JANUS INVESTMENT FUND, 497, 1997-02-21

JANUS INVESTMENT FUND
497, 1997-02-21

Previous: FIRST INVESTORS SGL P&PP PLANS FOR FIRST INVE GLOBAL FUND IN, 24F-2NT, 1997-02-21

Next: C TEC CORP, SC 13D/A, 1997-02-21

<PAGE>

CONTENTS

THE FUND AT A GLANCE

Brief description of the Fund ........................ 3

EXPENSE INFORMATION

The Fund's annual operating expenses ................. 4
Financial Highlights - a summary
of financial data .................................. 4

THE FUND IN DETAIL

Investment Objective and Policies .................... 7
General Portfolio Policies ...........................10
Additional Risk Factors ..............................12

PERFORMANCE TERMS

An Explanation of Performance Terms ..................16

SHAREHOLDER'S MANUAL

Types of Account Ownership ...........................17
How to Open Your Janus Account .......................18
How to Purchase Shares ...............................19
How to Exchange Shares ...............................21
How to Redeem Shares .................................23
Shareholder Services and Account Policies ............27

MANAGEMENT OF THE FUND

Investment Adviser and Portfolio Manager .............30
Management Expenses ..................................31
Portfolio Transactions ...............................31
Other Service Providers ..............................32
Other Information ....................................32

DISTRIBUTIONS AND TAXES

Distributions ........................................33
Taxes ................................................35

APPENDIX A

Glossary of Investment Terms .........................36

<PAGE>

Janus Enterprise Fund

100 Fillmore Street
Denver, CO 80206-4928
1-800-525-3713

http://www.JanusFunds.com

February 17, 1997

Janus Enterprise Fund (the "Fund") is a no-load, nondiversified
mutual fund that seeks long-term growth of capital. The Fund
intends to invest primarily in common stocks, with an emphasis on
securities issued by medium-sized companies.

For complete information on how to purchase, exchange and sell
shares, please see the Shareholder's Manual beginning on page 16.

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.

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.

<PAGE>

THE FUND AT A GLANCE

INVESTMENT OBJECTIVE:

The investment objective of the Fund is long-term growth of
capital.

PRIMARY HOLDINGS:

A nondiversified fund that pursues its investment objective by
investing primarily in common stocks, with an emphasis on
securities issued by medium-sized companies.

SHAREHOLDER'S INVESTMENT HORIZON:

The Fund is designed for long-term investors who seek growth of
capital and who can tolerate the greater risks associated with
investments in 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 $50 billion in assets.

FUND MANAGER:

James P. Goff

FUND INCEPTION:

September 1992

<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 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 0.73%
Other Expenses 0.41%
Total Fund Operating Expenses 1.14%

(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. $12 $36 $63 $139

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE
SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

The information below is for fiscal periods ending on October 31
of each year and has been audited by the accounting firm of Price
Waterhouse LLP. Their report is included in the Fund's Annual
Report, which is incorporated by reference into the SAI.

1996 1995 1994 1993 1992(1)

1. Net asset value, beginning
of period $27.14 $24.43 $21.87 $17.09 $15.00
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) 5.85 3.09 3.18 4.76 2.09
4. Total from investment
operations 5.85 3.61 3.12 4.80 2.09
Less distributions:
5. Dividends (from net
investment income) -- (0.52) (0.02) (0.02) --
6. Distributions (from
capital gains) (1.80) (0.38) (0.54) -- --
7. Total distributions (1.80) (0.90) (0.56) (0.02) --
8. Net asset value, end
of period $31.19 $27.14 $24.43 $21.87 $17.09
9. Total return* 22.43% 15.46% 14.56% 28.09% 13.93%
10. Net assets, end of
period (in millions) $732 $459 $370 $239 $8
11. Average net assets for
the period (in millions) $596 $408 $270 $188 $2
12. Ratio of gross expenses
to average net assets** 1.14% 1.26% N/A N/A N/A
13. Ratio of net expenses to
average net assets** 1.12% 1.23% 1.25% 1.36% 2.50%
14. Ratio of net investment
income/(loss)
to average net assets** (0.78) 0.02% (0.32%) 0.14% (0.81%)
15. Portfolio turnover rate** 93% 194% 193% 201% 53%
16. Average commission rate $.0333 N/A N/A N/A N/A

(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992.

* Total return is not annualized for periods of less than one full year.

** Annualized for periods of less than one full year.

<PAGE>

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) are 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
realized when securities increase or decrease in value but are
not sold. Distributions (from capital gains) are 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
purposes 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.

<PAGE>

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.

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 long-term growth of
capital. It is a nondiversified fund that pursues its objective
by normally investing at least 50% of its equity assets in
securities issued by medium-sized companies. Medium-sized
companies are those whose market capitalizations fall within the
range of companies in the S&P MidCap 400 Index (the "MidCap
Index"). Companies whose capitalization falls outside this range
after the Fund's initial purchase continue to be considered
medium-sized companies for the purpose of this policy. As of
December 30, 1996, the MidCap Index included companies with
capitalizations between approximately $192 million to $6.5
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.

<PAGE>

TYPES OF INVESTMENTS

The Fund invests primarily in common stocks selected for their
growth potential. The Fund may invest to a lesser degree in
other types of securities, including preferred stock, warrants,
convertible securities and debt securities. 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 may
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 12. 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.

<PAGE>

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, the manager
seeks to identify individual companies with earnings growth
potential that may not be recognized by the market at large.
Although themes may emerge in the Fund, securities are 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 12.

What is the main risk of investing in a common stock fund?

The fundamental risk associated with any common stock fund is the
risk that the value of the stocks it holds might decrease. Stock
values may fluctuate in response to the activities of an
individual company or in response to general market and/or
economic conditions. Historically, common stocks have provided
greater long-term returns and have entailed greater short-term
risks than other investment choices. Smaller or newer issuers
are more likely to realize more substantial growth as well as
suffer more significant losses than larger or more established
issuers. Investments in such companies can be both more volatile
and more speculative. See "Additional Risk Factors" on page 12.

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,
under normal market circumstances, the Fund will emphasize

<PAGE>

issuers with market capitalizations in the range of the MidCap
Index.

How does a diversified fund differ from a nondiversified fund?

Diversification is a means of reducing risk by investing in a
broad range of stocks or other securities. A "nondiversified"
fund has the ability to take larger positions in a smaller number
of issuers. Because the appreciation or depreciation of a single
stock may have a greater impact on the NAV per share of a
nondiversified fund, its share price can be expected to fluctuate
more than a comparable diversified fund.

How does the Fund try to reduce risk?

The Fund may use futures, options and other derivative
instruments to protect the portfolio from movements in securities
prices and interest rates. The Fund may also use a variety of
currency hedging techniques, including forward currency
contracts, to manage exchange rate risk. See "Additional Risk
Factors" on page 12. In addition, 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 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.

Classification

The Investment Company Act of 1940 (the "1940 Act") classifies
investment companies as either diversified or nondiversified.
The Fund is deemed to be a nondiversified fund under the 1940 Act
and is subject to the following diversification requirements:

- - As a fundamental policy, the Fund may not own more than 10%
of the outstanding voting shares of any issuer.

- - As a fundamental policy, with respect to 50% of its total
assets, the Fund will not purchase a security of any issuer
(other than cash items and U.S. government securities, as
defined in the 1940 Act) if such purchase would cause the
Fund's holdings of that issuer to amount to more than 5% of
the Fund's total assets.

<PAGE>

- - The Fund will invest no more than 25% of its total assets in
a single issuer (other than U.S. government securities).

- - The Fund reserves the right to become a diversified company
by limiting the investments in which more than 5% of its
total assets are invested.

Industry Concentration

As a fundamental policy, the Fund will not invest 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 Trustees of the Trust ("Trustees")
in making liquidity determinations for Rule 144A securities and
other securities, including privately placed commercial paper.

<PAGE>

Borrowing and Lending

The Fund may borrow money and lend securities or other assets, as
follows:

- - The Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.

- - The Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.

- - 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
percentage limits. There is no assurance that such permission
will be granted.

ADDITIONAL RISK FACTORS

Investments in Smaller Companies

Smaller or newer companies may suffer more significant losses as
well as realize more substantial growth than larger or more
established issuers.

The Fund may invest in companies that have relatively small
revenues, have a small share of the market for their products or
services, or have limited geographic or product markets. Small
companies may lack depth of management, they may be unable to
generate internally funds necessary for growth or potential
development or to generate such funds through external financing
on favorable terms, or they may be developing or marketing new
products or services for which markets are not yet established
and may never become established. In addition, such companies
may be insignificant factors in their industries and may become
subject to intense competition from larger companies. Securities
of small companies held by the Fund may have limited trading
markets that may be subject to wide price fluctuations.
Investments in such companies tend to be more volatile and
somewhat more speculative.

Special Situations

The Fund may invest in "special situations" from time to time. A
special situation arises when, in the opinion of the Fund's
portfolio manager, the securities of a particular issuer will be

<PAGE>

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, may 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:

- - 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 denominated 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.

- - 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.

- - 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.

<PAGE>

- - 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.

- - 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 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:

- - the risk that interest rates, securities prices and currency
markets will not move in the direction that the portfolio
manager anticipates;

- - imperfect correlation between the price of derivative
instruments and movements in the prices of the securities,
interest rates or currencies being hedged;

- - the fact that skills needed to use these strategies are
different from those needed to select portfolio securities;

<PAGE>

- - inability to close out certain hedged positions to avoid
adverse tax consequences;

- - 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;

- - 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

- - 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 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

<PAGE>

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 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.

