareholder held liable for the obligations of their
Fund. Thus, the risk of a shareholder incurring a financial loss on account of
its liability as a shareholder of one of the Funds is limited to circumstances
in which their Fund would be unable to meet its obligations. The possibility
that these circumstances would occur is remote. The Trustees intend to conduct
the operations of the Funds to avoid, to the extent possible, liability of
shareholders for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for each series of
the Trust. Shares of each Fund are fully paid and nonassessable when issued. All
shares of a Fund participate equally in dividends and other distributions by
such Fund, and in residual assets of that Fund in the event of liquidation.
Shares of each Fund have no preemptive, conversion or subscription rights.
The Trust is authorized to issue multiple classes of shares for each Fund.
Currently, Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund each offer three classes of shares by separate
prospectuses. The Shares discussed in this SAI are offered only through
Financial Institutions that meet minimum investment requirements in connection
with trust accounts, cash management programs and similar programs provided to
their customers. A second class of shares, Institutional Shares, is offered to
individual, institutional and corporate clients and foundations and trusts
meeting certain minimum investment criteria. A third class of shares, Investor
Shares, is offered to the general public.
VOTING RIGHTS
The present Trustees were elected at a meeting of the Trust's shareholders
held on July 10, 1992, with the exception of Mr. Craig who was appointed by the
Trustees as of June 30, 1995. Under the Declaration of Trust, each Trustee will
continue in office until the termination of the Trust or his earlier death,
resignation, bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held, unless
otherwise required by the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize their Fund, to amend the Declaration of Trust, to bring
certain derivative actions and on any other matters on which a shareholder vote
is required by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or the
Trustees.
14
<PAGE>
Each share of each series of the Trust has one vote (and fractional votes
for fractional shares). Shares of all series of the Trust have noncumulative
voting rights, which means that the holders of more than 50% of the shares of
all series of the Trust voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Trustees. Each series or class of
the Trust will vote separately only with respect to those matters that affect
only that series or class or if the interest of the series or class in the
matter differs from the interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Suite 2500, Denver, Colorado
80202, independent accountants for the Funds, audit the Funds' annual financial
statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI relates. If further
information is desired with respect to the Funds or such securities, reference
is made to the Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The following audited financial statements of the Institutional Shares and
Investor Shares of the Funds for the period ended October 31, 1996 are hereby
incorporated by reference to the Funds' Annual Report dated October 31, 1996. A
copy of such report accompanies this SAI.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1996
Statements of Operations for the period ended October 31, 1996
Statements of Assets and Liabilities as of October 31, 1996
Statements of Changes in Net Assets for the periods ended October 31, 1996
and the fiscal period ended October 31, 1995
Financial Highlights for Investor Shares for the fiscal year ended October
31, 1996 and the fiscal period February 15, 1995 to October 31, 1995
Financial Highlights for Institutional Shares for the fiscal year ended
October 31, 1996 and the fiscal period April 17, 1995 to October 31, 1995
Notes to Financial Statements
The portions of such Annual Report that are not specifically listed above
are not incorporated by reference into this SAI and are not part of the
Registration Statement.
15
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS
The two highest ratings of Standard & Poor's Ratings Services ("S&P") for
municipal and corporate bonds are AAA and AA. Bonds rated AAA have the highest
rating assigned by S&P to a debt obligation. Capacity to pay interest and repay
principal is extremely strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated issues only in a
small degree. The AA rating may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within that rating category.
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are judged by
Moody's to be of the best quality. Bonds rated Aa are judged to be of high
quality by all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa bonds are rated
lower than the best bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The generic rating
Aa may be modified by the addition of the numerals 1, 2 or 3. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT TERM MUNICIPAL LOANS
S&P's highest rating for short-term municipal loans is SP-1. S&P states
that short-term municipal securities bearing the SP-1 designation have a strong
capacity to pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service will be given a
plus (+) designation. Issues rated SP-2 have satisfactory capacity to pay
principal and interest with some vulnerability to adverse financial and economic
changes over the term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/VMIG-1.
Moody's states that short-term municipal securities rated MIG-1/VMIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2 designation are
of high quality, with margins of protection ample although not so large as in
the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES
Prime-1 and Prime-2 are the two highest ratings assigned by Moody's for
other short-term debt securities and commercial paper, and A-1 and A-2 are the
two highest ratings for commercial paper assigned by S&P. Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest classification
of Prime, while S&P uses the numbers 1, 2 and 3 to denote relative strength
within its highest classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt obligations and have
many of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and well established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 by Moody's have a strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics displayed by issuers
rated Prime-1, but to a lesser degree. Issuers rated A-1 by S&P carry a strong
degree of safety regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+) designation.
Issuers rated A-2 by S&P carry a satisfactory degree of safety regarding timely
repayment.
FITCH
F-1+ - Exceptionally strong credit quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 - Very strong credit quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2 - Good credit quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 ratings.
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DUFF & PHELPS INC.
Duff 1+ - Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or ready access to alternative sources of
funds, is clearly outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
Duff 1 - Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
Duff 1- - High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
Duff 2 - Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
THOMSON BANKWATCH, INC.
TBW-1- The highest category; indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
TBW-2- The second highest category; while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated TBW-1.
TBW-3- The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest
in a timely fashion is considered adequate.
TBW-4- The lowest rating category; this rating is regarded as non-investment
grade and therefore speculative.
IBCA, INC.
A1+ - Obligations supported by the highest capacity for timely repayment. Where
issues possess a particularly strong credit feature, a rating of A1+ is
assigned.
A2 - Obligations supported by a good capacity for timely repayment.
A3 - Obligations supported by a satisfactory capacity for timely repayment.
B - Obligations for which there is an uncertainty as to the capacity to
ensure timely repayment.
C - Obligations for which there is a high risk of default or which are
currently in default.
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APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term capital needs
and usually have maturities of one year or less. They include the following:
1. Project Notes, which carry a U.S. government guarantee, are issued by
public bodies (called "local issuing agencies") created under the laws of a
state, territory, or U.S. possession. They have maturities that range up to one
year from the date of issuance. Project Notes are backed by an agreement between
the local issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of financial
assistance programs for housing, redevelopment, and related needs (such as
low-income housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business taxes, and are payable
from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of receipt of other
types of revenues, such as Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds then
provide the money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction financing.
After successful completion and acceptance, many projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association ("Fannie Mae") or the Government National Mortgage
Association ("Ginnie Mae").
6. Tax-Exempt Commercial Paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer term financing.
Municipal Bonds, which meet longer term capital needs and generally have
maturities of more than one year when issued, have three principal
classifications:
1. General Obligation Bonds are issued by such entities as states,
counties, cities, towns, and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds in recent years have come to include an increasingly wide
variety of types of municipal obligations. As with other kinds of municipal
obligations, the issuers of revenue bonds may consist of virtually any form of
state or local governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or redevelopment
authorities, and special districts, such as water, sewer or sanitary districts.
Generally, revenue bonds are secured by the revenues or net revenues derived
from a particular facility, group of facilities, or, in some cases, the proceeds
of a special excise or other specific revenue source. Revenue bonds are issued
to finance a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of these bonds provide additional
security in the form of a debt service reserve fund to be used to make principal
and interest payments. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/ or collateralized
mortgages, and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
In recent years, revenue bonds have been issued in large volumes for
projects that are privately owned and operated (see 3 below).
3. Private Activity Bonds are considered municipal bonds if the interest
paid thereon is exempt from Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing and health. These bonds are
also used to finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations
and the pledge, if any, of real and personal property as security for such
payment.
While, at one time, the pertinent provisions of the Internal Revenue Code
permitted private activity bonds to bear tax-exempt interest in connection with
virtually any type of commercial or industrial project (subject to various
restrictions as to authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying projects under the
Code
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<PAGE>
have become increasingly limited, particularly since the enactment of the Tax
Reform Act of 1986. Under current provisions of the Code, tax-exempt financing
remains available, under prescribed conditions, for certain privately owned and
operated rental multi-family housing facilities, nonprofit hospital and nursing
home projects, airports, docks and wharves, mass commuting facilities and solid
waste disposal projects, among others, and for the refunding (that is, the
tax-exempt refinancing) of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing are expected to
become increasingly limited.
Because of terminology formerly used in the Internal Revenue Code,
virtually any form of private activity bond may still be referred to as an
"industrial development bond," but more and more frequently revenue bonds have
become classified according to the particular type of facility being financed,
such as hospital revenue bonds, nursing home revenue bonds, multi-family housing
revenue bonds, single family housing revenue bonds, industrial development
revenue bonds, solid waste resource recovery revenue bonds, and so on.
Other Municipal Obligations, incurred for a variety of financing purposes,
include: municipal leases, which may take the form of a lease or an installment
purchase or conditional sale contract, are issued by state and local governments
and authorities to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, telecommunications equipment and other capital
assets. Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations of many state constitutions and statutes are deemed to
be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce this risk, the Fund will only purchase municipal
leases subject to a non-appropriation clause when the payment of principal and
accrued interest is backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria described in the
Prospectus.
Tax-exempt bonds are also categorized according to whether the interest is
or is not includible in the calculation of alternative minimum taxes imposed on
individuals, according to whether the costs of acquiring or carrying the bonds
are or are not deductible in part by banks and other financial institutions, and
according to other criteria relevant for Federal income tax purposes. Due to the
increasing complexity of Internal Revenue Code and related requirements
governing the issuance of tax-exempt bonds, industry practice has uniformly
required, as a condition to the issuance of such bonds, but particularly for
revenue bonds, an opinion of nationally recognized bond counsel as to the
tax-exempt status of interest on the bonds.
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JANUS INVESTMENT FUND
PART C - OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
List all financial statements and exhibits filed as part of the
Registration Statement.
(a)(1) Financial Statements Included in the Prospectus:
Financial Highlights for all of the Funds (except Janus Special
Situations Fund) will be filed by amendment on or before the
effective date of this amendment.
(a)(2) Financial Statements Incorporated by Reference into the Statement of
Additional Information:
The Financial Statements for all of the Funds (except Janus
Special Situations Fund) will be included in the Annual Report
dated October 31, 1996, and will be incorporated by reference
into the respective Statement of Additional Information by
amendment which will be filed on or before the effective date of
this amendment.
(b) Exhibits:
Exhibit 1 (a) Agreement and Declaration of Trust,
dated February 11, 1986 is filed herein
as Exhibit 1(a).
(b) Certificate of Designation for Janus
Growth and Income Fund is filed herein
as Exhibit 1(b).
(c) Certificate of Designation for Janus
Worldwide Fund is filed herein as
Exhibit 1(c).
(d) Certificate of Designation for Janus
Twenty Fund is incorporated herein by
reference to Exhibit 1(d) to Post-
Effective Amendment No. 46.
(e) Certificate of Designation for Janus
Flexible Income Fund is incorporated
herein by reference to Exhibit 1(e) to
Post-Effective Amendment No. 46.
(f) Certificate of Designation for Janus
Intermediate Government Securities Fund
is incorporated herein by reference to
Exhibit 1(f) to Post-Effective Amendment
No. 46.
(g) Certificate of Designation for Janus
Venture Fund is incorporated herein by
reference to Exhibit 1(g) to Post-
Effective Amendment No. 47.
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(h) Certificate of Designation for Janus
Enterprise Fund is incorporated herein
by reference to Exhibit 1(h) to Post-
Effective Amendment No. 48.
(i) Certificate of Designation for Janus
Balanced Fund is incorporated herein by
reference to Exhibit 1(i) to Post-
Effective Amendment No. 48.
(j) Certificate of Designation for Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 1(j) to
Post-Effective Amendment No. 48.
(k) Certificate of Designation for Janus
Federal Tax-Exempt Fund is incorporated
herein by reference to Exhibit 1(k) to
Post-Effective Amendment No. 54.
(l) Certificate of Designation for Janus
Mercury Fund is incorporated herein by
reference to Exhibit 1(l) to Post-
Effective Amendment No. 54.
(m) Certificate of Designation for Janus
Overseas Fund is incorporated herein by
reference to Exhibit 1(m) to
Post-Effective Amendment No. 60.
(n) Form of Amendment to the Registrant's
Agreement and Declaration of Trust is
incorporated herein by reference to
Exhibit 1(n) to Post-Effective Amendment
No. 62.
(o) Form of Certificate of Designation for
Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund is
incorporated herein by reference to
Exhibit 1(o) to Post-Effective Amendment
No. 62.
(p) Form of Certificate of Designation for
Janus High-Yield Fund and Janus Olympus
Fund is incorporated herein by reference
to Exhibit 1(p) to Post-Effective
Amendment No. 68.
(q) Certificate of Designation for Janus
Equity Income Fund is incorporated
herein by reference to Exhibit 1(q) to
Post-Effective Amendment No. 72.
(r) Form of Certificate of Establishment and
Designation for Janus Special Situations
Fund is incorporated herein by reference
to Exhibit 1(r) to Post-Effective
Amendment No. 75.
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(s) Form of Amendment to Registrant's
Agreement and Declaration of Trust is
incorporated herein by reference to
Exhibit 1(s) to Post-Effective Amendment
No. 75.
Exhibit 2 (a) Restated Bylaws are incorporated herein
by reference to Exhibit 2(a) to
Post-Effective Amendment No. 71.
(b) First Amendment to the Bylaws is
incorporated herein by reference to
Exhibit 2(b) to Post-Effective Amendment
No. 71.
Exhibit 3 Not Applicable.
Exhibit 4 (a) Specimen Stock Certificate for Janus
Fund(1) is filed herein as Exhibit 4(b).
(b) Specimen Stock Certificate for Janus
Growth and Income Fund is filed herein
as Exhibit 4(b).
(c) Specimen Stock Certificate for Janus
Worldwide Fund is filed herein as
Exhibit 4(c).
(d) Specimen Stock Certificate for Janus
Twenty Fund(1) is incorporated herein by
reference to Exhibit 4(d) to Post-
Effective Amendment No. 46.
(e) Specimen Stock Certificate for Janus
Flexible Income Fund(1) is incorporated
herein by reference to Exhibit 4(e) to
Post-Effective Amendment No. 46.
(f) Specimen Stock Certificate for Janus
Intermediate Government Securities
Fund(1) is incorporated herein by
reference to Exhibit 4(f) to
Post-Effective Amendment No. 46.
(g) Specimen Stock Certificate for Janus
Venture Fund(1) is incorporated herein
by reference to Exhibit 4(g) to
Post-Effective Amendment 47.
(h) Specimen Stock Certificate for Janus
Enterprise Fund is incorporated herein
by reference to Exhibit 4(h) to Post-
Effective Amendment No. 48.
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(1) Outstanding certificates representing shares of predecessor entity to this
series of the Trust are deemed to represent shares of this series.
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(i) Specimen Stock Certificate for Janus
Balanced Fund is incorporated herein by
reference to Exhibit 4(i) to Post-
Effective Amendment No. 48.
(j) Specimen Stock Certificate for Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 4(j) to
Post-Effective Amendment No. 48.
(k) Specimen Stock Certificate for Janus
Federal Tax-Exempt Fund is incorporated
herein by reference to Exhibit 4(k) to
Post-Effective Amendment No. 54.
(l) Specimen Stock Certificate for Janus
Mercury Fund is incorporated herein by
reference to Exhibit 4(l) to Post-
Effective Amendment No. 54.
(m) Specimen Stock Certificate for Janus
Overseas Fund is incorporated herein by
reference to Exhibit 4(m) to
Post-Effective Amendment No. 60.
(n) Revised Specimen Stock Certificates for
Janus High-Yield Fund and Janus Olympus
Fund are filed herein as Exhibit 4(n).
(o) Revised Specimen Stock Certificate for
Janus Equity Income Fund is filed herein
as Exhibit 4(o).
(p) Revised Specimen Stock Certificate for
Janus Special Situations Fund is filed
herein as Exhibit 4(p).
Exhibit 5 (a) Restated form of Investment Advisory
Agreement for Janus Fund is filed herein
as Exhibit 5(a).
(b) Restated form of Investment Advisory
Agreement for Janus Growth and Income
Fund and Janus Worldwide Fund is filed
herein as Exhibit 5(b).
(c) Restated form of Investment Advisory
Agreement for Janus Twenty Fund and
Janus Venture Fund is filed herein as to
Exhibit 5(c).
(d) Restated form of Investment Advisory
Agreement for Janus Flexible Income Fund
is filed herein as Exhibit 5(d).
(e) Restated form of Investment Advisory
Agreement for Janus Enterprise Fund,
Janus Balanced Fund and Janus Short-Term
Bond Fund is filed herein as Exhibit
5(e).
(f) Restated form of Investment Advisory
Agreement for Janus Federal Tax-Exempt
Fund and Janus Mercury Fund is filed
herein as Exhibit 5(f).
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(g) Restated form of Investment Advisory
Agreement for Janus Overseas Fund is
filed herein as Exhibit 5(g).
(h) Form of Investment Advisory Agreement
for Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund is
incorporated herein by reference to
Exhibit 5(h) to Post-Effective Amendment
No. 64.
(i) Restated form of Investment Advisory
Agreement for Janus High-Yield Fund is
filed herein as Exhibit 5(i).
(j) Restated form of Investment Advisory
Agreement for Janus Olympus Fund is
filed herein as Exhibit 5(j).
(k) Form of Investment Advisory Agreement
for Janus Equity Income Fund is
incorporated herein by reference to
Exhibit 5(k) to Post-Effective Amendment
No. 73.
(l) Form of Investment Advisory Agreement
for Janus Special Situations Fund is
incorporated herein by reference to
Exhibit 5(l) to Post-Effective Amendment
No. 75.
Exhibit 6 Form of Distribution Agreement between
Janus Investment Fund and Janus
Distributors, Inc. is incorporated
herein by reference to Exhibit 6 to
Post-Effective Amendment No. 57.
Exhibit 7 Not Applicable.
Exhibit 8 (a) Custodian Contract between Janus
Investment Fund and State Street Bank
and Trust Company is filed herein as
Exhibit 8(a).
(b) Amendment dated April 25, 1990 of State
Street Custodian Contract is filed
herein as Exhibit 8(b).
(c) Letter Agreement dated February 1, 1991
regarding State Street Custodian
Contract is filed herein as Exhibit
8(c).
(d) Custodian Contract between Janus
Investment Fund and Investors Fiduciary
Trust Company is hereby withdrawn.
(e) Letter Agreement dated October 9, 1992
regarding State Street Custodian
Agreement is incorporated herein by
reference to Exhibit 8(e) to
Post-Effective Amendment No. 52.
(f) Letter Agreement dated April 28, 1993
regarding State Street Custodian
Agreement is incorporated herein by
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reference to Exhibit 8(f) to
Post-Effective Amendment No. 60.
(g) Letter Agreement dated April 4, 1994
regarding State Street Custodian
Agreement is incorporated herein by
reference to Exhibit 8(g) to
Post-Effective Amendment No. 64.
(h) Form of Custody Agreement between Janus
Investment Fund, on behalf of Janus
Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt
Money Market Fund, and United Missouri
Bank, N.A. is incorporated herein by
reference to Exhibit 8(h) to Post-
Effective Amendment No. 64.
(i) Letter Agreement dated December 12, 1995
regarding State Street Custodian
Contract is incorporated herein by
reference to Exhibit 8(i) to
Post-Effective Amendment No. 72.
(j) Amendment dated October 11, 1995 of
State Street Custodian Contract is
incorporated herein by reference to
Exhibit 8(j) to Post-Effective Amendment
No. 71.
(k) Form of Amendment dated September 10,
1996 of State Street Custodian Contract
is incorporated herein by reference to
Exhibit 8(k) to Post-Effective Amendment
No. 75.
(l) Letter Agreement dated September 10,
1996 regarding State Street Custodian
Contract is incorporated herein by
reference to Exhibit 8(l) to
Post-Effective Amendment No. 75.
(m) Form of Subcustodian Contract between
United Missouri Bank, N.A., and State
Street Bank and Trust Company is
incorporated herein by reference to
Exhibit 8(m) to Post-Effective Amendment
No. 75.
Exhibit 9 (a) Transfer Agency Agreement with Investors
Fiduciary Trust Company is hereby
withdrawn.
(b) Subagency Agreement between Janus
Service Corporation and Investors
Fiduciary Trust Company is hereby
withdrawn.
(c) Form of Administration Agreement with
Janus Capital Corporation for Janus
Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt
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Money Market Fund is incorporated herein
by reference to Exhibit 9(c) to
Post-Effective Amendment No. 64.
(d) Transfer Agency Agreement dated December
9, 1994 with Janus Service Corporation
for Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund filed as
Exhibit 9(d) to Post-Effective Amendment
No. 64 is withdrawn.
(e) Transfer Agency Agreement dated
September 27, 1995 with Janus Service
Corporation for Janus Money Market Fund,
Janus Government Money Market Fund,
Janus Tax-Exempt Money Market Fund,
Janus High-Yield Fund and Janus Olympus
Fund is incorporated herein by reference
to Exhibit 9(e) to Post-Effective
Amendment No. 70.
(f) Letter Agreement dated December 21, 1995
regarding Janus Service Corporation
Transfer Agency Agreement is
incorporated herein by reference to
Exhibit 9(f) to Post-Effective Amendment
No. 72.
(g) Letter Agreement dated May 21, 1996
regarding Janus Service Corporation
Transfer Agency Agreement is
incorporated by reference to Exhibit
9(g) to Post-Effective Amendment No. 73.
(h) Form of Amended Administration Agreement
with Janus Capital Corporation for Janus
Money Market Fund, Janus Government
Money Market Fund, and Janus Tax-Exempt
Money Market Fund is incorporated by
reference to Exhibit 9(h) to
Post-Effective Amendment No. 77.
(i) Letter Agreement dated September 10,
1996 regarding Janus Service Corporation
Transfer Agency Agreement is
incorporated herein by reference to
Exhibit 9(i) to Post-Effective Amendment
No. 76.
Exhibit 10 (a) Opinion and Consent of Messrs. Davis,
Graham & Stubbs with respect to shares
of Janus Fund is filed herein as Exhibit
10 (a).
(b) Opinion and Consent of Fund Counsel with
respect to shares of Janus Growth and
Income Fund and Janus Worldwide Fund is
filed herein as Exhibit 10(b).
(c) Opinion and Consent of Fund Counsel with
respect to shares of Janus Enterprise
Fund, Janus Balanced Fund and Janus
Short-Term Bond Fund is incorporated
herein by reference to Exhibit 10(d) to
Post-Effective Amendment No. 48.
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(d) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Twenty Fund is incorporated herein
by reference to Exhibit 10(e) to Post-
Effective Amendment No. 49.
(e) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Venture Fund is incorporated
herein by reference to Exhibit 10(f) to
Post-Effective Amendment No. 49.
(f) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Flexible Income Fund is
incorporated herein by reference to
Exhibit 10(g) to Post-Effective
Amendment No. 49.
(g) Opinion and Consent of Messrs. Sullivan
and Worcester with respect to shares of
Janus Intermediate Government Securities
Fund is incorporated herein by reference
to Exhibit 10(h) to Post-Effective
Amendment No. 49.
(h) Opinion and Consent of Fund Counsel with
respect to shares of Janus Federal
Tax-Exempt Fund and Janus Mercury Fund
is incorporated herein by reference to
Exhibit 10(i) to Post-Effective
Amendment No. 54.
(i) Opinion and Consent of Fund Counsel with
respect to shares of Janus Overseas Fund
is incorporated herein by reference to
Exhibit 10(i) to Post-Effective
Amendment No. 60.
(j) Opinion and Consent of Fund Counsel with
respect to shares of Janus Money Market
Fund, Janus Government Money Market Fund
and Janus Tax-Exempt Money Market Fund
is incorporated herein by reference to
Exhibit 10(j) to Post-Effective
Amendment No. 62.
