Income Funds
Janus Flexible Income Fund
Janus High-Yield Fund
Janus Federal Tax-Exempt Fund
Janus Short-Term Bond Fund
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Prospectus
[Logo] Janus
<PAGE>
Contents
- ---------------------------------------
FUNDS AT A GLANCE
Brief description of the Funds ...... 1
- ---------------------------------------
EXPENSE INFORMATION
Each Fund's annual
operating expenses ............... 3
Financial Highlights-a summary
of financial data ................ 4
- ---------------------------------------
THE FIXED-INCOME FUNDS IN DETAIL
Investment Objectives and Policies .. 7
General Portfolio Policies ......... 10
Additional Risk Factors ............ 11
- ---------------------------------------
THE MONEY MARKET FUNDS IN DETAIL
Investment Objectives,
Policies and Techniques ......... 13
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SHAREHOLDER'S MANUAL
Types of Account Ownership ......... 17
How to Open Your Janus Account ..... 18
How to Purchase Shares ............. 18
How to Exchange Shares ............. 18
How to Redeem Shares ............... 19
Shareholder Services
and Account Policies ............ 21
- ---------------------------------------
MANAGEMENT OF THE FUNDS
Investment Adviser, Administrator
and Investment Personnel ........ 23
Management Expenses ................ 24
Portfolio Transactions ............. 24
Other Service Providers ............ 25
Other Information .................. 25
- ---------------------------------------
DISTRIBUTIONS AND TAXES
Distributions ...................... 26
Taxes .............................. 27
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PERFORMANCE TERMS
An Explanation of Performance Terms 27
- ---------------------------------------
APPENDIX A
Glossary of Investment Terms ....... 28
- ---------------------------------------
APPENDIX B
Explanation of Rating Categories ... 31
Janus Investment Fund
JANUS INCOME FUNDS
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
http://www.JanusFunds.com
February 17, 1997 as supplemented April 30, 1997
A FAMILY OF NO-LOAD MUTUAL FUNDS
All Janus funds are no-load investments. This means you may purchase and sell
shares in any of our mutual funds without incurring any sales charges. If you
enroll in our low minimum initial investment program, you can open your account
for as little as $500 and a $100 subsequent purchase per month. Otherwise, the
minimum initial investment is $2,500. For complete information on how to
purchase, exchange and sell shares, please see the Shareholder's Manual
beginning on page 17.
This prospectus describes four mutual funds that emphasize income-producing
securities (the "Fixed-Income Funds") and three money market funds that seek
current income consistent with stability of capital (the "Money Market Funds").
Only the Investor Shares of the Money Market Funds, a separate class of shares
of Janus Money Market Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund (collectively, the "Shares"), are offered by this
Prospectus. Janus Capital Corporation ("Janus Capital") serves as investment
adviser to each Fund. Janus Capital has been in the investment advisory business
for over 26 years and currently manages approximately $50 billion in assets.
Janus Flexible Income Fund and Janus High-Yield Fund may invest all of their
respective assets in high-yield corporate debt securities, commonly known as
"junk bonds." See "Additional Risk Factors" on page 11 for the risks associated
with investing in these securities.
AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Each Fund is a series of Janus Investment Fund (the "Trust"). The Trust is
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company. This Prospectus contains information about the
Funds that you should consider before investing. Please read it carefully and
keep it for future reference.
Additional information about the Funds is contained in a Statement of Additional
Information ("SAI") filed with the SEC. The SAI dated February 17, 1997, is
incorporated by reference into this Prospectus. For a copy of the SAI, write or
call the Funds at the address or phone number listed above. The SEC maintains a
Web site located at http://www.sec.gov that contains the SAI, material
incorporated by reference, and other information regarding the Funds.
The shares offered by this Prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank, and are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC NOR HAS THE SEC PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus does not constitute an offer to sell securities in any state or
other jurisdiction to any person to whom it is unlawful to make such an offer in
such state or other jurisdiction.
<PAGE>
Funds At A Glance
This section is designed to provide you with a brief overview of the Funds and
their investment emphasis. A more detailed discussion of the Funds' investment
objectives and policies begins on page 7 and complete information on how to
purchase, redeem and exchange shares begins on page 18.
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
Janus Money Market Fund
Fund Focus: A money market mutual fund that seeks maximum current income to the
extent consistent with stability of capital. The Fund seeks to achieve this
objective by investing primarily in high quality debt obligations and
obligations of financial institutions.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
Janus Government Money Market Fund
Fund Focus: A money market mutual fund that seeks maximum current income to the
extent consistent with stability of capital. The Fund seeks to achieve this
objective by investing exclusively in obligations issued and/or guaranteed as to
principal and interest by the United States government or its agencies and
instrumentalities and repurchase agreements secured by such obligations.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
Janus Tax-Exempt Money Market Fund
Fund Focus: A money market mutual fund that seeks maximum current income that is
exempt from federal income taxes to the extent consistent with stability of
capital. The Fund seeks to achieve this objective by investing primarily in
municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax.
Fund Inception: February 1995
Fund Manager: Sharon S. Pichler
FIXED-INCOME FUNDS
Janus Flexible Income Fund
Fund Focus: A diversified fund that seeks to maximize total return from a
combination of income and capital appreciation by investing in income-producing
securities.
Fund Inception: July 1987
Fund Managers: Ronald V. Speaker
Sandy R. Rufenacht
Janus Federal Tax-Exempt Fund
Fund Focus: A diversified fund that seeks a high level of current income exempt
from federal income tax by normally investing at least 80% of its assets in
municipal obligations whose interest is exempt from federal income taxes,
including the federal alternative minimum tax.
Fund Inception: May 1993
Fund Manager: Darrell W. Watters
Janus High-Yield Fund
Fund Focus: A diversified fund that seeks high current income as its primary
objective. Capital appreciation is a secondary objective when consistent with
the primary objective. The Fund seeks to achieve these objectives by investing
primarily in high-yield/high-risk fixed-income securities.
Fund Inception: December 1995
Fund Managers: Ronald V. Speaker
Sandy R. Rufenacht
Janus Short-Term Bond Fund
Fund Focus: A diversified fund that seeks a high level of current income while
minimizing interest rate risk by investing in shorter term fixed-income
securities. Its average-weighted effective maturity is normally less than three
years.
Fund Inception: September 1992
Fund Manager: Sandy R. Rufenacht
1
<PAGE>
- --------------------------------------------------------------------------------
JANUS SPECTRUM
The spectrum below shows Janus Capital's assessment of the potential volatility
of the Janus Funds relative to one another and should not be used to compare the
Funds to other mutual funds or other types of investments. A Fund's position in
the spectrum was determined based on a number of factors such as selected
historic volatility measurements, the types of securities in which the Fund
intends to invest, the degree of diversification intended and/or permitted, and
the size of the Fund. In addition, the spectrum is significantly affected by the
portfolio managers' investment styles. These factors were considered as of the
date of this prospectus and will be reassessed with each new prospectus.
Increased volatility results in increased fluctuations in a Fund's net asset
value per share. Increased volatility may be associated with a Fund that
undertakes more risk in order to seek greater returns. Specific risks of certain
types of instruments in which some of the Funds may invest, including foreign
securities, junk bonds and derivative instruments such as futures contracts and
options, are described under "Additional Risk Factors" on pages 11-12. The
spectrum is not indicative of the future volatility or performance of a Fund and
relative positions of Funds within the spectrum may change.
NARRATIVE DESCRIPTION - SPECTRUM
(SPECTRUM CHART)
The spectrum illustrates the potential volatility of the Janus funds relative to
one another. The funds' volatility ranges from low to high. The Growth Funds are
illustrated as follows: Janus Fund* is shown as moderate; Janus Enterprise Fund*
is shown as high; Janus Mercury Fund* is shown as moderately-high; Janus Olympus
Fund* is shown as high; Janus Overseas Fund* is shown as moderately-high (but
less volatile than Janus Mercury Fund); Janus Special Situations Fund* is shown
as moderately-high (the same as Janus Mercury Fund); Janus Twenty Fund* is shown
as moderately-high (the same as Janus Special Situations Fund and Janus Mercury
Fund); Janus Venture Fund, which is closed to new investors, is shown as
moderately-high (the same as Janus Mercury Fund, Janus Special Situations Fund
and Janus Twenty Fund); Janus Worldwide Fund* is shown as moderately-high (but
less volatile than Janus Overseas Fund). The Combination Funds are illustrated
as follows: Janus Balanced Fund* is shown as moderate; Janus Equity Income Fund
is shown as moderate (but more volatile than Janus Balanced Fund); and Janus
Growth and Income Fund* is shown as moderately-high. The Fixed-Income Funds are
illustrated as follows: Janus Flexible Income Fund is shown as low-moderate;
Janus High-Yield Fund is shown as moderate; Janus Federal Tax-Exempt Fund is
shown as low-moderate (but less volatile than Janus Flexible Income Fund); Janus
Short-Term Bond Fund is shown as low (but less volatile than Janus Federal
Tax-Exempt Fund). The Money Market Funds are illustrated as follows: Janus Money
Market Fund is shown as low (but less volatile than Janus Short-Term Bond Fund);
Janus Government Money Market Fund is shown equally as low as Janus Money Market
Fund; and Janus Tax-Exempt Money Market Fund is shown equally as low as Janus
Government Money Market Fund.
*These funds are offered by separate prospectuses.
+This fund is closed to new investors and is offered by a separate prospectus.
2
<PAGE>
Expense Information
The tables and example below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Funds. Shareholder Transaction Expenses are fees charged
directly to your individual account when you buy, sell or exchange shares. The
table below shows that you pay no such fees. Annual Operating Expenses are paid
out of each Fund's assets and include fees for portfolio management, maintenance
of shareholder accounts, shareholder servicing, accounting and other services.
SHAREHOLDER TRANSACTION EXPENSES (applicable to each Fund)
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales charges on redemptions None
Redemption fee* None
Exchange fee None
* There is an $8 service fee for redemptions by wire.
- --------------------------------------------------------------------------------
Why do expenses vary across the Funds? Expenses vary for a number of reasons,
including Fund size, differences in management fees, average shareholder account
size, and the extent of foreign investments which entail greater transaction
costs.
ANNUAL OPERATING EXPENSES(1)
(expressed as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Fee Other Expenses Total Operating Expenses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund 0.60% 0.28% 0.88%
Janus High-Yield Fund(2) 0.58% 0.43% 1.01%
Janus Federal Tax-Exempt Fund(2) 0.14% 0.54% 0.68%
Janus Short-Term Bond Fund(2) 0.09% 0.58% 0.67%
Janus Money Market Fund-Investor Shares(2) 0.10% 0.50% 0.60%
Janus Government Money Market Fund-Investor Shares(2) 0.10% 0.50% 0.60%
Janus Tax-Exempt Money Market Fund-Investor Shares(2) 0.10% 0.50% 0.60%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The information in the table above is based on expenses before expense
offset arrangements for the fiscal year ended October 31, 1996. When
applicable, all expenses are stated net of waivers by Janus Capital.
Waivers for the Fixed-Income Funds are first applied against the management
fee and then against other expenses.
(2) Net of waivers. Without such waivers, the Management Fee, Other Expenses
and Total Operating Expenses would have been .75%, .43% and 1.18%,
respectively, for Janus High-Yield Fund; .60%, .54% and 1.14%,
respectively, for Janus Federal Tax-Exempt Fund; .65%, .58% and 1.23%,
respectively, for Janus Short-Term Bond Fund; and .20%, .50% and .70% for
each of the Money Market Funds - Investor Shares. Janus Capital may modify
or terminate the waivers at any time upon at least 90 days' notice to the
Trustees.
EXAMPLE
Assume you invest $1,000, the Funds return 5% annually and each Fund's expense
ratio remains as listed above. The example below shows the operating expenses
that you would indirectly bear as an investor in the Funds.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income Fund $ 9 $28 $49 $108
Janus High-Yield Fund $10 $32 $56 $124
Janus Federal Tax-Exempt Fund $ 7 $22 $38 $ 85
Janus Short-Term Bond Fund $ 7 $21 $37 $ 83
Janus Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
Janus Government Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
Janus Tax-Exempt Money Market Fund - Investor Shares $ 6 $19 $33 $ 75
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE RETURNS
OR EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
3
<PAGE>
Financial Highlights
Unless otherwise noted, the information below is for fiscal periods ending on
October 31 of each year. The accounting firm of Price Waterhouse LLP has audited
the Funds' financial statements beginning with the year ended October 31, 1990.