Please refer to the SAI for a description of bond rating
categories.

Short Sales

The Fund may engage in "short sales against the box." This
technique involves selling either a security that the Fund owns,
or a security equivalent in kind and amount to the security sold
short that the Fund has the right to obtain, for delivery at a
specified date in the future. The Fund will enter into a short
sale against the box 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

<PAGE>

for more than one year tend to smooth out variations in the
Fund's return and are not the same as actual annual results.

The Fund imposes no sales or other charges that would affect
total return computations. Fund performance figures are based
upon historical results and are not intended to indicate future
performance. Investment returns and net asset value will
fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.

SHAREHOLDER'S MANUAL

This section will help you become familiar with the different
types of accounts you can establish with Janus. 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 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

If you are investing for the first time, you will need to
establish an account. You can establish the following types of
accounts by completing the New Account Application. To request
an application, call 1-800-525-3713.

- - Individual or Joint Ownership. Individual accounts are owned
by one person. Joint accounts have two or more owners.

<PAGE>

- - 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.

- - 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.

- - 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.

- - Individual Retirement Account ("IRA"): An IRA allows
individuals under the age of 70-1/2 with earned income to
contribute up to the lesser of $2,000 ($4,000 for most
married couples) or 100% of compensation annually. Please
refer to the Janus IRA booklet for complete information
regarding IRAs.

- - 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.

- - Profit Sharing or Money Purchase Pension Plan: These plans
are open to corporations, partnerships and sole proprietors
to benefit their employees and themselves.

<PAGE>

- - Section 403(b)(7) Plan: Employees of educational
organizations or other qualifying, tax-exempt organizations
may be eligible to participate in a Section 403(b)(7) Plan.

HOW TO OPEN YOUR JANUS ACCOUNT

Complete and sign the appropriate application. Please be sure to
provide your Social Security or taxpayer identification number on
the application. Make your check payable to Janus. Send all
items to one of the following addresses:

Janus
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier
Janus
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811

Investor Service Centers

Janus 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:

- - Cash, credit cards, third party checks and credit card checks
will not be accepted.

- - All purchases must be made in U.S. dollars.

- - Checks must be drawn on a U.S. bank and made payable to
Janus.

<PAGE>

- - If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.

- - 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.

- - 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 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.

<PAGE>

Automatic Investment Programs

Janus offers several automatic investment programs to help
investors achieve their financial goals as simply and
conveniently as possible. You may open a new account with a $500
initial purchase and $100 automatic subsequent investments.

- - 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.

- - 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.

- - By Systematic Exchange

With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from
one Janus account to another on any day of the month. For
more information on how to establish this option, call
1-800-525-3713.

HOW TO EXCHANGE SHARES

On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.

In Writing

To request an exchange in writing, please follow the instructions
for written requests on page 25.

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.

<PAGE>

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

- - Except for Systematic Exchanges, new accounts established by
exchange must be opened with $2,500 or the total account
value if the value of the account you are exchanging from is
less than $2,500.

- - Exchanges between existing accounts must meet the $100
subsequent investment requirement.

- - You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges) free of charge.

- - Exchanges between accounts will be accepted only if the
registrations are identical.

- - If the shares you are exchanging are held in certificate
form, you must return the certificate to your Fund prior to
making any exchanges.

- - Be sure that you read the prospectus for the fund into which
you are exchanging.

- - 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.

- - 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.

<PAGE>

QUICK ADDRESS AND TELEPHONE REFERENCE

Mailing Address

Janus
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier

Janus
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.

<PAGE>

In Writing

To request a redemption in writing, please follow the
instructions for written requests noted on page 25.

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

- - 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.

- - 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.

- - 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

<PAGE>

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 22
and must include the following information:

- - the name of the Fund,

- - the account number,

- - the amount of money or number of shares being redeemed,

- - the name(s) on the account,

- - the signature(s) of all registered account owners, and

- - your daytime telephone number.

Signature Requirements Based on Account Type

- - Individual, Joint Tenants, Tenants in Common: Written
instructions must be signed by each shareholder, exactly as
the names appear in the account registration.

- - UGMA or UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the account
registration.

- - Sole Proprietor, General Partner: Written instructions must
be signed by an authorized individual in his/her capacity as
it appears on the account registration.

- - 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.

- - 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.

- - 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

<PAGE>

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:

- - The redemption exceeds $100,000.

- - You would like the check made payable to anyone other than
the shareholder(s) of record.

- - You would like the check mailed to an address which has been
changed within 10 days of the redemption request.

- - You would like the check mailed to an address other than the
address of record.

The Fund reserves the right to require a signature guarantee
under other circumstances or to reject or delay a redemption on
certain legal grounds. For more information pertaining to
signature guarantees, please call 1-800-525-3713.

HOW TO OBTAIN A SIGNATURE GUARANTEE

A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized
account transfers. The following financial institutions may
guarantee signatures: banks, savings and loan associations, trust
companies, credit unions, broker-dealers and member firms of a
national securities exchange. Call your financial institution to

<PAGE>

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 or 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
Fund's NAV through the Web site. In addition, you may request
and/or download a prospectus for any Janus fund.

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
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

<PAGE>

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. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. A
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 the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Fund to withhold
31% of any dividends paid and redemption or exchange proceeds.
In addition to the 31% backup withholding, you may be subject to
a $50 fee to reimburse the Fund for any penalty that the IRS may
impose.

Share Certificates

Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Fund. The Fund will issue share certificates
upon written request only. Share certificates will not be issued
until the shares have been held for at least 15 days 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.

<PAGE>

Involuntary Redemption

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 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 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 transaction 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.

<PAGE>

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.

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.

<PAGE>

PORTFOLIO MANAGER

James P. Goff is Executive Vice President and portfolio manager
of the Fund, which he has managed since its inception. Mr. Goff
joined Janus Capital in 1988 and managed or co-managed Janus
Venture Fund from December 1993 to February 1997. 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 calculated
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 0.73% of the value of the Fund's
average daily net assets. The Fund incurs expenses not assumed
by Janus Capital, including transfer agent and subcustodian fees
and expenses, legal and auditing fees, printing and mailing costs
of sending reports and other information to existing
shareholders, and independent Trustees' fees and expenses.

PORTFOLIO TRANSACTIONS

<PAGE>

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 serving to reduce those 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.

<PAGE>

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 the Fund's interest in the matter differs from the
interest of the other portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.

Size of the Fund

The Fund has no present plans to limit its size. However, the
Fund may discontinue sales of its shares if management believes
that continued sales may adversely affect the Fund's ability to
achieve its investment objective. If sales of the Fund are
discontinued, it is expected that existing shareholders of the
Fund would be permitted to continue to purchase shares and to
reinvest any dividends or capital gains distributions, absent
highly unusual circumstances.

Master/Feeder Option

The Trust may in the future seek to achieve the Fund's investment
objective by investing all of the Fund's assets in another
investment company having the same investment objective and
substantially the same investment policies and restrictions as
those applicable to the Fund. It is expected that any such
investment company would be managed by Janus Capital in
substantially the same manner as the Fund. The shareholders of
the Trust of record on April 30, 1992, and the initial
shareholder(s) of all series of the Trust created after April 30,
1992, have voted to vest authority to use this investment
structure in the sole discretion of the Trustees. No further
approval of the shareholders of the Fund is required. You will
receive at least 30 days' prior notice of any such investment.
Such investment would be made only if the Trustees determine it
to be in the best interests of the Fund and its shareholders. In
making that determination the Trustees will consider, among other
things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the
Fund believes that the Trustees will not approve an arrangement
that is likely to result in higher costs, no assurance is given
that costs will be materially reduced if this option is
implemented.

<PAGE>

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

How Distributions Affect A Fund's NAV

Distributions are paid to shareholders as of the record date of
the distribution of the Fund, regardless of how long the shares
have been held. Dividends and capital gains awaiting
distribution are included in the Fund's daily NAV. The share
price of the Fund drops by the amount of the distribution, net of
any subsequent market fluctuations. As an example, assume that
on December 31, the Fund declared a dividend in the amount of
$0.25 per share. If the Fund's share price was $10.00 on
December 30, the Fund's share price on December 31 would be
$9.75, barring market fluctuations. Shareholders should be aware
that distributions from a taxable mutual fund are not value-
enhancing and may create income tax obligations.

"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:

<PAGE>

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.

<PAGE>

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.

<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 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.

<PAGE>

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 the 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

<PAGE>

for cash and an agreement by the Fund to buy the security back at
a specified price and time. This technique will be used
primarily to provide cash to satisfy unusually heavy redemption
requests.

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.

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 stocks
or bonds, that give the holder the right to buy a proportionate

<PAGE>

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

<PAGE>

securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the
market risk of an investment in the underlying instruments, as
well as the credit risk of the issuer.

Interest rate swaps involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an
exchange of floating rate payments for fixed rate payments).

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.