(k) Opinion and Consent of Fund Counsel with
respect to Institutional Shares of Janus
Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt
Money Market Fund is incorporated herein
by reference to Exhibit 10(k) to
Post-Effective Amendment No. 65.
(l) Opinion and Consent of Fund Counsel with
respect to shares of Janus High-Yield
Fund and Janus Olympus Fund is
incorporated herein by reference to
Exhibit 10(l) to Post-Effective
Amendment No. 68.
(m) Opinion and Consent of Fund Counsel with
respect to shares of Janus Equity Income
Fund is incorporated herein
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by reference to Exhibit 10(m) to
Post-Effective Amendment No. 72.
(n) Opinion and Consent of Fund Counsel with
respect to shares of Janus Special
Situations Fund is incorporated herein
by reference to Exhibit 10(n) to
Post-Effective Amendment No. 75.
(o) Opinion and Consent of Fund Counsel with
respect to shares of Janus Money Market
Fund, Janus Government Money Market
Fund, and Janus Tax-Exempt Money Market
Fund is incorporated herein by reference
to Exhibit 10(o) to Post-Effective
Amendment No. 76.
Exhibit 11 Consent of Price Waterhouse LLP is filed
herein as Exhibit 11.
Exhibit 12 Not Applicable.
Exhibit 13 Not Applicable.
Exhibit 14 (a) Model Individual Retirement Plan is
incorporated herein by reference to
Exhibit 14(a) to Post-Effective
Amendment No. 57.
(b) Model Defined Contribution Retirement
Plan is incorporated herein by reference
to Exhibit 14(b) to Post-Effective
Amendment No. 41.
(c) Model Section 403(b)(7) Plan is
incorporated herein by reference to
Exhibit 14(c) to Post-Effective
Amendment No. 38.
Exhibit 15 Not Applicable.
Exhibit 16 (a) Computation of Total Return is
incorporated herein by reference to
Exhibit 16 to Post-Effective Amendment
No. 44.
(b) Computation of Current Yield and
Effective Yield is incorporated herein
by reference to Exhibit 16(b) to Post-
Effective Amendment No. 67.
Exhibit 17 Powers of Attorney dated as of June 30,
1995, are incorporated herein by
reference to Exhibit 17 to Post-
Effective Amendment No. 67.
Exhibit 18 (a) Form of plan entered into by Janus Money
Market Fund, Janus Government Money
Market Fund and Janus Tax- Exempt Money
Market Fund pursuant to Rule 18f-3
setting
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forth the separate arrangement and
expense allocation of each class of such
Funds filed as Exhibit 18 to
Post-Effective Amendment No. 66 is
withdrawn.
(b) Restated form of Rule 18f-3 Plan entered
into by Janus Money Market Fund, Janus
Government Money Market Fund and Janus
Tax-Exempt Money Market Fund is
incorporated herein by reference to
Exhibit 18(b) to Post-Effective
Amendment No. 69.
(c) Amended and Restated form of Rule 18f-3
Plan entered into by Janus Money Market
Fund, Janus Government Money Market
Fund, and Janus Tax-Exempt Money Market
Fund is incorporated herein by reference
to Exhibit 18(c) to Post-Effective
Amendment No. 78.
Exhibit 27 Financial Data Schedules for all of the
Funds, except Janus Special Situations
Fund, (or classes thereof) to be filed
by amendment on or before the effective
date of this amendment.
ITEM 25. Persons Controlled by or Under Common Control with Registrant
None
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ITEM 26. Number of Holders of Securities
The number of record holders of shares of the Registrant as of October
31, 1996, was as follows:
Number of
Title of Class Record Holders
Janus Fund shares 799,880
Janus Growth and Income Fund shares 96,914
Janus Worldwide Fund shares 249,340
Janus Overseas Fund shares 47,070
Janus Twenty Fund shares 330,454
Janus Flexible Income Fund shares 30,117
Janus Intermediate Government
Securities Fund shares 3,586
Janus Venture Fund shares 128,875
Janus Enterprise Fund shares 86,408
Janus Balanced Fund shares 21,216
Janus Short-Term Bond Fund shares 4,285
Janus Federal Tax-Exempt Fund shares 3,851
Janus Mercury Fund shares 214,487
Janus Money Market Fund - Investor Shares 71,765
Janus Money Market Fund - Institutional Shares 163
Janus Money Market Fund - Service Shares N/A
Janus Government Money
Market Fund - Investor Shares 11,127
Janus Government Money
Market Fund - Institutional Shares 37
Janus Government Money
Market Fund - Service Shares N/A
Janus Tax-Exempt Money
Market Fund - Investor Shares 5,603
Janus Tax-Exempt Money
Market Fund - Institutional Shares 12
Janus Tax-Exempt Money
Market Fund - Service Shares N/A
Janus High-Yield Fund shares 5,918
Janus Olympus Fund shares 39,708
Janus Equity Income Fund shares 3,111
Janus Special Situations Fund shares N/A
ITEM 27. Indemnification
Article VIII of Janus Investment Fund's Agreement and Declaration of Trust
provides for indemnification of certain persons acting on behalf of the Funds.
In general, Trustees and officers will be indemnified against liability and
against all expenses of litigation incurred by them in connection with any
claim, action, suit or proceeding (or settlement of the same) in which they
become involved by virtue of their Fund office, unless their conduct is
determined to constitute willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties, or unless it has been determined that they
have not acted in good faith in the reasonable belief that their actions were in
or not opposed to the best interests of the Funds. A determination that a person
covered by the indemnification provisions is entitled to indemnification may be
made by the court or other body before which the proceeding is brought, or by
either a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust nor parties to the proceeding or by an independent legal
counsel in a written opinion. The Funds also may advance money for these
expenses, provided that the Trustee or officer undertakes to repay the Funds if
his conduct is later determined to preclude indemnification, and that either he
provide
C-11
<PAGE>
security for the undertaking, the Trust be insured against losses resulting from
lawful advances or a majority of a quorum of disinterested Trustees, or
independent counsel in a written opinion, determines that he ultimately will be
found to be entitled to indemnification. The Trust also maintains a liability
insurance policy covering its Trustees and officers.
ITEM 28. Business and Other Connections of Investment Adviser
The only business of Janus Capital Corporation is to serve as the
investment adviser of the Registrant and as investment adviser or subadviser to
several other mutual funds and private and retirement accounts. Business
backgrounds of the principal executive officers and directors of the adviser
that also hold positions with the Registrant are included under "Officers and
Trustees" in the currently effective Statements of Additional Information of the
Registrant. The remaining principal executive officers of the investment adviser
and their positions with the adviser and affiliated entities are: Mark B.
Whiston, Vice President and Chief Marketing Officer of Janus Capital
Corporation, Director and President of Janus Capital International Ltd.;
Marjorie G. Hurd, Vice President of Janus Capital Corporation, Director and
President of Janus Service Corporation; and Stephen L. Stieneker, Assistant
General Counsel, Chief Compliance Officer and Vice President of Compliance of
Janus Capital Corporation. Mr. Michael E. Herman, a director of Janus Capital
Corporation, is Chairman of the Finance Committee (1990 to present) of Ewing
Marion Kauffman Foundation, 4900 Oak, Kansas City, Missouri 64112. Mr. Michael
N. Stolper, a director of Janus Capital Corporation, is President of Stolper &
Company, Inc., 525 "B" Street, Suite 1080, San Diego, California 92101, an
investment performance consultant. Mr. Thomas A. McDonnell, a director of Janus
Capital Corporation, is President, Chief Executive Officer and a Director of DST
Systems, Inc., 1055 Broadway, 9th Floor, Kansas City, Missouri 64105, provider
of data processing and recordkeeping services for various mutual funds, and is
Executive Vice President and a director of Kansas City Southern Industries,
Inc., 114 W. 11th Street, Kansas City, Missouri 64105, a publicly traded holding
company whose primary subsidiaries are engaged in transportation, information
processing and financial services. Mr. Landon H. Rowland, a director of Janus
Capital Corporation, is President and Chief Executive Officer of Kansas City
Southern Industries, Inc.
ITEM 29. Principal Underwriters
(a) Janus Distributors, Inc. ("Janus Distributors") does not serve as
a principal underwriter for any investment company other than
Registrant.
(b) The principal business address, positions with Janus Distributors
and positions with Registrant of David C. Tucker and Steven R.
Goodbarn, officers and directors of Janus Distributors, are
described under "Officers and Trustees" in the Statement of
Additional Information included in this Registration Statement.
The remaining principal executive officers of Janus Distributors
are Dana R. Cunningham, President, and Jennifer A. Davis,
Secretary. Mr. Cunningham and Ms. Davis do not hold any positions
with the Registrant. The principal business address of each
person is 100 Fillmore Street, Denver, Colorado 80206-4928.
(c) Not applicable.
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ITEM 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by Janus Capital Corporation and Janus Service
Corporation, both of which are located at 100 Fillmore Street, Denver, Colorado
80206-4928, and by State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts 02101, and United Missouri Bank, P.O. Box 419226, Kansas City,
Missouri 64141-6226.
ITEM 31. Management Services
The Registrant has no management-related service contract which is not
discussed in Part A or Part B of this form.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Denver, and State of Colorado, on the
18th day of December, 1996.
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
Janus Investment Fund is organized under the Agreement and Declaration of
Trust of the Registrant dated February 11, 1986, a copy of which is on file with
the Secretary of State of The Commonwealth of Massachusetts. The obligations of
the Registrant hereunder are not binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Registrant personally, but bind
only the trust property of the Registrant, as provided in the Agreement and
Declaration of Trust of the Registrant. The execution of this Amendment to the
Registration Statement has been authorized by the Trustees of the Registrant and
this Amendment to the Registration Statement has been signed by an authorized
officer of the Registrant, acting as such, and neither such authorization by
such Trustees nor such execution by such officer shall be deemed to have been
made by any of them personally, but shall bind only the trust property of the
Registrant as provided in its Declaration of Trust.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Thomas H. Bailey President December 18, 1996
Thomas H. Bailey (Principal Executive
Officer) and Trustee
/s/ Steven R. Goodbarn Vice President and December 18, 1996
Steven R. Goodbarn Chief Financial Officer
(Principal Financial
Officer)
/s/ Glenn P. O'Flaherty Treasurer and Chief December 18, 1996
Glenn P. O'Flaherty Accounting Officer
(Principal Accounting
Officer)
<PAGE>
/s/ James P. Craig, III Trustee December 18, 1996
James P. Craig, III
Gary O. Loo* Trustee December 18, 1996
Gary O. Loo
Dennis B. Mullen* Trustee December 18, 1996
Dennis B. Mullen
John W. Shepardson* Trustee December 18, 1996
John W. Shepardson
William D. Stewart* Trustee December 18, 1996
William D. Stewart
Martin H. Waldinger* Trustee December 18, 1996
Martin H. Waldinger
/s/ Steven R. Goodbarn
*By Steven R. Goodbarn
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
Exhibit 1(a) Agreement and Declaration of Trust dated
February 11, 1986
Exhibit 1(b) Certificate of Designation for Janus
Growth and Income Fund
Exhibit 1(c) Certificate of Designation for Janus
Worldwide Fund
Exhibit 4(a) Specimen Stock Certificate for Janus
Fund
Exhibit 4(b) Specimen Stock Certificate for Janus
Growth and Income Fund
Exhibit 4(c) Specimen Stock Certificate for Janus
Worldwide Fund
Exhibit 4(n) Revised Specimen Stock Certificates for
Janus Olympus Fund and Janus High-Yield
Fund.
Exhibit 4(o) Revised Specimen Stock Certificate for
Janus Equity Income Fund
Exhibit 4(p) Revised Specimen Stock Certificate for
Janus Special Situations Fund
Exhibit 5(a) Restated Investment Advisory Agreement
for Janus Fund
Exhibit 5(b) Restated Investment Advisory Agreement
for Janus Growth and Income Fund and
Janus Worldwide Fund
Exhibit 5(c) Restated Investment Advisory Agreement
for Janus Twenty Fund and Janus Venture
Fund
Exhibit 5(d) Restated Investment Advisory Agreement
for Janus Flexible Income Fund
Exhibit 5(e) Restated Investment Advisory Agreement
for Janus Enterprise Fund, Janus
Balanced and Janus Short-Term Bond Fund
<PAGE>
Exhibit 5(f) Restated Investment Advisory Agreement
for Janus Federal Tax-Exempt Fund and
Janus Mercury Fund
Exhibit 5(g) Restated Investment Advisory Agreement
for Janus Overseas Fund
Exhibit 8(a) Custodian Contract between Janus
Investment Fund and State Street Bank
and Trust Company
Exhibit 8(b) Amendment dated April 25, 1990 to State
Street Contract
Exhibit 8(c) Letter Agreement dated February 1, 1991
regarding State Street Custodian
Contract
Exhibit 10(a) Opinion and Consent of Fund Counsel for
Janus Fund.
Exhibit 10(b) Opinion and Consent of Fund Counsel for
Janus Growth and Income Fund and Janus
Worldwide Fund
Exhibit 11 Consent of Price Waterhouse
EXHIBIT 1(a)
JANUS INVESTMENT FUND
AGREEMENT AND DECLARATION OF TRUST
_________________________________________
Dated: February 11, 1986
<PAGE>
JANUS INVESTMENT FUND
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
Page
RECITALS ......................................................................1
ARTICLE I THE TRUST ...................................................... 2
Section 1.1 Name .......................................................... . 2
Section 1.2 Location ........................................................ 2
Section 1.3 Nature of Trust ................................................. 2
Section 1.4 Definitions ......................................................3
Section 1.5 Real Property to be Converted into
Personal Property ................................................7
ARTICLE II PURPOSE OF THE TRUST ..............................................8
ARTICLE III POWERS OF THE TRUSTEES ............................................8
Section 3.1 Powers in General ................................................8
(a) Investments ..................................................9
(b) Dispositions of Assets .......................................9
(c) Ownership Powers .............................................9
(d) Form of Holding .............................................10
(e) Reorganization, etc .........................................10
(f) Voting Trusts, etc ..........................................10
(g) Contracts, etc ..............................................10
(h) Guarantees, etc .............................................11
(i) Partnerships, etc ...........................................11
(j) Insurance ...................................................11
(k) Pensions, etc ...............................................11
(l) Power of Collection and Litigation ..........................11
(m) Issuance and Repurchase of Shares ...........................12
(n) Offices .....................................................12
(o) Expenses ....................................................12
(p) Agents, etc .................................................12
(q) Accounts ....................................................12
(r) Valuation ...................................................12
(s) Indemnification .............................................13
(t) General .....................................................13
Section 3.2 Borrowings; Financings; Issuance of
Securities ......................................................13
Section 3.3 Deposits ........................................................13
Section 3.4 Allocations .....................................................14
Section 3.5 Further Powers; Limitations .....................................14
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ARTICLE IV TRUSTEES AND OFFICERS ...........................................15
Section 4.1 Number, Designation, Election, Term, etc ........................15
(a) Initial Trustee ............................................15
(b) Number .....................................................15
(c) Election and Term ..........................................15
(d) Resignation and Retirement .................................16
(e) Removal ....................................................16
(f) Vacancies ..................................................16
(g) Acceptance of Trusts .......................................16
(h) Effect of Death, Resignation, etc ..........................17
(i) Conveyance .................................................17
(j) No Accounting ..............................................17
(k) Filings ....................................................17
Section 4.2 Trustees' Meetings; Participation by
Telephone, etc ..................................................18
Section 4.3 Committees; Delegation ..........................................18
Section 4.4 Advisory Trustees ...............................................18
Section 4.5 Officers ........................................................19
Section 4.6 Compensation of Trustees and Officers ...........................19
Section 4.7 Ownership of Shares and Securities of the
Trust ...........................................................19
Section 4.8 Right of Trustees and Officers to Own
Property or to Engage in Business; Authority
of Trustees to Permit Others to Do Likewise .....................20
Section 4.9 Reliance on Experts............................................ .20
Section 4.10 Surety Bonds ....................................................20
Section 4.11 Apparent Authority of Trustees and
Officers ........................................................21
Section 4.12 Other Relationships Not Prohibited ..............................21
Section 4.13 Payment of Trust Expenses .......................................22
Section 4.14 Ownership of the Trust Property .................................22
ARTICLE V DELEGATION OF MANAGERIAL RESPONSIBILITIES .......................22
Section 5.1 Appointment; Action by Less than All
Trustees ........................................................22
Section 5.2 Certain Contracts ...............................................23
(a) Advisory ....................................................23
(b) Administration ..............................................24
(c) Distribution ................................................24
(d) Custodian ...................................................24
(e) Transfer and Dividend Disbursing Agency .....................24
(f) Shareholder Servicing .......................................25
(g) Accounting ...............................................25
ARTICLE VI FUNDS AND SHARES ................................................25
Section 6.1 Description of Funds and Shares .................................25
(a) Shares; Funds; Series of Shares ............................25
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<PAGE>
(b) Establishment, etc. of Funds;
Authorization of Shares ...................................26
(c) Character of Separate Funds and Shares
Thereof ...................................................26
(d) Consideration for Shares ..................................27
Section 6.2 Establishment and Designation of the Janus
Fund; General Provisions for All Funds ........................27
(a) Assets Belonging to Funds ..................................27
(b) Liabilities of Funds .......................................28
(c) Dividends ..................................................28
(d) Liquidation ................................................29
(e) Voting .....................................................29
(f) Redemption by Shareholder ..................................29
(g) Redemption at the Option of the Trust ......................30
(h) Net Asset Value ............................................30
(i) Transfer ...................................................31
(j) Equality ...................................................31
(k) Rights of Fractional Shares ................................31
(l) Conversion Rights ..........................................31
Section 6.3 Ownership of Shares ............................................31
Section 6.4 Investments in the Trust .......................................32
Section 6.5 No Preemptive Rights ...........................................32
Section 6.6 Status of Shares ...............................................32
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS .......................33
Section 7.1 Voting Powers ..................................................33
Section 7.2 Number of Votes and Manner of Voting; Proxies ..................33
Section 7.3 Meetings .......................................................34
Section 7.4 Record Dates ...................................................34
Section 7.5 Quorum and Required Vote .......................................35
Section 7.6 Action by Written Consent ......................................35
Section 7.7 Inspection of Records ..........................................35
Section 7.8 Additional Provisions ..........................................35
ARTICLE VIII LIMITATION OF LIABILITY; INDEMNIFICATION .......................35
Section 8.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice ................................................36
Section 8.2 Trustees' Good Faith Action; Expert Advice;
No Bond or Surety ..............................................36
Section 8.3 Indemnification of Shareholders ................................37
Section 8.4 Indemnification of Trustees, Officers, etc .....................37
Section 8.5 Compromise Payment .............................................38
Section 8.6 Indemnification Not Exclusive, etc .............................39
Section 8.7 Liability of Third Persons Dealing with
Trustees .......................................................39
ARTICLE IX DURATION; REORGANIZATION; AMENDMENTS ...........................39
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Section 9.1 Duration and Termination of Trust ..............................39
Section 9.2 Reorganization .................................................40
Section 9.3 Amendments; etc ................................................40
Section 9.4 Filing of Copies of Declaration and
Amendments .....................................................41
ARTICLE X MISCELLANEOUS ..................................................42
Section 10.1 Governing Law ..................................................42
Section 10.2 Counterparts ...................................................42
Section 10.3 Reliance by Third Parties ......................................42
Section 10.4 References; Headings ...........................................42
Section 10.5 Provisions in Conflict with Law
or Regulations ................................................42
Section 10.6 Use of the Name "Janus" ........................................43
SIGNATURES ...................................................................43
ACKNOWLEDGEMENTS .............................................................44
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<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
JANUS INVESTMENT FUND
This AGREEMENT AND DECLARATION OF TRUST, made at Boston, Massachusetts,
this 11th day of February, 1986, by and between the Settlor and the Trustee
whose signature is set forth below (the "INITIAL TRUSTEE"),
W I T N E S S E T H T H A T:
WHEREAS, Bryan G. Tyson, an individual residing in Brookline, Massachusetts
(the "Settlor"), proposed to deliver to the Initial Trustee the sum of one
hundred dollars ($100.00) lawful money of the United States of America in trust
hereunder and to authorize the initial Trustee and all other Persons acting as
Trustees hereunder to employ such funds, and any other funds coming into their
hands or the hands of their successor or successors as such Trustees, to carry
on the business of an investment company, and as such of buying, selling,
investing in or otherwise dealing in and with stocks, bonds, debentures,
warrants, options, futures contracts and other securities and interests therein,
or calls or puts with respect to any of the same, or such other and further
investment media and other property as the Trustees may deem advisable, which
are not prohibited by law or the terms of this Declaration; and
WHEREAS, the Initial Trustee is willing to accept sum, together with any
and all additions thereto and the income or increments thereof, upon the terms,
conditions and trusts hereinafter set forth; and
WHEREAS, the assets held by the Trustees may be divided into separate
funds, each with its own separate investment portfolio, investment objectives,
policies and purposes, and that the beneficial interest in each such Fund shall
be divided into transferable Shares of Beneficial Interest, a separate Series of
Shares for each Fund, all in accordance with the provisions hereinafter set
forth; and
WHEREAS, it is desired that the trust established hereby (the "Trust") be
managed and operated as a trust with transferable shares under the laws of
Massachusetts, of the type commonly known as and referred to as a Massachusetts
business trust, in accordance with the provisions hereinafter set forth,
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<PAGE>
NOW, THEREFORE, the Initial Trustee, for himself and his successors as
Trustees, hereby declares, and agrees with the Settlor, for himself and for all
Persons who shall hereafter become holders of Shares of Beneficial Interest of
the Trust, of any Series, that the Trustees will hold the sum delivered to them
upon the execution hereof, and all other and further cash, securities and other
property of every type and description which they may in any way acquire in
their capacity as such Trustees, together with the income therefrom and the
proceeds thereof, IN TRUST NEVERTHELESS, to manage and dispose of the same for
the benefit of the holders from time to time of the Shares of Beneficial
Interest of the several Series being issued and to be issued hereunder and in
the manner and subject to the provisions hereof, to wit:
ARTICLE I
THE TRUST
Section 1.1 NAME. The name of the Trust shall be
"JANUS INVESTMENT FUND,"
and so far as may be practicable the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which name
(and the word "TRUST" wherever used in this Agreement and Declaration of Trust,
except where the context otherwise requires) shall refer to the Trustees in
their capacity as Trustees, or to the holders of the Shares of Beneficial
Interest of the Trust, of any Series. If the Trustees determine that the use of
such name is not practicable, legal or convenient at any time or in any
jurisdiction, or if the Trust is required to discontinue the use of such name
pursuant to Section 10.5 hereof, then subject to that Section, the Trustees may
use such other designation, or they may adopt such other name for the Trust as
they deem proper, and the Trust may hold property and conduct its activities
under such designation or name.
Section 1.2 LOCATION. The Trust shall have an office in Boston,
Massachusetts, unless changed by the Trustees to another location in
Massachusetts or elsewhere, but such office need not be the sole or principal
office of the Trust. The Trust may have such other offices or places of business
as the Trustees may from time to time determine to be necessary or expedient.
Section 1.3 NATURE OF TRUST. The Trust shall be a trust with transferable
shares under the laws of the Commonwealth of Massachusetts, of the type referred
to in Section 1 of Chapter 182 of the Massachusetts General Laws and commonly
termed a Massachusetts business trust. The Trust is not intended to be, shall
not be deemed to be, and shall not be treated as, a general partnership, limited
partnership, joint venture,
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<PAGE>
corporation or joint stock company. The Shareholders shall be beneficiaries, and
their relationship to the Trustees shall be solely in that capacity in
accordance with the rights conferred upon them hereunder.
