TABLE OF CONTENTS
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Our Message to You 1
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Portfolio Manager's Commentary and Schedule of Investments
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Janus Flexible Income Fund 2
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Janus High-Yield Fund 6
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Janus Federal Tax-Exempt Fund 10
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Janus Short-Term Bond Fund 13
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Janus Money Market Fund 16
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Janus Government Money Market Fund 19
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Janus Tax-Exempt Money Market Fund 20
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Statements of Operations - Bond Funds 22
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Statements of Assets and Liabilities - Bond Funds 23
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Statements of Changes in Net Assets - Bond Funds 24
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Financial Highlights - Bond Funds 25
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Statements of Operations - Money Market Funds 27
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Statements of Assets and Liabilities - Money Market Funds 27
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Statements of Changes in Net Assets - Money Market Funds 28
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Financial Highlights - Money Market Funds 29
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Notes to Schedules of Investments 30
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Notes to Financial Statements 30
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Performance Information
Performance overview graphs on the following pages compare the performance
of a $10,000 investment in each fund, since its inception, to one or more widely
used market indexes. Each graph reflects the lifetime performance of the fund
through April 30, 1997.
When comparing the performance of a fund to an index, keep in mind that
market indexes do not take into account brokerage commissions that would be
incurred if you purchased the individual securities that comprise the index.
They also do not include taxes payable on dividends and interest payments, or
operating expenses necessary to maintain a portfolio investing in the index.
Average annual total returns are quoted for each fund. Average annual total
return is calculated by taking the growth or decline in value of an investment
over a period of time, including reinvestment of dividends and distributions,
and then calculating the annual compound percentage rate that would have
produced the same result had the rate of growth been constant throughout the
period.
An Explanation of the Schedule of Investments
Following the performance overview graph is each fund's Schedule of
Investments. This schedule reports the industry concentrations and the different
types of securities held in the fund's portfolio on the last day of the
reporting period. Securities are usually listed by type (common stocks,
corporate bonds, U.S. government obligations, etc.) and by industry
classification (banking, communications, insurance, etc.).
The market value of each security represents its value on the last day of
the reporting period. Funds that own securities denominated in foreign
currencies convert the value of their securities into U.S. dollars.
An Explanation of the Forward Currency Contract Table
A table listing forward currency contracts will follow each fund's Schedule
of Investments (if applicable). Forward currency contracts represent agreements
to deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the fund's
long-term holdings.
The table provides the foreign currency being sold and the settlement date,
the amount sold, the value of the currency in U.S. dollars, and the amount of
unrealized gain or loss. The amount of unrealized gain or loss reflects the
change in currency exchange rates from the time the contract was opened to the
last day of the reporting period.
<PAGE>
OUR MESSAGE TO YOU
Dear Shareholders:
During the first half of our fiscal year, from October 31, 1996 to April
30, 1997, the bond market fluctuated within a clearly defined zone, also known
as a trading range. One way to measure the market's range is the yield paid by
the benchmark 30-year Treasury bond, which varied from 7.25% at the upper end of
the range to 6.5% on the lower end.
At first glance, a trading range of this size would seem to indicate a
stable market, and in some important ways it did. But movements within the range
were often volatile. In other words, the bond market did not idle away somewhere
in the middle of the zone, but instead fluctuated between the poles, probing the
upper boundary when the economy showed signs of strength and backing down again
when economic data was soft.
All in all, it made for a skittish debt market, especially in the more
interest rate sensitive sectors, such as Treasury securities and
investment-grade corporate bonds. Lower grade debt, including high-yield bonds,
fared better because there was demand for their yields, and because high-yield
bonds benefit from a good stock market and a healthy economy. We had both during
the last six months.
The Economy Gathered Momentum
The economy was stronger than expected in the first calendar quarter of
1997. Gross domestic product surged to an annual rate of 5.6%, and the Federal
Reserve Board raised short-term interest rates in late March. Intermediate- and
long-term rates had already risen in anticipation of the rate hike, and
immediately after the increase they tested the top of the trading range. The
stock market also experienced a sharp decline.
As we approached April 30, however, rates backed down. Once again, the
upper limit of the zone held. The reason was softer economic data. Industrial
demand dropped sharply and inflation was very low. The stock market responded to
the news and to the bond market's rally with a powerful rebound of its own. And,
as I write this letter in mid-May, bond yields are still declining on excellent
inflation news.