41
00178001.AY3

<PAGE>

CONTENTS

THE FUND AT A GLANCE

Brief description of the Fund............................. 3

EXPENSE INFORMATION

The Fund's annual operating expenses...................... 4
Financial Highlights - a summary of financial data........ 4

THE FUND IN DETAIL

Investment Objective and Policies......................... 7
General Portfolio Policies................................ 9
Additional Risk Factors................................... 11

PERFORMANCE TERMS

An Explanation of Performance Terms....................... 15

SHAREHOLDER'S MANUAL

Types of Account Ownership................................ 16
How to Open Your Janus Account............................ 17
How to Purchase Shares.................................... 18
How to Exchange Shares.................................... 20
How to Redeem Shares...................................... 22
Shareholder Services and Account Policies................. 25

MANAGEMENT OF THE FUND

Investment Adviser and Portfolio Manager.................. 28
Management Expenses....................................... 29
Portfolio Transactions.................................... 29
Other Service Providers................................... 30
Other Information......................................... 30

DISTRIBUTIONS AND TAXES

Distributions............................................. 31
Taxes..................................................... 33

APPENDIX A

Glossary of Investment Terms.............................. 34

<PAGE>

Janus Balanced Fund

100 Fillmore Street
Denver, CO 80206-4928
1-800-525-3713
http://www.JanusFunds.com

February 17, 1997

Janus Balanced Fund (the "Fund") is a no-load, diversified mutual
fund that seeks long-term growth of capital, consistent with
preservation of capital and balanced by current income.

For complete information on how to purchase, exchange and sell
shares, please see the Shareholder's Manual beginning on page 15.

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 investment objective of the Fund is long-term capital growth,
consistent with preservation of capital and balanced by current
income.

PRIMARY HOLDINGS:

A diversified fund that, under normal circumstances, pursues its
investment 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.

SHAREHOLDER'S INVESTMENT HORIZON:

The Fund is designed for investors who primarily seek growth of
capital with a degree of emphasis on income. The Fund is not
designed for investors who desire a consistent level of income
nor is it a short-term trading vehicle and should not be relied
upon for short-term financial needs.

FUND ADVISER:

FUND MANAGER:

Blaine P. Rollins

FUND INCEPTION:

September 1992

EXPENSE INFORMATION

<PAGE>

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 0.80%
Other Expenses 0.43%
Total Fund Operating Expenses 1.23%

(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. $13 $39 $68 $149

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE
SHOWN.

Financial Highlights

<PAGE>

1996 1995 1994 1993 1992(1)

1. Net asset value, beginning of
period $13.72 $12.17 $12.23 $10.64 $10.00
Income from investment operations:
2. Net investment income 0.33 0.61 0.27 0.19 --
3. Net gains or (losses) on securities
(both realized and unrealized) 2.22 1.52 (0.09) 1.56 0.64
4. Total from investment operations 2.55 2.13 0.18 1.75 0.64
Less distributions:
5. Dividends (from net investment
income) (0.26) (0.58) (0.24) (0.16) --
6. Distributions (from capital gains) (0.81) -- -- -- --
7. Total distributions (1.07) (0.58) (0.24) (0.16) --
8. Net asset value, end of period $15.20 $13.72 $12.17 $12.23 $10.64
9. Total return* 19.39% 18.26% 1.51% 16.54% 6.40%
10. Net assets, end of period (in
millions) $207 $125 $94 $73 $2
11. Average net assets for the period
(in millions) $159 $107 $86 $44 $1
12. Ratio of gross expenses to average
net assets** 1.23% 1.35% N/A N/A N/A
13. Ratio of net expenses to average
net assets** 1.21% 1.32% 1.42% 1.70% 2.50%
14. Ratio of net investment income/
(loss) to average net assets** 2.35% 2.52% 2.28% 2.15% (0.12%)
15. Portfolio turnover rate** 151% 185% 167% 131% 130%
16. Average commission rate $.0428 N/A N/A N/A N/A

(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.

Understanding Financial Highlights

<PAGE>

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) are the per share
amount that the Fund paid from net realized gains.

Ratio of net investment income to average net assets is the
Fund's total net investment income divided by its average net
assets for the stated period.

Average commission rate is the total of the Fund's agency
commissions paid on equity securities trades divided by the
number of shares purchased.

THE FUND IN DETAIL

<PAGE>

INVESTMENT OBJECTIVE

The investment objective of the 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. The Fund normally invests
at least 25% of its assets in fixed-income senior securities,
which include debt securities and preferred stocks.

TYPES OF INVESTMENTS

The Fund may invest in any combination of common stock, preferred
stock, warrants, convertible securities, debt securities and
other fixed-income 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. As further discussed below, such securities may be
selected for their growth potential or income potential. 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.

<PAGE>

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 11. 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 assets allocated between the growth and income component
of the Fund's portfolio?
The Fund may shift assets between the growth and income
components of its portfolio based on the portfolio manager's
analysis of relevant market, financial and economic conditions.
If the portfolio manager believes that growth securities will
provide better returns than the yields then available or expected
on income-producing securities, then the Fund will place a
greater emphasis on the growth component.

What type of securities make up the growth component of the Fund?
The growth component of the Fund is expected to consist primarily
of common stocks. The portfolio manager will invest in common
stocks to the extent that he 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.

Because income is a part of the investment objective of the Fund,
the portfolio manager may also consider dividend-paying
characteristics in selecting equity securities for the Fund. The
Fund may also find opportunities for capital growth from debt
securities because of anticipated changes in interest rates,
credit standing, currency relationships or other factors.

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 company-by-company basis without regard
to any defined allocation among countries or geographic regions.

<PAGE>

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 11.

What types of securities make up the income component of the
Fund?
The income component of the 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 Fund if they currently
pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing
dividends, if none are currently paid. Investors in the Fund
should keep in mind that the Fund is not designed to produce a
consistent level of income.

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
the portfolio from movements in securities prices and interest
rates. The Fund may also use a variety of currency hedging
techniques, including forward currency contracts, to manage
exchange rate risk. See "Additional Risk Factors" on page 11.
In addition, 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 fully invested in common stock.

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
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:

- - As a fundamental policy, the Fund may not own more than 10%
of the outstanding voting shares of any issuer.

<PAGE>

- - 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.

- - 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, anticipated changes in
interest rates or the credit standing of an issuer, or by reason
of economic or other developments not foreseen at the time of the
investment decision. Changes are made in the Fund's portfolio
whenever its portfolio manager believes such changes are
desirable. Portfolio turnover rates are generally not a factor
in making buy and sell decisions.

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 Trustees of the Trust ("Trustees")
in making liquidity determinations for Rule 144A securities and
other securities, including privately placed commercial paper.

<PAGE>

Borrowing and Lending

The Fund may borrow money and lend securities or other assets, as
follows:

- - The Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.

- - The Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.

- - 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.

ADDITIONAL RISK FACTORS

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, may 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:

- - 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

<PAGE>

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 denominated 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.

- - 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.

<PAGE>

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:

- - the risk that interest rates, securities prices and currency
markets will not move in the directions that the portfolio
manager anticipates;

- - imperfect correlation between the price of derivative
instruments and movements in the prices of the securities,
interest rates or currencies being hedged;

- - the fact that skills needed to use these strategies are
different from those needed to select portfolio securities;

- - inability to close out certain hedged positions to avoid
adverse tax consequences;

Although the Fund believes the use of derivative instruments will
benefit the Fund, the Fund's performance could be worse than if

<PAGE>

the Fund had not used such instruments if the portfolio manager's
judgement proves incorrect.

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 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 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.

Please refer to the SAI for a description of bond rating
categories.

Short Sales
The Fund may engage in "short sales against the box." This
technique involves selling either a security that the Fund owns,
or a security equivalent in kind and amount to the security sold
short that the Fund has the right to obtain, for delivery at a
specified date in the future. The Fund will enter into a short
sale against the box 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

<PAGE>

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

SHAREHOLDER'S MANUAL

<PAGE>

HOW TO GET IN TOUCH WITH JANUS

MINIMUM INVESTMENTS*
To open a new account................$2,500
To open a new retirement or
GMA/UTMA account...................$ 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
If you are investing for the first time, you will need to
establish an account. You can establish the following types of
accounts by completing the New Account Application. To request
an application, call 1-800-525-3713.

- - Individual or Joint Ownership. Individual accounts are owned
by one person. Joint accounts have two or more owners.

- - 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.

- - 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

<PAGE>

subject to income tax and may be subject to an additional tax if
withdrawn prior to age 59-1/2.

The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.

- - Profit Sharing or Money Purchase Pension Plan: These plans
are open to corporations, partnerships and sole proprietors
to benefit their employees and themselves.

- - Section 403(b)(7) Plan: Employees of educational
organizations or other qualifying, tax-exempt organizations
may be eligible to participate in a Section 403(b)(7) Plan.

HOW TO OPEN YOUR JANUS ACCOUNT

Janus
P.O. Box 173375
Denver, CO 80217-3375

<PAGE>

For Overnight Carrier
Janus
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811

Investor Service Centers
Janus 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:

- - Cash, credit cards, third party checks and credit card checks
will not be accepted.

- - All purchases must be made in U.S. dollars.

- - Checks must be drawn on a U.S. bank and made payable to
Janus.

- - If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.

- - 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.

- - The Fund reserves the right to reject any specific purchase
request.

<PAGE>

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 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 programs to help
investors achieve their financial goals as simply and
conveniently as possible. You may open a new account with a $500
initial purchase and $100 automatic subsequent investments.

- - 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.

- - Payroll Deduction
If your employer can initiate an automatic payroll deduction,
you may have all or a portion of your paycheck ($100 minimum)

<PAGE>

invested directly into your Fund account. To obtain
information on establishing this option, call 1-800-525-3713.

- - By Systematic Exchange
With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from
one Janus account to another on any day of the month. For
more information on how to establish this option, call
1-800-525-3713.

HOW TO EXCHANGE SHARES

On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.

In Writing
To request an exchange in writing, please follow the instructions
for written requests on page 23.

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

- - Exchanges between existing accounts must meet the $100
subsequent investment requirement.