Section 1.4 DEFINITIONS. As used in this Agreement and Declaration of
Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:
"ACCOUNTING AGENT" shall have the meaning designated in Section 5.2(g)
hereof.
"ADMINISTRATOR" shall have the meaning designated in Section 5.2(b) hereof.
"AFFILIATED PERSON" shall have the meaning assigned to it in the 1940 Act
"BYLAWS" shall mean the Bylaws of the Trust, as amended from time to time
"CERTIFICATE OF DESIGNATION" shall have the meaning designated in Section
6.1 hereof.
"CERTIFICATE OF TERMINATION" shall have the meaning designated in Section
6.1 hereof.
"COMMISSION" shall have the same meaning as in the 1940 Act.
"CONTRACTING PARTY" shall have the meaning designated in the preamble to
Section 5.2 hereof.
"COVERED PERSON" shall have the meaning designated in Section 8.4 hereof.
"CUSTODIAN" shall have the meaning designated in Section 5.2(d) hereof.
"DECLARATION" and "DECLARATION OF TRUST" shall mean this Agreement and
Declaration of Trust and all amendments or modifications thereof as from time to
time in effect. References in this Agreement and Declaration of Trust to
"HEREOF," "HEREIN" and "HEREUNDER" shall be deemed to refer to the Declaration
of Trust generally, and shall not be limited to the particular text, Article or
Section in which such words appear.
"DISABLING CONDUCT" shall have the meaning designated in Section 8.4
hereof.
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<PAGE>
"DISTRIBUTOR" shall have the meaning designated in Section 5.2(c) hereof.
"DIVIDEND DISBURSING AGENT" shall have the meaning designated in Section
5.2(e) hereof.
"FUND" or "FUNDS" shall mean one or more of the separate components of the
assets of the Trust which are now or hereafter established and designated under
or in accordance with the provisions of Article VI hereof.
"FUND ASSETS" shall have the meaning defined in Section 6.2(a) hereof.
"GENERAL ITEMS" shall have the meaning defined in Section 6.2(a) hereof.
"INITIAL TRUSTEE" shall have the meaning defined in the preamble hereto.
"INVESTMENT ADVISER" shall have the meaning stated in Section 5.2(a)
hereof.
"MAJORITY OF THE TRUSTEES" shall mean a majority of the Trustees in office
at the time in question. At any time at which there shall be only one (1)
Trustee in office, such term shall mean such Trustee.
"MAJORITY SHAREHOLDER VOTE," as used with respect to the election of any
Trustee at a meeting of Shareholders, shall mean the vote for the election of
such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and entitled to vote
thereon, provided that a quorum (as determined in accordance with the Bylaws) is
present, and as used with respect to any other action required or permitted to
be taken by Shareholders, shall mean the vote for such action of the holders of
that majority of all outstanding Shares (or, where a separate vote of Shares of
any particular Series is to be taken, the affirmative vote of that majority of
the outstanding Shares of that Series) of the Trust which consists of: (i) a
majority of all Shares (or of Shares of the particular Series) represented in
person or by proxy and entitled to vote on such action at the meeting of
Shareholders at which such action is to be taken, provided that a quorum (as
determined in accordance with the Bylaws) is present; or (ii) if such action is
to be taken by written consent of Shareholders, a majority of all Shares (or of
Shares of the particular Series) issued and outstanding and entitled to vote on
such action; PROVIDED, that (iii) as used with respect to any action requiring
the affirmative vote of "a majority of the outstanding voting securities," as
the quoted phrase is defined
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<PAGE>
in the 1940 Act, of the Trust or of any Fund, "Majority Shareholder Vote" means
the vote for such action at a meeting of Shareholders of the smallest majority
of all outstanding Shares of the Trust (or of Shares of the particular Fund)
entitled to vote on such action which satisfies such 1940 Act voting
requirement.
"1940 ACT" shall mean the provisions of the Investment Company Act of 1940
and the rules and regulations thereunder, both as amended from time to time, and
any order or orders thereunder which may from time to time be applicable to the
Trust.
"PERSON" shall mean and include individuals, as well as corporations,
limited partnerships, general partnerships, joint stock companies, joint
venture, associations, banks, trust companies, land trusts, business trusts or
other organizations established under the laws of any jurisdiction, whether or
not considered to be legal entities, and governments and agencies and political
subdivisions thereof.
"PRINCIPAL UNDERWRITER" shall have the meaning designated in Section 5.2(c)
hereof.
"PROSPECTUS," as used with respect to any Fund or Series of Shares, shall
mean the prospectus relating to such Fund or Series which constitutes part of
the currently effective Registration Statement of the Trust under the Securities
Act of 1933, as such prospectus may be amended or supplemented from time to
time.
"SECURITIES" shall mean any and all bills, notes, bonds, debentures or
other obligations or evidences of indebtedness, certificates of deposit,
bankers' acceptances, commercial paper, repurchase agreements or other money
market instruments; stocks, shares or other equity ownership interests; and
warrants, options, futures contracts or other instruments representing rights to
subscribe for, purchase, receive or otherwise acquire or to sell, transfer,
assign or otherwise dispose of, and scrip, certificates, receipts or other
instruments evidencing any ownership rights or interests in, any of the
foregoing and "when issued" and "delayed delivery " contracts for securities,
issued, guaranteed or sponsored by any governments, political subdivisions or
governmental authorities, agencies or instrumentalities, by any individuals,
firms, companies, corporations, syndicates, associations or trusts, or by any
other organizations or entities whatsoever, irrespective of their forms or the
names by which they may be described, whether or not they be organized and
operated for profit, and whether they be domestic or foreign with respect to The
Commonwealth of Massachusetts or the United States of America.
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<PAGE>
"SECURITIES OF THE TRUST" shall mean any Securities issued by the Trust.
"SERIES" shall mean one or more of the series of Shares authorized by the
Trustees to represent the beneficial interest in one or more of the Funds.
"SETTLOR" shall have the meaning stated in the first "Whereas" clause set
forth above.
"SHAREHOLDER" shall mean as of any particular time any Person shown of
record at such time on the books of the Trust as a holder of outstanding Shares
of any Series, and shall include a pledgee into whose name any such Shares are
transferred in pledge.
"SHAREHOLDER SERVICING AGENT" shall have the meaning designated in Section
5.2(f) hereof.
"SHARES" shall mean the transferable units into which the beneficial
interest in the Trust and each Fund of the Trust (as the context may require)
shall be divided from time to time, and includes fractions of Shares as well as
whole Shares. All references herein to "Shares" which are not accompanied by a
reference to any particular Series or Fund shall be deemed to apply to
outstanding Shares without regard to Series.
"SINGLE CLASS VOTING," as used with respect to any matter to be acted upon
at a meeting or by written consent of Shareholders, shall mean a style of voting
in which each holder of one or more Shares shall be entitled to one vote on the
matter in question for each Share standing in his name on the records of the
Trust, irrespective of Series, and all outstanding Shares of all Series vote as
a single class.
"STATEMENT OF ADDITIONAL INFORMATION," as used with respect to any Fund or
Series of Shares, shall mean the statement of additional information relating to
such Fund or Series, which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act of 1933, as such
statement of additional information may be amended or supplemented from time to
time.
"TRANSFER AGENT" shall have the meaning defined in Section 5.2(e) hereof.
"TRUST" shall have the meaning stated in the fourth "Whereas" clause set
forth above.
"TRUST PROPERTY" shall mean, as of any particular time, any and all
property which shall have been transferred,
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<PAGE>
conveyed or paid to the Trust or the Trustees, and all interest, dividends,
income, earnings, profits and gains therefrom, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds in whatever
from the same may be, and which at such time is owned or held by, or for the
account of, the Trust or the Trustees, without regard to the Fund to which such
property is allocated.
"TRUSTEES" shall mean, collectively, the Initial Trustee, so long as he
shall continue in office, and all other individuals who at the time in question
have been duly elected or appointed as Trustees of the Trust in accordance with
the provisions hereof and who have qualified and are then in office. At any time
at which there shall be only one (1) Trustee in office, such term shall mean
such single Trustee.
Section 1.5 REAL PROPERTY TO BE CONVERTED INTO PERSONAL PROPERTY.
Notwithstanding any other provision hereof, any real property at any time
forming part of the Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and in such manner and
upon such terms as the Trustees shall approve, but the Trustees shall have power
until the termination of this Trust to postpone such conversion as long as they
in their uncontrolled discretion shall think fit, and for the purpose of
determining the nature of the interest of the Shareholders therein, all such
real proeprty shall at all times be considered as personal property.
ARTICLE II
PURPOSE OF THE TRUST
The purpose of the Trust shall be to engage in the business of being an
investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and otherwise disposing of,
and turning to account, realizing upon and generally dealing in and with, in any
manner, (a) Securities of all kinds, (b) precious metals and other minerals,
contracts to purchase and sell, and other interests of every nature and kind in
, such metals or minerals, and (c) rare coins and other numismatic items, and
all as the Trustees in their discretion shall determine to be necessary,
desirable or appropriate, and to exercise and perform any and every act, thing
or power necessary, suitable or desireable for the accomplishment of such
purpose, the attainment of any of the objects or the furtherance of any of the
powers given hereby which are lawful purposes, objects or powers of a trust with
transferable shares of the type commonly
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termed a Massachusetts business trust; and to do every other act or acts or
thing or things incidental or appurtenant to or growing out of or in connection
with the aforesaid objects, purposes or powers, or any of them, which a trust of
the type commonly termed a Massachusetts business trust is not now or hereafter
prohibited from doing, exercising or performing.
ARTICLE III
POWERS OF THE TRUSTEES
Section 3.1 POWERS IN GENERAL. The Trustees shall have, without other or
further authorization, full, entire, exclusive and absolute power, control and
authority over, and management of, the business of the Trust and over the Trust
Property, to the same extent as if the Trustees were the sole owners of the
business and property of the Trust in their own right, and with such powers of
delegation as may be permitted by this Declaration, subject only to such
limitations as may be expressly imposed by this Declaration of Trust or by
applicable law. The enumeration of any specific power or authority herein shall
not be construed as limiting the aforesaid power or authority or any specific
power or authority. Without limiting the foregoing, the Trustees may adopt
Bylaws not inconsistent with this Declaration of Trust providing for the conduct
of the business and affairs of the Trust and may amend and repeal them to the
extent that such Bylaws do not reserve that right to the Shareholders; they may
select, and from time to time change, the fiscal year of the Trust; they may
adopt and use a seal for the Trust, PROVIDED, that unless otherwise required by
the Trustees, it shall not be necessary to place the seal upon, and its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust; they may from time to time
in accordance with the provisions of Section 6.1 hereof establish one or more
Funds to which they may allocate such of the Trust Property, subject to such
liabilities, as they shall deem appropriate, each such Fund to be operated by
the Trustees as a separate and distinct investment medium and with separately
defined investment objectives and policies and distinct investment purposes, all
as established by the Trustees, or from time to time changed by them or by the
shareholders of said Fund; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee;
they may appoint from their own number, and terminate, any one or more
committees consisting of one or more Trustees, including without implied
limitation an Executive Committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 5.2 they may employ one or more
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Investment Advisers, Administrators and Custodians and may authorize any
Custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the Central handling of Securities,
retain Transfer, Dividend Disbursing, Accounting or Shareholder Servicing Agents
or any of the foregoing, provide for the distribution of Shares by the Trust
directly to the public or through one or more Distributors, Principal
Underwriters or otherwise, set record dates or times for the determination of
Shareholders entitled to participate in, benefit from or act with respect to
various matters; and in general they may delegate to any officer of the Trust,
to any Committee of the Trustees and to any employee, Investment Adviser,
Administrator, Distributor, Custodian, Transfer Agent, Dividend Disbursing
Agent, or any other agent or consultant of the Trust, such authority, powers,
functions and duties as they consider desirable or appropriate for the conduct
of the business and affairs of the Trust, including without implied limitation
the power and authority to act in the name of the Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees. Without limiting
the foregoing and to the extent not inconsistent with the 1940 Act or other
applicable law, the Trustees shall have power and authority:
(a) INVESTMENTS. To invest and reinvest cash and other property;
to buy, for cash or on margin, and otherwise acquire and hold,
Securities created or issued by any Persons, including Securities
maturing after the possible termination of the Trust; to make payment
therefor in any lawful manner in exchange for any of the Trust
Property; and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) DISPOSITION OF ASSETS. Upon such terms and conditions as they
deem best, to lend, sell, exchange, mortgage, pledge, hypothecate,
grant security interests in, encumber, negotiate, convey, transfer or
otherwise dispose of, and to trade in, any and all of the Trust
Property, free and clear of all trusts, for cash or on terms, with or
without advertisement, and on such terms as to payment, security or
otherwise, all as they shall deem necessary or expedient;
(c) OWNERSHIP POWERS. To vote or give assent, or exercise and any
all other rights, powers and privileges of ownership with respect to,
and to perform any and all duties and obligations as owners of, any
Securities or other property forming part of the Trust Property, the
same as any individual might do; to exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership
of Securities, and to receive powers of attorney
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from, and to execute and deliver proxies or powers of attorney to, such
Person or Persons as the Trustees shall deem proper, receiving from or
granting to such Person or Persons such power and discretion with
relation to Securities or other property of the Trust, all as the
Trustees shall deem proper;
(d) FORM OF HOLDING. To hold any Security or other property in a
form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust,
or of the Fund to which such Securities or property belong, or in the
name of a Custodian, subcustodian or other nominee or nominees, or
otherwise, upon such terms, in such manner or with such powers, as the
Trustees may determine, and with or without indicating any trust or
the interest of the Trustees therein;
(e) REORGANIZATION, ETC. To consent to or participate in any plan
for the reorganization, consolidation or merger of any corporation or
issuer, any Security of which is or was held in the Trust or any Fund;
to consent to any contract, lease, mortgage, purchase or sale of
property by such corporations or issuer, and to pay calls or
subscriptions with respect to any Security forming part of the Trust
Property;
(f) VOTING TRUSTS, ETC. To join with other holders of any
Securities in acting through a committee, depository, voting trustee
or otherwise, and in that connection to deposit any Security with, or
transfer any Security to, any such committee, depository or trustee,
and to delegate to them such power and authority with relation to any
Security (whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion of
the expenses and compensation of such committee, depository or trustee
as the Trustees shall deem proper;
(g) CONTRACTS, ETC. To enter into, make and perform all such
obligations, contracts, agreements and undertakings of every kind and
description, with any Person or Persons, as the Trustees shall in
their discretion deem expedient in the conduct of the business of the
Trust, for such terms as they shall see fit, whether or not extending
beyond the term of office of the Trustees, or beyond the possible
expiration of the Trust; to amend, extend, release or cancel any such
obligations, contracts, agreements or understandings; and to execute,
acknowledge, deliver and record all written instruments which they may
deem necessary or expedient in the exercise of their powers;
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(h) GUARANTEES, ETC. To endorse or guarantee the payment of any
notes or other obligations of any Person; to make contracts of
guaranty or suretyship, or otherwise assume liability for payment
thereof; and to mortgage and pledge the Trust Property or any part
thereof to secure any of or all such obligations;
(i) PARTNERSHIPS, ETC. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) INSURANCE. To purchase and pay for entirely out of Trust
Property such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
consultants, Investment Advisers, managers, Administrators,
Distributors, Principal Underwriters, or other independent
contractors, or any thereof (or any Person connected therewith), of
the Trust, individually, against all claims and liabilities of every
nature arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have been
taken or omitted by any such Person in any such capacity, including
any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify
such Person against such liability;
(k) PENSIONS, ETC. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the
Trust;
(1) POWER OF COLLECTION AND LITIGATION. To collect, sue for and
receive all sums of money coming due to the Trust, to employ counsel,
and to commence, engage in, prosecute, intervene in, join, defend,
compound, compromise, adjust or abandon, in the name of the Trust, any
and all actions, suits, proceedings, disputes, claims, controversies,
demands or other litigation or legal proceedings relating to the
Trust, the business of the Trust, the Trust Property, or the Trustees,
officers, employees, agents and other independent contractors of the
Trust, in their capacity as such, at law or in equity, or before any
other bodies or tribunals, and to compromise,
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arbitrate or otherwise adjust any dispute to which the Trust may be a
party, whether or not any suit is commence or any claim shall have been
made or asserted;
(m) ISSUANCE AND REPURCHASE OF SHARES. To issue, sell,
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue,
dispose of, transfer, and otherwise deal in Shares of any Series, and,
subject to Article VI hereof, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares of any
Series, any of the Fund Assets belonging to the Fund to which such
Series relates, whether constituting capital or surplus or otherwise,
to the full extent now or hereafter permitted by applicable law;
PROVIDED, that any Shares belonging to the Trust shall not be voted,
directly or indirectly;
(n) OFFICES. To have one or more offices, and to carry on all or
any of the operations and business of the Trust, in any of the States,
Districts or Territories of the United States, and in any and all
foreign countries, subject to the laws of such State, District,
Territory or country;
(o) EXPENSES. To incur and pay any and all such expenses and
charges as they may deem advisable (including, without limitation,
appropriate fees to themselves as Trustees), and to pay all such sums
of money for which they may be held liable by way of damages, penalty,
fine or otherwise;
(p) AGENTS, ETC. To retain and employ any and all such servants,
agents, employees, attorneys, brokers, investment advisers,
accountants, escrow agents, depositories, consultants, ancillary
trustees, custodians, agents for collection, insurers, banks and
officers, as they think best for the business of the Trust or any
Fund, to supervise and direct the acts of any of the same, and to fix
and pay their compensation and define their duties;
(q) ACCOUNTS. To determine, and from time to time change, the
method or form in which the accounts of the Trust shall be kept;
(r) VALUATION. Subject to the requirements of the 1940 Act, to
determine from time to time the value of all or any part of the Trust
Property and of any services, Securities, property or other
consideration to be furnished to or acquired by the Trust, and from
time to time to revalue all or any part of the Trust Property in
accordance with such appraisals or other information as is, in the
Trustees' sole judgment, necessary and satisfactory;
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(s) INDEMNIFICATION. In addition to the mandatory indemnification
provided for in Article VIII hereof and to the extent permitted by
law, to indemnify or enter into agreements with respect to
indemnification with any Person with whom this Trust has dealings,
including, without limitation, any independent contractor, to such
extent as the Trustees shall determine; and
(t) GENERAL. To do all such other acts and things and to conduct,
operate, carry on and engage in such other lawful businesses or
business activities as they shall in their sole and absolute
discretion consider to be incidental to the business of the Trust or
any Fund as an investment company, and to exercise all powers which
they shall in their discretion consider necessary, useful or
appropriate to carry on the business of the Trust or any Fund, to
promote any of the purposes for which the Trust is formed, whether or
not such things are specifically mentioned herein, in order to protect
or promote the interests of the Trust or any Fund, or otherwise to
carry out the provisions of this Declaration.
Section 3.2 BORROWINGS; FINANCINGS; ISSUANCE OF SECURITIES. Subject to the
requirements of the 1940 Act, the Trustees have power to borrow or in any other
manner raise such sum or sums of money, and to incur such other indebtedness for
goods or services, or for or in connection with the purchase or other
acquisition of property, as they shall deem advisable for the purposes of the
Trust, in any manner and on any terms, and to evidence the same by negotiable or
nonnegotiable Securities which may mature at any time or times, even beyond the
possible date of termination of the Trust; to issue Securities of any type for
such cash, property, services or other considerations, and at such time or times
and upon such terms, as they may deem advisable; and to reacquire any such
Securities. Any such Securities of the Trust may, at the discretion of the
Trustees, be made convertible into Shares of any Series, or may evidence the
right to purchase, subscribe for or otherwise acquire Shares of any Series, at
such times and on such terms as the Trustees may prescribe.
Section 3.3 DEPOSITS. Subject to the requirements of the 1940 Act, the
Trustees shall have power to deposit any moneys or Securities included in the
Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest. Such deposits are
to be subject to withdrawal in such manner as the Trustees may determine, and
the Trustees shall have no responsibility for any loss which may occur by reason
of the failure of the bank, trust company or other banking institution with
which any such moneys
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or Securities have been deposited, other than liability based on their gross
negligence or willful fault.
Section 3.4 ALLOCATIONS. The Trustees shall have power to determine whether
moneys or other assets received by the Trust shall be charged or credited to
income or capital, or allocated between income and capital, including the power
to amortize or fail to amortize any part or all of any premium or discount, to
treat any part of all of the profit resulting from the maturity or sale of any
asset, whether purchased at a premium or at a discount, as income or capital, or
to apportion the same between income and capital, or to apportion the sale price
of any asset between income and capital, and to determine in what manner any
expenses or disbursements are to be borne as between income and capital, whether
or not in the absence of the power and authority conferred by this Section 3.4
such assets would be regarded as income or as capital or such expense or
disbursement would be charged to income or to capital; to treat any dividend or
other distribution on any investment as income or capital, or to apportion the
same between income and capital; to provide or fail to provide reserves,
including reserves for depreciation, amortization or obsolescence in respect of
any Trust Property in such amounts and by such methods as they shall determine;
to allocate less than all of the consideration paid for Shares of any Series to
the shares of beneficial interest account of the Fund to which such Shares
relate and to allocate the balance thereof to paid-in capital of that Fund, and
to reallocate such amounts from time to time; all as the Trustees may reasonably
deem proper.
Section 3.5 FURTHER POWERS; LIMITATIONS. The Trustees shall have power to
do all such other matters and things, and to execute all such instruments, as
they deem necessary, proper or desirable in order to carry out, promote or
advance the interests of the Trust, although such matters or things are not
herein specifically mentioned. Any determination as to what is in the interests
of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration of Trust, the presumption shall be
in favor of a grant of power to the Trustees. The Trustees shall not be required
to obtain any court order to deal with the Trust Property. The Trustees may
limit their right to exercise any of their powers through express restrictive
provisions in the instruments evidencing or providing the terms for any
Securities of the Trust or in other contractual instruments adopted on behalf of
the Trust.
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ARTICLE IV
TRUSTEES AND OFFICERS
Section 4.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) INITIAL TRUSTEE. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which he accepts
such Trusteeship and agrees to the provisions hereof, the individual
whose signature is affixed hereto as Initial Trustee shall become the
Initial Trustee hereof.
(b) NUMBER. The Trustees serving as such, whether named above
or hereafter becoming Trustees, may increase (to not more than fifteen
(15)) or decrease the number of Trustees to a number other than the
number theretofore determined by a written instrument signed by a
Majority of the Trustees (or by an officer of the Trust pursuant to the
vote of a Majority of the Trustees). No decrease in the number of
Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 4.1.
(c) ELECTION AND TERM. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of Shareholders
immediately prior to the date that the Trust acquires assets in
addition to the one hundred dollars contributed by the Settlor and the
term of office of any Trustees in office before such election shall
terminate at the time of such election. Subject to Section 16(a) of the
1940 Act and to the preceding sentence of this subsection (c), the
Trustees shall have the power to set and alter the terms of office of
the Trustees, and at any time to lengthen or shorten their own terms or
make their terms of unlimited duration, to elect their own successors
and, pursuant to subsection (f) of this Section 4.1, to appoint
Trustees to fill vacancies; PROVIDED, that Trustees shall e elected by
a Majority Shareholder Vote at any such time or times as the Trustees
shall determine that such action is required under Section 16(a) of the
1940 Act or, if not so required, that such action is advisable; and
FURTHER PROVIDED, that, after the initial election of Trustees by the
Shareholders, the term of office of any incumbent Trustee shall
continue until the termination of this Trust or his earlier death,
resignation, retirement, bankruptcy, adjudicated incompetency or other
incapacity or removal, or if not so terminated, until the election of
such Trustee's successor
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in office has become effective in accordance with this
subsection (c).