Their report is included in the Funds' Annual Reports, which are incorporated by
reference into the SAI. A detailed explanation of the Financial Highlights can
be found on page 6.
<TABLE>
<CAPTION>
Janus Flexible Income Fund
1996 1995 1994 1993 1992(1) 1991(2) 1990(2) 1989(2) 1988(2) 1987(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 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%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992.
(2) Fiscal year ended on December 31st of each year.
(3) Fiscal period from July 2, 1987 (inception) to December 31, 1987.
(4) The ratio of net expenses to average net assets was 1.01% in 1993, 1.21% in
1992 and 1.74% in 1991 before waiver of certain Fund expenses. The ratio
was 2% in prior years.
*Total return is not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
<TABLE>
<CAPTION>
Janus High-Yield Fund
1996 (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Net asset value, beginning of period $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income 0.80
3. Net gains or (losses) on securities (both realized and unrealized) 1.12
- ------------------------------------------------------------------------------------------------------------------
4. Total from investment operations 1.92
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income) (0.80)
6. Distributions (from capital gains) --
- ------------------------------------------------------------------------------------------------------------------
7. Total distributions (0.80)
- ------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $11.12
- ------------------------------------------------------------------------------------------------------------------
9. Total return* 19.71%
- ------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period (in millions) $211
11. Average net assets for the period (in millions) $88
12. Ratio of gross expenses to average net assets** 1.01%(2)
13. Ratio of net expenses to average net assets** 1.00%
14. Ratio of net investment income to average net assets** 9.00%
15. Portfolio turnover rate** 324%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) The ratio was 1.18% before waiver of certain Fund expenses.
*Total return is not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
4
<PAGE>
<TABLE>
<CAPTION>
Janus Janus
Federal Tax-Exempt Fund Short-Term Bond Fund
1996 1995 1994 1993(1) 1996 1995 1994 1993 1992(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $6.88 $6.45 $7.30 $7.00 $2.84 $2.87 $3.02 $2.98 $3.00
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income 0.36 0.36 0.36 0.14 0.16 0.18 0.18 0.14 0.01
3. Net gains or (losses) on securities
(both realized and unrealized) 0.04 0.43 (0.83) 0.30 0.02 (0.03) (0.15) 0.04 (0.02)
- ------------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations 0.40 0.79 (0.47) 0.44 0.18 0.15 0.03 0.18 (0.01)
- ------------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income)(0.36) (0.36) (0.36) (0.14) (0.16) (0.18) (0.17) (0.14) (0.01)
6. Distributions (from capital gains) -- -- (0.02) -- -- -- (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------
7. Total distributions (0.36) (0.36) (0.38) (0.14) (0.16) (0.18) (0.18) (0.14) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $6.92 $6.88 $6.45 $7.30 $2.86 $2.84 $2.87 $3.02 $2.98
- ------------------------------------------------------------------------------------------------------------------------------
9. Total return* 5.94% 12.60% (6.62%) 6.33% 6.49% 5.55% 1.26% 6.17% (0.19%)
- ------------------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period (in millions) $45 $33 $26 $27 $41 $48 $54 $76 $3
11. Average net assets for the period
(in millions) $36 $29 $28 $16 $42 $47 $60 $37 $1
12. Ratio of gross expenses to
average net assets** 0.68%(3) 0.70%(3) N/A N/A 0.67%(5) 0.66%(5) N/A N/A N/A
13. Ratio of net expenses to
average net assets** 0.65% 0.65% 0.65%(3) 0.75%(3,4) 0.65% 0.65% 0.65%(5) 0.83%(4,5) 1.00%
14. Ratio of net investment income
to average net assets** 5.18% 5.43% 5.20% 4.58% 5.57% 6.67% 6.08% 4.86% 3.22%
15. Portfolio turnover rate** 225% 164% 160% 124% 486% 337% 346% 372% 7%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 3, 1993 (inception) to October 31, 1993.
(2) Fiscal period from September 1, 1992 (inception) to October 31, 1992.
(3) The ratio of net expenses to average net assets was 1.14% in 1996, 1.31% in
1995, 1.41% in 1994 and 1.60% in 1993 before waiver of certain Fund
expenses.
(4) The ratio of net expenses to average net assets reflects the Fund's
previous expense limit of 1.00%. This limit was reduced to .65% as of
August 1, 1993.
(5) The ratio of net expenses to average net assets was 1.23% in 1996, 1.23%
in 1995, 1.15% in 1994, 1.40% in 1993 and 2.50% in 1992 before waiver of
certain Fund expenses.
*Total return is not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
<TABLE>
<CAPTION>
Janus Janus Janus
Money Market Government Money Market Tax-Exempt Money Market
Fund Fund Fund
Investor Shares 1996 1995(1) 1996 1995(1) 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
2. Net investment income .05 .04 .05 .04 .03 .02
3. Net gains or (losses) on securities
(both realized and unrealized) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
4. Total from investment operations .05 .04 .05 .04 .03 .02
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
5. Dividends (from net investment income) (.05) (.04) (.05) (.04) (.03) (.02)
6. Distributions (from capital gains) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
7. Total distributions (.05) (.04) (.05) (.04) (.03) (.02)
- ------------------------------------------------------------------------------------------------------------------------
8. Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------
9. Total return* 5.13% 3.95% 5.03% 3.90% 3.27% 2.40%
- ------------------------------------------------------------------------------------------------------------------------
10. Net assets, end of period (in millions) $774 $643 $117 $119 $75 $67
11. Average net assets for
the period (in millions) $676 $461 $112 $87 $69 $57
12. Ratio of expenses to
average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
13. Ratio of net investment income
to average net assets** 5.01% 5.56% 4.91% 5.40% 3.22% 3.38%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from February 15, 1995 (inception) to October 31, 1995.
(2) The ratio of expenses to average net assets was 0.70% before voluntary
reduction of fees.
*Total return is not annualized for periods of less than one full year.
**Annualized for periods of less than one full year.
5
<PAGE>
Understanding the Financial Highlights
This section is designed to help you better understand the information
summarized in the Financial Highlights tables. The tables contain important
historical operating information that may be useful in making your investment
decision or understanding how your investment has performed. The Funds' Annual
Reports contain additional information about each Fund's performance, including
a comparison to an appropriate securities index. For a copy of your Fund's
Annual Report, call 1-800-525-8983.
Net asset value ("NAV") is the value of a single share of a Fund. It is computed
by adding the value of all of a Fund's investments and other assets, subtracting
any liabilities and dividing the result by the number of shares outstanding. The
difference between line 1 and line 8 in the Financial Highlights tables
represents the change in value of a share of a Fund over the fiscal period, but
not its total return. The Money Market Funds' NAV is expected to be $1.00.
Net investment income is the per share amount of dividends and interest income
earned on securities held by a Fund, less Fund expenses. Dividends (from net
investment income) are the per share amount that a Fund paid from net investment
income.
Net gains or (losses) on securities is the per share increase or decrease in
value of the securities a Fund holds. A gain (or loss) is realized when
securities are sold. A gain (or loss) is unrealized when securities increase or
decrease in value but are not sold. Distributions (from capital gains) are the
per share amount that a Fund paid from net realized gains.
Total return is the percentage increase or decrease in the value of an
investment over a stated period of time. A total return percentage includes both
changes in NAV and income. For the purposes of calculating total return, it is
assumed that dividends and distributions are reinvested at the NAV on the day of
the distribution. A FUND'S TOTAL RETURN CANNOT BE COMPUTED DIRECTLY FROM THE
FINANCIAL HIGHLIGHTS TABLES.
Ratio of net expenses to average net assets is the total of a Fund's operating
expenses divided by its average net assets for the stated period. Ratio of gross
expenses to average net assets does not reflect reductions in expenses through
the use of brokerage commissions and uninvested cash balances earning interest
with a Fund's custodian.
Ratio of net investment income to average net assets is a Fund's net investment
income divided by its average net assets for the stated period.
Portfolio turnover rate is a measure of the amount of a fund's buying and
selling activity. It is computed by dividing total purchases or sales, whichever
is less, by the average monthly market value of a fund's portfolio securities.
The Money Market Funds do not calculate portfolio turnover.
6
<PAGE>
The Fixed-Income Funds in Detail
To help you decide which Fixed-Income Fund is appropriate for you, this section
takes a closer look at the Fixed-Income Funds' investment objectives, policies
and the securities in which they invest. Please carefully review the "Additional
Risk Factors" section of this Prospectus for a more detailed discussion of the
risks associated with certain investment techniques, as well as the Janus
Spectrum on page 2. Appendix A contains a more detailed description of
investment terms used throughout this Prospectus. You should carefully consider
your own investment goals, time horizon and risk tolerance before investing in a
Fixed-Income Fund.
Policies that are noted as "fundamental" cannot be changed without a shareholder
vote. All other policies, including each Fixed-Income Fund's investment
objective, are not fundamental and may be changed by the Funds' Trustees without
a shareholder vote. You will be notified of any such changes that are material.
If there is a material change in a Fixed-Income Fund's objective or policies,
you should consider whether that Fixed-Income Fund remains an appropriate
investment for you.
The Janus Fixed-Income Funds are designed for those investors who primarily seek
current income.
FIXED-INCOME FUNDS
Investment Objective:
Janus Flexible Income Fund........................................Total Return
Others..................................................................Income
Primary Holdings:....................................Income-Producing Securities
Shareholder's Investment Horizon:
Janus Short-Term Bond Fund.........................Short- to Intermediate-Term
Others..............................................Intermediate- to Long-Term
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A shareholder's investment horizon is the amount of time you should plan to hold
your investment in a Fund to maximize the potential for realizing the Fund's
objective.
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Janus Flexible Income Fund
The investment objective of this Fund is to obtain maximum total return,
consistent with preservation of capital. This Fund pursues its objective
primarily through investments in income-producing securities. Total return is
expected to result from a combination of current income and capital
appreciation, although income will normally be the dominant component of total
return. As a fundamental policy, this Fund will invest at least 80% of its
assets in income-producing securities.
Janus Flexible Income Fund may invest in a wide variety of income-producing
securities including corporate bonds and notes, government securities,
indexed/structured securities, preferred stock, income-producing common stocks,
debt securities that are convertible or exchangeable into equity securities, and
debt securities that carry with them the right to acquire equity securities as
evidenced by warrants attached to or acquired with the securities. The Fund may
invest to a lesser degree in common stocks, other equity securities or debt
securities that are not currently paying dividends or interest. The Fund may
purchase securities of any maturity and quality and the average maturity and
quality of its portfolio may vary substantially.
Janus Flexible Income Fund may invest without limit in foreign securities,
including those of corporate and government issuers. The Fund may invest without
limit in high-yield/high-risk securities and may have substantial holdings of
such securities. The Fund may invest without limit in mortgage- and asset-backed
securities and up to 10% of its assets in zero coupon, pay-in-kind and step
coupon securities. The risks of foreign securities and high-yield securities are
described under "Additional Risk Factors" on pages 11-12.
The Fund may purchase defaulted debt securities if, in the opinion of Janus
Capital, it appears likely that the issuer may resume interest payments or other
advantageous developments appear likely in the near term. Defaulted debt
securities may be illiquid and subject to the Fund's limit on illiquid
investments.
Janus High-Yield Fund
The primary investment objective of this Fund is to obtain high current income.
Capital appreciation is a secondary objective when consistent with its primary
objective. Capital appreciation may result, for example, from an improvement in
the credit standing of an issuer whose securities are held by this Fund or from
a general lowering of interest rates, or both. This Fund pursues its objectives
by investing primarily in high-yield/high-risk fixed-income securities. This
Fund will normally invest at least 65% of its total assets in those securities.
In addition, the Fund may invest in all of the types of securities previously
described under Janus Flexible Income Fund (except this Fund may invest without
limit in zero coupon, pay-in-kind and step coupon securities).
The high yields sought by this Fund are expected to result primarily from
investments in longer-term, lower quality corporate bonds, commonly referred to
as "junk" bonds. This Fund considers lower quality securities to be securities
rated below investment grade by established rating agencies or unrated
securities of comparable quality. Securities rated BB or lower by Standard &
Poor's Ratings Services ("Standard & Poor's") or Ba or lower by Moody's
Investors Service, Inc. ("Moody's") are below investment grade. Lower quality
securities are often considered to be more speculative and involve greater risk
of default or price changes due to changes in interest rates, economic
conditions and the issuer's credit-worthiness. As a result, their market prices
tend to fluctuate more than higher quality securities of comparable maturity.