- - You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges) free of charge.

- - Exchanges between accounts will be accepted only if the
registrations are identical.

<PAGE>

- - If the shares you are exchanging are held in certificate
form, you must return the certificate to your Fund prior to
making any exchanges.

- - Be sure that you read the prospectus for the fund into which
you are exchanging.

- - 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
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier
Janus
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.

<PAGE>

Janus Literature Line 1-800-525-8983
To request a prospectus, shareholder reports or marketing
materials.

HOW TO REDEEM SHARES

In Writing
To request a redemption in writing, please follow the
instructions for written requests noted on page 23.

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

- - 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.

- - 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.

- - 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

<PAGE>

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 or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on page 21
and must include the following information:

- - the name of the Fund,

- - the account number,

- - the amount of money or number of shares being redeemed,

- - the name(s) on the account,

- - the signature(s) of all registered account owners, and

- - your daytime telephone number.

Signature Requirements Based on Account Type
- - Individual, Joint Tenants, Tenants in Common: Written
instructions must be signed by each shareholder, exactly as
the names appear in the account registration.

- - UGMA or UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the account
registration.

- - Sole Proprietor, General Partner: Written instructions must
be signed by an authorized individual in his/her capacity as
it appears on the account registration.

- - Trust: Written instructions must be signed by the trustee(s).
If the name(s) of the current trustee(s) does not appear in

<PAGE>

the account registration, a certificate of incumbency dated
within 60 days must also be submitted.

- - 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

SIGNATURE GUARANTEE

In addition to the signature requirements, a signature guarantee
is also required if any of the following is applicable:

- - The redemption exceeds $100,000.

- - You would like the check made payable to anyone other than
the shareholder(s) of record.

- - You would like the check mailed to an address which has been
changed within 10 days of the redemption request.

- - You would like the check mailed to an address other than the
address of record.

<PAGE>

HOW TO OBTAIN A SIGNATURE GUARANTEE

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 or 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
Fund's NAV through the Web site. In addition, you may request
and/or download a prospectus for any Janus fund.

Account Minimums
Minimum account sizes are noted on page 16. 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.

<PAGE>

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. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. A
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 the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Fund to withhold
31% of any dividends paid and redemption or exchange proceeds.
In addition to the 31% backup withholding, you may be subject to
a $50 fee to reimburse the Fund for any penalty that the IRS may
impose.

Share Certificates
Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Fund. The Fund will issue share certificates
upon written request only. Share certificates will not be issued
until the shares have been held for at least 15 days 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.

<PAGE>

Involuntary Redemption
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.

Temporary Suspension of Services
The Fund or its 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 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 and
dividends. The Fund will send you a transaction 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.

<PAGE>

MANAGEMENT OF THE FUND

TRUSTEES

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.

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.

PORTFOLIO MANAGER

Blaine P. Rollins is Executive Vice President and portfolio
manager of the 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. He joined Janus Capital in 1990 and gained
experience as a fixed-income trader and equity research analyst

<PAGE>

prior to assuming management responsibility for the Fund. He
holds a Bachelor of Science in Finance from the University of
Colorado 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

Average Daily Net Annual Rate
Assets of Fund Percentage (%)

First $ 30 Million 1.00
Next $270 Million .75
Next $200 Million .70
Next $500 Million .65

The actual management fee paid by the Fund for the fiscal year
ended October 31, 1996, was 0.80% of the value of the Fund's
average daily net assets. The Fund incurs expenses not assumed
by Janus Capital, including transfer agent and subcustodian fees
and expenses, legal and auditing fees, printing and mailing costs
of sending reports and other information to existing
shareholders, and independent Trustees' fees and expenses.

PORTFOLIO TRANSACTIONS

<PAGE>

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 serving to reduce those 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 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

<PAGE>

by the Fund only if a matter affects or requires the vote of just
the Fund or the Fund's interest in the matter differs from the
interest of other portfolios of the Trust. As a shareholder, you
are entitled to one vote for each share that you own.

Size of the Fund
The Fund has no present plans to limit its size. However, the
Fund may discontinue sales of its shares if management believes
that continued sales may adversely affect the Fund's ability to
achieve its investment objective. If sales of the Fund are
discontinued, it is expected that existing shareholders of the
Fund would be permitted to continue to purchase shares and to
reinvest any dividends or capital gains distributions, absent
highly unusual circumstances.

Master/Feeder Option
The Trust may in the future seek to achieve the Fund's investment
objective by investing all of the Fund's assets in another
investment company having the same investment objective and
substantially the same investment policies and restrictions as
those applicable to the Fund. It is expected that any such
investment company would be managed by Janus Capital in
substantially the same manner as the Fund. The shareholders of
the Trust of record on April 30, 1992, and the initial
shareholder(s) of all series of the Trust created after April 30,
1992, have voted to vest authority to use this investment
structure in the sole discretion of the Trustees. No further
approval of the shareholders of the Fund is required. You will
receive at least 30 days' prior notice of any such investment.
Such investment would be made only if the Trustees determine it
to be in the best interests of the Fund and its shareholders. In
making that determination the Trustees will consider, among other
things, the benefits to shareholders and/or the opportunity to
reduce costs and achieve operational efficiencies. Although the
Fund believes that the Trustees will not approve an arrangement
that is likely to result in higher costs, no assurance is given
that costs will be materially reduced if this option is
implemented.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

<PAGE>

How Distributions Affect A Fund's NAV
Distributions are paid to shareholders as of the record date of
the distribution of the Fund, regardless of how long the shares
have been held. Dividends and capital gains awaiting
distribution are included in the Fund's daily NAV. The share
price of the Fund drops by the amount of the distribution, net of
any subsequent market fluctuations. As an example, assume that
on December 31, the Fund declared a dividend in the amount of
$0.25 per share. If the Fund's share price was $10.00 on
December 30, the Fund's share price on December 31 would be
$9.75, barring market fluctuations. Shareholders should be aware
that distributions from a taxable mutual fund are not value-
enhancing and may create income tax obligations.

"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

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

<PAGE>

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

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.

<PAGE>

APPENDIX A

GLOSSARY OF INVESTMENT TERMS

I. EQUITY AND DEBT SECURITIES

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.

<PAGE>

Passive foreign investment companies (PFICs) are any foreign
corporations which generate certain amounts of passive income or
hold certain amounts of assets for the production of passive
income. Passive income includes dividends, interest, royalties,
rents and annuities. Income tax regulations may require the Fund
to recognize income associated with the PFIC prior to the actual
receipt of any such income.

Reverse repurchase agreements involve the sale of a security by
the Fund to another party (generally a bank or dealer) in return

<PAGE>

for cash and an agreement by the Fund to buy the security back at
a specified price and time. This technique will be used
primarily to provide cash to satisfy unusually heavy redemption
requests, or for other temporary or emergency purposes.

Rule 144A securities are securities that are not registered for
sale to the general public under the Securities Act of 1933, but
that may be resold to certain institutional investors.

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.

Warrants are securities, typically issued with preferred stocks
or bonds, that give the holder the right to buy a proportionate

<PAGE>

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.

II. FUTURES, OPTIONS AND OTHER DERIVATIVES

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

<PAGE>

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).

38
00178001.AY3

<PAGE>

CONTENTS

THE FUND AT A GLANCE

Brief description of the Fund ......................... 3

EXPENSE INFORMATION

The Fund's annual operating expenses .................. 4
Financial Highlights - a summary of
financial data ...................................... 5

THE FUND IN DETAIL

Investment Objective and Policies ..................... 7
General Portfolio Policies ............................10
Additional Risk Factors ...............................12

PERFORMANCE TERMS

An Explanation of Performance Terms ...................16

SHAREHOLDER'S MANUAL

Types of Account Ownership ............................17
How to Open Your Janus Account ........................18
How to Purchase Shares ................................19
How to Exchange Shares ................................21
How to Redeem Shares ..................................23
Shareholder Services and Account Policies .............26

MANAGEMENT OF THE FUND

Investment Adviser and Investment Personnel ...........30
Management Expenses ...................................31
Portfolio Transactions ................................31
Other Service Providers ...............................32
Other Information .....................................32

DISTRIBUTIONS AND TAXES

Distributions .........................................34
Taxes..................................................35

Appendix A

Glossary of Investment Terms ..........................37

<PAGE>

Janus Growth and Income Fund

100 Fillmore Street
Denver, CO 80206-4928
1-800-525-3713

http://www.JanusFunds.com

February 17, 1997

Janus Growth and Income Fund (the "Fund") is a no-load,
diversified mutual 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.

For complete information on how to purchase, exchange and sell
shares, please see the Shareholder's Manual beginning on page 16.

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 investment objective of the Fund is long-term capital growth
and current income.

PRIMARY HOLDINGS:

A diversified fund that emphasizes equity securities selected for
their growth potential, although the Fund will normally invest at
least 25% of its assets in securities that have income potential.

SHAREHOLDER'S INVESTMENT HORIZON:

The Fund is designed for long-term investors who seek growth of
capital with a limited emphasis on income. The Fund is not
designed for investors who desire a consistent level of income
nor is it a short-term trading vehicle and should not be relied
upon for short-term financial needs.