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his
trust or retire as a Trustee, by a written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust, and
such resignation or retirement shall take effect upon such delivery or
upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed with or without cause
at any time: (i) by vote of Shareholders holding not less than a
majority of the Shares of each Series then outstanding, cast in person
or by proxy at any meeting called for the purpose; or (ii) by a written
declaration signed by Shareholders holding not less than a majority of
the Shares of each Series then outstanding and filed with the Trust's
Custodian.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting
from any reason, including an increase in the number of Trustees, may
(but need not unless required by the 1940 Act) be filled by a Majority
of the Trustees through the appointment in writing of such other
individual as such remaining Trustees in their discretion shall
determine; PROVIDED, that after filling any such vacancy, at least
two-thirds of the Trustees then holding office shall have been elected
to their offices by the Shareholders; and, PROVIDED FURTHER, that if
there shall be not Trustees in office, such vacancy or vacancies shall
be filled by vote of the Shareholders. Any such appointment or election
shall be effective upon such individual's written acceptance of his
appointment as a Trustee and his agreement to be bound by the
provisions of this Declaration of Trust, except that any such
appointment in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in the number of Trustees to be
effective at a later date shall become effective only at or after the
effective date of said retirement, resignation or increase in the
number of Trustees.
(g) ACCEPTANCE OF TRUSTS. Any individual appointed as a
Trustee under subsection (f), and any individual elected as a Trustee
under subsection (c), of this Section 4.1 who was not, immediately
prior to such election, acting as a Trustee, shall accept such
appointment or election in writing and agree in such writing to be
bound by the provisions hereof, and whenever such individual shall have
executed such writing and any conditions to such appointment or
election shall have been satisfied, such individual shall become a
Trustee and the Trust Property shall vest in the
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new Trustee, together with the continuing Trustees, without
any further act or conveyance.
(h) EFFECT OF DEATH, RESIGNATION, ETC. No vacancy, whether
resulting from the death, resignation, retirement, removal or
incapacity of any Trustee, an increase in the number of Trustees or
otherwise, shall operate to annul or terminate the Trust hereunder or
to revoke or terminate any existing agency or contract created or
entered into pursuant to the terms of this Declaration of Trust. Until
such vacancy is filled as provided in this Section 4.1, the Trustees in
office (if any), regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon
the Trustees by this Declaration. A written instrument certifying the
existence of such vacancy signed by a Majority of the Trustees shall be
conclusive evidence of the existence of such vacancy.
(i) CONVEYANCE. In the event of the resignation or removal of
a Trustee or his otherwise ceasing to be a Trustee, such former Trustee
or his legal representative shall, upon request of the continuing
Trustees, execute and deliver such documents as may be required for the
purpose of consummating or evidencing the conveyance to the Trust or
the remaining Trustees of any Trust Property held in such former
Trustee's name, but the execution and delivery of such documents shall
not be requisite to the vesting of title to the Trust Property in the
remaining Trustees, as provided in subsection (g) of this Section 4.1
and in Section 4.13 hereof.
(j) NO ACCOUNTING. Except to the extent required by the 1940
Act or under circumstances which would justify his removal for cause,
no Person ceasing to be a Trustee (nor the estate of any such Person)
shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
(k) FILINGS. Whenever there shall be a change in the
composition of the Trustees, the Trust shall cause to be filed in the
office of the Secretary of The Commonwealth of Massachusetts and in
each other place where the Trust is required to file amendments to this
Declaration a copy of (i) the instrument by which (in the case of the
appointment of a new Trustee, or the election of an individual who was
not theretofore a Trustee) the new Trustee accepted his appointment or
election and agreed to be bound by the terms of this Declaration, or
(in the case of a resignation) by which the former Trustee resigned as
such, together in either case with a certificate of one of the other
Trustees as to the circumstances of such election, appointment or
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resignation, or (ii) in the case of the removal or death of
a Trustee, a certificate of one of the Trustees as to the
fact of such removal or death.
Section 4.2 TRUSTEES' MEETINGS; PARTICIPATION BY TELEPHONE, ETC. An annual
meeting of Trustees shall be held each fiscal year of the Trust and special
meetings may be held from time to time, in each case, upon the call of such
officers as may be thereunto authorized by the Bylaws or vote of the Trustees,
or by any two (2) Trustees, or pursuant to a vote of the Trustees adopted at a
duly constituted meeting of the Trustees, and upon such notice as shall be
provided in the Bylaws. The Trustees may act with or without a meeting, and a
written consent to any matter, signed by a Majority of the Trustees, shall be
equivalent to action duly taken at a meeting of the Trustees, duly called and
held. Except as otherwise provided by the 1940 Act or other applicable law, or
by this Declaration of Trust or the Bylaws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum, consisting of at least a Majority of the Trustees, being
present), within or without Massachusetts. If authorized by the Bylaws, all or
any one or more Trustees may participate in a meeting of the Trustees or any
Committee thereof by means of conference telephone or similar means of
communication by means of which all Persons participating in the meeting can
hear each other, and participation in a meeting pursuant to such means of
communication shall constitute presence in person at such meeting. The minutes
of any meeting thus held shall be prepared in the same manner as a meeting at
which all participants were present in person.
Section 4.3 COMMITTEES; DELEGATION. The Trustees shall have power,
consistent with their ultimate responsibility, to supervise the affairs of the
Trust, to delegate from time to time to an Executive committee, and to one or
more other Committees, or to any single Trustee or to any other Person, the
doing of such things and the execution of such deeds or other instruments,
either in the name of the Trust or the names of the Trustees or as their
attorney or attorneys in fact, or otherwise as the Trustees may from time to
time deem expedient, and any agreement, deed, mortgage, lease or other
instrument or writing executed by the Trustee or Trustees or other Person to
whom such delegation was made shall be valid and binding upon the Trustees and
upon the Trust.
Section 4.4 ADVISORY TRUSTEES. The Trustees may appoint one or more
Advisory Trustees for the purpose of advising the Trustees in such matters as
the Trustees may request. Such
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Advisory Trustees shall meet and confer at such times and places as the Trustees
may specify, including, if the Trustees so request, with the Trustees at annual
and special meetings of the Trustees, provided that no Advisory Trustee shall be
entitled to vote at any meeting of the Trustees and the actions or decisions of
Advisory Trustees shall be advisory only. Advisory Trustees shall be entitled to
such compensation, if any, as may be determined by the Trustees.
Section 4.5 OFFICERS. The Trustees shall annually elect such offices or
agents who shall have such powers, duties and responsibilities as the Trustees
may deem to be advisable, and as they shall specify by resolution or in the
Bylaws. Except as may be provided in the Bylaws, any officer elected by the
Trustees may be removed at any time with or without cause. Any two (2) or more
offices may be held by the same individual.
Section 4.6 COMPENSATION OF TRUSTEES AND OFFICERS. The Trustees shall fix
the compensation of all officers and Trustees. Without limiting the generality
of any of the provisions hereof, the Trustees shall be entitled to receive
reasonable compensation for their general services as such, and to fix the
amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including legal, accounting,
or other professional services, as they in good faith may deem reasonable. No
Trustee or officer resigning and (except where a right to receive compensation
for a definite future period shall be expressly provided in a written agreement
with the Trust, duly approved by the Trustees) no Trustee or office removed
shall have any right to any compensation as such Trustee or officer for any
period following his resignation or removal, or any right to damages on account
of his removal, whether his compensation be by the month, by the year or
otherwise.
Section 4.7 OWNERSHIP OF SHARES AND SECURITIES OF THE TRUST. Any Trustee,
and any officer, employee or agent of the Trust, and any organization in which
any such Person is interested, may acquire, own, hold and dispose of Shares of
any Series and other Securities of the Trust for his or its individual account,
and may exercise all rights of a holder of such Shares or Securities to the same
extent and in the same manner as if such Person were not such a Trustee,
officer, employee or agent of the Trust; subject, in the case of Trustees and
officers, to the same limitations as directors or officers (as the case may be)
of a Massachusetts business corporation; and the Trust may issue and sell or
cause to be sold and may purchase any such Shares or other Securities from any
such Person or any such organization, subject only to the general limitations,
restrictions or other provisions applicable to the sale or
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purchase of Shares of such Series or other Securities of the
Trust generally.
Section 4.8 RIGHT OF TRUSTEES AND OFFICERS TO OWN PROPERTY OR TO ENGAGE IN
BUSINESS; AUTHORITY OF TRUSTEES TO PERMIT OTHERS TO DO LIKEWISE. The Trustees,
in their capacity as Trustees, and (unless otherwise specifically directed by
vote of the Trustees) the officers of the Trust in their capacity as such, shall
not be required to devote their entire time to the business and affairs of the
Trust. Except as otherwise specifically provided by vote of the Trustees, or by
agreement in any particular case, any Trustee or officer of the Trust may
acquire, own, hold and dispose of, for his own individual account, any property,
and acquire, own, hold, carry on and dispose of, for his own individual account,
any business entity or business activity, whether similar or dissimilar to any
property or business entity or business activity invested in or carried on by
the Trust, and without first offering the same as an investment opportunity to
the Trust, and may exercise all rights in respect thereof as if he were not a
Trustee or officer of the Trust. The Trustees shall also have power, generally
or in specific cases, to permit employees or agents of the Trust to have the
same rights (or lesser rights) to acquire, hold, own and dispose of property and
businesses, to carry on businesses, and to accept investment opportunities
without offering them to the Trust, as the Trustees have by virtue of this
Section 4.7.
Section 4.9 RELIANCE ON EXPERTS. The Trustees and officers may consult with
counsel, engineers, brokers, appraisers, auctioneers, accountants, investment
bankers, securities analysts or other Persons (any of which may be a firm in
which one or more of the Trustees or officers is or are members or otherwise
interested) whose profession gives authority to a statement made by them on the
subject in question, and who are reasonably deemed by the Trustees or officers
in question to be competent, and the advice or opinion of such Persons shall be
full and complete personal protection to all of the Trustees and officers in
respect of any action taken or suffered by them in good faith and in reliance on
or in accordance with such advice or opinion. In discharging their duties,
Trustees and officers, when acting in good faith, may rely upon financial
statements of the Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant fairly to present
the financial position of the Trust. The Trustees and officers may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.
Section 4.10 SURETY BONDS. No Trustee, officer, employee or agent of the
Trust shall, as such, be obligated to give any bond or surety or other security
for the performance of
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any of his duties, unless required by applicable law or regulation, or unless
the Trustees shall otherwise determine in any particular case.
Section 4.11 APPARENT AUTHORITY OF TRUSTEES AND OFFICERS. No purchaser,
lender, transfer agent or other Person dealing with the Trustees or any officer
of the Trust shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by such officer, or to make
inquiry concerning or be liable for the application of money or property paid,
loaned or delivered to or on the order of the Trustees or of such officer.
Section 4.12 OTHER RELATIONSHIPS NOT PROHIBITED. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party (as defined in Section 5.2 hereof), or of or
for any parent or affiliate of any Contracting Party, or that the
Contracting Party or any parent or affiliate thereof is a Shareholder
or has an interest in the Trust or any Fund, or that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnership, limited partnerships
or other organizations, or have other business or interests, shall not
affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or
the Trustees or disqualify any Shareholder, Trustee of officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or to the holders of Shares of any Series;
PROVIDED that, in the case of any relationship or interest referred to
in the preceding clause (i) on the part of any Trustee or officer of
the Trust, either (x) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having
any such relationship or interest and the contract involved is approved
in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested
or interest (even though such unrelated or disinterested Trustees), (y)
the material facts as to such relationship or interest and as to the
contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically
approved in good faith by vote of the Shareholders, or (z) the specific
contract involved is fair
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to the Trust as of the time it is entered into by the Shareholders.
Section 4.13 PAYMENT OF TRUST EXPENSES. The Trustees are authorized to pay
or to cause to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, and according to any allocation to
particular Funds made by them pursuant ot Section 6.2(b) hereof, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
business and affairs of the Trust of in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, Investment Adviser,
Administrator, Distributor, Principal Underwriter, auditor, counsel, Custodian,
Transfer Agent, Dividend Disbursing Agent, Accounting Agent, Shareholder
Servicing Agent, and such other agents, consultants, and independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur.
Section 4.14 OWNERSHIP OF THE TRUST PROPERTY. Legal title to all the Trust
Property shall be vested in the Trustees as joint tenants, except that the
Trustees shall have power to cause legal title to any Trust Property to be held
by or in the name of one or more of the Trustees, or in the name of the Trust,
or of any particular Fund, or in the name of any other Person as nominee, on
such terms as the Trustees may determine; PROVIDED that the interest of the
Trust and of the respective Fund therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office of a Trustee as provided in Section 4.1(c),
(d) or (e) hereof, such Trustee shall automatically cease to have any right,
title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to Section 4.1(i) hereof.
ARTICLE V
DELEGATION OF MANAGERIAL RESPONSIBILITIES
Section 5.1 APPOINTMENT; ACTION BY LESS THAN ALL TRUSTEES. The Trustees
shall be responsible for the general operating policy of the Trust and for the
general supervision of the business of the Trust conducted by officers, agents,
employees or advisers of the Trust or by independent contractors, but the
Trustees shall not be required personally to conduct all
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the business of the Trust and, consistent with their ultimate responsibility as
stated herein, the Trustees may appoint, employ or contract with one or more
officers, employees and agents to conduct, manage and/or supervise the
operations of the Trust, and may grant or delegate such authority to such
officers, employees and/or agents as the Trustees may, in their sole discretion,
deem to be necessary or desirable, without record to whether such authority is
normally granted or delegated by trustees.
Section 5.2 CERTAIN CONTRACTS. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time in their discretion and without limiting
the generality of their powers and authority otherwise set forth herein, enter
into one or more contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships or other types of
organizations, or individuals ("CONTRACTING PARTY"), to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any Fund, and/or the
Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below, as
the Trustees may deem appropriate:
(a) ADVISORY. An investment advisory or management agreement
whereby the Investment Adviser shall undertake to furnish the Trust
such management, investment advisory or supervisory, administrative,
accounting, legal, statistical and research facilities and services,
and such other facilities and services, if any, as the Trustees shall
from time to time consider desirable, all upon such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the
1940 Act or any applicable provisions of the Bylaws. Any such advisory
or management agreement and any amendment thereto shall be subject to
approval by a Majority Shareholder Vote at a meeting of the
Shareholders of the Trust. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser (subject
to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities of the Trust on behalf of the Trustees or may
authorize any officer or employee of the Trust or any Trustee to effect
such purchases, sales, loans or exchanges pursuant to recommendations
of the Investment Adviser (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees. The Trustees
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may, in their sole discretion, call a meeting of Shareholders in order
to submit to a vote of Shareholders at such meeting the approval of
continuance of any such investment advisory or management agreement. If
the Shareholders of any Fund should fail to approve any such investment
advisory or management agreement, the Investment Adviser may
nonetheless serve as Investment Adviser with respect to any other Fund
whose Shareholders shall have approved such contract.
(b) ADMINISTRATION. An agreement whereby the agent, subject to
the general supervision of the Trustees and in conformity with any
policies of thge Trustees with respect to the operations of the Trust
and each Fund, will supervise all or any part of the operations of the
Trust and each Fund, and will provide all or any part of the
administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration and
operations of the Trust and each Fund (any such agent being herein
referred to as an "ADMINISTRATOR").
(c) DISTRIBUTION. An agreement providing for the sale of
Shares of any one or more Series to net the Trust not less than the net
asset value per Share (as described in Section 6.2(h) hereof) and
pursuant to which the Trust may appoint the other party to such
agreement as its principal underwriter or sales agent for the
distribution of such Shares. The agreement shall contain such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the
1940 Act and any applicable provisions of the Bylaws (any such agent
being herein referred to as a "DISTRIBUTOR" or a "PRINCIPAL
UNDERWRITER," as the case may be).
(d) CUSTODIAN. The appointment of a bank or trust company
having an aggregate capital, surplus and undivided profits (as shown in
its last published report) of at least two million dollars ($2,000,000)
as custodian of the Securities and cash of the Trust and of each Fund
and of the accounting records in connection therewith (any such agent
being herein referred to as a "CUSTODIAN").
(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. An agreement with
a agent to maintain records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof (any such agent being
herein referred to as a "TRANSFER AGENT"), and to disburse any
dividends declared by the Trustees and in accordance with the policies
of the Trustees and/or the instructions of any particular Shareholder
to reinvest any such dividends (any such agent
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being herein referred to as a "DIVIDEND DISBURSING AGENT").
(f) Shareholder Servicing. An agreement with an agent to
provide service with respect to the relationship of the Trust and its
Shareholders, records with respect to Shareholders and their Shares,
and similar matters (any such agent being herein referred to as a
"SHAREHOLDER SERVICING AGENT").
(g) ACCOUNTING. An agreement with an agent to handle all or
any part of the accounting responsibilities, whether with respect to
the Trust's properties, Shareholders or otherwise (any such agent being
herein referred to as an "ACCOUNTING AGENT".
The same Person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub- contractual arrangements relative to any of the matters referred to in
subsections (a) through (g) of this Section 5.2.
ARTICLE VI
FUNDS AND SHARES
Section 6.1 DESCRIPTION OF FUNDS AND SHARES.
(a) SHARES; FUNDS; SERIES OF SHARES. The beneficial interest
in the Trust shall be divided into Shares having a nominal or par value
of one cent ($.01) per Share, and all of the one class, of which an
unlimited number may be issued. The Trustees shall have the authority
from time to time to establish and designate one or more separate,
distinct and independent Funds into which the assets of the Trust shall
be divided, and to authorize a separate Series of Shares for each such
Fund (each of which Series, including without limitation each Series
authorized in Section 6.2 hereof, shall represent interests only in the
Fund with respect to which such Series was authorized), as they deem
necessary or desirable. Except as otherwise provided as to a particular
Fund herein, or in the Certificate of Designation therefor, the
Trustees shall have all the rights and powers, and be subject to all
the duties
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and obligations, with respect to each such Fund and the assets and
affairs thereof as they have under this Declaration with respect to the
Trust and the Trust Property in general.
(b) ESTABLISHMENT, ETC. OF FUNDS; AUTHORIZATION OF SHARES. The
establishment and designation of any Fund in addition to the Fund
established and designated in Section 6.2 hereof and the authorization
of the Shares thereof shall be effective upon the execution by a
Majority of the Trustees (or by an officer of the Trust pursuant to the
vote of a Majority of the Trustees) of an instrument setting forth such
establishment and designation and the relative rights and preferences
of the Shares of such Fund and the manner in which the same may be
amended (a "CERTIFICATE OF DESIGNATION"), and may provide that the
number of Shares of such Series which may be issued is unlimited, or
may limit the number issuable. At any time that there are no Shares
outstanding of any particular Fund previously established and
designated, including any Fund established and designated in Section
6.2 hereof, the Trustees may by an instrument executed by a Majority of
the Trustees (or by an officer of the Trust pursuant to the vote of a
Majority of the Trustees) terminate such Fund and the establishment and
designation thereof and the authorization of its Shares (a "CERTIFICATE
OF TERMINATION"). Each Certificate of Designation, Certificate of
Termination and any instrument amending a Certificate of Designation
shall have the status of an amendment to this Declaration of Trust, and
shall be filed and become effective as provided in Section 9.4 hereof.
(c) CHARACTER OF SEPARATE FUNDS AND SHARES THEREOF. Each Fund
established hereunder shall be a separate component of the assets of
the Trust, and the holders of Shares of the Series representing the
beneficial interest in the assets of that Fund shall be considered
Shareholders of such Fund, but such Shareholders shall also be
considered Shareholders of the Trust for purposes of receiving reports
and notices and, except as otherwise provided herein or in the
Certificate of Designation of a particular Fund as to such Fund, or as
required by the 1940 Act or other applicable law, the right to vote,
all without distinction by Series. The Trustees shall have exclusive
power without the requirement of Shareholder approval to establish and
designate such separate and distinct Funds, and to fix and determine
the relative rights and preferences as between the shares of the
respective Funds as to rights of redemption and the price, terms and
manner of redemption, special and relative rights as to dividends and
other distributions and on liquidation, sinking or purchase fund
provisions,
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conversion rights, and conditions under which the Shareholders of the
several Funds shall have separate voting rights or no voting rights.
(d) CONSIDERATION FOR SHARES. The Trustees may issue Shares of
any Series for such consideration (which may include property subject
to, or acquired in connection with the assumption, liabilities) and on
such terms as they may determine (or for no consideration if pursuant
to a Share dividend or split-up), all without action or approval of the
Shareholders. All Shares when so issued on the terms determined by the
Trustees shall be fully paid and non-assessable (but may be subject to
mandatory contribution back to the Trust as provided in Section 6.2(h)
hereof). The Trustees may classify or reclassify any unissued Shares,
or any Shares of any Series previously issued and reacquired by the
Trust, into Shares of one or more other Funds that may be established
and designated from time to time.
Section 6.2 ESTABLISHMENT AND DESIGNATION OF THE JANUS FUND; GENERAL
PROVISIONS FOR ALL FUNDS. Without limiting the authority of the Trustees set
forth in Section 6.1(a) hereof to establish and designate further Funds, there
is hereby established and designated the Janus Fund. The Shares of such Fund,
and the Shares of any further Fund that may from time to time be established and
designated by the Trustees shall (unless the Trustees otherwise determine with
respect to some further Fund at the time of establishing and designating the
same) have the following relative rights and preferences:
(a) ASSETS BELONGING TO FUNDS. Any portion of the Trust
Property allocated to a particular Fund, and all consideration received
by the Trust for the issue or sale of Shares of such Fund, together
with all assets in which such consideration is invested or reinvested,
all interest, dividends, income, earnings, profits and gains therefrom,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Fund and shall irrevocably belong to that
Fund for all purposes, and shall be so recorded upon the books of
account of the Trust, and the Shareholders of such Fund shall not have,
and shall be conclusively deemed to have waived, any claims to the
assets of any Fund of which they are not Shareholders. Such
consideration, assets, interest, dividends, income, earnings, profits,
gains and proceeds, together with any General Items allocated to that
Fund as provided in the following sentence, are herein referred to
collectively as "FUND ASSETS" of such Fund, and
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as assets "BELONGING TO" that Fund. In the event that there are any
assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any
particular Fund (collectively "GENERAL ITEMS"), the Trustees shall
allocate such General Items to and among any one or more of the Funds
established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable; and
any General Items so allocated to a particular Fund shall belong to and
be part of the Fund Assets of that Fund. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all
Funds for all purposes.
(b) LIABILITIES OF FUNDS. The assets belonging to each
particular Fund shall be charged with the liabilities in respect of
that Fund and all expenses, costs, charges and reserves attributable to
that Fund, and any general liabilities, expenses, costs, charges or
reserves attributable to that Fund, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as pertaining to any particular Fund shall be allocated
and charged by the Trustees to and among any one or more of the Funds
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
The indebtedness, expenses, costs, charges and reserves allocated and
so charged to a particular Fund are herein referred to as "LIABILITIES
OF" that Fund. Each allocation of liabilities, expenses, costs, charges
and reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Funds for all purposes. Any creditor of any Fund
may look only to the assets of that Fund to satisfy such creditor's
debt.
(c) DIVIDENDS. Dividends and distributions on Shares of a
particular Fund may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, to the Shareholders of that Fund, from such
of the income, accrued or realized, and capital gains, realized or
unrealized, and out of the assets belonging to that Fund, as the
Trustees may determine, after providing for actual and accrued
liabilities of that Fund. All dividends and distributions on Shares of
a particular Fund shall be distributed pro rata to the Shareholders of
that Fund in proportion to the number of such Shares held by such
holders at the date and time of record established for the payment of
such dividends or distributions, except that in connection with any
dividend or distribution program or
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procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order
and/or payment have not been received by the time or times established
by the Trustees under such program or procedure, or that dividends or
distributions shall be payable on Shares which have been tendered by
the holder thereof for redemption or repurchase, but the redemption or
repurchase proceeds of which have not yet been paid to such
Shareholder. Such dividends and distributions may be made in cash or
Shares of that Fund or a combination thereof as determined by the
Trustees, or pursuant to any program that the Trustees may have in
effect at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance with
subsection (h) of this Section 6.2.