Additional risks of lower quality securities are described under "Additional
Risk Factors" on pages 11-12.
7
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Janus Federal Tax-Exempt Fund
The investment objective of this Fund is to seek as high a level of current
income exempt from federal income tax as is consistent with preservation of
capital. This Fund pursues its objective by investing primarily in municipal
obligations of any maturity whose interest is exempt from federal income tax.
Because of this emphasis, capital appreciation is not a significant investment
consideration. However, to the extent that capital gains are realized, they are
subject to federal income tax. As a fundamental policy, this Fund will normally
invest at least 80% of its net assets in securities whose interest is exempt
from federal income tax, including the federal alternative minimum tax. The Fund
is designed for investors who seek a higher after-tax yield than comparable
investing in taxable securities.
Municipal securities in which the Fund may invest include general obligation
bonds, revenue bonds, industrial development bonds, municipal lease obligations,
certificates of participation (not to exceed 10% of assets), inverse floaters
(not to exceed 5% of assets), instruments with demand features, tender option
bonds and standby commitments.
At times, this Fund may invest more than 25% of its assets in tax-exempt
securities that are related in such a way that an economic, business, or
political development or change affecting one security could similarly affect
the other securities; for example, securities whose issuers are located in the
same state, or securities whose interest is derived from revenues of similar
type projects. The Fund may invest more than 25% of its assets in industrial
development bonds.
Subject to the policies above, the Fund may invest up to 25% of its assets in
mortgage- and asset-backed securities and up to 10% of its assets in zero
coupon, pay-in-kind and step coupon securities. The Fund will invest less than
35% of its net assets in high-yield/high-risk securities.
Janus Short-Term Bond Fund
The investment objective of this Fund is to seek as high a level of current
income as is consistent with preservation of capital. This Fund pursues its
objective by investing primarily in short- and intermediate-term fixed-income
securities. Under normal circumstances, it is expected that this Fund's
dollar-weighted average portfolio effective maturity will not exceed three
years.
Effective maturity is the weighted average period over which a security's
principal is expected to be paid. It differs from stated maturity in that it
estimates the effect of expected principal prepayments and call provisions.
Targeting effective maturity provides additional flexibility in portfolio
management but, all else being equal, could result in higher volatility than a
fund targeting a stated maturity or maturity range. See the question and answer
section below for a more detailed discussion of the Fund's maturity policy.
Janus Short-Term Bond Fund will normally invest at least 65% of its assets in
debt securities. Subject to this policy and subject to its maturity limits, the
Fund may invest in the types of securities previously described under Janus
Flexible Income Fund except that the Fund will invest less than 35% of its net
assets in high-yield/ high-risk securities and its investments in mortgage- and
asset-backed securities will not exceed 25% of assets.
FIXED-INCOME FUNDS
Each Fund may purchase securities on a when-issued, delayed delivery or forward
commitment basis. In addition, each Fund may use futures, options, swaps and
other derivatives for hedging purposes or for non-hedging purposes such as
seeking to enhance return. See "Additional Risk Factors" on pages 11-12. When
its portfolio manager is unable to locate investment opportunities with
favorable risk/reward characteristics, the cash position of any Fund may
increase and the Fund may have substantial holdings of cash or cash equivalent
short-term obligations. See "General Portfolio Policies" on page 10.
The following questions are designed to help you better understand an investment
in the Janus Fixed-Income Funds.
How do interest rates affect the value of my investment?
A fundamental risk associated with any fund that invests in fixed-income
securities (e.g., a bond fund) is the risk that the value of the securities it
holds will rise or fall as interest rates change. Generally, a fixed-income
security will increase in value when interest rates fall and decrease in value
when interest rates rise. Longer-term securities are generally more sensitive to
interest rate changes than shorter-term securities, but they generally offer
higher yields to compensate investors for the associated risks. A bond fund's
average-weighted effective maturity and its duration are measures of how the
fund may react to interest rate changes. High-yield bond prices are generally
less directly responsive to interest rate changes than investment grade issues
and may not always follow this pattern.
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What is meant by a Fund's "average-weighted effective maturity"?
The stated maturity of a bond is the date when the issuer must repay the bond's
entire principal value to an investor, such as a Fund. Some types of bonds, such
as mortgage-backed securities and securities with call provisions, may also have
an "effective maturity" that is shorter than the stated date. With respect to
GNMA securities and other mortgage-backed securities, effective maturity is
likely to be substantially less than the stated maturities of the mortgages in
the underlying pools. With respect to obligations with call provisions,
effective maturity is typically the next call date on which the obligation
reasonably may be expected to be called. Securities without prepayment or call
provisions generally have an effective maturity equal to their stated maturity.
Dollar-weighted effective maturity is calculated by averaging the effective
maturity of bonds held by a Fund with each effective maturity "weighted"
8
<PAGE>
according to the percentage of net assets that it represents.
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What is meant by a Fund's "duration"?
A bond's duration indicates the time it will take an investor to recoup his
investment. Unlike average maturity, duration reflects both principal and
interest payments. Generally, the higher the coupon rate on a bond, the lower
its duration will be. The duration of a bond fund is calculated by averaging the
duration of bonds held by a fund with each duration "weighted" according to the
percentage of net assets that it represents. Because duration accounts for
interest payments, a Fund's duration is usually shorter than its average
maturity.
- --------------------------------------------------------------------------------
How do the Fixed-Income Funds manage interest rate risk?
Each Fixed-Income Fund may vary the average-weighted effective maturity of its
portfolio to reflect its portfolio manager's analysis of interest rate trends
and other factors. A Fund's average-weighted effective maturity will tend to be
shorter when its portfolio manager expects interest rates to rise and longer
when its portfolio manager expects interest rates to fall. The Funds may also
use futures, options and other derivatives to manage interest rate risk. See
"Additional Risk Factors" on pages 11-12.
- --------------------------------------------------------------------------------
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 statistical rating agencies such as
Standard & Poor's and Moody's are widely accepted measures of credit risk. The
lower a bond issue is rated by an agency, the more credit risk it is considered
to represent. Lower rated bonds generally pay higher yields to compensate
investors for the associated risk. Please refer to Appendix B for a description
of rating categories.
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What is a high-yield/ high-risk security?
A high-yield security (also called a "junk" bond) is a debt security rated below
investment grade by major rating agencies (i.e., BB or lower by Standard &
Poor's or Ba or lower by Moody's) or an unrated bond of similar quality. It
presents greater risk of default (the failure to make timely interest and
principal payments) than higher quality bonds.
- --------------------------------------------------------------------------------
What risks do high-yield/high-risk securities present?
High-yield securities are often considered to be more speculative and involve
greater risk of default or price changes due to changes in economic and industry
conditions and the issuer's creditworthiness. Their market prices tend to
fluctuate more than higher quality securities as a result of changes in these
factors.
The default rate of lower quality debt securities is likely to be higher when
issuers have difficulty meeting projected goals or obtaining additional
financing. This could occur during economic recessions or periods of high
interest rates. In addition, there may be a smaller market for lower quality
securities than for higher quality securities, making lower quality securities
more difficult to sell promptly at an acceptable price.
The junk bond market can experience sudden and sharp price swings. Because Janus
Flexible Income Fund and Janus High-Yield Fund may invest a significant portion
of their portfolios in high-yield/high-risk securities, investors in such Funds
should be willing to tolerate a corresponding increase in the risk of
significant and sudden changes in NAV.
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What are the tax advantages of investing in Janus Federal Tax-Exempt Fund?
Most regular income dividends you receive from Janus Federal Tax-Exempt Fund
generally will not be subject to federal income tax. Additionally, your state
may not tax the portion of this Fund's income derived from obligations issued by
your state (if any). Capital gains distributed by this Fund are taxable to you.
See "Distributions" and "Taxes" on pages 26-27. The higher your income tax level
is, the more you will benefit from tax-exempt investing.
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How do the Fixed-Income Funds differ from each other?
The chart below shows that the Fixed-Income Funds differ substantially in terms
of the type, credit quality and interest rate risk of the securities in which
they invest.
Primary Interest Rate
Investment Type Credit Risk Risk
- --------------------------------------------------------------------------------
Janus Flexible Income Fund Corporate Bonds High High
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Janus High-Yield Fund Corporate Bonds Highest Moderate
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Janus Federal Municipal
Tax-Exempt Fund Securities Moderate High
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Janus Short-Term
Bond Fund Corporate Bonds Moderate Low
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9
<PAGE>
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies to all of the
Fixed-Income Funds. The percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if a Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of any securities.
Cash Position
When a Fixed-Income Fund's portfolio manager believes that market conditions are
not favorable for profitable investing or when the portfolio manager is
otherwise unable to locate favorable investment opportunities, the Fund's
investments may be hedged to a greater degree and/or its cash or similar
investments may increase. In other words, the Fixed-Income Funds do not always
stay fully invested in stocks and bonds. Cash or similar investments are a
residual - they represent the assets that remain after a portfolio manager has
committed available assets to desirable investment opportunities. Partly because
the portfolio managers act independently of each other, the cash positions of
the Fixed-Income Funds may vary significantly. Larger hedged positions and/or
larger cash positions may serve as a means of preserving capital in unfavorable
market conditions.
Securities that the Fixed-Income Funds may invest in as a means of receiving a
return on idle cash include high-grade commercial paper, certificates of
deposit, repurchase agreements or other short-term debt obligations. The
Fixed-Income Funds may also invest in money market funds (including funds
managed by Janus Capital). Janus Federal Tax-Exempt Fund may invest in such
securities even though they may be federally taxable. When a Fixed-Income Fund's
investments in cash or similar investments increase, a Fund may not participate
in stock or bond market advances or declines to the same extent that it would if
the Fund remained more fully invested in stocks or bonds.
Diversification
The Investment Company Act of 1940 (the "1940 Act") classifies investment
companies as either diversified or nondiversified. All of the Fixed-Income Funds
qualify as diversified funds under the 1940 Act. The Fixed-Income Funds are
subject to the following diversification requirements:
o As a fundamental policy, no Fixed-Income Fund may own more than 10% of the
outstanding voting shares of any issuer.
o As a fundamental policy, with respect to 75% of the total assets of each
Fixed-Income Fund, no Fund will purchase a security of any issuer (other
than cash items and U.S. government securities, as defined in the 1940 Act)
if such purchase would cause the Fund's holdings of that issuer to amount
to more than 5% of that Fund's total assets.
o No Fund will invest more than 25% of its total assets in a single issuer
(other than U.S. government securities).
Industry Concentration
As a fundamental policy, no Fixed-Income Fund will invest 25% or more of its
total assets in any particular industry (excluding U.S. government securities
and municipal obligations issued by governments or their subdivisions because
the issuers of those securities are not considered a part of any industry).
Portfolio Turnover
Each Fixed-Income Fund generally intends to purchase securities for long-term
investment rather than short-term gains. However, short-term transactions may
result from liquidity needs, securities having reached a price or yield
objective, changes in interest rates or the credit standing of an issuer, or by
reason of economic or other developments not foreseen at the time of the initial
investment decision. Changes are made in a Fixed-Income Fund's portfolio
whenever its portfolio manager believes such changes are desirable. Portfolio
turnover rates are generally not a factor in making buy and sell decisions.
To a limited extent, a Fixed-Income Fund may purchase securities in anticipation
of relatively short-term price gains. A Fixed-Income Fund may also sell one
security and simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or securities prices.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups and other transaction costs and may also result in
taxable capital gains. Certain tax rules may restrict the Fixed-Income Funds'
ability to engage in short-term trading if a security has been held for less
than three months.
Illiquid Investments
Each Fixed-Income Fund may invest up to 15% of its net assets in illiquid
investments, including restricted securities or private placements that are not
deemed to be liquid by Janus Capital. An illiquid investment is a security or
other position that cannot be disposed of quickly in the normal course of
business. Some securities cannot be sold to the U.S. public because of their
terms or because of SEC regulations. Janus Capital will follow guidelines
established by the Funds' Trustees in making liquidity determinations for Rule
144A securities and certain other securities, including privately placed
commercial paper and municipal lease obligations.
Borrowing and Lending
Each fixed-income fund may borrow money and lend securities or other assets, as
follows:
o Each Fixed-Income Fund may borrow money for temporary or emergency purposes
in amounts up to 25% of its total assets.
o Each Fixed-Income Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.