FUND ADVISER:

FUND MANAGER:

Thomas F. Marsico

ASSISTANT FUND MANAGERS:

Marc Pinto
Claire Young

FUND INCEPTION:

May 1991

<PAGE>

EXPENSE INFORMATION

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 0.71%
Other Expenses 0.34%
Total Fund Operating Expenses 1.05%

(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. $11 $33 $58 $128

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

<PAGE>

1996 1995 1994 1993 1992 1991(1)

1. Net asset value,
beginning of period $18.13 $14.69 $15.24 $12.95 $12.13 $10.00
Income from investment
operations:

2. Net investment income 0.16 0.11 0.19 0.14 0.17 0.02
3. Net gains or (losses)
on securities (both
realized and
unrealized) 4.01 3.43 (0.31) 2.29 0.80 2.13
4. Total from investment
operations 4.17 3.54 (0.12) 2.43 0.97 2.15
Less distributions:
5. Dividends (from net
investment income) (0.08) (0.10) (0.10) (0.14) (0.15) (0.02)
6. Distributions (from
capital gains) (2.17) -- (0.33) -- -- --
7. Total distributions (2.25) (0.10) (0.43) (0.14) (0.15) (0.02)
8. Net asset value,
end of period $20.05 $18.13 $14.69 $15.24 $12.95 $12.13
9. Total return* 25.56% 24.20% (0.76%) 18.81% 7.98% 21.50%
10. Net assets, end of
period (in millions) $1,033 $583 $490 $519 $244 $56
11. Average net assets
for the period
(in millions) $773 $498 $500 $404 $157 $21
12. Ratio of gross expenses
to average net
assets** 1.05% 1.19% N/A N/A N/A N/A
13. Ratio of net expenses
to average net
assets** 1.03% 1.17% 1.22% 1.28% 1.52% 2.33%
14. Ratio of net investment
income to average
net assets** 0.70% 1.11% 1.26% 1.13% 1.61% 0.76%
15. Portfolio turnover
rate** 153% 195% 123% 138% 120% 14%
16. Average commission
rate $.0520 N/A N/A N/A N/A N/A

(1) Fiscal period from May 15, 1991 (inception) to October 31, 1991.

* Total return is not annualized for periods of less than one full year.

** Annualized for periods of less than one full year.

<PAGE>

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

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) are 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
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 TABLE.

Ratio of net investment income to average net assets is the
Fund's total net investment income divided by its average net
assets for the stated period.

<PAGE>

Average commission rate is the total of the Fund's agency
commissions paid on equity securities trades divided by the
number of shares purchased.

THE FUND IN DETAIL

INVESTMENT OBJECTIVE

The investment objective of the 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, the Fund
may reduce the growth component of its portfolio to 25% of its
assets.

TYPES OF INVESTMENTS

The Fund may invest in any combination of common stock, preferred
stock, warrants, convertible securities and debt securities.
However, it is expected that the Fund will emphasize investments
in common stocks. 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

<PAGE>

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. As further
discussed below, such securities may be selected for their growth
potential or income potential. 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.

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 12. 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 assets allocated between the growth and income component
of the Fund's portfolio?

The Fund may invest in a combination of common stocks, preferred
stocks, convertible securities, debt securities and other fixed-
income securities. The Fund may shift assets between the growth
and income components of its portfolio based on the portfolio
manager's analysis of relevant market, financial and economic
conditions. If the portfolio manager believes that growth
securities will provide better returns than the yields then
available or expected on income-producing securities, then the
Fund will place a greater emphasis on the growth component.

<PAGE>

What type of securities make up the growth component of the Fund?

The Fund places a stronger emphasis on the growth component and
normally invests up to 75% of its assets in such securities. The
growth component of the Fund is expected to consist primarily of
common stocks. The portfolio manager will invest in common
stocks to the extent he 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.

What types of securities make up the income component of
the Fund?

The income component of the 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 Fund if they currently
pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing
dividends, if none are currently paid. Investors in the Fund
should keep in mind that the Fund is not designed to produce a
consistent level of income.

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 company-by-company 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 12.

<PAGE>

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 use
futures, options and other derivative instruments to protect the
portfolio from movements in securities prices and interest rates.
The Fund may also use a variety of currency hedging techniques,
including forward currency contracts, to manage exchange rate
risk. See "Additional Risk Factors" on page 12. In addition, 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

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:

- - As a fundamental policy, the Fund may not own more than 10%
of the outstanding voting shares of any issuer.

- - 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).

<PAGE>

Portfolio Turnover

Illiquid Investments

Borrowing and Lending

The Fund may borrow money and lend securities or other assets, as
follows:

- - The Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.

- - The Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.

- - 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.

<PAGE>

ADDITIONAL RISK FACTORS

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, may 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:

- - 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 denominated 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
denonimated securities of foreign issuers may also be
affected by currency risk.

<PAGE>

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.

- - Transaction Costs. Transaction costs of buying and selling
foreign securities, including brokerage, tax and custody
costs, are generally higher than those involved in domestic
transactions.

Futures, Options and Other Derivative Instruments

The Fund may enter into futures contracts on securities,
financial indices and foreign currencies and options on such
contracts ("futures contracts") and may invest in options on
securities, financial indices and foreign currencies ("options"),
forward contracts and interest rate swaps and swap-related
products (collectively "derivative instruments"). The Fund
intends to use most derivative instruments primarily to hedge the
value of its portfolio against potential adverse movements in
securities prices, foreign currency markets or interest rates.
To a limited extent, the Fund may also use derivative instruments
for non-hedging purposes such as seeking to increase the Fund's
income or otherwise seeking to enhance return. Please refer to
Appendix A to this Prospectus and the SAI for a more detailed
discussion of these instruments.

<PAGE>

The use of derivative instruments exposes the Fund to additional
investment risks and transaction costs. Risks inherent in the
use of derivative instruments include:

- - the risk that interest rates, securities prices and currency
markets will not move in the directions that the portfolio
manager anticipates;

- - imperfect correlation between the price of derivative
instruments and movements in the prices of the securities,
interest rates or currencies being hedged;

- - the fact that skills needed to use these strategies are
different from those needed to select portfolio securities;

- - inability to close out certain hedged positions to avoid
adverse tax consequences;

When the Fund invests in a derivative instrument, it may be
required to segregate cash and other high-grade liquid assets or
certain portfolio securities with its custodian to "cover" the
Fund's position. Assets segregated or set aside generally may
not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could
diminish the Fund's return due to the opportunity losses of
foregoing other potential investments with the segregated assets.

<PAGE>

High-Yield/High-Risk Securities

Please refer to the SAI for a description of bond rating
categories.

Short Sales

See Appendix A for risks associated with certain other
investments.

<PAGE>

PERFORMANCE TERMS

SHAREHOLDER'S MANUAL

HOW TO GET IN TOUCH WITH JANUS

<PAGE>

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

- - Individual or Joint Ownership. Individual accounts are owned
by one person. Joint accounts have two or more owners.

- - 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.

- - 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 an account under a
tax-sheltered retirement plan. A retirement plan allows you to
shelter your investment income and capital gains from current
income taxes. A contribution to these plans may also be tax
deductible. Distributions from retirement plans are generally
subject to income tax and may be subject to an additional tax if
withdrawn prior to age 59-1/2.

Investors Fiduciary Trust Company ("IFTC") serves as custodian
for the Retirement Plans offered by the Fund. There is an annual
$12 fee per account to maintain your retirement account. The

<PAGE>

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.

- - Profit Sharing or Money Purchase Pension Plan: These plans
are open to corporations, partnerships and sole proprietors
to benefit their employees and themselves.

- - Section 403(b)(7) Plan: Employees of educational
organizations or other qualifying, tax-exempt organizations
may be eligible to participate in a Section 403(b)(7) Plan.

HOW TO OPEN YOUR JANUS ACCOUNT

Janus
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier

Janus
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811

<PAGE>

Investor Service Centers

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:

- - Cash, credit cards, third party checks and credit card checks
will not be accepted.

- - All purchases must be made in U.S. dollars.

- - Checks must be drawn on a U.S. bank and made payable to
Janus.

- - If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.

- - 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.

- - The Fund reserves the right to reject any specific purchase
request.

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:

<PAGE>

By Mail

By Telephone

By Wire

Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.

Automatic Investment Programs

- - Automatic Monthly Investment Program

<PAGE>

- - Payroll Deduction

- - By Systematic Exchange

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 24.

By Telephone

By Systematic Exchange

Exchange Policies

<PAGE>

- - Exchanges between existing accounts must meet the $100
subsequent investment requirement.

- - You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges) free of charge.

- - Exchanges between accounts will be accepted only if the
registrations are identical.

- - If the shares you are exchanging are held in certificate
form, you must return the certificate to your Fund prior to
making any exchanges.

- - Be sure that you read the prospectus for the fund into which
you are exchanging.

- - 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
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier

Janus
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

<PAGE>

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

In Writing

To request a redemption in writing, please follow the
instructions for written requests noted on page 24.

By Telephone

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.

<PAGE>

PAYMENT OF REDEMPTION PROCEEDS

- - 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.

- - Electronic Transfer

- - By Wire

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 22
and must include the following information:

- - the name of the Fund,
- - the account number,
- - the amount of money or number of shares being redeemed,
- - the name(s) on the account,
- - the signature(s) of all registered account owners, and
- - your daytime telephone number.

<PAGE>

Signature Requirements Based on Account Type

- - Individual, Joint Tenants, Tenants in Common: Written
instructions must be signed by each shareholder, exactly as
the names appear in the account registration.

- - UGMA or UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the account
registration.

- - Sole Proprietor, General Partner: Written instructions must
be signed by an authorized individual in his/her capacity as
it appears on the account registration.

- - 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.

- - 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.

PRICING OF FUND SHARES

<PAGE>

SIGNATURE GUARANTEE

In addition to the signature requirements, a signature guarantee
is also required if any of the following is applicable:

- - The redemption exceeds $100,000.