(d) LIQUIDATION. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Fund of which Shares
are outstanding shall be entitled to receive, when and as declared by
the Trustees, the excess of the Fund Assets over the liabilities of
such Fund. The assets so distributable to the Shareholders of any
particular Fund shall be distributed among such Shareholders in
proportion to the number of Shares of that Fund held by them and
recorded on the books of the Trust. The liquidation of any particular
Fund may be authorized by vote of a Majority of the Trustees, subject
to the affirmative vote of "a majority of the outstanding voting
securities" of that Fund, as the quoted phrase is defined in the 1940
Act, determined in accordance with clause (iii) of the definition of
"MAJORITY SHAREHOLDER VOTE" in Section 1.4 hereof.
(e) VOTING. The Shareholders shall have the voting
rights set forth in or determined under Article VII hereof.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Fund shall have the right at such times as may be permitted
by the Trust, but no less frequently than once a week, to require the
Trust to redeem all or any part of his Shares of that Fund at a
redemption price equal to the net asset value per Share of that Fund
next determined in accordance with subsection (h) of this Section 6.2
after the Shares are properly tendered for redemption; PROVIDED that
the Trustees may from time to time, in their discretion, determine and
impose a fee for such redemption. Payment of the redemption price shall
be in cash; PROVIDED, HOWEVER, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Trust may
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make payment wholly or partly in Securities or other assets belonging
to such Fund at the value of such Securities or assets used in such
determination of net asset value. Notwithstanding the foregoing, the
Trust may postpone payment of the redemption price and may suspend the
right of the holders of Shares of any Fund to require the Trust to
redeem Shares of that Fund during any period or at any time when and to
the extent permissible under the 1940 Act.
(g) REDEMPTION AT THE OPTION OF THE TRUST. Each Shares of any
Fund shall be subject to redemption at the option of the Trust at the
redemption price which would be applicable if such Share were then
being redeemed by the Shareholder pursuant to subsection (f) of this
Section 6.2: (i) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse
consequences to the holders of the Shares of the Trust or of any Fund,
or (ii) upon such other conditions with respect to maintenance of
Shareholder accounts of a minimum amount as may from time to time be
determined by the Trustees and set forth in the then current Prospectus
of such Fund. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any Fund
at any time shall be the quotient obtained by dividing the value of the
net assets of such Fund at such time (being the current value of the
assets belonging to such Fund, less its then existing liabilities) by
the total number of Shares of that Fund then outstanding, all
determined i accordance with the methods and procedures, including
without limitation those with respect to rounding, established by the
Trustees from time to time. The Trustees may determine to maintain the
net asset value per Share of any Fund at a designated constant dollar
amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declaration of income
attributable to that Fund as dividends payable in additional Shares of
that Fund at the designated constant dollar amount and for the handling
of any losses attributable to that Fund. Such procedures may provide
that in the event of any loss each Shareholder shall be deemed to have
contributed to the shares of beneficial interest account of that Fund
his pro rata portion of the total number of Shares required to be
cancelled in order to permit the net asset value per share of that Fund
to be maintained, after reflecting such loss, at the designated
constant dollar amount. Each Shareholder of the Trust shall be deemed
to have expressly agreed, by his investment in any Fund with respect to
which the Trustees shall have adopted any such procedure, to make
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the contribution referred to in the preceding sentence in
the event of any such loss.
(i) TRANSFER. All Shares of each particular Fund shall be
transferable, but transfers of Shares of a particular Fund will be
recorded on the Share transfer records of the Trust applicable to that
Fund only at such times as Shareholders shall have the right to require
the Trust to redeem Shares of that Fund and at such other times as may
be permitted by the Trustees.
(j) EQUALITY. All Shares of each particular Fund shall
represent an equal proportionate interest in the assets belonging to
that Fund (subject to the liabilities of that Fund), and each Share of
any particular Fund shall be e1ual to each other Share thereof; but the
provisions of this sentence shall not restrict any distinctions
permissible under subsection (c) of this Section 6.2 that may exist
with respect to dividends and distributions on Shares of the same Fund.
The Trustees may from time to time divide or combine the Shares of any
particular Fund into a greater or lesser number of Shares of that Fund
without thereby changing the proportionate beneficial interest in the
assets belonging to that Fund or in any way affecting the rights of the
holders of Shares of any other Fund.
(k) RIGHTS OF FRACTIONAL SHARES. Any fractional Share of any
Series shall carry proportionately all the rights and obligations of a
whole Share of that Series, including rights and obligations with
respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust or of the Fund to which they
pertain.
(l) CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Fund shall have the right to
convert said Shares into Shares of one or more other Funds in
accordance with such requirements and procedures as the Trustees may
establish.
Section 6.3 OWNERSHIP OF SHARES. The ownership of Shares shall
be recorded on the books of the Trust or of a Transfer Agent or similar agent
for the Trust, which books shall be maintained separately for the Shares of each
Series that has been authorized. Certificates evidencing the ownership of Shares
need not be issued except as the Trustees may otherwise determine from time to
time, and the Trustees shall have power to call outstanding Share certificates
and to replace them with book entries. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
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facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any Transfer Agent or similar agent,
as the case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Fund held from time to time by each such
Shareholder.
The holders of Shares of each Fund shall upon demand disclose to the
Trustees in writing such information with respect to their direct and indirect
ownership of Shares of such Fund as the Trustees deem necessary to comply with
the provisions of the Internal Revenue Code, or to comply with the requirements
of any other authority.
Section 6.4 INVESTMENTS IN THE TRUST. The Trustees may accept investments
in any Fund of the Trust from such Persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any Distributor,
Principal Underwriter, Custodian, Transfer Agent or other Person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares, whether or not conforming to such
authorized terms.
Section 6.5 NO PREEMPTIVE RIGHTS. No Shareholder, by virtue of holding
Shares of any Fund, shall have any preemptive or other right to subscribe to any
additional Shares of that Fund, or to any shares of any other Fund, or any other
Securities issued by the Trust.
Section 6.6 STATUS OF SHARES. Every Shareholder, by virtue of having become
a Shareholder, shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. Shares shall be deemed to be personal
property, giving only the rights provided herein. Ownership of Shares shall not
entitled the Shareholder to any title in or to the whole or any part of the
Trust Property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. The death of a Shareholder during the continuance of the Trust shall
not operate to terminate the Trust or any Fund, nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Declaration of Trust.
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ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.1 VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Sections 4.1(c) and
(e) hereof, (ii) with respect to the approval or termination in accordance with
the 1940 Act of any contract with a Contracting Party as provided in Section 5.2
hereof as to which Shareholder approval is required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any Fund to the
extent and as provided in Sections 9.1 and 9.2 hereof, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
9.3 hereof, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or any Fund, or the Shareholders of any of them
(PROVIDED, HOWEVER, that a Shareholder of a particular Fund shall not in any
event be entitled to maintain a derivative or class action on behalf of any
other Fund or the Shareholders thereof), and (vi) with respect to such
additional matters relating to the Trust as may be required by the 1940 Act,
this Declaration of Trust, the Bylaws or any registration of the Trust with the
Commission (or any successor agency) or any State, or as the Trustees may
consider necessary or desirable. If and to the extent that the Trustees shall
determine that such action is required by law, they shall cause each matter
required or permitted to be voted upon at a meeting or by written consent of
Shareholders to be submitted to a separate vote of the outstanding Shares of
each Fund entitled to vote thereon; PROVIDED that (i) when expressly required by
this Declaration or by the 1940 Act, actions of Shareholders shall be taken by
Single Class Voting of all outstanding Shares of each Series whose holders are
entitled to vote thereon; and (ii) when the Trustees determine that any matter
to be submitted to a vote of Shareholders affects only the rights or interests
of Shareholders of one or more but not all Funds, then only the Shareholders of
the Funds so affected shall be entitled to vote thereon.
Section 7.2 NUMBER OF VOTES AND MANNER OF VOTING; PROXIES. On each matter
submitted to a vote of the Shareholders, each holder of Shares of any Series
shall be entitled to a number of votes equal to the number of Shares of such
Series standing in his name on the books of the Trust. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two (2) or more
Persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one
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of them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the Bylaws to be taken by
Shareholders.
Section 7.3 MEETINGS. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided, or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least ten (10) days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than ten
percent (10%) of the Shares then outstanding. If the Trustees shall fail to call
or give notice of any meeting of Shareholders for a period of thirty (30) days
after written application by Shareholders holding at least ten percent (10%) of
the Shares then outstanding requesting that a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
Bylaws, then Shareholders holding at least ten percent (10%) of the Shares then
outstanding may call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call thereof by the
Trustees.
Section 7.4 RECORD DATES. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding thirty (30) days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than ninety (90) days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action, and any Shareholder
who was a Shareholder at the date and time so fixed shall be entitled to vote at
such meeting or any adjournment thereof or to be treated as a Shareholder of
record for purposes of such other action, even though he has since that date and
time disposed of his
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Shares, and no Shareholder becoming such after that date and time shall be so
entitled to vote at such meeting or any adjournment thereof or to be treated as
a Shareholder of record for purposes of such other action.
Section 7.5 QUORUM AND REQUIRED VOTE. Thirty percent (30%) of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice. A Majority Shareholder Vote at a meeting at which a quorum is
present shall decide any question, except when a different vote is required or
permitted by any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the Bylaws, or when the Trustees shall in their
discretion require a larger vote or the vote of a majority or larger fraction of
the Shares of one or more particular Series.
Section 7.6 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if Shareholders who held at least thirty percent (30%) of the
Shares entitled to vote on the matter (or such larger proportion thereof or of
the Shares of any particular Series as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the Bylaws or as shall be
permitted by the Trustees) consent to the action in writing and if the writings
in which such consent is given are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
Section 7.7 INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 7.8 ADDITIONAL PROVISIONS. The Bylaws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 8.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. The
Trustees and officers of the Trust, in incurring any debts, liabilities or
obligations, or in limiting or omitting any other actions for or in connection
with
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the Trust, are or shall be deemed to be acting as Trustees or officers of the
Trust and not in their own capacities. No Shareholder shall be subject to any
personal liability whatsoever in tort, contract or otherwise to any other Person
or Persons in connection with the assets or the affairs of the Trust or of any
Fund, and subject to Section 8.4 hereof, no Trustee, officer, employee or agent
of the Trust shall be subject to any personal liability whatsoever in tort,
contract, or otherwise, to any other Person, or Persons in connection with the
assets or affairs of the Trust or of any Fund, save only that arising from his
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office or the discharge of his
functions. The Trust (of if the matter relates only to a particular Fund, that
Fund) shall be solely liable for any and all debts, claims, demands, judgments,
decrees, liabilities or obligations of any and every kind, against or with
respect to the Trust or such Fund in tort, contract or otherwise in connection
with the assets or the affairs of the Trust or such Fund, and all Persons
dealing with the Trust or any Fund shall be deemed to have agreed that resort
shall be had solely to the Trust Property of the Trust or the Fund Assets of
such Fund, as the case may be, for the payment or performance thereof.
The Trustees shall use their best efforts to ensure that every note, bond,
contract, instrument, certificate, or undertaking made or issued by the Trustees
or by any officers or officer shall give notice that this Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts and shall
recite to the effect that the same was executed or made by or on behalf of the
Trust or by them as Trustees or Trustee or as officers or officer, and not
individually, and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Fund in question, as the
case may be, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually, or
to subject the Fund Assets of any Fund to the obligations of any other Fund.
Section 8.2 TRUSTEES' GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR SURETY.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to Section 8.4 hereof, a Trustee shall
be liable for his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of the
Trustee, and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law. Subject to the foregoing, (i) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, consultant, Investment Adviser,
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Administrator, Distributor or Principal Underwriter, Custodian or Transfer
Agent, Dividend Disbursing Agent, Shareholder Servicing Agent or Accounting
Agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (ii) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (iii) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 5.2 hereof. The Trustees as
such shall not be required to give any bond or surety or any other security for
the performance of their duties.
Section 8.3 INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder (or former
Shareholder) of the Trust shall be charged or held to be personally liable for
any obligation or liability of the Trust solely by reason of being or having
been a Shareholder and not because of such Shareholder's acts or omissions or
for some other reason, the Trust shall assume the defense against such charge
and satisfy any judgment thereon, and the Shareholder or former Shareholder (or
the heirs, executors, administrators or other legal representatives thereof, or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled (but solely out of the assets of the Fund of which
such Shareholder or former Shareholder is or was the holder of Shares) to b held
harmless from and indemnified against all loss and expense arising from such
liability.
Section 8.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to the
limitations set forth hereinafter in this Section 8.4, the Trust shall indemnify
(from the assets of the Fund or Funds to which the conduct in question relates)
each of its Trustees and officers (including Persons who serve at the Trust's
request as directors, officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise [hereinafter,
together with such Person's heirs, executors, administrators or personal
representative, referred to as a "COVERED PERSON"]) against all liabilities,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or
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administrative or legislative body, in which such Covered Person may be or my
have been involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust or (ii)
had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(either and both of the conduct described in (i) and (ii) being referred to
hereafter as "DISABLING CONDUCT"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in Section
2(a) (19) of the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time by the Fund or Funds to which the conduct in question related
in advance of the final disposition of any such action, suit or proceeding;
PROVIDED that the Covered Person shall have undertaken to repay the amounts so
paid to such Fund or Funds if it is ultimately determined that indemnification
of such expenses is not authorized under this Article VIII and (i) Covered
Person shall have provided security for such undertaking, (ii) the Trust shall
be insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested Trustees, or an independent legal
counsel in a written opinion, shall have determined, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Covered Person ultimately will be found entitled to
indemnification.
Section 8.5 COMPROMISE PAYMENT. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 8.4 hereof,
pursuant to a consent decree or otherwise, such indemnification for said payment
and for any other expenses shall be provided if such indemnification shall be
approved (i) by a majority of a quorum of the disinterested Trustees or (ii) by
an independent legal counsel in
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a written opinion. Approval by the Trustees pursuant to clause (i) or by
independent legal counsel pursuant to clause (ii) shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with either of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust or to have been liable to the
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Section 8.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VIII shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled. As
used in this Article VIII, a "DISINTERESTED" Person is one against whom none of
the actions, suits or other proceedings in question, and no other action, suit
or other proceeding on the same or similar grounds is then or has been pending
or threatened. Nothing contained in this Article VIII shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other Persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such Person.
Section 8.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of ny payments made or property transferred to the Trust or upon its
order.
ARTICLE IX
DURATION; REORGANIZATION; AMENDMENTS
Section 9.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Fund or Series of Shares shall operate to
terminate the Trust. The Trust may be terminated at any time by a Majority of
the Trustees, subject to the favorable vote of the holders of not less than a
majority of the Shares outstanding and entitled to vote of each Fund of the
Trust, or by an instrument or instruments in writing without a meeting,
consented to by the holders of not less than a majority of such Shares, or by
such greater or different vote of Shareholders of any Series as may be
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established by the Certificate of Designation by which such Series was
authorized. Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated
as may be determined by the Trustees, the Trust shall, in accordance with such
procedures as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash, Securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of Section 6.2(d) hereof.
Section 9.2 REORGANIZATION. The Trustees may sell, convey and transfer all
or substantially all of the assets of the Trust, or the assets belonging to any
one or more Funds, to another Trust, partnership, association or corporation
organized under the laws of any State of the United States, or may transfer such
assets to another Fund of the Trust, in exchange for cash, Shares or other
Securities (including, in the case of a transfer to another Fund of the Trust,
Shares of such other Fund), or to the extent permitted by law then in effect may
merge or consolidate the Trust or any Fund with any other trust or any
corporation, partnership, or association organized under the laws of any State
of the United States, all upon such terms and conditions and for such
consideration when and as authorized by vote or written consent of a Majority of
the Trustees and approved by the affirmative vote of the holders of not less
than a majority of the Shares outstanding and entitled to vote of each Fund
whose assets are affected by such transaction, or by an instrument or
instruments in writing without a meeting, consented to by the holders of not
less than a majority of such Shares, and/or by such other vote of any Series as
may be established by the Certificate of Designation with respect to such
Series. Following such transfer, the Trustees shall distribute the cash, Shares
or other Securities or other consideration received in such transaction (giving
due effect to the assets belonging to and indebtedness of, and any other
differences among, the various Funds of which the assets have so been
transferred) among the Shareholders of the Fund of which the assets have been so
transferred; and if all of the assets of the Trust have been so transferred, the
Trust shall be terminated. Nothing in this Section 9.2 shall be construed as
requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations, and to sell, convey or transfer less than substantially all of
the Trust Property or the assets belonging to any Fund to such organizations or
entities.
Section 9.3 AMENDMENTS; ETC. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall
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repeal the limitations on personal liability of any Shareholder or Trustee or
the prohibition of assessment upon the Shareholders (otherwise than as permitted
under Section 6.2(h)) without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of Trust
(whether or not related to the rights of Shareholders) may be amended at any
time, so long as such amendment does not adversely affect the rights of any
Shareholder with respect to which such amendment is or purports to be applicable
and so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a Majority of the
Trustees (or by an officer of the Trust pursuant to the vote of a Majority of
the Trustees). Any amendment to this Declaration of Trust that adversely affects
the rights of all Shareholders may be adopted at any time by an instrument in
writing signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to a vote of a Majority of the Trustees) when authorized to do so by
the vote in accordance with Section 7.1 hereof of Shareholders holding a
majority of all the Shares outstanding and entitled to vote, without regard to
Series, or if said amendment adversely affects the rights of the Shareholders of
less than all of the Funds, by the vote of the holders of a majority of all the
Shares entitled to vote of each Fund so affected. Subject to the foregoing, any
such amendment shall be effective when the instrument containing the terms
thereof and a certificate (which may be a part of such instrument) to the effect
that such amendment has been duly adopted, and setting forth the circumstances
thereof, shall have been executed and acknowledged by a Trustee or officer of
the Trust and filed as provided in Section 9.4 hereof.
Section 9.4 FILING OF COPIES OF DECLARATION AND AMENDMENTS. The original or
a copy of this Declaration and of each amendment hereto (including each
Certificate of Designation and Certificate of Termination), as well as the
certificates called for by Section 4.1(k) hereof as to changes in the Trustees,
shall be kept at the office of the Trust where it may be inspected by any
Shareholder, and one copy of each such instrument shall be filed with the
Secretary of The Commonwealth of Massachusetts, as well as with any other
governmental office where such filing may from time to time be required by the
laws of Massachusetts. A restated Declaration, integrating into a single
instrument all of the provisions of this Declaration which are then in effect
and operative, may be executed from time to time by a Majority of the Trustees
and shall, upon filing with the Secretary of The Commonwealth of Massachusetts,
be conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
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ARTICLE X
MISCELLANEOUS
Section 10.1 GOVERNING LAW. This Declaration of Trust is executed and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the construction and effect of every
provision hereof shall be subject to and construed according to the laws of said
Commonwealth.
Section 10.2 COUNTERPARTS. This Declaration of Trust and any amendment
hereto may be simultaneously executed in several counterparts, each of which so
executed shall be deemed to be an original, and such counterparts, together,
shall constitute but one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.
Section 10.3 RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records in the office of the Secretary of The
Commonwealth of Massachusetts appears to be a Trustee hereunder, certifying to:
(a) the number or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration of Trust, (e)
the form of any Bylaw adopted, or the identity of any officers elected, by the
Trustees, or (f) the existence or non existence of any fact or facts which in
any manner relate to the affairs of the Trust, shall be conclusive evidence as
to the matters so certified in favor of any Person dealing with the Trustees, or
any of them, and the Successors of such Person.
Section 10.4 REFERENCES; HEADINGS. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part of this Declaration or control
or affect the meaning, construction or effect hereof.
Section 10.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with requirements of the 1940 Act, would
be inconsistent with any of the conditions necessary for qualification
of the Trust as a regulated investment company under the United States
Internal Revenue Code or is inconsistent with other
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applicable laws and regulations, such provision shall be deemed never
to have constituted a part of this Declaration, PROVIDED that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such validity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
Section 10.6 USE OF THE NAME "JANUS." Janus Capital Corporation ("JANUS")
has consented to the use by the Trust and by each Fund and each Series thereof
to the identifying work "Janus" in the name of the Trust and of each Fund and
Series Thereof. Such consent is conditioned upon the Trust's employment of Janus
as investment adviser to the Trust and to each Fund and each Series thereof. As
between Janus and the Trust, Janus shall control the use of such name insofar as
such name contains the identifying work "Janus." Janus may from time to time use
the identifying work "Janus" in other connections and for other purposes,
including without limitation in the names of other investment companies,
corporations or businesses that it may manage, advise, sponsor or own or in
which it may have a financial interest. Janus may require the Trust or any Fund
or Series thereof to cease using the identifying work "Janus" in the name of the
Trust or any Fund or any Series thereof if the Trust or any Fund or Series
thereof ceases to employ Janus or a subsidiary or affiliate thereof as
investment adviser.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal, for
himself and his assigns, and has thereby accepted the Trusteeship as the Initial
Trustee of Janus Trust hereby granted and agreed to the provisions hereof, all
as of the day and year first above written.
/s/ Thomas E. Weesner
Thomas E. Weesner
The undersigned Settlor of Janus Trust, hereby accepts, approves and
authorizes the foregoing Agreement and Declaration of Trust of Janus Trust.
Dated: February 11, 1986
/s/ Bryan G. Tyson
Bryan G. Tyson
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ACKNOWLEDGMENTS
M A S S A C H U S E T T S
Suffolk, ss: February 11, 1986
Then personally appeared the above named Thomas E. Weesner and
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/ Frances R. DiPietro
Notary Public
My Commission Expires: January 22, 1993
M A S S A C H U S E T T S
Suffolk, ss: February 11, 1986
Then personally appeared the above named Bryan G. Tyson and
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/ Frances R. DiPietro
Notary Public
My Commission Expires: January 22, 1993
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ACCEPTANCE OF TRUSTS
The undersigned George M. Berman, of Lexington, Massachusetts, having
been duly appointed a Trustee of Janus Investment Fund, does hereby accept the
trust established under the Agreement and Declaration of Trust between Bryan G.
Tyson, of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of
Boston, Massachusetts, under which such Trust has been established, and does
agree faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ George M. Berman
George M. Berman
STATE OF MASSACHUSETTS)
:
COUNTY OF MIDDLESEX )
On this 7th day of March, 1986, before me personally came George M.
Berman, to me known, and known to me to be the person described in and who
executed the foregoing Acceptance of Trusts, and acknowledged that he had
executed the same as his free act and deed.
/s/______________________
Notary Public
My Commission Expires: August 20, 1987
<PAGE>
ACCEPTANCE OF TRUSTS
The undersigned Gary O. Loo, of Colorado Springs, Colorado, having been
duly appointed a Trustee of Janus Investment Fund, does hereby accept the trust
established under the Agreement and Declaration of Trust between Bryan G. Tyson,
of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of Boston,
Massachusetts, under which such Trust has been established, and does agree
faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ Gary O. Loo
Gary O. Loo
STATE OF COLORADO)
:
COUNTY OF EL PASO)
On this 19th day of February, 1986, before me personally came Gary O.
Loo, to me known, and known to me to be the person described in and who executed
the foregoing Acceptance of Trusts, and acknowledged that he had executed the
same as his free act and deed.