10
<PAGE>
o As a fundamental policy, each Fixed-Income Fund may lend securities or
other assets if, as a result, no more than 25% of its total assets would be
lent to other parties.
Each Fixed-Income Fund intends to seek permission from the SEC to borrow money
from or lend money to each other and other funds that permit such transactions
and for which Janus Capital serves as investment adviser. All such borrowing and
lending will be subject to the above percentage limits. There is no assurance
that such permission will be granted.
ADDITIONAL RISK FACTORS
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). Please refer to Appendix B for a description of rating categories.
The value of lower quality securities generally is more dependent on the ability
of the issuer to meet interest and principal payments (i.e., credit risk) than
is the case for higher quality securities. Conversely, the value of higher
quality securities may be more sensitive to interest rate movements than lower
quality securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing, particularly if the
issuer is highly leveraged. In the event of a default, a Fixed-Income Fund would
experience a reduction of its income and could expect a decline in the market
value of the defaulted securities.
The market for lower quality securities is generally less liquid than the market
for higher quality securities. Adverse publicity and investor perceptions as
well as new or proposed laws may also have a greater negative impact on the
market for lower quality securities. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a market as rated
securities. Sovereign debt of foreign governments is generally rated by country.
Because these ratings do not take into account individual factors relevant to
each issue and may not be updated regularly, Janus Capital may treat such
securities as unrated debt.
The market prices of high-yield securities structured as zero coupon or
pay-in-kind securities are generally affected to a greater extent by interest
rate changes and tend to be more volatile than securities which pay interest
periodically. In addition, zero coupon, pay-in-kind and delayed interest bonds
often do not pay interest until maturity. However, the Fixed-Income Funds must
recognize a computed amount of interest income and pay dividends to shareholders
even though they have received no cash. In some instances, the Fixed-Income
Funds may have to sell securities to have sufficient cash to pay the dividends.
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 many foreign securities are traded primarily in foreign markets. The
risks of foreign investing include:
o Currency Risk. A Fixed-Income Fund may buy the local currency when it buys
a foreign currency denominated security and sell the local currency when it
sells the security. As long as a Fund holds a foreign denominated security,
its value will be affected by the value of the local currency relative to
the U.S. dollar. When a Fund sells a foreign 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.
o Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a
company or that the government may impose taxes or limits on the removal of
a Fixed-Income Fund's assets from that country. The Fixed-Income Funds may
invest in emerging market countries. Emerging market countries involve
greater risks such as immature economic structures, national policies
restricting investments by foreigners, and different legal systems.
o Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices applicable to
domestic issuers. There may be less publicly available information about
foreign issuers than domestic issuers.
11
<PAGE>
o Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more
volatile than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be
protection against failure by other parties to complete transactions. There
may be limited legal recourse against an issuer in the event of a default
on a debt instrument.
o Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally
higher than those involved in domestic transactions.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
Futures, Options and Other Derivative Instruments
Each Fixed-Income Fund may enter into futures contracts on securities, financial
indices and foreign currencies and options on such contracts ("futures
contracts") and may invest in options on securities, financial indices and
foreign currencies ("options"), forward contracts and interest rate swaps and
swap-related products (collectively "derivative instruments"). The Fixed-Income
Funds intend to use most derivative instruments primarily to hedge the value of
their portfolios against potential adverse movements in securities prices,
foreign currency markets or interest rates. To a limited extent, the
Fixed-Income Funds may also use derivative instruments for non-hedging purposes
such as seeking to increase income or otherwise seeking to enhance return.
Please refer to Appendix A to this Prospectus and the SAI for a more detailed
discussion of these instruments.
The use of derivative instruments exposes the Fixed-Income Funds to additional
investment risks and transaction costs. Risks inherent in the use of derivative
instruments include:
o the risk that interest rates, securities prices and currency markets will
not move in the direction that a portfolio manager anticipates;
o imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
o the fact that skills needed to use these strategies are different from
those needed to select portfolio securities;
o inability to close out certain hedged positions to avoid adverse tax
consequences;
o the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either
of which may make it difficult or impossible to close out a position when
desired;
o leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than a Fixed-Income
Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); and
o particularly in the case of privately-negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave a
Fixed-Income Fund worse off than if it had not entered into the position.
Although the Fixed-Income Funds believe the use of derivative instruments will
benefit the Funds, a Fund's performance could be worse than if the Fund had not
used such instruments if a portfolio manager's judgement proves incorrect.
When a Fixed-Income Fund invests in a derivative instrument, it may be required
to segregate cash and other liquid assets or certain portfolio securities with
its custodian to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as the Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish the Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
Short Sales
Each Fixed-Income Fund may engage in "short sales against the box." This
technique involves selling either a security that a 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. A 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, a Fund loses the opportunity to participate in the gain.
Special Situations
Each Fixed-Income Fund may invest in "special situations" from time to time.
A special situation arises when, in the opinion of a Fund's portfolio manager,
the securities of a particular issuer will be recognized and appreciate in value
due to a specific development with respect to that issuer. Developments creating
a special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investment in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
See Appendix A for risks associated with certain other investments.
12
<PAGE>
The Money Market Funds in Detail
INVESTMENT OBJECTIVES
The investment objective of each of Janus Money Market Fund and Janus Government
Money Market Fund is to seek maximum current income to the extent consistent
with stability of capital. The investment objective of Janus Tax-Exempt Money
Market Fund is to seek maximum current income that is exempt from federal income
taxes to the extent consistent with stability of capital. There can be no
assurance that a Fund will achieve its investment objective or that the Shares
will be able to maintain a stable net asset value of $1.00 per share.
COMMON INVESTMENT POLICIES
The Money Market Funds will invest only in eligible high quality, short-term
money market instruments that present minimal credit risks, as determined by
Janus Capital, pursuant to procedures adopted by the Trustees. Each Money Market
Fund may invest only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the 1940 Act) and will maintain a dollar-weighted average portfolio
maturity of 90 days or less.
Except to the limited extent permitted by Rule 2a-7 and except for U.S.
Government Securities (as defined below), each Money Market Fund will not invest
more than 5% of its total assets in the securities of any one issuer. A
guarantor is not considered an issuer for the purpose of this limit provided
that the value of all securities held by a Money Market Fund that are issued or
guaranteed by that institution does not exceed 10% of the Money Market Fund's
total assets. Until pending amendments to Rule 2a-7 become effective, up to 25%
of Janus Tax-Exempt Money Market Fund's total assets may be invested without
regard to the foregoing limitations. A Money Market Fund may not invest more
than 25% of its total assets in any one industry, except that this limit does
not apply to U.S. Government Securities, bank obligations or municipal
securities. To ensure adequate liquidity, no Money Market Fund may invest more
than 10% of its net assets in illiquid investments, including repurchase
agreements maturing in more than seven days (unless subject to a demand feature)
and certain time deposits that are subject to early withdrawal penalties and
mature in more than seven days. Because the Money Market Funds are typically
used as a cash management vehicle, they intend to maintain a high degree of
liquidity. Janus Capital determines and monitors the liquidity of portfolio
securities under the supervision of the Trustees.
Ratings
High quality money market instruments include those that (i) are rated (or, if
unrated, are issued by an issuer with comparable outstanding short-term debt
that is rated) in one of the two highest rating categories for short-term debt
by any two nationally recognized statistical rating organizations ("NRSROs") or,
if only one NRSRO has issued a rating, by that NRSRO or (ii) are otherwise
unrated and determined by Janus Capital to be of comparable quality. Each Money
Market Fund, except Janus Tax-Exempt Money Market Fund, will invest at least 95%
of its total assets in securities in the highest rating category (as determined
pursuant to Rule 2a-7). Descriptions of the rating categories of Standard &
Poor's, Moody's, and certain other NRSROs are contained in Appendix B. A further
description of the Money Market Funds' investment policies is included in the
Money Market Funds' SAI.
Although each Money Market Fund only invests in high quality money market
instruments, an investment in a Money Market Fund is subject to risk even if all
securities in a Money Market Fund's portfolio are paid in full at maturity. All
money market instruments, including U.S. Government Securities, can change in
value as a result of changes in interest rates, the issuer's actual or perceived
creditworthiness or the issuer's ability to meet its obligations.
TYPES OF INVESTMENTS
Janus Money Market Fund
Janus money market fund pursues its objective by investing primarily in high
quality debt obligations and obligations of financial institutions. The fund may
also invest in U.S. Government securities (as defined below) and municipal
securities, although the fund expects to invest in such securities to a lesser
degree.
Debt Obligations
The Fund may invest in debt obligations of domestic issuers, including
commercial paper (short-term promissory notes issued by companies to finance
their, or their affiliates' current obligations), notes and bonds, and variable
amount master demand notes. The payment obligations on these instruments may be
backed by securities, swap agreements or other assets, by a guarantee of a third
party or solely by the unsecured promise of the issuer to make payments when
due. The Fund may invest in privately issued commercial paper or other
securities that are restricted as to disposition under the federal securities
laws. In general, sales of these securities may not be made absent registration
under the Securities Act of 1933 (the "1933 Act") or the availability of an
appropriate exemption. Pursuant to Section 4(2) of the 1933 Act or Rule 144A
adopted under the 1933 Act, however, some of these securities are eligible for
resale to institutional investors, and accordingly, Janus Capital may determine
that a liquid market exists for such a security pursuant to guidelines adopted
by the Trustees.
Obligations of Financial Institutions
The Fund may invest in obligations of financial institutions. Examples of
obligations in which the Fund may invest include negotiable certificates of
deposit, bankers' acceptances and time deposits of U.S. banks (including savings
and loan associations) having total assets in excess of one billion dollars and
U.S. branches of foreign banks having total assets in excess of ten billion
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dollars. The Fund may also invest in Eurodollar and Yankee bank obligations as
discussed below.
Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Fixed time deposits, which
are payable at a stated maturity date and bear a fixed rate of interest,
generally may be withdrawn on demand by the Fund but may be subject to early
withdrawal penalties that could reduce the Fund's yield. Unless there is a
readily available market for them, time deposits that are subject to early
withdrawal penalties and that mature in more than seven days will be treated as
illiquid securities.
Eurodollar or Yankee Obligations
The Fund may invest in Eurodollar and Yankee bank obligations. Eurodollar bank
obligations are dollar-denominated certificates of deposit or time deposits
issued outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Eurodollar (and to a limited extent, Yankee) bank obligations are subject to
certain sovereign risks. One such risk is the possibility that a foreign
government might prevent dollar-denominated funds from flowing across its
borders. Other risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers.
U.S. Government Securities
The Fund may invest without limit in U.S. Government Securities as described
below under "Janus Government Money Market Fund."
Municipal Securities
The Fund may invest in obligations of states, territories or possessions of the
United States and their subdivisions, authorities and corporations as described
below under "Janus Tax-Exempt Money Market Fund." These obligations may pay
interest that is exempt from federal income taxation.
Janus Government Money Market Fund
Janus Government Money Market Fund pursues its objective by investing
exclusively in obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
U.S. Government Securities
U.S. Government Securities shall have the meaning set forth in the 1940 Act. The
1940 Act defines U.S. Government Securities to include securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. U.S.
Government Securities may also include repurchase agreements collateralized by
and municipal securities escrowed with or refunded with U.S. government
securities. U.S. Government Securities in which the Fund may invest include U.S.
Treasury securities and obligations issued or guaranteed by U.S. government
agencies and instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small Business
Administration or issued by the Government National Mortgage Association. In
addition, U.S. Government Securities in which the Fund may invest include
securities supported primarily or solely by the creditworthiness of the issuer,
such as securities of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation and the Tennessee Valley Authority. There is no
guarantee that the U.S. government will support securities not backed by its
full faith and credit. Accordingly, although these securities have historically
involved little risk of loss of principal if held to maturity, they may involve
more risk than securities backed by the full faith and credit of the U.S.
government.
Janus Tax-Exempt Money Market Fund
Janus Tax-Exempt Money Market Fund pursues its objective by investing primarily
in municipal securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. Although the Fund will attempt to
invest substantially all of its assets in municipal securities whose interest is
exempt from federal income taxes, the Fund reserves the right to invest up to
20% of its net assets in securities whose interest is federally taxable.
Additionally, when its portfolio manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Fund may invest
without limit in cash and cash equivalents, including obligations that may be
federally taxable (See "Taxable Investments").