- - You would like the check made payable to anyone other than
the shareholder(s) of record.

- - You would like the check mailed to an address which has been
changed within 10 days of the redemption request.

- - You would like the check mailed to an address other than the
address of record.

HOW TO OBTAIN A SIGNATURE GUARANTEE

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))

<PAGE>

Janus Web Site

Account Minimums

Transactions Through Processing Organizations

<PAGE>

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

Share Certificates

Involuntary Redemption

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

<PAGE>

Temporary Suspension of Services

The Fund or its agents may, in case of emergency, temporarily
suspend telephone transactions and other shareholder services.

Address Changes

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 Fund will send you a transaction 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.

MANAGEMENT OF THE FUND

Trustees

<PAGE>

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.

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.

INVESTMENT PERSONNEL

PORTFOLIO MANAGER

Thomas F. Marsico is Executive Vice President and portfolio
manager of the Fund, which he has managed since its inception.
Mr. Marsico is also the Executive Vice President and portfolio
manager of Janus Twenty Fund, which he has managed since March
1988 and Executive Vice President and a co-manager of Janus
Venture Fund, which he has managed since February 1997. He holds
a Bachelor of Arts in Biology from the University of Colorado and
a Master of Business Administration in Finance from the
University of Denver.

ASSISTANT PORTFOLIO MANAGERS

Marc Pinto is an assistant portfolio manager of the Fund and
Janus Twenty Fund. He received an undergraduate degree in
History from Yale University and a Masters of Business

<PAGE>

Administration from Harvard. He is a Chartered Financial
Analyst.

Claire Young is an assistant portfolio manager of the Fund and
Janus Twenty Fund. She received an undergraduate degree in
Electrical Engineering from Yale University. She is a Chartered
Financial Analyst.

Personal Investing

Breakdown of Management Expenses

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 0.71% 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.

Portfolio Transactions

<PAGE>

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 serving to
reduce those 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

As of the date of this Prospectus, the Trust offers 19 separate
series, three of which currently offer three classes of shares.

<PAGE>

The Trust currently offers the other 18 series by other
prospectuses.

Shareholder Meetings

Size of the Fund

Master/Feeder Option

<PAGE>

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

How Distributions Affect A Fund's NAV

Distributions are paid to shareholders as of the record date of
the distribution of the Fund, regardless of how long the shares
have been held. Dividends and capital gains awaiting
distribution are included in the Fund's daily NAV. The share
price of the Fund drops by the amount of the distribution, net of
any subsequent market fluctuations. As an example, assume that
on December 31, the Fund declared a dividend in the amount of
$0.25 per share. If the Fund's share price was $10.00 on
December 30, the Fund's share price on December 31 would be
$9.75, barring market fluctuations. Shareholders should be aware
that distributions from a taxable mutual fund are not
value-enhancing and may create income tax obligations.

"Buying A Dividend"

Distribution Options

<PAGE>

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.

TAXES

Taxes on Distributions

Taxation of the Fund

<PAGE>

APPENDIX A

GLOSSARY OF INVESTMENT TERMS

I. EQUITY AND DEBT SECURITIES

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.

<PAGE>

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.

Reverse repurchase agreements involve the sale of a security by
the Fund to another party (generally a bank or dealer) in return

<PAGE>

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.

Warrants are securities, typically issued with preferred stocks
or bonds, that give the holder the right to buy a proportionate

<PAGE>

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.

II. FUTURES, OPTIONS AND OTHER DERIVATIVES

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 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.

<PAGE>

indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the
market risk of an investment in the underlying instruments, as
well as the credit risk of the issuer.

Interest rate swaps involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an
exchange of floating rate payments for fixed rate payments).

42
00178001.AY3

<PAGE>

CONTENTS

THE FUND AT A GLANCE

Brief description of the Fund........................ 3

EXPENSE INFORMATION

The Fund's annual operating expenses................. 4
Financial Highlights - a summary of financial data... 5

THE FUND IN DETAIL

Investment Objective and Policies.................... 7
General Portfolio Policies........................... 11
Additional Risk Factors.............................. 13

PERFORMANCE TERMS

An Explanation of Performance Terms.................. 17

SHAREHOLDER'S MANUAL

Types of Account Ownership........................... 18
How to Open Your Janus Account....................... 20
How to Purchase Shares............................... 20
How to Exchange Shares............................... 22
How to Redeem Shares................................. 24
Shareholder Services and Account Policies............ 28

MANAGEMENT OF THE FUND

Investment Adviser and Portfolio Managers............ 31
Management Expenses.................................. 32
Portfolio Transactions............................... 33
Other Service Providers.............................. 33
Other Information.................................... 34

DISTRIBUTIONS AND TAXES

Distributions........................................ 35
Taxes................................................ 36

APPENDIX A

Glossary of Investment Terms........................ 38

APPENDIX B

Explanation of Rating Categories.................... 44

<PAGE>

Janus Flexible Income Fund
100 Fillmore Street
Denver, CO 80206-4928
1-800-525-3713
http://www.JanusFunds.com

February 17, 1997

Janus Flexible Income Fund (the "Fund") is a no-load, diversified
mutual fund that seeks to obtain maximum total return, consistent
with preservation of capital, by investing primarily in income-
producing securities.

The Fund may have substantial holdings of high-yield debt
securities, commonly known as "junk bonds." See "Additional Risk
Factors" on page 13 for the risks associated with investing in
these securities.

For complete information on how to purchase, exchange and sell
shares, please see the Shareholder's Manual beginning on page 18.

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 investment objective of the Fund is to obtain maximum total
return, consistent with preservation of capital.

Primary Holdings:

A diversified fund that pursues its objective primarily through
investments in income-producing securities.

Shareholder's Investment Horizon:

The Fund is designed for long-term investors who primarily seek
current income and are willing to accept credit and other risks
associated with investments in high-yield securities.

Fund Adviser:

Fund Managers:

Sandy R. Rufenacht
Ronald V. Speaker*

* Mr. Speaker will not manage the Fund for the 90-day period
starting on or about January 27, 1997. See Management of the
Fund on page 31.

Fund Inception:

July 1987

<PAGE>

EXPENSE INFORMATION

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 0.60%
Other Expenses 0.28%
Total Fund Operating Expenses 0.88%

(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 $108

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE RETURNS OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE
SHOWN.

<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 beginning with the year ended October 31, 1990. Their
report is included in the Fund's Annual Report, which is
incorporated by reference into the SAI.

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992(1) 1991(2) 1990(2) 1989(2) 1988(2) 1987(3)

1. Net asset value,
beginning of period $9.55 $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 0.73 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) 0.10 0.59 (0.86) 0.79 0.15 1.29 (1.38) (0.56) 0.09 (0.07)
4. Total from investment
operations 0.83 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) (0.73) (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 (0.73) (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 $9.65 $9.55 $8.96 $10.03 $9.26 $9.09 $8.01 $9.35 $9.99 $9.92
9. Total return* 9.01% 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) $604 $580 $377 $473 $205 $72 $14 $18 $10 $4
11. Average net assets
for the period (in
millions) $604 $450 $429 $338 $144 $33 $15 $15 $7 $2
12. Ratio of gross
expenses to average
net assets 0.88% 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** 0.87% 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

<PAGE>

assets** 7.60% 7.91% 7.75% 7.96% 8.98% 9.38% 11.24% 10.00% 9.32% 8.52%
15. Portfolio turnover
rate** 214% 250% 137% 201% 210% 88% 96% 75% 76% 130%

<FN>
(1) Fiscal period from January 1, 1992 to October 31, 1992.
(2) Fiscal year ended on December 31st of each year.
(3) Fiscal period from July 2, 1987 (inception) to December 31, 1987.
(4) The ratio of expenses to average net assets was 1.01% in 1993, 1.21% in 1992 and 1.74% in 1991 before voluntary
waiver of certain Fund expenses. The ratio was 2% in prior years.
*Total return is not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
</TABLE>

UNDERSTANDING FINANCIAL HIGHLIGHTS

<PAGE>

of the distribution. THE FUND'S TOTAL RETURN CANNOT BE COMPUTED
DIRECTLY FROM THE FINANCIAL HIGHLIGHTS TABLE.

Ratio of net investment income to average net assets is the
Fund's total net investment income divided by its average net
assets for the stated period.

THE FUND IN DETAIL

INVESTMENT OBJECTIVE

The investment objective of the Fund is to obtain maximum total
return, consistent with preservation of capital. The 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.

<PAGE>

TYPES OF INVESTMENTS

The Fund may invest in a wide variety of income-producing
securities including corporate bonds and notes, government
securities, preferred stock, income-producing common stock, debt
securities that are convertible or exchangeable into equity
securities, and debt securities that carry with them the right to
acquire equity securities as evidenced by warrants attached to or
acquired with the securities. The Fund may invest to a lesser
degree in common stocks, other equity securities or debt
securities that are not currently paying 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.

The 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 page 13.

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.

The Fund may also purchase securities; on a when-issued, delayed
delivery or forward commitment basis. In addition, the Fund 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 page 13.

When the Fund's portfolio manager believes that market conditions
are not favorable for profitable investing or when the portfolio
manager is otherwise unable to locate favorable investment
opportunities, the Fund's investments may be hedged to a greater
degree and/or its cash or similar investments may increase. In
other words, the Fund does not always stay fully invested in
stocks and bonds. Cash and similar investments are a residual -
they represent the assets that remain after the portfolio manager
has committed available assets to desirable investment
opportunities. Securities that the Fund may 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 including money market funds managed
by Janus Capital.