/s/ Margaret R. Buchanan
Notary Public
My Commission Expires: 3/3/88
6714 Dublin Loop W.
Colorado Springs, CO 80918
<PAGE>
ACCEPTANCE OF TRUSTS
The undersigned Dennis B. Mullen, of Scottsdale, Arizona, having been
duly appointed a Trustee of Janus Investment Fund, does hereby accept the trust
established under the Agreement and Declaration of Trust between Bryan G. Tyson,
of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of Boston,
Massachusetts, under which such Trust has been established, and does agree
faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ Dennis B. Mullen
Dennis B. Mullen
STATE OF ARIZONA )
:
COUNTY OF MARICOPA)
On this 20th day of February, 1986, before me personally came Dennis B.
Mullen, to me known, and known to me to be the person described in and who
executed the foregoing Acceptance of Trusts, and acknowledged that he had
executed the same as his free act and deed.
/s/
Notary Public
My Commission Expires: April 26, 1989
<PAGE>
ACCEPTANCE OF TRUSTS
The undersigned John W. Shepardson, of Denver, Colorado, having been
duly appointed a Trustee of Janus Investment Fund, does hereby accept the trust
established under the Agreement and Declaration of Trust between Bryan G. Tyson,
of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of Boston,
Massachusetts, under which such Trust has been established, and does agree
faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ John W. Shepardson
John W. Shepardson
STATE OF COLORADO)
:
COUNTY OF DENVER )
On this 24th day of February, 1986, before me personally came John W.
Shepardson, to me known, and known to me to be the person described in and who
executed the foregoing Acceptance of Trusts, and acknowledged that he had
executed the same as his free act and deed.
/s/ Janice L. Jones
Notary Public
My Commission Expires: September 9, 198_
<PAGE>
ACCEPTANCE OF TRUSTS
The undersigned William D. Stewart, of Boulder, Colorado, having been
duly appointed a Trustee of Janus Investment Fund, does hereby accept the trust
established under the Agreement and Declaration of Trust between Bryan G. Tyson,
of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of Boston,
Massachusetts, under which such Trust has been established, and does agree
faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ William D. Stewart
William D. Stewart
STATE OF COLORADO)
:
COUNTY OF BOULDER)
On this 27th day of February, 1986, before me personally came William
D. Stewart, to me known, and known to me to be the person described in and who
executed the foregoing Acceptance of Trusts, and acknowledged that he had
executed the same as his free act and deed.
/s/ Susana M. Giles
Notary Public
My Commission Expires: 4/19/86
<PAGE>
ACCEPTANCE OF TRUSTS
The undersigned Martin H. Waldinger, of Los Gatos, California, having
been duly appointed a Trustee of Janus Investment Fund, does hereby accept the
trust established under the Agreement and Declaration of Trust between Bryan G.
Tyson, of Brookline, Massachusetts, as Settlor, and Thomas E. Weesner, of
Boston, Massachusetts, under which such Trust has been established, and does
agree faithfully to perform the duties of a Trustee of Janus Investment Fund in
accordance with the terms of such Agreement and Declaration of Trust, to the
best of his ability.
/s/ Martin H. Waldinger
Martin H. Waldinger
STATE OF CALIFORNIA )
:
COUNTY OF SANTA CLARA)
On this 21st day of February, 1986, before me personally came Martin H.
Waldinger, to me known, and known to me to be the person described in and who
executed the foregoing Acceptance of Trusts, and acknowledged that he had
executed the same as his free act and deed.
/s/ Rosanne Burton
Notary Public
My Commission Expires: 11-28-86
EXHIBIT 1(b)
JANUS INVESTMENT FUND
CERTIFICATE OF DESIGNATION
FOR
JANUS GROWTH AND INCOME FUND
The undersigned, being the Secretary of Janus Investment Fund (hereinafter
referred to as the "Trust"), a trust with transferable shares of the type
commonly called a Massachusetts business trust, DOES HEREBY CERTIFY that,
pursuant to the authority conferred upon the Trustees of the Trust by Section
6.1(b) and Section 9.3 of the Agreement and Declaration of Trust, dated February
11, 1986, and by the affirmative vote of a Majority of the Trustees at a meeting
duly called and held on December 2, 1992, the Declaration of Trust is amended as
follows:
There is hereby established and designated the Janus Growth and Income Fund
(hereinafter referred to as the "Growth and Income Fund"). The beneficial
interest in the Growth and Income Fund shall be divided into Shares having a
nominal or par value of one cent ($.01) per Share, of which an unlimited number
may be issued, which Shares shall represent interests only in the Growth and
Income Fund. The Shares of the Growth and Income Fund shall have the following
rights and preferences:
(a) Assets Belonging to the Growth and Income Fund. Any portion of the
Trust Property allocated to the Growth and Income Fund, and all
consideration received by the Trust for the issue or sale of Shares of the
Growth and Income Fund, together with all assets in which such
consideration is invested or reinvested, all interest, dividends, income,
earnings, profits and gains therefrom, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held by the Trustees in trust for
the benefit of the holders of Shares of the Growth and Income Fund and
shall irrevocably belong to the Growth and Income Fund for all purposes,
and shall be so recorded upon the books of account of the Trust, and the
Shareholders of any other Fund who are not Shareholders of
1
<PAGE>
Certificate of Designation
Growth and Income Fund
the Growth and Income Fund shall not have, and shall be conclusively deemed
to have waived, any claims to the assets of the Growth and Income Fund.
Such consideration, assets, interest, dividends, income, earnings, profits,
gains and proceeds, together with any General Items allocated to the Growth
and Income Fund as provided in the following sentence, are herein referred
to collectively as "Fund Assets" of the Growth and Income Fund, and as
assets "belonging to" the Growth and Income Fund. In the event that there
are any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Fund (collectively "General Items"), the Trustees shall allocate such
General Items to and among any one or more of the Funds established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to the Growth and Income Fund shall belong to and be part of the
Fund Assets of the Growth and Income Fund. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all the
Funds for all purposes.
(b) Liabilities of the Growth and Income Fund. The assets belonging to
the Growth and Income Fund shall be charged with the liabilities in respect
of the Growth and Income Fund and all expenses, costs, charges and reserves
attributable to the Growth and Income Fund, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as pertaining to any particular Fund shall be allocated and
charged by the Trustees to and among any one or more of the Funds
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable. The
indebtedness, expenses, costs, charges and reserves allocated and so
charged to the Growth and Income Fund are herein referred to as
"liabilities of" the Growth and Income Fund. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all the Funds for all
purposes. Any creditor of the Growth and Income Fund may look only to the
assets of the Growth and Income Fund to satisfy such creditor's debt.
(c) Dividends. Dividends and distributions on Shares of the Growth and
Income Fund may be paid with such frequency as the Trustees may determine,
which may be daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the Shareholders of the Growth and Income Fund, from such of
the income, accrued or realized, and capital gains, realized or unrealized,
and out of the assets belonging to the Growth and Income Fund, as the
Trustees may determine, after providing for actual and accrued liabilities
of the Growth and Income Fund.
2
<PAGE>
Certificate of Designation
Growth and Income Fund
All dividends and distributions on Shares of the Growth and Income Fund
shall be distributed pro rata to the Shareholders of the Growth and Income
Fund in proportion to the number of such Shares held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's
purchase order and/or payment have not been received by the time or times
established by the Trustees under such program or procedure, or that
dividends or distributions shall be payable on Shares which have been
tendered by the holder thereof for redemption or repurchase, but the
redemption or repurchase proceeds of which have not yet been paid to such
Shareholder. Such dividends and distributions may be made in cash or Shares
of the Growth and Income Fund or a combination thereof as determined by the
Trustees, or pursuant to any program that the Trustees may have in effect
at the time for the election by each Shareholder of the mode of the making
of such dividend or distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with subsection (h) hereof.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of the Growth and Income Fund shall be entitled to
receive, when and as declared by the Trustees, the excess of the Fund
Assets over the liabilities of the Growth and Income Fund. The assets so
distributable to the Shareholders of the Growth and Income Fund shall be
distributed among such Shareholders in proportion to the number of Shares
of the Growth and Income Fund held by them and recorded on the books of the
Trust. The liquidation of the Growth and Income Fund may be authorized by
vote of a Majority of the Trustees, subject to the affirmative vote of "a
majority of the outstanding voting securities" of the Growth and Income
Fund, as the quoted phrase is defined in the 1940 Act, determined in
accordance with clause (iii) of the definition of "Majority Shareholder
Vote" in Section 1.4 of the Declaration of Trust.
(e) Voting. The Shareholders shall have the voting rights set forth in
or determined under Article 7 of the Declaration of Trust.
(f) Redemption by Shareholder. Each holder of Shares of the Growth and
Income Fund shall have the right at such times as may be permitted by the
Trust, but no less frequently than once each week, to require the Trust to
redeem all or any part of his Shares of the Growth and Income Fund at a
redemption price equal to the net asset value per Share of the Growth and
Income Fund next determined in accordance with subsection (h) hereof after
3
<PAGE>
Certificate of Designation
Growth and Income Fund
the Shares are properly tendered for redemption; provided, that the
Trustees may from time to time, in their discretion, determine and impose a
fee for such redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which determination
shall be conclusive, that conditions exist which make payment wholly in
cash unwise or undesirable, the Trust may make payment wholly or partly in
Securities or other assets belonging to the Growth and Income Fund at the
value of such Securities or assets used in such determination of net asset
value. Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of the
Growth and Income Fund to require the Trust to redeem Shares of the Growth
and Income Fund during any period or at any time when and to the extent
permissible under the 1940 Act.
(g) Redemption at the Option of the Trust. Each Share of the Growth
and Income Fund shall be subject to redemption at the option of the Trust
at the redemption price which would be applicable if such Share were then
being redeemed by the Shareholder pursuant to subsection (f) hereof: (i) at
any time, if the Trustees determine in their sole discretion that failure
to so redeem may have materially adverse consequences to the holders of the
Shares of the Trust or of any Fund, or (ii) upon such other conditions with
respect to maintenance of Shareholder accounts of a minimum amount as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Growth and Income Fund. Upon such redemption the
holders of the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of the Growth and
Income Fund at any time shall be the quotient obtained by dividing the
value of the net assets of the Growth and Income Fund at such time (being
the current value of the assets belonging to the Growth and Income Fund,
less its then existing liabilities) by the total number of Shares of the
Growth and Income Fund then outstanding, all determined in accordance with
the methods and procedures, including without limitation those with respect
to rounding, established by the Trustees from time to time. The Trustees
may determine to maintain the net asset value per Share of the Growth and
Income Fund at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declaration of income attributable to the Growth and Income Fund
as dividends payable in additional Shares of the Growth and Income Fund at
the designated constant dollar amount and for the handling of any losses
attributable to the Growth and Income Fund. Such procedures may provide
that in the event of any loss each Shareholder shall be deemed to have
contributed to the shares of beneficial interest account of the
4
<PAGE>
Certificate of Designation
Growth and Income Fund
Growth and Income Fund his pro rata portion of the total number of Shares
required to be canceled in order to permit the net asset value per share of
the Growth and Income Fund to be maintained, after reflecting such loss, at
the designated constant dollar amount. Each Shareholder of the Growth and
Income Fund shall be deemed to have expressly agreed, by his investment in
the Growth and Income Fund, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of the Growth and Income Fund shall be
transferable, but transfers of Shares of the Growth and Income Fund will be
recorded on the Share transfer records of the Trust applicable to the
Growth and Income Fund only at such times as Shareholders shall have the
right to require the Trust to redeem Shares of the Growth and Income Fund
and at such other times as may be permitted by the Trustees.
(j) Equality. All Shares of the Growth and Income Fund shall represent
an equal proportionate interest in the assets belonging to the Growth and
Income Fund (subject to the liabilities of the Growth and Income Fund), and
each Share of the Growth and Income Fund shall be equal to each other Share
thereof; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) hereof that may exist with
respect to dividends and distributions on Shares of the Growth and Income
Fund. The Trustees may from time to time divide or combine the Shares of
the Growth and Income Fund into a greater or lesser number of Shares of the
Growth and Income Fund without thereby changing the proportionate
beneficial interest in the assets belonging to the Growth and Income Fund
or in any way affecting the rights of the holders of Shares of any other
Fund.
(k) Rights of Fractional Shares. Any fractional Share of the Growth
and Income Fund shall carry proportionately all the rights and obligations
of a whole Share of the Growth and Income Fund, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust or of the Growth and
Income Fund.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders
of Shares of the Growth and Income Fund shall have the right to convert
said Shares into Shares of one or more other Funds in accordance with such
requirements and procedures as the Trustees may establish.
(m) Amendment, etc. Subject to the provisions and limitations of
Section 9.3 of the Declaration of Trust and applicable law, this
Certificate of Designation may be amended by an instrument in writing
signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a
5
<PAGE>
Certificate of Designation
Growth and Income Fund
Majority of the Trustees), provided that, if any amendment adversely
affects the rights of the Shareholders of the Growth and Income Fund, such
amendment may be adopted by an instrument in writing signed by a Majority
of the Trustees (or by an officer of the Trust pursuant to the vote of a
Majority of the Trustees) when authorized to do so by the vote in
accordance with Section 7.1 of the Declaration of Trust of the holders of a
majority of all the Shares of the Growth and Income Fund outstanding and
entitled to vote.
(n) Incorporation of Defined Terms. All capitalized terms which are
not defined herein shall have the same meanings as are assigned to those
terms in the Declaration of Trust filed with the Secretary of State of the
Commonwealth of Massachusetts.
The Trustees further direct that, upon the execution of this Certificate of
Designation, the Trust take all necessary action to file a copy of this
Certificate of Designation with the Secretary of State of The Commonwealth of
Massachusetts and at any other place required by law or by the Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set her hand and seal this 28th day
of February, 1991.
/s/ Janice M. Teague
Janice M. Teague, Secretary
6
<PAGE>
ACKNOWLEDGMENT
STATE OF COLORADO )
CITY AND :
COUNTY OF DENVER )
On this 28th day of February, 1991, before me personally came Janice M.
Teague, Secretary of Janus Investment Fund, to me known, and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged that she had executed the same as her free act and deed. Witness my
hand and official seal.
/s/ Diane M. Austin
Notary Public
My commission expires __________________
My Commission Expires 11/14/92
------------------------------
7
EXHIBIT 1(c)
JANUS INVESTMENT FUND
CERTIFICATE OF DESIGNATION
FOR
JANUS WORLDWIDE FUND
The undersigned, being the Secretary of Janus Investment Fund (hereinafter
referred to as the "Trust"), a trust with transferable shares of the type
commonly called a Massachusetts business trust, DOES HEREBY CERTIFY that,
pursuant to the authority conferred upon the Trustees of the Trust by Section
6.1(b) and Section 9.3 of the Agreement and Declaration of Trust, dated February
11, 1986, and by the affirmative vote of a Majority of the Trustees at a meeting
duly called and held on November 2, 1990 and adjourned to December 3, 1990, the
Declaration of Trust is amended as follows:
There is hereby established and designated the Janus Worldwide Fund
(hereinafter referred to as the "Worldwide Fund"). The beneficial interest in
the Worldwide Fund shall be divided into Shares having a nominal or par value of
one cent ($.01) per Share, of which an unlimited number may be issued, which
Shares shall represent interests only in the Worldwide Fund. The Shares of the
Worldwide Fund shall have the following rights and preferences:
(a) Assets Belonging to the Worldwide Fund. Any portion of the Trust
Property allocated to the Worldwide Fund, and all consideration received by
the Trust for the issue or sale of Shares of the Worldwide Fund, together
with all assets in which such consideration is invested or reinvested, all
interest, dividends, income, earnings, profits and gains therefrom, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
held by the Trustees in trust for the benefit of the holders of Shares of
the Worldwide Fund and shall irrevocably belong to the Worldwide Fund for
all purposes, and shall be so recorded upon the books of account of the
Trust, and the Shareholders of any other Fund who are not Shareholders of
the Worldwide Fund shall not have, and shall be conclusively deemed to have
waived, any claims to the assets of the Worldwide Fund. Such consideration,
assets, interest, dividends, income, earnings, profits, gains and proceeds,
together with any General Items allocated to the Worldwide Fund
-1-
<PAGE>
Certificate of Designation
Janus Worldwide Fund
as provided in the following sentence, are herein referred to collectively
as "Fund Assets" of the Worldwide Fund, and as assets "belonging to" the
Worldwide Fund. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Fund (collectively "General
Items"), the Trustees shall allocate such General Items to and among any
one or more of the Funds established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to the Worldwide Fund
shall belong to and be part of the Fund Assets of the Worldwide Fund. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all the Funds for all purposes.
(b) Liabilities of the Worldwide Fund. The assets belonging to the
Worldwide Fund shall be charged with the liabilities in respect of the
Worldwide Fund and all expenses, costs, charges and reserves attributable
to the Worldwide Fund, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
pertaining to any particular Fund shall be allocated and charged by the
Trustees to and among any one or more of the Funds established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
indebtedness, expenses, costs, charges and reserves allocated and so
charged to the Worldwide Fund are herein referred to as "liabilities of"
the Worldwide Fund. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon
the Shareholders of all the Funds for all purposes. Any creditor of the
Worldwide Fund may look only to the assets of the Worldwide Fund to satisfy
such creditor's debt.
(c) Dividends. Dividends and distributions on Shares of the Worldwide
Fund may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to
the Shareholders of the Worldwide Fund, from such of the income, accrued or
realized, and capital gains, realized or unrealized, and out of the assets
belonging to the Worldwide Fund, as the Trustees may determine, after
providing for actual and accrued liabilities of the Worldwide Fund. All
dividends and distributions on Shares of the Worldwide Fund shall be
distributed pro rata to the Shareholders of the Worldwide Fund in
proportion to the number of such Shares held by such holders at the date
and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or
distribution shall be payable
-2-
<PAGE>
Certificate of Designation
Janus Worldwide Fund
on Shares as to which the Shareholder's purchase order and/or payment have
not been received by the time or times established by the Trustees under
such program or procedure, or that dividends or distributions shall be
payable on Shares which have been tendered by the holder thereof for
redemption or repurchase, but the redemption or repurchase proceeds of
which have not yet been paid to such Shareholder. Such dividends and
distributions may be made in cash or Shares of the Worldwide Fund or a
combination thereof as determined by the Trustees, or pursuant to any
program that the Trustees may have in effect at the time for the election
by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution paid in
Shares will be paid at the net asset value thereof as determined in
accordance with subsection (h) hereof.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of the Worldwide Fund shall be entitled to receive,
when and as declared by the Trustees, the excess of the Fund Assets over
the liabilities of the Worldwide Fund. The assets so distributable to the
Shareholders of the Worldwide Fund shall be distributed among such
Shareholders in proportion to the number of Shares of the Worldwide Fund
held by them and recorded on the books of the Trust. The liquidation of the
Worldwide Fund may be authorized by vote of a Majority of the Trustees,
subject to the affirmative vote of "a majority of the outstanding voting
securities" of the Worldwide Fund, as the quoted phrase is defined in the
1940 Act, determined in accordance with clause (iii) of the definition of
"Majority Shareholder Vote" in Section 1.4 of the Declaration of Trust.
(e) Voting. The Shareholders shall have the voting rights set forth in
or determined under Article 7 of the Declaration of Trust.
(f) Redemption by Shareholder. Each holder of Shares of the Worldwide
Fund shall have the right at such times as may be permitted by the Trust,
but no less frequently than once each week, to require the Trust to redeem
all or any part of his Shares of the Worldwide Fund at a redemption price
equal to the net asset value per Share of the Worldwide Fund next
determined in accordance with subsection (h) hereof after the Shares are
properly tendered for redemption; provided, that the Trustees may from time
to time, in their discretion, determine and impose a fee for such
redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise
or undesirable, the Trust may make payment wholly or partly in Securities
or other assets belonging to the Worldwide Fund at
-3-
<PAGE>
Certificate of Designation
Janus Worldwide Fund
the value of such Securities or assets used in such determination of net
asset value. Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the holders of Shares
of the Worldwide Fund to require the Trust to redeem Shares of the
Worldwide Fund during any period or at any time when and to the extent
permissible under the 1940 Act.
(g) Redemption at the Option of the Trust. Each Share of the Worldwide
Fund shall be subject to redemption at the option of the Trust at the
redemption price which would be applicable if such Share were then being
redeemed by the Shareholder pursuant to subsection (f) hereof: (i) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the
Shares of the Trust or of any Fund, or (ii) upon such other conditions with
respect to maintenance of Shareholder accounts of a minimum amount as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Worldwide Fund. Upon such redemption the holders
of the Shares so redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of the Worldwide
Fund at any time shall be the quotient obtained by dividing the value of
the net assets of the Worldwide Fund at such time (being the current value
of the assets belonging to the Worldwide Fund, less its then existing
liabilities) by the total number of Shares of the Worldwide Fund then
outstanding, all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by
the Trustees from time to time. The Trustees may determine to maintain the
net asset value per Share of the Worldwide Fund at a designated constant
dollar amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declaration of income
attributable to the Worldwide Fund as dividends payable in additional
Shares of the Worldwide Fund at the designated constant dollar amount and
for the handling of any losses attributable to the Worldwide Fund. Such
procedures may provide that in the event of any loss each Shareholder shall
be deemed to have contributed to the shares of beneficial interest account
of the Worldwide Fund his pro rata portion of the total number of Shares
required to be canceled in order to permit the net asset value per share of
the Worldwide Fund to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Worldwide Fund
shall be deemed to have expressly agreed, by his investment in the
Worldwide Fund, to make the contribution referred to in the preceding
sentence in the event of any such loss.
-4-
<PAGE>
Certificate of Designation
Janus Worldwide Fund
(i) Transfer. All Shares of the Worldwide Fund shall be transferable,
but transfers of Shares of the Worldwide Fund will be recorded on the Share
transfer records of the Trust applicable to the Worldwide Fund only at such
times as Shareholders shall have the right to require the Trust to redeem
Shares of the Worldwide Fund and at such other times as may be permitted by
the Trustees.
(j) Equality. All Shares of the Worldwide Fund shall represent an
equal proportionate interest in the assets belonging to the Worldwide Fund
(subject to the liabilities of the Worldwide Fund), and each Share of the
Worldwide Fund shall be equal to each other Share thereof; but the
provisions of this sentence shall not restrict any distinctions permissible
under subsection (c) hereof that may exist with respect to dividends and
distributions on Shares of the Worldwide Fund. The Trustees may from time
to time divide or combine the Shares of the Worldwide Fund into a greater
or lesser number of Shares of the Worldwide Fund without thereby changing
the proportionate beneficial interest in the assets belonging to the
Worldwide Fund or in any way affecting the rights of the holders of Shares
of any other Fund.
(k) Rights of Fractional Shares. Any fractional Share of the Worldwide
Fund shall carry proportionately all the rights and obligations of a whole
Share of the Worldwide Fund, including rights and obligations with respect
to voting, receipt of dividends and distributions, redemption of Shares,
and liquidation of the Trust or of the Worldwide Fund.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders
of Shares of the Worldwide Fund shall have the right to convert said Shares
into Shares of one or more other Funds in accordance with such requirements
and procedures as the Trustees may establish.
(m) Amendment, etc. Subject to the provisions and limitations of
Section 9.3 of the Declaration of Trust and applicable law, this
Certificate of Designation may be amended by an instrument in writing
signed by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a Majority of the Trustees), provided that, if any
amendment adversely affects the rights of the Shareholders of the Worldwide
Fund, such amendment may be adopted by an instrument in writing signed by a
Majority of the Trustees (or by an officer of the Trust pursuant to the
vote of a Majority of the Trustees) when authorized to do so by the vote in
accordance with Section 7.1 of the Declaration of Trust of the holders of a
majority of all the Shares of the Worldwide Fund outstanding and entitled
to vote.