Municipal Securities
The municipal securities in which the Fund may invest include municipal notes
and short-term municipal bonds. Municipal notes are generally used to provide
for the issuer's short-term capital needs and generally have maturities of 397
days or less. Examples include tax anticipation and revenue anticipation notes,
which generally are issued in anticipation of various seasonal revenues, bond
anticipation notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation bonds," which are
secured by the issuer's pledge of its faith, credit and taxing power for payment
of principal and interest; "revenue bonds," which are generally paid from the
revenues of a particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf of public
authorities to provide funding for various privately operated industrial and
commercial facilities. The Fund may also invest in high quality participation
interests in municipal securities. A more detailed description of various types
of municipal securities is contained in Appendix B in the Money Market Funds'
SAI.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
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issuing entity and a security is backed only by the assets and revenues of the
issuing entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development bond backed only
by the assets and revenues of the non-governmental issuer, the non-governmental
issuer will be deemed to be the sole issuer of the bond.
At times, the Fund may invest more than 25% of its total assets in tax-exempt
securities that are related in such a way that an economic, business, or
political development or change affecting one such security could similarly
affect the other securities; for example, securities whose issuers are located
in the same state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of its assets in
industrial development bonds or participation interests therein.
Yields on municipal securities are dependent on a variety of factors, including
the general conditions of the money market and of the municipal bond and
municipal note markets, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The achievement of the Fund's investment
objective is dependent in part on the continuing ability of the issuers of
municipal securities in which the Fund invests to meet their obligations for the
payment of principal and interest when due. Obligations of issuers of municipal
securities are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Bankruptcy
Reform Act of 1978, as amended. Therefore, the possibility exists, that as a
result of litigation or other conditions, the ability of any issuer to pay, when
due, the principal of and interest on its municipal securities may be materially
affected.
Municipal Leases
The Fund may invest in municipal leases or participation interests therein.
Municipal leases are municipal securities which may take the form of a lease or
an installment purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire a wide variety
of equipment and facilities. Lease obligations may not be backed by the issuing
municipality's credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their interest may become
taxable if the lease is assigned and the holders may incur losses if the issuer
does not appropriate funds for the lease payment on an annual basis, which may
result in termination of the lease and possible default. Janus Capital may
determine that a liquid market exists for municipal lease obligations pursuant
to guidelines established by the Trustees.
Taxable Investments
As discussed above, although the Fund will attempt to invest substantially all
of its assets in municipal securities whose interest is exempt from federal
income tax, the Fund may under certain circumstances invest in certain
securities whose interest is subject to such taxation. These securities include:
(i) short-term obligations of the U.S. government, its agencies or
instrumentalities, (ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than one
billion dollars and whose deposits are insured by the Federal Deposit Insurance
Corporation, (iii) commercial paper and (iv) repurchase agreements as described
below covering any of the securities described in items (i)-(iii) above or any
other obligations of the U.S. government, its agencies or instrumentalities.
COMMON INVESTMENT TECHNIQUES
Participation Interests
The Money Market Funds may invest in participation interests in any type of
security in which the Money Market Funds may invest. A participation interest
gives a Money Market Fund an undivided interest in the underlying securities in
the proportion that the Money Market Fund's participation interest bears to the
total principal amount of the underlying securities. Participation interests
usually carry a demand feature, as described below, backed by a letter of credit
or guarantee of the institution that issued the interests permitting the holder
to tender them back to the institution.
Demand Features
The Money Market Funds may invest in securities that are subject to puts and
stand-by commitments ("demand features"). Demand features give the Money Market
Funds the right to resell securities at specified periods prior to their
maturity dates to the seller or to some third party at an agreed-upon price or
yield. Securities with demand features may involve certain expenses and risks,
including the inability of the issuer of the instrument to pay for the
securities at the time the instrument is exercised, non-marketability of the
instrument and differences between the maturity of the underlying security and
the maturity of the instrument. Securities may cost more with demand features
than without them. Demand features can serve three purposes: to shorten the
maturity of a variable or floating rate security, to enhance the instrument's
credit quality and to provide a source of liquidity. Demand features are often
issued by third party financial institutions, generally domestic and foreign
banks. Accordingly, the credit quality and liquidity of the Money Market Funds'
investments may be dependent in part on the credit quality of the banks
supporting the Money Market Funds' investments. This will result in exposure to
risks pertaining to the banking industry, including the foreign banking
industry. Brokerage firms and insurance companies also provide certain liquidity
and credit support. A substantial portion of the Janus Tax-Exempt Money Market
Fund's portfolio in particular may consist of securities backed by banks and
other financial institutions, and thus adverse changes in the credit quality of
these institutions could cause losses to the Fund and affect its share price.
Variable and Floating Rate Securities
The securities in which the Money Market Funds invest may have variable or
floating rates of interest. These securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with reference
to some interest rate index or market interest rate. Securities with ultimate
maturities of greater than 397 days may be purchased only pursuant to Rule 2a-7.
Under that Rule, only those long-term instruments that have demand features
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which comply with certain requirements and certain variable rate U.S. Government
Securities may be purchased. Similar to fixed rate debt instruments, variable
and floating rate instruments are subject to changes in value based on changes
in market interest rates or changes in the issuer's or guarantor's
creditworthiness. The rate of interest on securities purchased by a Money Market
Fund may be tied to short-term Treasury or other government securities or
indices on securities that are permissible investments of the Money Market
Funds, as well as other money market rates of interest. The Money Market Funds
will not purchase securities whose values are tied to interest rates or indices
that are not appropriate for the duration and volatility standards of a money
market fund.
Mortgage- and Asset-Backed Securities
Janus Money Market Fund and Janus Government Money Market Fund may purchase
fixed or adjustable rate mortgage-backed securities issued by the Government
National Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entities. In addition, Janus Money Market Fund may purchase
other asset-backed securities, including securities backed by automobile loans,
equipment leases or credit card receivables. These securities directly or
indirectly represent a participation in, or are secured by and payable from,
fixed or adjustable rate mortgage or other loans which may be secured by real
estate or other assets. Unlike traditional debt instruments, payments on these
securities include both interest and a partial payment of principal. Prepayments
of the principal of underlying loans may shorten the effective maturities of
these securities and may result in a Fund having to reinvest proceeds at a lower
interest rate.
Repurchase Agreements
Each Money Market Fund may seek additional income by entering into
collateralized repurchase agreements. Repurchase agreements are transactions in
which a Money Market Fund purchases securities and simultaneously commits to
resell those securities to the seller at an agreed-upon price on an agreed-upon
future date. The resale price reflects a market rate of interest that is not
related to the coupon rate or maturity of the purchased securities. If the
seller of the securities underlying a repurchase agreement fails to pay the
agreed resale price on the agreed delivery date, a Money Market Fund may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
Reverse Repurchase Agreements
Each Money Market Fund may enter into reverse repurchase agreements. Reverse
repurchase agreements are transactions in which a Money Market Fund sells a
security and simultaneously commits to repurchase that security from the buyer
at an agreed-upon price on an agreed-upon future date. This technique will be
used primarily for temporary or emergency purposes, such as meeting redemption
requests.
Delayed Delivery Securities
Each Money Market Fund may purchase securities on a when-issued or delayed
delivery basis. Securities so purchased are subject to market price fluctuation
from the time of purchase but no interest on the securities accrues to a Money
Market Fund until delivery and payment for the securities take place.
Accordingly, the value of the securities on the delivery date may be more or
less than the purchase price. Forward commitments will be entered into only when
a Money Market Fund has the intention of taking possession of the securities,
but a Money Market Fund may sell the securities before the settlement date if
deemed advisable.
Borrowing and Lending
Each Money Market Fund may borrow money for temporary or emergency purposes in
amounts up to 25% of its total assets. A Money Market Fund may not mortgage or
pledge securities except to secure permitted borrowings. As a fundamental
policy, a Money Market Fund will not lend securities or other assets if, as a
result, more than 25% of its total assets would be lent to other parties;
however, the Money Market Funds do not currently intend to engage in securities
lending. Each Money Market Fund intends to seek permission from the SEC to
borrow money from or lend money to other funds that permit such transactions and
are advised by Janus Capital. There is no assurance that such permission will be
granted.
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Shareholder's Manual
This section will help you become familiar with the different types of accounts
you can establish with Janus. This section also explains in detail the wide
array of services and features you can establish on your account. These services
and features may be modified or discontinued without shareholder approval or
prior notice.
HOW TO GET IN TOUCH WITH JANUS
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00
a.m.-10:00 p.m., and Saturday: 10:00 a.m.-7:00 p.m., New York time.
- --------------------------------------------------------------------------------
MINIMUM INVESTMENTS*
To open a new account ..................................................$2,500
To open a new retirement or
UGMA/UTMA account ....................................................$ 500
To open a new account with
an Automatic Investment Program ......................................$ 500**
To add to any type of an account .......................................$ 100
* The Funds reserve the right to change the amount of these minimums from
time to time or to waive them in whole or in part for certain types of
accounts.
** There is a $100 minimum for each subsequent investment.
- --------------------------------------------------------------------------------
TYPES OF ACCOUNT OWNERSHIP
If you are investing in the funds for the first time, you will need to establish
an account. You can establish the following types of accounts by completing the
new account application. To request an application, call 1-800-525-3713.
o Individual or Joint Ownership. Individual accounts are owned by one person.
Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA account is a
custodial account managed for the benefit of a minor. To open an UGMA or
UTMA account, you must include the minor's Social Security number on the
application.
o Trust. An established trust can open an account. The names of each trustee,
the name of the trust and the date of the trust agreement must be included
on the application.
o Business Accounts. Corporations and partnerships may also open an account.
The application must be signed by an authorized officer of the corporation
or a general partner of the partnership.
RETIREMENT ACCOUNTS
If you are eligible, you may set up your account under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your investment income
and capital gains from current income taxes. A contribution to these plans may
also be tax deductible. Distributions from a retirement plan are generally
subject to income tax and may be subject to an additional tax if withdrawn prior
to age 59 1/2.
Investors Fiduciary Trust Company serves as custodian for the retirement plans
offered by the Funds. There is an annual $12 fee per account to maintain your
retirement account. The maximum annual fee is $24 per taxpayer identification
number. You may pay the fee by check or have it automatically deducted from your
account (usually in December).
The following plans require a special application. For an application and more
details about our Retirement Plans, call 1-800-525-3713.
o Individual Retirement Account: An IRA allows individuals under age 701/2
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.
o Simplified Employee Pension Plan ("SEP"): This plan allows small business
owners (including sole proprietors) to make tax-deductible contributions
for themselves and any eligible employee(s). A SEP requires an IRA (a
SEP-IRA) to be set up for each SEP.
o Profit Sharing or Money Purchase Pension Plan: These plans are open to
corporations, partnerships and sole proprietors to benefit their employees
and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations or other
qualifying, tax-exempt organizations may be eligible to participate in a
Section 403(b)(7) Plan.
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HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to provide your
Social Security or taxpayer identification number on the application. Make your
check payable to Janus. 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:
o Cash, credit cards, third party checks and credit card checks will not be
accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on U.S. banks and made payable to Janus.
o If a check does not clear your bank, the Funds reserve the right to cancel
the purchase.
o If the Funds are unable to debit your predesignated bank account on the day
of purchase, they may make additional attempts or cancel the purchase.
o The Funds reserve the right to reject any specific purchase request.
If your purchase is cancelled, you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the cancelled purchase. The Funds (or their agents) have the
authority to redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
Once you have opened your Janus account, the minimum amount for an additional
investment is $100. You may add to your account at any time through any of the
following options:
By Mail
Complete the remittance slip attached at the bottom of your confirmation
statement. If you are making a purchase into a retirement account, please
indicate whether the purchase is a rollover or a current or prior year
contribution. Send your check and remittance slip or written instructions to one
of the addresses listed previously. You may also request a booklet of remittance
slips for non-retirement accounts.
By Telephone
This service allows you to purchase additional shares quickly and conveniently
through an electronic transfer of money. When you make an additional purchase by
telephone, Janus will automatically debit your predesignated bank account for
the desired amount. To establish the telephone purchase option on your new
account, complete the "Telephone Purchase of Shares Option" section on the
application and attach a "voided" check or deposit slip from your bank account.
If your account is already established, call 1-800-525-3713 to request the
appropriate form. This option will become effective ten business days after the
form is received.