<PAGE>

The following questions are designed to help you better
understand an investment in the Fund.

What is meant by "credit quality"?

Credit quality measures the likelihood that the issuer will meet
its obligations on a bond. One of the fundamental risks
associated with all fixed-income funds is credit risk, which is
the risk that an issuer will be unable to make principal and
interest payments when due. U.S. government securities are
generally considered to be the safest type of investment in terms
of credit risk. 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.

How is credit quality measured?

Ratings published by nationally recognized rating agencies such
as Standard & Poor's Ratings Services ("Standard &Poor's") and
Moody's Investors Service, Inc. ("Moody's") are widely accepted
measures of credit risk. The lower a bond issue is rated by an
agency, the more credit risk it is considered to represent.
Lower rated bonds generally pay higher yields to compensate
investors for the associated risk. Please refer to Appendix B
for a description of rating categories.

What is a high-yield/high-risk security?

A high-yield security (also called a "junk" bond) is rated below
investment grade by major rating agencies (i.e., BB or lower
by Standard & Poor's or Ba or lower by Moody's) or an unrated
bond of similar quality. It presents greater risk of default
(the failure to make timely interest and principal payments) than
higher quality bonds.

What risks do high-yield/high-risk securities present?

High-yield securities are often considered to be speculative and
involve greater risk of default or price changes due to changes
in economic and industry conditions and the issuer's
creditworthiness. Their market prices tend to fluctuate more
than higher quality securities as a result of changes in these
factors.

The default rate of lower quality debt securities is likely to be
higher when issuers have difficulty meeting projected goals or
obtaining additional financing. This could occur during economic
recessions or periods of high interest rates. In addition, there
may be a smaller market for lower quality securities than for

<PAGE>

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. Because the Fund may invest a significant portion of its
portfolio in high-yield/high-risk securities, investors in the
Fund should be willing to tolerate a corresponding increase in
the risk of significant and sudden changes in NAV.

How do interest rates affect the value of my investment?

A fundamental risk associated with any fund that invests in
fixed-income securities (e.g., a bond fund) is the risk that the
value of the securities it holds will rise or fall as interest
rates change. Generally, a fixed-income security will increase
in value when interest rates fall and decrease in value when
interest rates rise. Longer-term securities are generally more
sensitive to interest rate changes than shorter-term securities,
but they generally offer higher yields to compensate investors
for the associated risks. A bond fund's average-weighted
maturity and its duration are measures of how the fund may react
to interest rate changes. High-yield bond prices are generally
less directly responsive to interest rate changes than investment
grade issues and may not always follow this pattern.

How does the Fund manage interest rate risk?

The Fund may vary the average-weighted maturity of its portfolio
to reflect its portfolio manager's analysis of interest rate
trends and other factors. The Fund's average-weighted maturity
will tend to be shorter when its portfolio manager expects
interest rates to rise and longer when its portfolio manager
expects interest rates to fall. The Fund may also use futures,
options and other derivatives to manage interest rate risk. See
"Additional Risk Factors" on page 13.

What is meant by the Fund's "average-weighted maturity"?

The stated maturity of a bond is the date when the issuer must
repay the bond's entire principal value to an investor, such as
the Fund. 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 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. Average-weighted

<PAGE>

effective maturity is calculated by averaging the effective
maturity of bonds held by the Fund with each maturity "weighted"
according to the percentage of net assets that it represents.

What is meant by the Fund's "duration"?

A bond's duration indicates the time it will take an investor to
recoup his or her investment. Unlike average maturity, duration
reflects both principal and interest payments. Generally, the
higher the coupon rate on a bond, the lower its duration will be.
The duration of a bond fund is calculated by averaging the
duration of bonds held by a fund with each duration "weighted"
according to the percentage of net assets that it represents.
Because duration accounts for interest payments, the Fund's
duration is usually shorter than its average maturity.

GENERAL PORTFOLIO POLICIES

Diversification

- - As a fundamental policy, the Fund may not own more than 10%
of the outstanding voting shares of any issuer.

- - 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).

<PAGE>

Portfolio Turnover

The Fund generally intends to purchase securities for long-term
investment rather than short-term gains. However, short-term
transactions may result from liquidity needs, securities having
reached a price or yield objective, anticipated changes in
interest rates or the credit standing of an issuer, or by reason
of economic or other developments not foreseen at the time of the
investment decision. Changes are made in the Fund's portfolio
whenever its portfolio manager believes such changes are
desirable. Portfolio turnover rates are generally not a factor
in making buy and sell decisions.

Illiquid Investments

Borrowing and Lending

The Fund may borrow money and lend securities or other assets, as
follows:

- - The Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.

- - The Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.

<PAGE>

- - 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.

ADDITIONAL RISK FACTORS

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 and Moody's.

Issuers of high-yield securities are more vulnerable to real or
perceived economic changes (for instance, an economic downturn or
prolonged period of rising interest rates), political changes or
adverse developments specific to the issuer. Adverse economic,
political or other developments may impair the issuer's ability
to service principal and interest obligations, to meet projected
business goals and to obtain additional financing, particularly
if the issuer is highly leveraged. In the event of a default,
the Fund would experience a reduction of its income and could
expect a decline in the market value of the defaulted securities.

The market for lower quality securities is generally less liquid
than the market for higher rated 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.

<PAGE>

The market prices of high-yield/high-risk 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 Fund must
recognize a computed amount of interest income and pay dividends
to shareholders even though it has received no cash. In some
instances, the Fund may have to sell securities to have
sufficient cash to pay dividends.

Foreign Securities

Investments in foreign securities, including those of foreign
governments, may 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:

<PAGE>

There may be less publicly available information about
foreign issuers than domestic issuers.

- - Transaction Costs. Transaction costs of buying and selling
foreign securities, including brokerage, tax and custody
costs, are generally higher than those involved in domestic
transactions.

Futures, Options and Other Derivative Instruments

The Fund may enter into futures contracts on securities,
financial indices and foreign currencies and options on such
contracts ("futures contracts") and may invest in options on
securities, financial indices and foreign currencies ("options"),
forward contracts and interest rate swaps and swap-related
products (collectively "derivative instruments"). The Fund
intends to use most derivative instruments primarily to hedge the
value of its portfolio against potential adverse movements in
securities prices, foreign currency markets or interest rates.
To a limited extent, the Fund may also use derivative instruments
for non-hedging purposes such as seeking to increase the Fund's
income or otherwise seeking to enhance return. Please refer to
Appendix A to this Prospectus and the SAI for a more detailed
discussion of these instruments.

The use of derivative instruments exposes the Fund to additional
investment risks and transaction costs. Risks inherent in the
use of derivative instruments include:

- - the risk that interest rates, securities prices and currency
markets will not move in the directions that the portfolio
manager anticipates;

- - imperfect correlation between the price of derivative
instruments and movements in the prices of the securities,
interest rates or currencies being hedged;

<PAGE>

- - the fact that skills needed to use these strategies are
different from those needed to select portfolio securities;

- - inability to close out certain hedged positions to avoid
adverse tax consequences;

Short Sales

<PAGE>

Special Situations

See Appendix A for risks associated with certain other
investments.

PERFORMANCE TERMS

Yield shows the rate of income the Fund earns on its investments
as a percentage of the Fund's share price. It is calculated by
dividing a Fund's net investment income for a 30-day period by
the average number of shares entitled to receive dividends and
dividing the result by the Fund's NAV per share at the end of the
30-day period. Yield does not include changes in NAV.

<PAGE>

Yields are calculated according to standardized SEC formulas and
may not equal the income on an investor's account. Yield is
usually quoted on an annualized basis. An annualized yield
represents the amount you would earn if you remained in a Fund
for a year and that Fund continued to have the same yield for the
entire year.

The Fund imposes no sales or other charges that would affect
yield computations. Fund performance figures are based upon
historical results and are not intended to indicate future
performance. Investment returns and net asset value will
fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.

SHAREHOLDER'S MANUAL

HOW TO GET IN TOUCH WITH JANUS

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

If you are investing for the first time, you will need to
establish an account. You can establish the following types of

<PAGE>

accounts by completing the New Account Application. To request
an application, call 1-800-525-3713.

- - Individual or Joint Ownership. Individual accounts are owned
by one person. Joint accounts have two or more owners.

- - 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.

- - 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.

The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.

- - Simplified Employee Pension Plan ("SEP"): This plan allows
small business owners (including sole proprietors) to make
tax-deductible contributions for themselves and any eligible

<PAGE>

employee(s). A SEP requires an IRA (a SEP-IRA) to be set up
for each SEP participant.

- - Profit Sharing or Money Purchase Pension Plan: These plans
are open to corporations, partnerships and sole proprietors
to benefit their employees and themselves.

- - Section 403(b)(7) Plan: Employees of educational
organizations or other qualifying, tax-exempt organizations
may be eligible to participate in a Section 403(b)(7) Plan.

HOW TO OPEN YOUR JANUS ACCOUNT

Janus
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier

Janus
Suite 101
3773 Cherry Creek North Drive
Denver, CO 80209-3811

Investor Service Centers

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:

<PAGE>

- - Cash, credit cards, third party checks and credit card checks
will not be accepted.

- - All purchases must be made in U.S. dollars.

- - Checks must be drawn on a U.S. bank and made payable to
Janus.

- - If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.

- - 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.

- - The Fund reserves the right to reject any specific purchase
request.

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

By Telephone

<PAGE>

This option will become effective ten days after the form is
received.