-5-
<PAGE>
Certificate of Designation
Janus Worldwide Fund
(n) Incorporation of Defined Terms. All capitalized terms which are
not defined herein shall have the same meanings as are assigned to those
terms in the Declaration of Trust filed with the Secretary of State of the
Commonwealth of Massachusetts.
The Trustees further direct that, upon the execution of this Certificate of
Designation, the Trust take all necessary action to file a copy of this
Certificate of Designation with the Secretary of State of The Commonwealth of
Massachusetts and at any other place required by law or by the Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set her hand and seal this 28th day
of February, 1991.
/s/ Janice M. Teague
Janice M. Teague, Secretary
-6-
<PAGE>
ACKNOWLEDGMENT
STATE OF COLORADO )
CITY AND :
COUNTY OF DENVER )
On this 28th day of February, 1991, before me personally came Janice M.
Teague, Secretary of Janus Investment Fund, to me known, and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged that she had executed the same as her free act and deed. Witness my
hand and official seal.
/s/ Diane M. Austin
Notary Public
My commission expires
11/14/92
-7-
EXHIBIT 4(a)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
JANUS FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that SPECIMEN CUSIP 471023 10 1
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the JANUS FUND
series of Janus Investment Fund (the "Fund"), fully paid and nonassessable, the
said shares being issued and held subject to the provisions of the Agreement and
Declaration of Trust of the Fund, and all amendments thereto, copies of which
are on file with the Secretary of The Commonwealth of Massachusetts. The said
owner by accepting this certificate agrees to and is bound by all of the said
provisions. The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this certificate to the
Fund properly endorsed for transfer (see the reverse side hereof). This
certificate is executed on behalf of the Trustees of the Fund as Trustees and
not individually and the obligations hereof are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the JANUS FUND series of Janus Investment Fund. This
certificate is not valid unless countersigned by the Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Janice M. Teague /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
INVESTORS FIDUCIARY TRUST COMPANY
(KANSAS CITY MISSOURI) TRANSFER AGENT
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) SUBTRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY A NATIONAL OR STATE BANK, A FEDERAL
SAVINGS AND LOAN ASSOCIATION, A TRUST COMPANY OR A MEMBER FIRM OF A DOMESTIC
STOCK EXCHANGE.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_____________________________________________ Shares of beneficial interest
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
_______________________________________________________________________ Attorney
to transfer the said shares on the books of the within-named Fund with full
power of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________________________________________________________
EXHIBIT 4(b)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
JANUS GROWTH AND INCOME FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that SPECIMEN CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the JANUS
GROWTH AND INCOME FUND series of Janus Investment Fund (the "Fund"), fully paid
and nonassessable, the said shares being issued and held subject to the
provisions of the Agreement and Declaration of Trust of the Fund, and all
amendments thereto, copies of which are on file with the Secretary of The
Commonwealth of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said provisions. The shares represented
hereby are transferable in writing by the owner thereof in person or by attorney
upon surrender of this certificate to the Fund properly endorsed for transfer
(see the reverse side hereof). This certificate is executed on behalf of the
Trustees of the Fund as Trustees and not individually and the obligations hereof
are not binding upon any of the Trustees, officers or shareholders individually
but are binding only upon the assets and property of the JANUS GROWTH AND INCOME
FUND series of Janus Investment Fund. This certificate is not valid unless
countersigned by the Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Janice M. Teague /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
INVESTORS FIDUCIARY TRUST COMPANY
(KANSAS CITY MISSOURI) TRANSFER AGENT
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) SUBTRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY A NATIONAL OR STATE BANK, A FEDERAL
SAVINGS AND LOAN ASSOCIATION, A TRUST COMPANY OR A MEMBER FIRM OF A DOMESTIC
STOCK EXCHANGE.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_____________________________________________ Shares of beneficial interest
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
_______________________________________________________________________ Attorney
to transfer the said shares on the books of the within-named Fund with full
power of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________________________________________________________
EXHIBIT 4(c)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
JANUS WORLDWIDE FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that SPECIMEN CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the JANUS
WORLDWIDE FUND series of Janus Investment Fund (the "Fund"), fully paid and
nonassessable, the said shares being issued and held subject to the provisions
of the Agreement and Declaration of Trust of the Fund, and all amendments
thereto, copies of which are on file with the Secretary of The Commonwealth of
Massachusetts. The said owner by accepting this certificate agrees to and is
bound by all of the said provisions. The shares represented hereby are
transferable in writing by the owner thereof in person or by attorney upon
surrender of this certificate to the Fund properly endorsed for transfer (see
the reverse side hereof). This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations hereof are not
binding upon any of the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the JANUS WORLDWIDE FUND series of
Janus Investment Fund. This certificate is not valid unless countersigned by the
Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Janice M. Teague /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
INVESTORS FIDUCIARY TRUST COMPANY
(KANSAS CITY MISSOURI) TRANSFER AGENT
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) SUBTRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY A NATIONAL OR STATE BANK, A FEDERAL
SAVINGS AND LOAN ASSOCIATION, A TRUST COMPANY OR A MEMBER FIRM OF A DOMESTIC
STOCK EXCHANGE.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_____________________________________________ Shares of beneficial interest
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
_______________________________________________________________________ Attorney
to transfer the said shares on the books of the within-named Fund with full
power of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________________________________________________________
EXHIBIT 4(n)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the Janus
High-Yield Fund series of Janus Investment Fund (the "Fund"), fully paid and
nonassessable, the said shares being issued and held subject to the provisions
of the Agreement and Declaration of Trust of the Fund, and all amendments
thereto, copies of which are on file with the Secretary of The Commonwealth of
Massachusetts. The said owner by accepting this certificate agrees to and is
bound by all of the said provisions. The shares represented hereby are
transferable in writing by the owner thereof in person or by attorney upon
surrender of this certificate to the Fund property endorsed for transfer (see
the reverse side hereof). This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations hereof are not
binding upon any of the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Janus High-Yield Fund series of
Janus Investment Fund. This certificate is not valid unless countersigned by the
Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Kelley Abbott Howes /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) TRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE. THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATIONS, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION IN
ACCORDANCE WITH FUND POLICIES.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
______________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
___________________________________________________________________ Shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named Fund with
full power of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________
<PAGE>
EXHIBIT 4(n)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the Janus
Olympus Fund series of Janus Investment Fund (the "Fund"), fully paid and
nonassessable, the said shares being issued and held subject to the provisions
of the Agreement and Declaration of Trust of the Fund, and all amendments
thereto, copies of which are on file with the Secretary of The Commonwealth of
Massachusetts. The said owner by accepting this certificate agrees to and is
bound by all of the said provisions. The shares represented hereby are
transferable in writing by the owner thereof in person or by attorney upon
surrender of this certificate to the Fund property endorsed for transfer (see
the reverse side hereof). This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations hereof are not
binding upon any of the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Janus Olympus Fund series of
Janus Investment Fund. This certificate is not valid unless countersigned by the
Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Kelley Abbott Howes /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) TRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE. THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATIONS, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION IN
ACCORDANCE WITH FUND POLICIES.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
______________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
___________________________________________________________________ Shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named Fund with
full power of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________
EXHIBIT 4(o)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
JANUS EQUITY INCOME FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the Janus
Equity Income Fund series of Janus Investment Fund (the "Fund"), fully paid and
nonassessable, the said shares being issued and held subject to the provisions
of the Agreement and Declaration of Trust of the Fund, and all amendments
thereto, copies of which are on file with the Secretary of The Commonwealth of
Massachusetts. The said owner by accepting this certificate agrees to and is
bound by all of the said provisions. The shares represented hereby are
transferable in writing by the owner thereof in person or by attorney upon
surrender of this certificate to the Fund property endorsed for transfer (see
the reverse side hereof). This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations hereof are not
binding upon any of the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Janus Equity Income Fund series
of Janus Investment Fund. This certificate is not valid unless countersigned by
the Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Kelley Abbott Howes /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) TRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE. THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATIONS, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION IN
ACCORDANCE WITH FUND POLICIES.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
____________________________________________________________________ Shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_________________________________________________________________________
_________________________________________________________________ Attorney to
transfer the said shares on the books of the within-named Fund with full power
of substitution in the premises.
Dated, ______________________ ____________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
________________________________
EXHIBIT 4(p)
[LOGO]
JANUS INVESTMENT FUND
(A Massachusetts Business Trust)
JANUS SPECIAL SITUATIONS FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO.
THIS CERTIFIES that CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
Is the owner of ________________ shares of beneficial interest in the Janus
Special Situations Fund series of Janus Investment Fund (the "Fund"), fully paid
and nonassessable, the said shares being issued and held subject to the
provisions of the Agreement and Declaration of Trust of the Fund, and all
amendments thereto, copies of which are on file with the Secretary of The
Commonwealth of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said provisions. The shares represented
hereby are transferable in writing by the owner thereof in person or by attorney
upon surrender of this certificate to the Fund property endorsed for transfer
(see the reverse side hereof). This certificate is executed on behalf of the
Trustees of the Fund as Trustees and not individually and the obligations hereof
are not binding upon any of the Trustees, officers or shareholders individually
but are binding only upon the assets and property of the Janus Special
Situations Fund series of Janus Investment Fund. This certificate is not valid
unless countersigned by the Transfer Agent.
Witness the facsimile seal of the Fund and the facsimile signatures of its duly
authorized officers.
Dated:
/s/ Kelley Abbott Howes /s/ Thomas H. Bailey
SECRETARY PRESIDENT
[SEAL]
COUNTERSIGNED
BY JANUS SERVICE CORPORATION
(DENVER COLORADO) TRANSFER AGENT
AUTHORIZED SIGNATURE
<PAGE>
NOTICE. THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATIONS, ENLARGEMENT, OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION IN
ACCORDANCE WITH FUND POLICIES.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT. _____ Custodian _____
(Cust) (Minor)
Under Uniform Gifts to Minors Act
______________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
___________________________________________________________________________
___________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
______________________________________________________________________ Shares
of beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_______________________________________________________________________
________________________________________________________________ Attorney to
transfer the said shares on the books of the within-named Fund with full power
of substitution in the premises.
Dated, ______________________ ___________________________________
Owner
___________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
WITH NOTICE PRINTED ABOVE.
Signature(s) guaranteed by:
______________________________
EXHIBIT 5(a)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 10th day
of July, 1992, as restated this 21st day of May, 1996, between JANUS INVESTMENT
FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
-4-
<PAGE>
name "Janus" in connection with the Fund as soon as reasonablypracticable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 5(b)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS GROWTH AND INCOME FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 1st day
of April, 1991, as restated this 21st day of May, 1996, between JANUS INVESTMENT
FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Growth and Income Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
-4-
<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1992,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Trust (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
-5-
<PAGE>
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder and
except to the extent otherwise provided by law. As used in this Section 15,
"JCC" shall include any affiliate of JCC performing services for the Trust
contemplated hereunder and directors, officers and employees of JCC and such
affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
<PAGE>
EXHIBIT 5(b)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS WORLDWIDE FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 1st day
of April, 1991, as restated this 21st day of May, 1996, between JANUS INVESTMENT
FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Worldwide Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
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<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
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<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
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<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1992,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Trust (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 5(c)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS TWENTY FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Twenty Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
-4-
<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
<PAGE>
EXHIBIT 5(c)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS VENTURE FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Venture Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
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<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 5(d)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS FLEXIBLE INCOME FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Flexible Income Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of .65% of the first $300,000,000 of the daily closing net
asset value of the Fund, plus 1/365 of 0.55% of the daily closing net asset
value of the Fund in excess of $300,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
-4-
<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 5(e)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS ENTERPRISE FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Enterprise Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
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<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
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<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
<PAGE>
EXHIBIT 5(e)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS BALANCED FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Balanced Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
-3-
<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
-4-
<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
<PAGE>
EXHIBIT 5(e)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS SHORT-TERM BOND FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 7th day
of August, 1992, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Short-Term Bond Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Board of Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Board of Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment portfolio of the
Fund, the investment recommendations of JCC, and the investment considerations
which have given rise to those recommendations. JCC shall supervise the purchase
and sale of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Board of Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trust's Board of Trustees of its performance of services hereunder upon request
therefor and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable. JCC is also authorized, subject to review by the Board of Trustees,
to furnish such other services as the Adviser shall from time to time determine
to be necessary or useful to perform the services contemplated by this
Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of .65% of the first $300,000,000 of the daily closing net
asset value of the Fund, plus 1/365 of 0.55% of the daily closing net asset
value of the Fund in excess of $300,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees (the "Trustees"), except for such Trustees
who are not interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
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<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that JCC or an affiliate is
registered as a broker-dealer, JCC may select a broker or dealer with which it
or the Fund is affiliated. JCC or such affiliated broker-dealer may effect or
execute Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Board of Trustees of the Trust, or by the shareholders of the
Trust acting by vote of at least a majority of its outstanding voting
securities, provided in either case that sixty (60) days advance written notice
of termination be given to JCC at its principal place of business. This
Agreement may be terminated by JCC at any time, without penalty, by giving sixty
(60) days advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Declaration of Trust, the Trust shall cease to use the
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<PAGE>
name "Janus" in connection with the Fund as soon as reasonably practicable
following any termination of this Agreement if JCC does not continue to provide
investment advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1993,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Board of Trustees of
the Trust or the affirmative vote of a majority of the outstanding voting
securities of the Trust. The annual approvals provided for herein shall be
effective to continue this Agreement from year to year if given within a period
beginning not more than sixty (60) days prior to June 16 of each applicable
year, notwithstanding the fact that more than three hundred sixty-five (365)
days may have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
-5-
<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6
EXHIBIT 5(f)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS FEDERAL TAX-EXEMPT FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 1st day
of April, 1993, as restated this 21st day of May, 1996, between JANUS INVESTMENT
FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Federal Tax-Exempt Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Trustees and appropriate officers of the Trust
fully informed as to the condition of the investment portfolio of the Fund, the
investment recommendations of JCC, and the investment considerations which have
given rise to those recommendations. JCC shall supervise the purchase and sale
of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trustees of its performance of services hereunder upon request therefor and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Fund as it shall determine to be desirable. JCC is
also authorized, subject to review by the Trustees, to furnish such other
services as JCC shall from time to time determine to be necessary or useful to
perform the services contemplated by this Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 0.60% of the first $300,000,000 of the daily closing net
asset value of the Fund, plus 1/365 of 0.55% of the daily closing net asset
value in excess of $300,000,000. The fee shall be paid monthly.
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise,
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<PAGE>
JCC shall incur and pay the following expenses relating to the Fund's operations
without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees, except for such Trustees who are not
interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above described administrative and clerical
functions, including transfer agency, registry, dividend disbursing,
recordkeeping, bookkeeping, accounting and blue sky monitoring and registration
functions, and the preparation of reports and returns, the Trust shall pay to
JCC compensation for,
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<PAGE>
or reimburse JCC for its expenses incurred in connection with, such services as
JCC and the Trust shall agree from time to time, any other provision of this
Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the 1940 Act and the Securities Exchange Act of 1934, as
amended, and in the event that JCC or an affiliate is registered as a
broker-dealer, JCC may select a broker or dealer with which it or the Fund is
affiliated. JCC or such affiliated broker-dealer may effect or execute Fund
portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Trust
acting by vote of at least a majority of its outstanding voting securities,
provided in either case that sixty (60) days advance written notice of
termination be given to JCC at its principal place of business. This Agreement
may be terminated by JCC at any time, without penalty, by giving sixty (60) days
advance written notice of termination to the Trust, addressed to its principal
place of business. The Trust agrees that, consistent with the terms of the
Trust's Declaration of Trust, the Trust shall cease to use the name "Janus" in
connection with the Fund as soon as reasonably practicable following any
termination of this Agreement if JCC does not continue to provide investment
advice to the Fund after such termination.
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<PAGE>
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1994,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting securities of
the Trust. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year if given within a period beginning not
more than ninety (90) days prior to June 16 of each applicable year,
notwithstanding the fact that more than three hundred sixty-five (365) days may
have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder and
except to the extent otherwise provided by law. As used in this Section 15,
"JCC" shall include any affiliate of JCC performing services for the Trust
contemplated hereunder and directors, officers and employees of JCC and such
affiliates.
-5-
<PAGE>
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
<PAGE>
EXHIBIT 5(f)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS MERCURY FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 1st day
of April, 1993, as restated this 21st day of May, 1996, between JANUS INVESTMENT
FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Mercury Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Trustees and appropriate officers of the Trust
fully informed as to the condition of the investment portfolio of the Fund, the
investment recommendations of JCC, and the investment considerations which have
given rise to those recommendations. JCC shall supervise the purchase and sale
of securities as directed by the appropriate officers of the Trust.
-1-
<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trustees of its performance of services hereunder upon request therefor and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Fund as it shall determine to be desirable. JCC is
also authorized, subject to review by the Trustees, to furnish such other
services as JCC shall from time to time determine to be necessary or useful to
perform the services contemplated by this Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
-2-
<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees, except for such Trustees who are not
interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
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<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the 1940 Act and the Securities Exchange Act of 1934, as
amended, and in the event that JCC or an affiliate is registered as a
broker-dealer, JCC may select a broker or dealer with which it or the Fund is
affiliated. JCC or such affiliated broker-dealer may effect or execute Fund
portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Trust
acting by vote of at least a majority of its outstanding voting securities,
provided in either case that sixty (60) days advance written notice of
termination be given to JCC at its principal place of business. This Agreement
may be terminated by JCC at any time, without penalty, by giving sixty (60) days
advance written notice of termination to the Trust, addressed to its principal
place of business. The Trust agrees that, consistent with the terms of the
Trust's Declaration of Trust, the Trust shall cease to use the name
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<PAGE>
"Janus" in connection with the Fund as soon as reasonably practicable following
any termination of this Agreement if JCC does not continue to provide investment
advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1994,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting securities of
the Trust. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year if given within a period beginning not
more than ninety (90) days prior to June 16 of each applicable year,
notwithstanding the fact that more than three hundred sixty-five (365) days may
have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
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<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understoodthat trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 5(g)
JANUS INVESTMENT FUND
RESTATED
INVESTMENT ADVISORY AGREEMENT
JANUS OVERSEAS FUND
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 10th day
of February, 1994, as restated this 21st day of May, 1996, between JANUS
INVESTMENT FUND, a Massachusetts business trust (the "Trust"), and JANUS CAPITAL
CORPORATION, a Colorado corporation ("JCC").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Trust is authorized to create separate funds, each with its
own separate investment portfolio of which the beneficial interests are
represented by a separate series of shares; one of such funds created by the
Trust being designated as the Janus Overseas Fund (the "Fund"); and
WHEREAS, the Trust and JCC deem it mutually advantageous that JCC should
assist the Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Investment Advisory Services. JCC shall furnish continuous advice and
recommendations to the Fund as to the acquisition, holding, or disposition of
any or all of the securities or other assets which the Fund may own or
contemplate acquiring from time to time. JCC shall give due consideration to the
investment policies and restrictions and the other statements concerning the
Fund in the Trust's declaration of trust, bylaws, and registration statements
under the 1940 Act and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable to the Fund as a
regulated investment company. In addition, JCC shall cause its officers to
attend meetings and furnish oral or written reports, as the Trust may reasonably
require, in order to keep the Trustees and appropriate officers of the Trust
fully informed as to the condition of the investment portfolio of the Fund, the
investment recommendations of JCC, and the investment considerations which have
given rise to those recommendations. JCC shall supervise the purchase and sale
of securities as directed by the appropriate officers of the Trust.
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<PAGE>
2. Other Services. JCC is hereby authorized (to the extent the Trust has
not otherwise contracted) but not obligated (to the extent it so notifies the
Trustees at least 60 days in advance), to perform (or arrange for the
performance by affiliates of) the management and administrative services
necessary for the operation of the Fund. JCC is specifically authorized, on
behalf of the Trust, to conduct relations with custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and such other persons in any
such other capacity deemed by JCC to be necessary or desirable. JCC shall
generally monitor and report to Fund officers the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended. JCC shall make reports to the
Trustees of its performance of services hereunder upon request therefor and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Fund as it shall determine to be desirable. JCC is
also authorized, subject to review by the Trustees, to furnish such other
services as JCC shall from time to time determine to be necessary or useful to
perform the services contemplated by this Agreement.
3. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) to keep JCC continuously and fully informed as to the composition
of its investment portfolio and the nature of all of its assets and
liabilities from time to time;
(b) to furnish JCC with a certified copy of any financial statement or
report prepared for it by certified or independent public accountants
and with copies of any financial statements or reports made to its
shareholders or to any governmental body or securities exchange;
(c) to furnish JCC with any further materials or information which JCC
may reasonably request to enable it to perform its function under this
Agreement; and
(d) to compensate JCC for its services and reimburse JCC for its
expenses incurred hereunder in accordance with the provisions hereof.
4. Compensation. The Trust shall pay to JCC for its investment advisory
services a fee, calculated and payable for each day that this Agreement is in
effect, of 1/365 of 1% of the first $30,000,000 of the daily closing net asset
value of the Fund, plus 1/365 of 0.75% of the next $270,000,000 of the daily
closing net asset value of the Fund, plus 1/365 of 0.70% of the next
$200,000,000 of the daily closing net asset value of the Fund, plus 1/365 of
0.65% of the daily closing net asset value of the Fund in excess of
$500,000,000. The fee shall be paid monthly.
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<PAGE>
5. Expenses Borne by JCC. In addition to the expenses which JCC may incur
in the performance of its investment advisory functions under this Agreement,
and the expenses which it may expressly undertake to incur and pay under other
agreements with the Trust or otherwise, JCC shall incur and pay the following
expenses relating to the Fund's operations without reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of the Trust's
officers and its Trustees, except for such Trustees who are not
interested persons of JCC;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the Fund, other
than expenses incurred in complying with federal and state laws and
the law of any foreign country or territory or other jurisdiction
applicable to the issue, offer or sale of shares of the Fund including
without limitation registration fees and costs, the costs of preparing
the Fund's registration statement and amendments thereto, and the
costs and expenses of preparing, printing, and mailing prospectuses
(and statements of additional information) to persons other than
shareholders of the Fund.
6. Expenses Borne by the Trust. The Trust assumes and shall pay all
expenses incidental to its organization, operations and business not
specifically assumed or agreed to be paid by JCC pursuant to Sections 2 and 5
hereof, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which the Trust pays to its Trustees who
are not interested persons of JCC; compensation of the Fund's custodian,
transfer agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping and
bookkeeping expenses; brokerage commissions and all other expenses in connection
with execution of portfolio transactions (including any appropriate commissions
paid to JCC or its affiliates for effecting exchange listed, over-the-counter or
other securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of local representation in Massachusetts; expenses of
shareholders' meetings and of preparing, printing and distributing proxy
statements, notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory authorities;
all expenses incurred in complying with all federal and state laws and the laws
of any foreign country applicable to the issue, offer, or sale of shares of the
Fund, including, but not limited to, all costs involved in the registration or
qualification of shares of the Fund for sale in any jurisdiction, the costs of
portfolio pricing services and systems for compliance with blue sky laws, and
all costs involved in preparing, printing and mailing prospectuses and
statements of additional information of the Fund; and all fees, dues and other
expenses incurred by the Trust in connection with the membership of the Trust in
any trade association or other investment company organization. To the extent
that JCC shall perform any of the above
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<PAGE>
described administrative and clerical functions, including transfer agency,
registry, dividend disbursing, recordkeeping, bookkeeping, accounting and blue
sky monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to JCC compensation for, or reimburse JCC for its
expenses incurred in connection with, such services as JCC and the Trust shall
agree from time to time, any other provision of this Agreement notwithstanding.