By Wire
Purchases may also be made by wiring money from your bank account to your Janus
account. Call 1-800-525-3713 to receive wiring instructions.
Automatic Investment Programs
Janus offers several automatic investment plans to help you achieve your
financial goals as simply and conveniently as possible. You may open a new
account with a $500 initial purchase and $100 automatic subsequent investments.
o Automatic Monthly Investment Program You select the day each month that
your money ($100 minimum) will be electroni- cally transferred from your
bank account to your Fund account. To establish this option, complete the
"Automatic Monthly Investment Program" section on the application and
attach a "voided" check or deposit slip from your bank account. If your
Fund account is already established, call 1-800-525-3713 to request the
appropriate form.
o Payroll Deduction If your employer can initiate an automatic payroll
deduction, you may have all or a portion of your paycheck ($100 minimum)
invested directly into your Fund account. To obtain information on
establishing this option, call 1-800-525-3713.
o Systematic Exchange With a Systematic Exchange you determine the amount of
money ($100 minimum) you would like automatically exchanged from one Janus
account to another on any day of the month. For more information on how to
establish this option, call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your shares into any
other available Janus fund.
In Writing
To request an exchange in writing, please follow the instructions for written
requests on page 20.
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By Telephone
All accounts are automatically eligible for the telephone exchange option. To
exchange shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus Electronic
Telephone Service (JETS(R)) line at 1-800-525-6125.
By Systematic Exchange
As noted above, you may establish a Systematic Exchange for as little as a $100
subsequent purchase per month on established accounts. You may establish a new
account with a $500 initial purchase and subsequent $100 systematic exchanges.
If the balance in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the program will be
discontinued.
Exchange Policies
o Except for Systematic Exchanges, new accounts established by exchange must
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.
o Exchanges between existing accounts must meet the $100 subsequent
investment requirement.
o You may make four exchanges out of each non-Money Market Fund during a
calendar year (exclusive of Systematic Exchanges) free of charge. There is
currently no limit on exchanges out of the Money Market Funds.
o Exchanges between accounts will be accepted only if the registrations are
identical.
o If the shares you are exchanging are held in certificate form, you must
return the certificate to your Fund prior to making any exchanges.
o Be sure that you read the prospectus for the fund into which you are
exchanging.
o The Funds reserve the right to reject any exchange request and to modify or
terminate the exchange privilege at any time. For example, the Funds may
reject exchanges from accounts engaged in excessive trading (including
market timing transactions) that are believed to be detrimental to the
Funds.
o An exchange represents the sale of shares from one fund and the purchase of
shares of another fund, which may produce a taxable gain or loss in a
non-tax deferred account. Because the Money Market Funds seek to maintain a
stable net asset value per share, it is not anticipated that a sale of
Shares of the Money Market Funds will produce a taxable gain or loss.
QUICK ADDRESS AND TELEPHONE REFERENCE
Mailing Address
Janus
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.
In Writing
To request a redemption in writing, please follow the instructions for written
requests on page 20.
By Telephone
Most accounts have the telephone redemption option, unless this option was
specifically declined on the application or in writing. This option enables you
to redeem up to $100,000 daily from your account by simply calling
1-800-525-3713 by 4:00 p.m. New York time.
Systematic Redemption Option
Systematic Redemption Options allow you to redeem a specific dollar amount from
your account on a regular basis. For more information or to request the
appropriate form, please call 1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
o By Check
Redemption proceeds will be sent to the shareholder(s) of record at the
address of record within seven days after receipt of a valid redemption
request.
o Electronic Transfer
If you have established this option, your redemption proceeds can be
electronically transferred to your predesignated bank account on the second
bank business day after receipt of your redemption request. To establish
this option, call 1-800-525-3713. There is no fee for this option.
o By Wire
If you are authorized for the wire redemption service, your redemption
proceeds will be wired directly into your designated bank account on the
next bank business day after receipt of your redemption request. There is
no limitation on redemptions by wire; however, there is an $8 fee for each
wire and your bank may charge an additional fee to receive the wire. If you
would like to establish this option on an existing account, please call
1-800-525-3713 to request the appropriate form. Wire redemptions are not
available for retirement accounts.
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If the shares being redeemed were purchased by check, telephone or through the
Automatic Monthly Investment Program, the Fixed-Income Funds may delay the
payment of your redemption proceeds for up to 15 days from the day of purchase
to allow the purchase to clear. Unless you provide alternate instructions, your
proceeds will be invested in Janus Money Market Fund - Investor Shares during
the 15 day hold period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your request should
be sent to one of the addresses listed on page 18 and must include the following
information:
o the name of the Fund(s)
o the account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o the signature(s) of all registered account owners
o your daytime telephone number
Signature Requirements Based on Account Type
o Individual, Joint Tenants, Tenants in Common: Written instructions must be
signed by each shareholder, exactly as the names appear in the account
registration.
o UGMA or UTMA: Written instructions must be signed by the custodian in his/
her capacity as it appears in the account registration.
o Sole Proprietor, General Partner: Written instructions must be signed by
an authorized individual in his/her capacity as it appears in the account
registration.
o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. In addition, a certified copy
of the corporate resolution authorizing the signer to act must accompany
the request.
o Trust: Written instructions must be signed by the trustee(s). If the name
of the current trustee(s) does not appear in the account registration, a
certificate of incumbency dated within 60 days must also be submitted.
o IRA: Written instructions must be signed by the account owner. If you do
not want federal income tax withheld from your redemption, you must state
that you elect not to have such withholding apply. In addition, your
instructions must state whether the distribution is normal (after age 59
1/2) or premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to the 10%
additional tax on early distributions.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the NAV next
calculated after your request is received and approved. A Fund's NAV is
calculated at the close of the regular trading session of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. New York time) each day that the NYSE
is open. In order to receive a day's price, your order must be received by the
close of the regular trading session of the NYSE. The Money Market Funds reserve
the right to require purchase, redemption and exchange requests and payments
prior to this time on days when the bond market closes before the NYSE.
For the Fixed-Income Funds, securities are valued at market value or, if a
market quotation is not readily available, at their fair value determined in
good faith under procedures established by and under the supervision of the
Trustees. Short-term instruments maturing within 60 days are valued at amortized
cost, which approximates market value.
For the Money Market Funds, portfolio securities are valued at their amortized
cost. Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity (or such other date as
permitted by Rule 2a-7) of any discount or premium. If fluctuating interest
rates cause the market value of a Fund's portfolio to deviate more than 1/2 of
1% from the value determined on the basis of amortized cost, the Trustees will
consider whether any action, such as adjusting the Share's NAV to reflect
current market conditions, should be initiated to prevent any material dilutive
effect on shareholders.
See your Fund's SAI for more detailed information.
SIGNATURE GUARANTEE
In addition to the signature requirements, a signature guarantee is also
required if any of the following is applicable:
o The redemption exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been changed
within 10 days of the redemption request.
o You would like the check mailed to an address other than the address of
record.
The Funds reserve the right to require a signature guarantee under other
circumstances or to reject or delay a redemption on certain legal grounds. For
more information pertaining to signature guarantees, please call 1-800-525-3713.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan association, 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.
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SHAREHOLDER SERVICES AND ACCOUNT POLICIES
Janus Electronic Telephone
Service (JETS(R))
JETS, our electronic telephone service line, offers you 24-hour access by
TouchTone(TM) telephone to obtain your account balance, to confirm your last
transaction or dividend posted to your account, to order duplicate account or
tax statements, to reorder Money Market Fund checks, to exchange your shares or
to purchase shares. JETS can be accessed by calling
1-800-525-6125. Calls on JETS are limited to seven minutes.
Janus Web Site
Janus maintains a Web site located at http://www.JanusFunds.com. You can access
information such as your account balance and the Funds' NAVs through the Web
site. In addition, you may request and/or download a prospectus for any Janus
fund.
Check Writing Privilege
Check writing privileges are available for all three Money Market Funds.
Checkbooks will be issued to shareholders who have completed a Signature Draft
Card, which is sent in the new account welcome package or by calling
1-800-525-3713. (There is no checkwriting privilege for retirement accounts.)
Your checkbook will be mailed approximately 10 days after the check writing
privilege is requested. Checks may be written for $250 or more per check.
Purchases made by check or the Automatic Monthly Investment Program may not be
redeemed by a redemption check until the 15-day hold period has passed. All
checks written on the account must be signed by all account holders unless
otherwise specified on the original application or the subsequent Signature
Draft Card. The Funds reserve the right to terminate or modify the check writing
privilege at any time.
Account Minimums
Minimum account sizes are noted on page 17. An account established on or before
February 18, 1996 is required to meet the minimum balances in effect when the
account was established ($1,000 for regular accounts and $250 for retirement and
UGMA/UTMA accounts). An active Automatic Monthly Investment (AMI) on any such
account exempted it from any minimum initial investment requirement and
continues to do so. In addition, an active AMI on these accounts may continue at
$50 per month, provided there is no interruption in the AMI program. All other
subsequent investments must meet the $100 required minimum.
Due to the proportionately higher costs of maintaining small accounts, Janus
reserves the right to deduct a $10 minimum balance fee (or the value of the
account if less than $10) from accounts with values below the minimums described
on page 17 or to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if your account
balance does not reach the required minimum initial investment or falls below
such minimum and you have discontinued monthly investments. This policy does not
apply to accounts that fall below the minimums solely as a result of market
value fluctuations. It is expected that accounts will be valued in September.
The $10 fee will be assessed on the second Friday of September of each year. You
will receive notice before we charge the $10 fee or close your account so that
you may increase your account balance to the required minimum.
Transactions Through Processing Organizations
You may purchase or sell Fund shares through a broker-dealer, bank or other
financial institution, or an organization that provides recordkeeping and
consulting services to 401(k) plans or other employee benefit plans (a
"Processing Organization"). Processing Organizations may charge you a fee for
this service and may require different minimum initial and subsequent
investments than the Funds. Processing Organizations may also impose other
charges or restrictions different from those applicable to shareholders who
invest in the Funds directly. A Processing Organization, rather than its
customers, may be the shareholder of record of your shares. The Funds are not
responsible for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations may receive
compensation from Janus Capital or its affiliates and certain Processing
Organizations may receive compensation from the Funds for shareholder
recordkeeping and similar services.
Taxpayer Identification Number
On the application or other appropriate form, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold 31% of any
dividends paid and redemption or exchange proceeds. In addition to the 31%
backup withholding, you may be subject to a $50 fee to reimburse the Funds for
any penalty that the IRS may impose.
Share Certificates (Fixed-Income Funds only)
Most shareholders choose not to hold their shares in certificate form because
account transactions such as exchanges and redemptions cannot be completed until
the certificate has been returned to the Funds. The Fixed-Income Funds will
issue share certificates upon written request only. Share certificates will not
be issued until the shares have been held for at least 15 days and will not be
issued for accounts
21
<PAGE>
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.
Share certificates are not available for the Money Market Funds in order to
maintain the general liquidity that is representative of a money market fund and
to help facilitate transactions in shareholder accounts.
Involuntary Redemptions
The Funds reserve the right to close an account if the shareholder is deemed to
engage in activities which are illegal or otherwise believed to be detrimental
to the Funds.
Telephone Transactions
You may initiate many transactions by telephone. The Funds and their agents will
not be responsible for any losses resulting from unauthorized transactions when
procedures designed to verify the identity of the caller are followed.
It may be difficult to reach the Funds by telephone during periods of unusual
market activity. If you are unable to reach a representative by telephone,
please consider sending written instructions, stopping by a Service Center or,
in the case of purchases and exchanges, calling
the JETS line.
Temporary Suspension of Services
The Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services.
Address Changes
To change the address on your account, call 1-800-525-3713 or send a written
request signed by all account owners. Include the name of your Fund(s), the
account number(s), the name(s) on the account and both the old and new
addresses. Certain options may be suspended for
10 days following an address change unless a signature guarantee is provided.
Registration Changes
To change the name on an account, the shares are generally transferred to a new
account. In some cases, legal documentation may be required. For more
information, call 1-800-525-3713.
Statements and Reports
Investors participating in an automatic investment program will receive
quarterly confirmations of all transactions and dividends. The Funds will send
you a 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.
Financial reports for the Funds, which include a list of the Funds' portfolio
holdings, will be mailed semiannually to all shareholders. To reduce expenses,
only one copy of most financial reports will be mailed to accounts with the same
record address. Upon request, such reports will be mailed to all accounts in the
same household. Please call 1-800-525-3713 if you would like to receive
additional reports.