By Wire

Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.

Automatic Investment Programs

- - Automatic Monthly Investment Program

- - Payroll Deduction

- - By Systematic Exchange

How to Exchange Shares

On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.

<PAGE>

In Writing

To request an exchange in writing, please follow the instructions
for written requests on page 26.

By Telephone

By Systematic Exchange

Exchange Policies

- - Except for Systematic Exchanges, new accounts must be opened
with $2,500 or the total account value if the value of the
account you are exchanging from is less than $2,500.

- - Exchanges between existing accounts must meet the $100
subsequent investment requirement.

- - You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges) free of charge.

- - Exchanges between accounts will be accepted only if the
registrations are identical.

- - If the shares you are exchanging are held in certificate
form, you must return the certificate to your Fund prior to
making any exchanges.

- - Be sure that you read the prospectus for the fund into which
you are exchanging.

<PAGE>

- - 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
P.O. Box 173375
Denver, CO 80217-3375

For Overnight Carrier

Janus
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.

<PAGE>

How to Redeem Shares

In Writing

To request a redemption in writing, please follow the
instructions for written requests noted on page 26.

By Telephone

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

- - 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.

- - Electronic Transfer

- - By Wire

<PAGE>

wire and your bank may charge an additional fee to receive
the wire. If you would like to establish this option on an
existing account, please call 1-800-525-3713 to request the
appropriate form. Wire redemptions are not available for
retirement accounts.

WRITTEN INSTRUCTIONS

To redeem or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on
pages 23-24 and must include the following information:

Signature Requirements Based on Account Type

- - Individual, Joint Tenants, Tenants in Common: Written
instructions must be signed by each shareholder, exactly as
the names appear in the account registration.

- - UGMA or UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the account
registration.

- - Sole Proprietor, General Partner: Written instructions must
be signed by an authorized individual in his/her capacity as
it appears on the account registration.

<PAGE>

PRICING OF FUND SHARES

SIGNATURE GUARANTEE

In addition to the signature requirements, a signature guarantee
is also required if any of the following is applicable:

- - The redemption exceeds $100,000.

- - You would like the check made payable to anyone other than
the shareholder(s) of record.

- - You would like the check mailed to an address which has been
changed within 10 days of the redemption request.

- - You would like the check mailed to an address other than the
address of record.

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

<PAGE>

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))

Janus Web Site

Account Minimums

Minimum account sizes are noted on page 18. 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.

<PAGE>

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 qualified plans (a "Processing Organization"). Processing
Organizations may charge you a fee for this service and may
require different minimum initial and subsequent investments than
the Fund. Processing Organizations may also impose other charges
or restrictions different from those applicable to shareholders
who invest in the Fund directly. A 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

Share Certificates

Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Fund. The Fund will issue share certificates
upon written request only. Share certificates will not be issued
until the shares have been held for at least 15 days. Share
certificates cannot be issued for retirement accounts. In
addition, if the certificate is lost, there may be a replacement
charge.

<PAGE>

Involuntary Redemption

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

Temporary Suspension of Services

The Fund or its agents may, in case of emergency, temporarily
suspend telephone transactions and other shareholder services.

Address Changes

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

<PAGE>

MANAGEMENT OF THE FUND

TRUSTEES

INVESTMENT ADVISER

Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4923,
is the investment adviser to the Fund and is responsible for the
day-to-day management of its investment portfolio and other
business affairs.

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.

<PAGE>

Janus Capital, including auditing fees and independent Trustees'
fees and expenses.

PORTFOLIO MANAGER

Sandy R. Rufenacht is Executive Vice President and co-manager of
the Fund which he has managed since June 1996. He 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. 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 portfolio
manager of the Fund, which he has managed since December 1991.
Mr. Speaker joined Janus Capital in 1986 and also manages Janus
High-Yield Fund. He previously managed Janus 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.

On January 13, 1997, Mr. Speaker settled an SEC administrative
action involving two personal trades made by him in January
of 1993. Without admitting or denying the allegations,
Mr. Speaker agreed to civil money penalty, disgorgement, and
interest payments totaling $37,199 and to a 90-day suspension
starting on or about January 27, 1997. During that time, the
Fund will be managed by its co-manager, Sandy Rufenacht.

BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS

The Fund pays Janus Capital a management fee equal, on an annual
basis, to 0.65% of the first $300 million in assets and 0.55% of
all assets in excess of $300 million. The fee is calculated
daily and paid monthly. The advisory agreement with the Fund
spells out the management fee and other expenses that the Fund
must pay. Janus Capital will waive certain fees and expenses to
the extent that the Fund's total expenses exceed 1.00%. Janus
Capital may modify or terminate this waiver at any time upon at
least 90 days' notice to the Trustees.

The actual management fee paid by the Fund for the fiscal year
ended October 31, 1996, was 0.60% 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.

<PAGE>

Personal Investing

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 serving to
reduce those 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

<PAGE>

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

As of the date of this Prospectus, the Trust offers 19 separate
series, three of which currently offer three classes of shares.

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 the Fund's interest in the matter differs from the
interest of other portfolios of the Trust. As a shareholder, you
are entitled to one vote for each share that you own.

Size of the Fund

<PAGE>

Master/Feeder Option

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. Dividends are declared daily and paid as of the
last business day of each month. If a month begins on a
Saturday, Sunday or holiday, dividends for those days are paid at
the end of the preceding month. Capital gains distributions (if
any) are declared and paid in December. Notices of dividends are
mailed as of each calendar quarter end.

How Distributions Affect A Fund's NAV

<PAGE>

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 not
value-enhancing and may create income tax obligations.

"Buying A Dividend"

Distribution 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.

<PAGE>

TAXES

Taxes on Distributions

Taxation of the Fund

<PAGE>

APPENDIX A

GLOSSARY OF INVESTMENT TERMS

I. Equity and Debt Securities

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.

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.

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

<PAGE>

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.

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, 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.

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

<PAGE>

income. Passive income includes dividends, interest, royalties,
rents and annuities. Income tax regulations may require the Fund
to recognize income associated with the PFIC prior to the actual
receipt of any such income.

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
primarily to provide cash to satisfy unusually heavy redemption
requests, or for other temporary or emergency purposes.

Rule 144A securities are securities that are not registered for
sale to the general public under the Securities Act of 1933, but
that may be resold to certain institutional investors.

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.

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

<PAGE>

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 have
been coupled with an option to tender the securities to a bank,
broker-dealer or other financial institution at periodic
intervals and receive the face value of the bond. This type of
security is commonly used as a means of enhancing the liquidity
of municipal securities.

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.

<PAGE>

II. Futures, Options and Other Derivatives

Forward contracts are contracts to purchase or sell a specified
amount of property for an agreed upon price at a specified time.
Forward contracts are not currently exchange traded and are
typically negotiated on an individual basis. The Fund may enter
into forward currency contracts to hedge against declines on 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 non-dollar denominated
securities. It may also enter into forward contracts to purchase
or sell securities or other financial indices.

Futures contracts are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a
specified price on a specified date. The Fund may buy and sell
futures contracts on foreign currencies, securities and financial
indices including interest rates or an index of U.S. government,
foreign government, equity or fixed-income securities. The Fund
may also buy options contracts. An option on a futures contract
gives the buyer the right, but not the obligation, to buy or sell
a futures contract at a specified price on or before a specified
date. Futures contracts and options on futures are standardized
and traded on designated exchanges.

Indexed/structured securities are typically short- to
intermediate-term debt securities whose value at maturity or
interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the
market risk of an investment in the underlying instruments, as
well as the credit risk of the issuer.

Interest rate swaps involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an
exchange of floating rate payments for fixed rate payments).

<PAGE>

Inverse floaters are debt instruments whose interest rate bears
an inverse relationship to the interest rate on another
instrument.

<PAGE>

Appendix B

EXPLANATION OF RATING CATEGORIES

The following is a description of credit ratings issued by two of
the major credit ratings agencies. Credit ratings evaluate only
the safety of principal and interest payments, not the market
value risk of lower quality securities. Credit rating agencies
may fail to change credit ratings to reflect subsequent events on
a timely basis. Although the adviser considers security ratings
when making investment decisions, it also performs its own
investment analysis and does not rely solely on the ratings
assigned by credit agencies.

Standard & Poor's Ratings Services

Bond Rating Explanation
Investment Grade

AAA Highest rating; extremely strong capacity to
pay principal and interest.

AA High quality; very strong capacity to pay
principal and interest.

A Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse
effects of changing circumstances and economic
conditions.

BBB Adequate capacity to pay principal and
interest; normally exhibit adequate protection
parameters, but adverse economic conditions or
changing circumstances more likely to lead to
a weakened capacity to pay principal and
interest than for higher rated bonds.

Non-Investment Grade

BB, B, Predominantly speculative with respect to the
issuer's capacity to meet required interest
and principal payments.

CCC, CC, C 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.

<PAGE>

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 are treated as noninvestment grade unless the
portfolio manager determines that such securities are the
equivalent of investment grade securities. Split rated
securities may be treated as investment grade so long as at least
one major agency has rated the security as investment grade.

<PAGE>

Securities Holdings by Rating Category

During the fiscal period ended October 31, 1996, the percentage
of securities holdings for the Fund by rating category based upon
a weighted monthly average was:

Bonds - S&P Rating The Fund
AAA 10%
AA 0%
A 16%
BBB 13%
BB 14%
B 32%
CCC 1%
CC 0%
C 0%
Preferred Stock 2%
Cash and Options 12%
TOTAL 100%

46
00178001.AY3