7. Treatment of Investment Advice. The Trust shall treat the investment
advice and recommendations of JCC as being advisory only, and shall retain full
control over its own investment policies. However, the Trustees may delegate to
the appropriate officers of the Trust, or to a committee of the Trustees, the
power to authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. JCC is authorized and directed to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates, provided, however, that JCC may pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if JCC determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibilities of JCC. JCC is also authorized to
consider sales of Trust shares as a factor in selecting broker-dealers to
execute Fund portfolio transactions. In placing portfolio business with such
broker-dealers, JCC shall seek the best execution of each transaction. Subject
to the terms of this Agreement and the applicable requirements and provisions of
the law, including the 1940 Act and the Securities Exchange Act of 1934, as
amended, and in the event that JCC or an affiliate is registered as a
broker-dealer, JCC may select a broker or dealer with which it or the Fund is
affiliated. JCC or such affiliated broker-dealer may effect or execute Fund
portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by JCC in placing
portfolio transactions for the Trust pursuant to the foregoing provisions. JCC
shall report on the placement of portfolio transactions in the prior fiscal
quarter at each quarterly meeting of such Trustees.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Trust
acting by vote of at least a majority of its outstanding voting securities,
provided in either case that sixty (60) days advance written notice of
termination be given to JCC at its principal place of business. This Agreement
may be terminated by JCC at any time, without penalty, by giving sixty (60) days
advance written notice of termination to the Trust, addressed to its principal
place of business. The Trust agrees that, consistent with the terms of the
Trust's Declaration of Trust, the Trust shall cease to use the name
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<PAGE>
"Janus" in connection with the Fund as soon as reasonably practicable following
any termination of this Agreement if JCC does not continue to provide investment
advice to the Fund after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until June 16, 1995,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting securities of
the Trust. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year if given within a period beginning not
more than ninety (90) days prior to June 16 of each applicable year,
notwithstanding the fact that more than three hundred sixty-five (365) days may
have elapsed since the date on which such approval was last given.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons (as that phrase is
defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required by
applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act).
13. Other Series. The Trustees shall determine the basis for making an
appropriate allocation of the Trust's expenses (other than those directly
attributable to the Fund) between the Fund and the other series of the Trust.
14. Limitation of Personal Liability. All the parties hereto acknowledge
and agree that all liabilities of the Trust arising, directly or indirectly,
under this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing liabilities. The Trust's Declaration of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Declaration of Trust describes in detail the
respective responsibilities and limitations on liability of the Trustees,
officers and holders of shares of beneficial interest of the Trust.
15. Limitation of Liability of JCC. JCC shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission taken with respect to the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties
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<PAGE>
hereunder and except to the extent otherwise provided by law. As used in this
Section 15, "JCC" shall include any affiliate of JCC performing services for the
Trust contemplated hereunder and directors, officers and employees of JCC and
such affiliates.
16. Activities of JCC. The services of JCC to the Trust hereunder are not
to be deemed to be exclusive, and JCC and its affiliates are free to render
services to other parties. It is understood that trustees, officers and
shareholders of the Trust are or may become interested in JCC as directors,
officers and shareholders of JCC, that directors, officers, employees and
shareholders of JCC are or may become similarly interested in the Trust, and
that JCC may become interested in the Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities", "assignment" and "interested persons" when used herein,
shall have the respective meanings specified in the 1940 Act, as now in effect
or hereafter amended, and the rules and regulations thereunder, subject to such
orders, exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Restated Investment Advisory Agreement as of this 21st day of
May, 1996.
JANUS CAPITAL CORPORATION
By: /s/ Steven R. Goodbarn
Steven R. Goodbarn, Vice President
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
-6-
EXHIBIT 8(a)
CUSTODIAN CONTRACT
Between
JANUS INVESTMENT FUND
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Employment of Custodian and Property to be
Held By It ...............................................................1
2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States ......................2
2.1 Holding Securities ..................................................2
2.2 Delivery of Securities ..............................................3
2.3 Registration of Securities ..........................................7
2.4 Bank Accounts .......................................................8
2.5 Investment and Availability of Federal Funds ........................8
2.6 Collection of Income ................................................9
2.7 Payment of Fund Moneys ..............................................9
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased ...............................................12
2.9 Appointment of Agents ..............................................12
2.10 Deposit of Securities in Securities System .........................12
2.11 Segregated Account .................................................15
2.12 Ownership Certificates for Tax Purposes ............................16
2.13 Proxies ............................................................17
2.14 Communications Relating to Fund
Portfolio Securities ...............................................17
2.15 Reports to Fund By Independent Public
Accountants ........................................................18
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States ..............................18
3.1 Appointment of Foreign Sub-Custodians ..............................18
3.2 Assets to be Held ..................................................19
3.3 Foreign Securities Depositories ....................................19
3.4 Segregation of Securities 19
3.5 Agreements with Foreign Banking Institutions 20
3.6 Access of Independent Accountants of the Fund ......................21
3.7 Reports by Custodian ...............................................21
3.8 Transactions in Foreign Custody Account ............................21
3.9 Liability of Foreign Sub-Custodians ................................23
3.10 Liability of Custodian .............................................23
3.11 Monitoring Responsibilities ........................................24
3.12 Branches of U.S. Banks .............................................24
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund ...................................................25
5. Proper Instructions .....................................................26
6. Actions Permitted Without Express Authority .............................26
7. Evidence of Authority ...................................................27
<PAGE>
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income ...............................................................28
9. Records ..................................................................28
10. Opinion of Fund's Independent Accountant .................................29
11. Compensation of Custodian ................................................29
12. Responsibility of Custodian ..............................................29
13. Effective Period, Termination and Amendment ..............................31
14. Successor Custodian ......................................................32
15. Interpretive and Additional Provisions ...................................34
16. Additional Funds .........................................................34
17. Massachusetts Law to Apply ...............................................34
18. Prior Contracts ..........................................................35
19. Limitation of Liability ..................................................35
<PAGE>
CUSTODIAN CONTRACT
This Contract between Janus Investment Fund, a business trust organized and
existing under the laws of Massachusetts, having its principal place of business
at 100 Fillmore Street, Suite 300, Denver, Colorado 80206, hereinafter called
the "Fund", and State Street Bank and Trust Company, a Massachusetts
corporation, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the
Janus Investment Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
paragraph 16, being herein referred to as the "Fund(s)");
NOW THEREFOR, that in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
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<PAGE>
Trust. The Fund agrees to deliver to the Custodian all securities and cash owned
by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $.01 par value, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" ("within the meaning of Article 5),
the Custodian shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable vote by the
Board of Trustees of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but only in accordance
with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES.
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States, including all
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<PAGE>
domestic securities owned by the Fund, other than securities which are
maintained pursuant to Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as "Securities
System".
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such
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<PAGE>
case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to be
delivered to the Custodian;
7) To the broker selling the same for examination in accordance with
the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of
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<PAGE>
such warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, BUT ONLY against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, BUT ONLY against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a
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<PAGE>
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
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<PAGE>
15) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, specifying the securities to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, UNLESS
the Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub- custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street name" or other good delivery form.
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<PAGE>
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for the Fund may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds
to be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between
the Fund and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
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amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 COLLECTION OF INCOME. The Custodian shall collect on a timely basis all
income and other payments with respect to Domestic registered securities
held hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to Domestic bearer
securities if, on the date of payment by the issuer, such securities are
held by the Custodian or its agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the generality
of the foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due the Fund on Domestic securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.
2.7 PAYMENT OF FUND MONEYS. Upon receipt of Proper Instructions, which may be
continuing instructions when
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deemed appropriate by the parties, the Custodian shall pay out moneys of
the Fund in the following cases only:
1) Upon the purchase of domestic securities, futures contracts or
options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities, or evidence of title
to futures contracts or operations on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under
the Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof or (c) in the
case of repurchase agreements entered into between the Fund and
the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase
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<PAGE>
by the Fund of securities owned by the Custodian along with
written evidence of the agreement by the Custodian to repurchase
such securities from the Fund;
2) In connection with the conversion, exchange or surrender of
securities owned by the Fund and in the case of warrants, rights,
or similar securities, as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its
Secretary
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<PAGE>
or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In any
and every case where payment for purchase of domestic securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund to so pay in advance, the Custodian shall be absolutely liable to
the Fund for securities to the same extent as if the securities had been
received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF SECURITIES IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain domestic securities owned by the Fund in a clearing agency
registered with the Securities and
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<PAGE>
Exchange Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to domestic securities
of the Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian
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<PAGE>
shall transfer domestic securities sold for the account of the
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
domestic securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request. Upon request, the Custodian
shall furnish the Fund confirmation of each transfer to or from
the account of the Fund in the form of a written advice or notice
and shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System for
the account of the Fund.
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
domestic securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13 hereof;
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<PAGE>
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such loss or
damage.
2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the provisions of
any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange
-15-
<PAGE>
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection with options
purchased, sold or written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other
proper corporate purposes, BUT ONLY, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee signed by
an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.12 OWNERSHIP CERTIFICATE FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with
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receipt of income or other payments with respect to domestic securities of
the Fund held by it and in connection with transfers of such securities.
2.13 PROXIES. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.14 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of the
domestic securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to
take
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<PAGE>
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.15 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including domestic
securities deposited and/or maintained in a Securities System, relating to
the services provided by the Custodian under this Contract; such reports
shall be of sufficient scope and in sufficient detail, as may reasonably be
required by the Fund to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no
such inadequacies, the reports shall so state.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Custodian is authorized and
instructed to employ as sub-custodians for the Fund's securities and other
assets maintained outside of the United States the foreign banking
institutions and foreign securities depositories designated on Schedule A
hereto ("foreign sub-custodians"). Upon receipt of Proper
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Instructions, together with a certified resolution of the Fund's Board of
Trustees, the Custodian and the Fund may agree to amend Schedule A hereto
from time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodians. Upon receipt of
Proper Instructions from the Fund the Custodian shall cease the employment
of any one or more of such sub-custodians for maintaining custody of the
Fund's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c) (1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof.
3.4 SEGREGATION OF SECURITIES. The Custodian shall identify on its books as
belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian. Each
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agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody account
for the Custodian on behalf of the Fund and physically segregate in that
account, securities and other assets of the Fund, and, in the event that
such institution deposits the Fund's securities in a foreign securities
depository, that it shall identify on its books as belonging to the
Custodian, as agent for the Fund, the securities so deposited (all
collectively referred to as the "Account").
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a foreign
banking institution shall be substantially in the form set forth in Exhibit
1 hereto and shall provide that : (a) the Fund's assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of the foreign banking institutions or its creditors, except a claim of
payment for their safe custody or administration; (b) beneficial ownership
for the Fund's assets will be freely transferable without the payment of
money or value other than for custody or administration; (c) adequate
records will be maintained identifying the assets as belonging to the Fund;
(d) officers of or auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books
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and records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the Fund held by
the foreign sub-custodian will be subject only to the instructions of the
Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institutions under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of the Fund indicating, as
to securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate
by the parties, the Custodian shall
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make or cause its foreign sub-custodian to transfer, exchange or deliver
foreign securities owned by the Fund, but except to the extent explicitly
provided herein only in any of the cases specified in Section 2.2 (b) Upon
receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties the Custodian shall pay out or cause its
foreign sub-custodians to pay out monies of the Fund, but except to the
extent explicitly provided herein only in any of the cases specified in
Section 2.7. (c) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
the Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (d) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract and the Fund
agrees to hold any such nominee
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harmless from any liability as a holder of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution appointed pursuant to the
provisions of Article 3 to the same extent as set forth in Article 1 hereof
with respect to sub-custodians located in the United States and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.11 hereof, the Custodian shall not be liable
for any loss,
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damage, cost, expense, liability or claim resulting from, or caused by, the
direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar
in kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or is
notified by a foreign banking institution employed as a foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 BRANCHES OF U.S. BANKS. Except as otherwise set forth in this Contract, the
provisions hereof shall not apply where the custody of the Fund assets
maintained in a foreign branch of a banking institution which is a "bank"
as defined
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by Section 2(a) (5) of the Investment Company Act of 1940 which meets the
qualification set forth in Section 26(a) of said Act. The appointment of
any such branch as a sub-custodian shall be governed by Article 1 of this
Contract.
4. PAYMENTS FOR REPURCHASES OR REDEMPTIONS AND SALES OF SHARES
OF THE FUND
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares
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of the Fund issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund and the Transfer Agent of any receipt by
it of payments for Shares of the Fund.
5. PROPER INSTRUCTIONS
Proper Instructions as used herein means a writing signed or initialled by
two or more person or persons as the Board of Trustees shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Trustees of the Fund accompanied by a detailed
description of procedures approved by the Board of Trustees, Proper Instructions
may include communications effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY The Custodian may in its
discretion, without express authority from the Fund:
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1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
PROVIDED that all such payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Board of
Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
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<PAGE>
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
9. RECORDS
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the
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<PAGE>
Fund. All such records shall be the property of the Fund and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities owned by the
Fund and held by the Custodian and shall, when requested to do so by the Fund
and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
11. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
12. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of
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<PAGE>
title thereto received by it or delivered by it pursuant to this Contract and
shall be held harmless in acting upon any notice, request, consent, certificate
or other instrument reasonably believed by it to be genuine and to be signed by
the proper party or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into between the
Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or
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<PAGE>
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the Fund shall be security therefor and should the Fund
fail to repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of the Fund assets to the extent necessary to
obtain reimbursement.
13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; PROVIDED, however that the Custodian
shall not act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees of the Fund have approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees have reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended; PROVIDED FURTHER,
-31-
<PAGE>
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
14. SUCCESSOR CUSTODIAN
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the
-32-
<PAGE>
office of the Custodian and transfer such securities, funds and other properties
in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to
-33-
<PAGE>
the duties and obligations of the Custodian shall remain in full
force and effect.
15. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional or additional
provisions shall contravene any applicable federal or state regulations or any
provision of the Declaration of Trust of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
16. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Janus Investment Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Fund hereunder.
17. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
-34-
<PAGE>
18. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
19. LIMITATION OF LIABILITY
A copy of the Fund's Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this Contract is executed on behalf of the Trustees of the Fund as Trustees of
the Fund and not individually, and that the obligations under this Contract are
not binding upon any of the Trustees, officers, shareholders, agents or
employees of the Fund individually, but binding only upon the assets and
property of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 31st day of July, 1986.
ATTEST JANUS INVESTMENT FUND
/s/ Susan R. Hughes By /s/ James P. Craig, III
Assistant Secretary Executive Vice President
ATTEST State Street Bank and Trust Company
/s/ Kim Kulurd By /s/ E. D. Hawkes, Jr.
Assistant Secretary Vice President
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<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Janus Investment
Fund for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
-36-
EXHIBIT 8(b)
AMENDMENT
The Custodian Contract dated July 31, 1986 between Janus Investment
Fund (the "Fund") and State Street Bank and Trust Company (the "Custodian") is
hereby amended as follows:
I. Section 2.1 is amended to read as follows:
"HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all securities
owned by the Fund, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System" and (b) commercial paper
of an issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10.A."
II. Section 2.2 is amended to read, in relevant part as follows:
"DELIVERY OF SECURITIES. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities System
account of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper System Account") only upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
-1-
<PAGE>
1) . . . .
.
.
.
15) . . . ."
III. Section 2.7(1) is amended to read in relevant part as follows:
"PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures contracts or
options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in Section
2.3 hereof or in
-2-
<PAGE>
proper form for transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions
set forth in Section 2.10 hereof or (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; or (d) in the case of
repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Funds
of securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such securities
from the Fund or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such transfer
may be effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions from
the Fund as defined in Section 5;"
IV. Following Section 2.10, there is inserted a new Section 2.10.A to read
as follows: 2.10.A "FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The
Custodian may deposit and/or maintain securities owned by the Fund in the Direct
Paper system of the Custodian subject to the following provisions:
-3-
<PAGE>
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to securities of
the Fund which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to
the Fund;
4) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the
records of the Custodian to reflect such payment and
transfer of securities to the account of the Fund. The
Custodian shall transfer securities sold for the account of
the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment
for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of
a written advice or notice, of
-4-
<PAGE>
Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transaction in the
Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may
reasonably request from time to time."
V. Section 13 is hereby amended to read as follows:
"EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not act under Section 2.10 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not act under
Section 2.10.A hereof in the absence
-5-
<PAGE>
of receipt of an initial certificate of the Secretary of an Assistant Secretary
that the Board of Directors has approved the initial use of the Direct Paper
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by the Fund of the
Direct Paper System; PROVIDED FURTHER, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Articles of Incorporation, and further
provided, that the Fund may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements."
Except as otherwise expressly amended and modified herein, the
provisions of the Custodian Contract shall remain in full force and effect.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed in its name and on its behalf by its duly authorized
representatives and its Seal to be hereto affixed as of the 25th day of April,
1990.
ATTEST: JANUS INVESTMENT FUND
/s/ Janice M. Teague By: /s/ Jack R. Thompson
Secretary Vice President
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ Eric Greene By: /s/ E. D. Hawkes, Jr.
Assistent Secretary Vice President
-7-
EXHIBIT 8(c)
February 1, 1991
FEDERAL EXPRESS
State Street Bank and Trust Company
P.O. Box 1713
Boston, Mass. 02105
Attention: Wendy LaBonte
RE: CUSTODIAN CONTRACT
Dear Wendy:
In accordance with our recent discussions regarding State Street's
continued custody of only our Funds' foreign securities, I propose that,
effective upon the conversion of the Funds' domestic securities to Investors
Fiduciary Trust Company, the first paragraph of Section 1 of the Custodian
Contract with each of Janus Investment Fund, Janus Twenty Fund, Inc., Janus
Venture Fund, Inc. and Janus Income Series be amended as follows:
"The Fund hereby employs the Custodian as the custodian of its securities
it desires to be held outside the United States and cash or cash
equivalents incidental thereto ("foreign securities") pursuant to the
provisions of the Declaration of Trust [Articles of Incorporation]. The
Fund agrees to deliver to the Custodian all foreign securities owned by it
from time to time. The Custodian shall not be responsible for any property
of the Fund held or received by the Fund and not delivered to the
Custodian."
Please indicate State Street's agreement to the foregoing by returning
to me a copy of this letter executed by the appropriate person in the space
provided below.
Very truly yours,
Janus Investment Fund
Janus Twenty Fund, Inc.
Janus Venture Fund, Inc.
Janus Income Series
by /s/ Jack R. Thompson
Vice President
Acknowledged and agreed to this ___ day of February, 1991.
State Street Bank and Trust Company
by /s/ Wendy M. LaBonte
Title: Vice President
EXHIBIT 10(a)
June 13, 1986
Janus Investment Fund
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Re: Shares of Janus Fund Series of
JANUS INVESTMENT FUND
Gentlemen:
We have acted as counsel for Janus Investment Fund, a Massachusetts
business trust (the "Trust"), in connection with a plan to reorganize Janus
Fund, Inc. (the "Corporation") from a Maryland corporation into the Trust. This
plan is set forth in an Agreement and Plan of Reorganization and Liquidation,
dated February 12, 1986, by and between the Corporation and the Trust (the
"Agreement"). Pursuant to the Agreement, at 5:00 p.m., Eastern time, on June 16,
1986 (the "Effective Time of the Reorganization"), the Corporation will transfer
all of its business and assets, and assign all of its liabilities, to the Trust,
and the Trust shall acquire all such business and assets, and shall assume all
such liabilities, in exchange for delivery to the Corporation of a number of
shares (both full and fractional) of the Janus Fund series of the Trust
equivalent to the number of shares of capital stock of the Corporation
outstanding immediately prior to the Effective Time of the Reorganization. (The
shares of the Janus Fund series of the Trust, par value $.01 per share,
hereinafter shall be referred to as the "Shares.") The Shares received by the
Corporation thereupon will be distributed to the shareholders of the Corporation
of record as of the Effective Time of the Reorganization in exchange for their
capital stock in the Corporation on a share-for-share basis. Thereafter, Shares
are proposed to be offered and sold to the public by the Trust.
Post-Effective Amendment No. 30 to Registration Statement No. 2-34393 (the
"Registration Statement") with respect to the Shares was filed with the
Securities and Exchange Commission on April 17, 1986, and Post-Effective
Amendment No. 31 to the Registration Statement is to be filed on or about June
16, 1986.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of certain records, instruments, certificates and other
documents, have made such inquiries as to questions of fact of officers and
representatives of the Corporation and of the Trust, and have made such
examinations of law as we have deemed appropriate for purposes of giving the
opinion hereinafter expressed. We have assumed the genuineness of all signatures
and the authenticity of all documents submitted to us as originals, the
conformity to authentic or original documents of all documents submitted to us
as certified, conformed or photostatic copies,
<PAGE>
Janus Investment Fund
June 13, 1986
Page 2
and the execution by duly authorized corporate officers, directors or trustees
of all documents reviewed by us in connection with the opinions set forth
herein.
We are attorneys in the State of Colorado and accordingly express no
opinion as to the laws of any jurisdiction other than the State of Colorado and
the United States of America, except that we do express certain opinions as to
the laws of the State of Massachusetts, but do so solely in reliance on the
opinion of Sullivan & Worcester of Boston, Massachusetts to our firm dated June
12, 1986.
Based on the foregoing, it is our opinion that the Shares have been duly
authorized and, either when issued and delivered to the stockholders of the
Corporation pursuant to the Agreement, or when issued and sold pursuant to the
Registration Statement, will be validly issued and fully paid and will be
nonassessable by the Trust.
With respect to the opinions stated above, we wish to point out that the
shareholders of a Massachusetts business trust may, under some circumstances, be
subject to assessment at the instance of creditors to pay the obligations of
such trust in the event that its assets are insufficient for the purpose.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/ s / Davis, Graham & Stubbs
DAVIS, GRAHAM & STUBBS
EXHIBIT 10(b)
February 27, 1991
Janus Investment Fund
100 Fillmore Street, Suite 300
Denver, CO 80206-9916
RE: PUBLIC OFFERING OF JANUS GROWTH AND INCOME FUND SHARES
AND JANUS WORLDWIDE FUND SHARES OF JANUS INVESTMENT FUND
Gentlemen:
I have acted as counsel for Janus Investment Fund (the "Trust"), a
Massachusetts Business Trust, in connection with the filing with the Securities
and Exchange Commission of a post-effective amendment to the Registration
Statement with respect to the proposed sale of shares of beneficial interest,
$0.01 par value (the "Shares"), of the Janus Growth and Income Fund and Janus
Worldwide series of the Trust.
I have examined the Trust's Agreement and Declaration of Trust and Bylaws,
as amended, the proceedings of its Trustees relating to the authorization,
issuance and proposed sale of the Shares, and such other records and documents
as I have deemed relevant. Based upon such examination, it is my opinion that
upon the issuance and sale of the Shares in the manner contemplated by the
aforesaid Registration Statement, such Shares will be legally issued, fully paid
and nonassessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement referred to above. This opinion is for the exclusive use
of the Trust in connection with the filing of the Registration Statement
referred to above with the Securities and Exchange Commission (and certain state
securities commissions) and is not to be used, circulated, quoted, relied upon
or otherwise referred to by any other person or for any other purpose. This
opinion is given as of the date hereof and I render no opinion and disclaim any
obligation to revise or supplement this opinion based upon any change in
applicable law or any factual matter that occurs or comes to my attention after
the date hereof.
Very truly yours,
/s/ David C. Tucker
Vice President
and General Counsel
DCT:jc
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 79 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated November 30, 1995, relating to the financial
statements and financial highlights appearing in the October 31, 1995 Annual
Reports to Shareholders of Janus Investment Fund, which are also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Highlights" in the Prospectus and under the
heading "Independent Accountants" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Denver, Colorado
December 17, 1996