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<PAGE>
Management of the Funds
TRUSTEES
The Trustees oversee the business affairs of the Trust and are responsible for
major decisions relating to each Fund's investment objectives and policies. The
Trustees delegate the day-to-day management of the Funds to the officers of the
Trust and meet at least quarterly to review the Funds' investment policies,
performance, expenses and other business affairs.
INVESTMENT ADVISER
Janus Capital, 100 Fillmore Street, Denver, Colorado 80206-4928, is the
investment adviser to each of the Funds and is responsible for the day-to-day
management of the investment portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to certain series of the Trust
in 1970 and currently serves as investment adviser to all of the Janus funds, as
well as adviser or subadviser to other mutual funds and individual, corporate,
charitable and retirement accounts.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 83% of the
outstanding voting stock of Janus Capital, most of which it acquired in 1984.
KCSI is a publicly traded holding company whose primary subsidiaries are engaged
in transportation, information processing and financial services. Thomas H.
Bailey, President and Chairman of the Board of Janus Capital, owns approximately
12% of its voting stock and, by agreement with KCSI, selects a majority of Janus
Capital's Board.
Janus Capital furnishes continuous advice and recommendations concerning each
Fund's investments.
Janus Capital also furnishes certain administrative, compliance and accounting
services for the Funds, and may be reimbursed by the Fixed-Income Funds for its
costs in providing those services. In addition, Janus Capital employees serve as
officers of the Trust and Janus Capital provides office space for the Funds and
pays the salaries, fees and expenses of all Fund officers and those Trustees who
are affiliated with Janus Capital. The Funds pay all of their expenses not
assumed by Janus Capital, including auditing fees and independent Trustees' fees
and expenses. (Janus Capital provides these services to the Money Market Funds
pursuant to an Administration Agreement as described below.)
ADMINISTRATOR
Each of the Money Market Funds has entered into an Administration Agreement with
Janus Capital, pursuant to which Janus Capital furnishes certain administrative,
compliance and accounting services for the Money Market Funds, pays the costs of
printing reports and prospectuses for existing shareholders, provides office
space for the Money Market Funds and pays the salaries, fees and expenses of
Fund officers and of those Trustees who are affiliated with Janus Capital.
Administrative services provided by Janus Capital under the Agreements include
custody and transfer agency services.
INVESTMENT PERSONNEL
Sharon S. Pichler is Executive Vice President and portfolio manager of Janus
Money Market Fund, Janus Government Money Market Fund and Janus Tax-Exempt Money
Market Fund, each of which she has managed since inception. She holds a Bachelor
of Arts in Economics from Michigan State University and a Master of Business
Administration from the University of Texas at San Antonio. Ms. Pichler is a
Chartered Financial Analyst.
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Sandy R. Rufenacht is Executive Vice President and portfolio manager of Janus
Short-Term Bond Fund, which he has managed since January 1996. Since June 1996,
he has served as Executive Vice President and co-manager of Janus High-Yield
Fund and Janus Flexible Income Fund. Mr. Rufenacht joined Janus Capital in 1990
and gained experience as a trader and research analyst before assuming
management of these funds. He holds a Bachelor of Arts in Business from the
University of Northern Colorado.
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Ronald V. Speaker is Executive Vice President and co-manager of Janus Flexible
Income Fund, which he has managed since December 1991 and Janus High-Yield Fund
which he has managed since inception. He previously managed Janus Short-Term
Bond Fund and Janus Federal Tax-Exempt Fund from their inceptions through
December 1995. He holds a Bachelor of Arts in Finance from the University of
Colorado and is a Chartered Financial Analyst.
In January 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 ending on or about
April 26, 1997.
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Darrell W. Watters is Executive Vice President and portfolio manager of Janus
Federal Tax-Exempt Fund, which he has managed since January 1996. Mr. Watters
joined Janus Capital in 1993 as a municipal bond trader. He was a municipal bond
trader at Piper Jaffray prior to joining Janus Capital (1991-1993). He holds a
Bachelor of Arts in Economics from Colorado State University.
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<PAGE>
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
FIXED-INCOME FUNDS
Each Fund pays Janus Capital a management fee which is calculated daily and paid
monthly. The advisory agreement with each Fund spells out the management fee and
other expenses that the Funds must pay. Each of the Funds is subject to the
following management fee schedule (expressed as an annual rate):
<TABLE>
<CAPTION>
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund First $300 Million .65 1.00*
Over $300 Million .55
- --------------------------------------------------------------------------------------------------------
Janus High-Yield Fund First $300 Million .75 1.00*
Over $300 Million .65
- --------------------------------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund First $300 Million .60 .65*
Over $300 Million .55
- --------------------------------------------------------------------------------------------------------
Janus Short-Term Bond Fund FIRST $300 MILLION .65 .65*
OVER $300 MILLION .55
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Janus Capital will waive certain fees and expenses to the extent that total
expenses exceed the stated limits. Janus Capital may modify or terminate
such waivers at any time upon at least 90 days' notice to the Trustees. You
will be notified of any changes in these limits.
Each Fixed-Income Fund incurs expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and auditing fees,
printing and mailing costs of sending reports and other information to existing
shareholders, and independent Trustees' fees and expenses. The Annual Operating
Expenses table on page 3 lists the management fees and total operating expenses
of each Fund for the most recent fiscal year.
MONEY MARKET FUNDS
Each of the Money Market Funds has agreed to compensate Janus Capital for its
advisory services by the monthly payment of a fee at the annual rate of 0.20% of
the value of the average daily net assets of each Money Market Fund. However,
Janus Capital has agreed to waive a portion of its fee and accordingly, the
advisory fee of each Money Market Fund will be calculated at the annual rate of
0.10% of the value of each Money Market Fund's average daily net assets. Janus
Capital may modify or terminate such waiver at any time upon at least 90 days'
notice to the Trustees. You will be notified of any change in this limit.
Janus Capital is paid a fee, calculated daily and paid monthly, at the annual
rate of 0.50% of the value of the average daily net assets of each Money Market
Fund attributable to Shares for services rendered pursuant to the Administration
Agreements.
Personal Investing
Janus Capital does not permit portfolio managers to purchase and sell securities
for their own accounts, except under the limited exceptions contained in Janus
Capital's policy governing personal investing. Janus Capital's policy requires
investment and other personnel to conduct their personal investment activities
in a manner that Janus Capital believes is not detrimental to the Funds or Janus
Capital's other advisory clients. See the SAI for more detailed information.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on behalf of each Fund are executed by
broker-dealers selected by Janus Capital. Broker-dealers are selected on the
basis of their ability to obtain best price and execution for a Fund's
transactions and recognizing brokerage, research and other services provided to
the Fund and to Janus Capital. Janus Capital may also consider payments made by
brokers effecting transactions for a Fund i) to the Fund or ii) to other persons
on behalf of the Fund for services provided to the Fund for which it would be
obligated to pay. Janus Capital may also consider sales of shares of a Fund as a
factor in the selection of broker-dealers. The Funds' Trustees have authorized
Janus Capital to place portfolio transactions on an agency basis with a
broker-dealer affiliated with Janus Capital. When transactions for a Fund are
effected with that broker-dealer, the commissions payable by the Fund are
credited against certain Fund operating expenses serving to reduce those
expenses. The SAI further explains the selection of broker-dealers.
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<PAGE>
OTHER SERVICE PROVIDERS
The following parties provide the Funds with other services.
Custodian for the Fixed-Income Funds
State Street Bank and Trust Company
P.O. Box 0351
Boston, Massachusetts 02117-0351
Custodian for the Money Market Funds
United Missouri Bank, N.A.
P.O. Box 419226
Kansas City, Missouri 64141-6226
Transfer Agent
Janus Service Corporation
P.O. Box 173375
Denver, Colorado 80217-3375
Distributor
Janus Distributors, Inc.
100 Fillmore Street
Denver, Colorado 80206-4928
Janus Service Corporation and Janus Distributors, Inc. are wholly-owned
subsidiaries of Janus Capital.
OTHER INFORMATION
Organization
The Trust is a "mutual fund" that was organized as a Massachusetts business
trust on February 11, 1986. A mutual fund is an investment vehicle that pools
money from numerous investors and invests the money to achieve a specified
objective.
As of the date of this Prospectus, the Trust offers 19 separate series. Each of
the Money Market Funds currently offer three classes of shares. This prospectus
only describes the Investor Shares of the Money Market Funds. Institutional
Shares of the Money Market Funds are available only to investors meeting the
minimum investment requirement of $250,000. Service Shares of the Money Market
Funds are available only to banks and other financial institutions that meet
minimum investment requirements in connection with trust accounts, cash
management programs and similar programs. Because the expenses of each class may
differ, the performance of each class is expected to differ. If you would like
additional information, please call 1-800-525-3713. This Prospectus describes
seven series of the Trust; the other series are offered by separate
prospectuses.
Shareholder Meetings
The Trust does not intend to hold annual shareholder meetings. However, special
meetings may be called for a specific Fund or for the Trust as a whole for
purposes such as electing or removing Trustees, terminating or reorganizing the
Trust, changing fundamental policies, or for any other purpose requiring a
shareholder vote under the 1940 Act. Separate votes are taken by each Fund only
if a matter affects or requires the vote of only that Fund or that Fund's
interest in the matter differs from the interest of other portfolios of the
Trust. As a shareholder, you are entitled to one vote for each share that you
own.
Size of Funds
The Funds have no present plans to limit their size. However, any Fund may
discontinue sales of its shares if management believes that continued sales may
adversely affect the Fund's ability to achieve its investment objective. If
sales of a Fund are discontinued, it is expected that existing shareholders of
that Fund would be permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions, absent highly unusual circumstances.
Master/Feeder Option
The Trust may in the future seek to achieve any Fund's investment objective by
investing all of that Fund's assets in another investment company having the
same investment objective and substantially the same investment policies and
restrictions as those applicable to that Fund. It is expected that any such
investment company would be managed by Janus Capital in substantially the same
manner as the existing Fund. The Trust's shareholders of record on April 30,
1992, and the initial shareholder(s) of all Funds created after April 30, 1992,
have voted to vest authority to use this investment structure in the sole
discretion of the Trustees. No further approval of the shareholders of the Funds
is required. You will receive at least 30 days' prior notice of any such
investment. Such investment would be made only if the Trustees determine it to
be in the best interests of a Fund and its shareholders. In making that
determination, the Trustees will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. Although management of the Funds believe the Trustees will not
approve an arrangement that is likely to result in higher costs, no assurance is
given that costs will be materially reduced if this option is implemented.
25
<PAGE>
Distributions and Taxes
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation, the Internal Revenue Code requires each Fund to distribute
net income and any net gains realized by its investments annually. A Fund's
income from dividends and interest and any net realized short-term capital gains
are paid to shareholders as ordinary income dividends. Net realized long-term
gains, if any, are paid to shareholders as capital gains distributions.
- --------------------------------------------------------------------------------
THE FIXED-INCOME FUNDS
Income dividends for the Fixed-Income Funds are declared daily, Saturdays,
Sundays and holidays included, and are generally paid as of the last business
day of each month. If a month begins on a Saturday, Sunday or holiday, dividends
for those days are paid at the end of the preceding month. An investor will
begin accruing income dividends the day after a purchase is effective. If shares
are redeemed, the investor will receive all dividends accrued through the day of
the redemption. Capital gains, if any, are declared and paid in December.
How Distributions Affect a Fund's NAV
Distributions are paid to shareholders as of the record date of a distribution
of a Fund, regardless of how long the shares have been held. Dividends and
capital gains awaiting distribution are included in each Fund's daily NAV. The
share price of a Fund drops by the amount of the distribution, net of any
subsequent market fluctuations. As an example, assume that on December 31, Janus
Flexible Income Fund declared a dividend in the amount of $0.25 per share.
If Janus Flexible Income Fund's share price was $10.00 on December 30, the
Fund's share price on December 31 would be $9.75, barring market fluctuations.
Shareholders should be aware that distributions from a taxable mutual fund are
not value-enhancing and may create income tax obligations. Capital gains
distributions, if any, for Janus Federal Tax-Exempt Fund will also be taxable.
"Buying a Dividend"
If you purchase shares of a Fund just before the distribution, you will pay the
full price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is referred to as "buying a dividend." In the above
example, if you bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as a dividend and
your shares would now be worth $9.75 per share. Unless your account is set up as
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the dividends.
THE MONEY MARKET FUNDS
For the Money Market Funds, dividends representing substantially all of the net
investment income and any net realized gains on sales of securities are declared
daily, Saturdays, Sundays and holidays included, and distributed on the last
business day of each month. If a month begins on a Saturday, Sunday or holiday,
dividends for those days are declared at the end of the preceding month and
distributed on the first business day of the month.
Shares of the Money Market Funds purchased by wire on a day on which the Funds
calculate their net asset value and the Federal Reserve Banks are open ("bank
business day") will receive that day's dividend if the purchase is effected
prior to 3:00 p.m. (New York time) for the Janus Money Market and Janus
Government Money Market Funds and 12:00 p.m. (New York time) for Janus
Tax-Exempt Money Market Fund. Otherwise, such Shares begin to accrue dividends
on the following bank business day. Orders for purchase accompanied by a check
or other negotiable bank draft will be accepted and effected as of 4:00 p.m.
(New York time) on the business day of receipt and such Shares will begin to
accrue dividends on the first bank business day following receipt of the order.
Redemption orders effected on any particular day will generally receive
dividends declared through the day of redemption. However, redemptions made by
wire which are received prior to 3:00 p.m. (New York time) for the Janus Money
Market and Janus Government Money Market Funds and 12:00 p.m. (New York time)
for Janus Tax-Exempt Money Market Fund will result in Shares being redeemed that
day. Proceeds of such a redemption will normally be sent to the predesignated
account on that day, and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. (12:00 p.m. for
Janus Tax-Exempt Money Market Fund) will be processed on that day and receive
that day's dividend, but will not be wired until the following bank business
day.
The Funds reserve the right to require purchase and redemption requests and
payments prior to these times on days when the bond market closes before 4:00
p.m.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application how you want to
receive your distributions. You may change your distribution option at any time
by writing or calling 1-800-525-3713. The Funds offer the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital
gains distributions in additional shares. This option is assigned
automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gains
distributions in cash.
3. Reinvest And Cash Option (the Fixed-Income Funds only). You may receive
either your income dividends or capital gains distributions in cash and
reinvest the other in additional shares.
4. Redirect Option. You may direct your dividends or capital gains
distributions (dividends in the case of the Money Market Funds) to purchase
shares of another Janus fund.
The Funds reserve the right to reinvest into your account undeliverable and
uncashed dividend and distribution checks that remain outstanding for six months
in shares of the applicable Fund at the NAV next computed after the check is
cancelled. Subsequent distributions may also be reinvested.
26
<PAGE>
- --------------------------------------------------------------------------------
TAXES
As with any investment, you should consider the tax consequences of investing in
the Funds. The following discussion does not apply to tax-deferred retirement
accounts, nor is it a complete analysis of the federal tax implications of
investing in the Funds. You may wish to consult your own tax adviser.
Additionally, state or local taxes may apply to your investment, depending upon
the laws of your state of residence.
Taxes on Distributions
Janus Federal Tax-Exempt Fund and Janus Tax-Exempt Money Market Fund anticipate
that substantially all their income dividends will be exempt from federal income
tax, although either Fund may occasionally earn income on taxable investments
and dividends attributable to that income would be taxable. In addition,
interest from certain private activity bonds is a preference item for purposes
of the alternative minimum tax, and to the extent a Fund earns such income,
shareholders subject to the alternative minimum tax must include that income as
a preference item. Distributions from capital gains, if any, are subject to
federal tax. The Funds will advise shareholders of the percentage of dividends,
if any, subject to any federal tax.
Dividends and distributions for all of the other Funds are subject to federal
income tax, regardless of whether the distribution is made in cash or reinvested
in additional shares of a Fund. In certain states, a portion of the dividends
and distributions (depending on the sources of a Fund's income) may be exempt
from state and local taxes. Information regarding the tax status of income
dividends and capital gains distributions will be mailed to shareholders on or
before January 31st of each year.
Taxation of the Funds
Dividends, interest and some capital gains received by a Fixed-Income Fund on
foreign securities may be subject to tax withholding or other foreign taxes. Any
foreign taxes paid by a Fund will be treated as an expense to the particular
Fund or passed through to shareholders as a foreign tax credit, depending on
particular facts and circumstances. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes.
The Funds do not expect to pay any federal income or excise taxes because they
intend to meet certain requirements of the Internal Revenue Code. It is
important that the Funds meet these requirements so that any earnings on your
investment will not be taxed twice.
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Performance Terms
This section will help you understand various terms that are commonly used to
describe a Fund's performance. You may see references to these terms in our
newsletters, advertisements and in media articles. Our newsletters and
advertisements may include comparisons of the Fund's performance to the
performance of other mutual funds, mutual fund averages or recognized stock
market indices. The Funds measure performance in terms of yield.
Yield shows the rate of income a Fund earns on its investments as a percentage
of the Fund's share price. It is calculated by dividing a Fund's net investment
income for a 30-day period (7-day period for the Money Market Funds) by the
average number of shares entitled to receive dividends and dividing the result
by the Fund's NAV per share at the end of such period. Yield does not include
changes in NAV.
Yields are calculated according to standardized SEC formulas and may not equal
the income on an investor's account. Yield is usually quoted on an annualized
basis. An annualized yield represents the amount you would earn if you remained
in a Fund for a year and that Fund continued to have the same yield for the
entire year.
Effective yield is similar to yield in that it is calculated over the same time
frame, but instead the net investment income is compounded and then annualized.
Due to the compounding effect, the effective yield will normally be higher than
the yield.
Tax-equivalent yield or total return (for Janus Federal Tax-Exempt Fund and
Janus Tax-Exempt Money Market Fund) shows the before-tax yield or total return
that an investor would have to earn to equal the Funds' tax-free yield or total
return. It is calculated by dividing a Fund's tax-free yield or total return by
the result of one minus a stated federal tax rate.
Cumulative total return represents the actual rate of return on an investment
for a specified period. The Financial Highlights tables beginning on page 4 show
total return for a single fiscal period. Cumulative total return is generally
quoted for more than one year (e.g., the life of the Fund). A cumulative total
return does not show interim fluctuations in the value of an investment.
Average annual total return represents the average annual percentage change of
an investment over a specified period. It is calculated by taking the cumulative
total return for the stated period and determining what constant annual return
would have produced the same cumulative return. Average annual returns for more
than one year tend to smooth out variations in a Fund's return and are not the
same as actual annual results.
The Funds impose no sales or other charges that would affect yield or total
return computations. Fund performance figures are based upon historical results
and are not intended to indicate future performance. Investment returns and net
asset value will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
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Appendix A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fixed-Income Funds may invest. The
Fixed-Income Funds may invest in these instruments to the extent permitted by
their investment objectives and policies. The Fixed-Income Funds are not limited
by this discussion and may invest in any other types of instruments not
precluded by the policies discussed elsewhere in this Prospectus. Please refer
to the SAI for a more detailed discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
Bonds are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
Certificates of Participation ("COPs") are certificates representing an interest
in a pool of securities. Holders are entitled to a proportionate interest in the
underlying securities. Municipal lease obligations are often sold in the form of
COPs. See "Municipal lease obligations" below.
Commercial paper is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Funds may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
Common stock represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
Convertible securities are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
Depositary receipts are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
Fixed-income securities are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the case of
adjustable and floating rate securities, for a shorter period.
High-yield/High-risk securities are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard &Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds," "noninvestment grade bonds" and "junk bonds."
Industrial development bonds are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a private
issuer and may involve greater credit risk. See "Municipal securities" below.
Mortgage- and asset-backed securities are shares in a pool of mortgages or other
debt. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to shareholders on a pro rata basis. These securities
involve prepayment risk, which is the risk that the underlying mortgages or
other debt may be refinanced or paid off prior to their maturities during
periods of declining interest rates. In that case, a portfolio manager may have
to reinvest the proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
Municipal lease obligations are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not normally
associated with general obligation bonds and other revenue bonds. For example,
their interest may become taxable if the lease is assigned and the holders may
incur losses if the issuer does not appropriate funds for the lease payments on
an annual basis, which may result in termination of the lease and possible
default.
Municipal securities are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the full
faith and credit (i.e., the borrowing and taxing power) of a municipality or a
revenue obligation paid out of the revenues of a designated project, facility or
revenue source.
Passive foreign investment companies (PFICs) are any foreign corporations which
generate certain amounts of passive income or hold certain amounts of assets for
the production of passive income. Passive income includes dividends, interest,
royalties, rents and annuities. Income tax regulations may require the Funds to
recognize income associated with a PFIC prior to the actual receipt of any such
income.
Pay-in-kind bonds are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
Preferred stock is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
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Repurchase agreements involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, a Fund will bear the risk of market value fluctuations until the security
can be sold and may encounter delays and incur costs in liquidating the
security.
Reverse repurchase agreements involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used primarily to provide cash to satisfy unusually high
redemption requests, or for other temporary or emergency purposes.
Rule 144A securities are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
Standby commitments are obligations purchased by a Fund from a dealer that give
the Fund the option to sell a security to the dealer at a specified price.
Step coupon bonds are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from the face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
Strip bonds are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
Tender option bonds are generally long-term securities that are coupled with an
option to tender the securities to a bank, broker-dealer or other financial
institution at periodic intervals and receive the face value of the bond. This
type of security is commonly used as a means of enhancing the security's
liquidity.
U.S. government securities include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
Variable and floating rate securities have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
Warrants are securities, typically issued with preferred stock or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
When-issued, delayed delivery and forward transactions generally involve the
purchase of a security with payment and delivery at some time in the future -
i.E., Beyond normal settlement. The Funds do not earn interest on such
securities until settlement and bear the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
Zero coupon bonds are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
Forward contracts are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Funds may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. They may also enter into forward contracts to
purchase or sell securities or other financial indices.
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Futures contracts are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Funds may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Funds may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options on
futures are standardized and traded on designated exchanges.
Indexed/structured securities are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e. their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/ structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. A Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
Interest rate swaps involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
Inverse floaters are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For example,
upon reset the interest rate payable on a security may go down when the
underlying index has risen. Certain inverse floaters may have an interest rate
reset mechanism that multiplies the effects of change in the underlying index.
Such mechanism may increase the volatility of the security's market value.
Options are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Funds may purchase and write put and call options on securities,
securities indices and foreign currencies.
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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.
- --------------------------------------------------------------------------------
Moody's Investors Service, Inc.
Investment Grade
- ----------------
Aaa Highest quality, smallest degree of investment risk.
Aa High quality; together with Aaa bonds, they compose the
high-grade bond group.
A Upper-medium grade obligations; many favorable investment
attributes.
Baa Medium-grade obligations; neither highly protected nor
poorly secured. Interest and principal appear adequate for
the present but certain protective elements may be lacking
or may be unreliable over any great length of time.
Non-Investment Grade
- --------------------
Ba More uncertain, with speculative elements. Protection of
interest and principal payments not well safeguarded during
good and bad times.
B Lack characteristics of desirable investment; potentially
low assurance of timely interest and principal payments or
maintenance of other contract terms over time.
Caa Poor standing, may be in default; elements of danger with
respect to principal or interest payments.
Ca Speculative in a high degree; could be in default or have
other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever attaining
investment standing.
- --------------------------------------------------------------------------------
Unrated securities will be treated as noninvestment grade securities unless the
portfolio manager determines that such securities are the equivalent of
investment grade securities. Securities that have received different ratings
from more than one agency are considered investment grade if at least one agency
has rated the security investment grade.
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended October 31, 1996, the percentage of securities
holdings for Janus Flexible Income Fund and Janus High-Yield Fund by rating
category based upon a weighted monthly average was:
Bonds - Janus Flexible Bonds - Janus High-
S&P Rating Income Fund S&P Rating Yield Fund
AAA 10% AAA 0%
AA 0% AA 0%
A 16% A 0%
BBB 13% BBB 0%
BB 14% BB 12%
B 32% B 82%
CCC 1% CCC 2%
CC 0% CC 0%
C 0% C 0%
Preferred Stock 2% Preferred Stock 0%
Cash and Options 12% Cash and Options 4%
- --------------------------------------------------------------------------------
TOTAL 100% TOTAL 100%
- --------------------------------------------------------------------------------
No other Fund held 5% or more of its assets in bonds rated below investment
grade for the fiscal period ended October 31, 1996.
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(800) 525-3713
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