But the real good news in the bond market's current rally is what it
indicates about the flexibility of the U.S. economy. Relatively minor, though
rapid, adjustments in interest rates are able to slow and restart economic
growth virtually on a dime. In short, the economy is now behaving more like a
formula racing car instead of the big eighteen wheeler it used to resemble. What
makes this possible, of course, are extremely efficient computerized management
systems. Computerized systems can run a manufacturing line with tight, very
sensitive parameters. Dell Computer, for example, keeps only twelve days
inventory on hand to support its manufacturing operations. Dell is the best in
its industry at inventory control, but it is also a leader in a trend toward
automation that cuts across the entire U.S. commercial landscape. The trend has
led to increased productivity and, in combination with international
competition, lower inflation.
How Fixed-Income Sectors Performed
During the first half, high-yield bonds continued to perform well, despite
criticism from Federal Reserve Board Chairman Alan Greenspan that the sector was
overvalued. When interest rates are low, the economy is robust, and the stock
market is strong, high-yield bonds tend to be in demand for their yields and
potential for capital appreciation. A good business climate provides more
opportunities for high-yield issuers to grow their earnings and improve their
balance sheets, and a strong stock market makes it easier to raise capital. New
offerings of both high-yield and investment-grade corporate debt were very heavy
during the six months, as companies of all grades sought to refinance borrowings
at lower rates.
Emerging market debt and convertible securities also posted good returns
for similar reasons. Investors were eager to take advantage of the capital
appreciation potential in emerging markets and to gain equity participation via
bonds that are convertible into stock.
In addition, U.S. Treasury securities are still experiencing good demand
from foreign investors. Our yields remain high compared to those of mature
markets such as Europe and Japan, where economic growth is slow and rates are
low. The strong dollar also added to the attractiveness of U.S. Treasuries.
Foreign investors wanted to own our bonds not only to collect the higher yields,
but also to profit from the dollar's rise versus their own currencies.
How Our Funds Performed
When interest rates are volatile, as they were during the first half, a
flexible investment strategy, which our funds have, is often the best means of
dealing with interest rate changes. In general, our funds reacted very well to
the skittish environment, and, as a result, were able to outperform their
benchmark indexes and also rank high versus their peers.(1) The individual
results are in each fund's semiannual letter, but Ron Speaker, Sharon Pichler,
Sandy Rufenacht, and Darrell Watters, and all the members of their research
teams, deserve congratulations for handling an often difficult environment.
We appreciate your continued investment with Janus.
Thomas H. Bailey
Chairman
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(1) For a prospectus containing more complete information, including expenses,
please call a Janus Investor Service Representative at 1-800-525-3713. Read
the prospectus carefully before you invest or send money. Past performance
is no guarantee of future results.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 1
<PAGE>
JANUS FLEXIBLE INCOME FUND
Portfolio Managers, Ronald V. Speaker, Sandy R. Rufenacht
Performance
The Janus Flexible Income Fund outperformed the Lehman Brothers
Government/Corporate Bond Index for the first half of our fiscal year, October
31, 1996 through April 30, 1997. The Fund posted a total return of 2.43%,
compared to a gain of 1.30% for the Lehman Index. Both returns include
reinvested dividends.
Over the last 12 months, Janus Flexible Income Fund's total return put it
in the top 16% (206/1326) of the general bond funds tracked by Lipper Analytical
Services, Inc., a mutual fund rating company.(1)
The Fund's diversity remains its chief advantage in outperforming the
Lehman Index. The portfolio contains a variety of fixed-income assets, and in
the first half, its high-yield bonds continued to register Index-beating
returns.
Overall, the bond market spent the period fluctuating between the high and
low ends of a trading range. Rates swung between 6.5% and 7.25%, as measured by
the yield on the benchmark 30-year Treasury bond. Even though the period ended
on a strong note, when the 30-year yield dropped back below 7%, bond performance
was generally mixed during the six months.
The high-yield sector came under pressure late in the period, primarily as
a result of Federal Reserve Board Chairman Alan Greenspan's comments that
high-yield securities were overvalued. When the stock market began to come down
as well, high-yield debt experienced additional pressure, since the sector is
really a hybrid. The same conditions that benefit equities - low interest rates,
abundant capital, and a healthy economy - also benefit high-yield issuers.
However, when interest rates fell sharply "right at the wire," as the first half
ended, high-yield bonds also rebounded.
Portfolio Strategy
As rates rose toward the top of their range we became more defensive. The
exposure to "cushion bonds" was increased. These are high-yield bonds that carry
generous yields and are more likely to be redeemed before they mature. Cushion
bonds tend to have less price volatility but still allow us to collect an
attractive coupon.
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Fund Profile April 30, 1997 October 31, 1996
Weighted Avg. Maturity 8.0 Yrs. 8.2 Yrs.
Average Modified Duration* 4.5 Yrs. 4.9 Yrs.
30-Day Avg. Yield** 7.25% 8.15%
Average Rating BBB+ BBB
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* A theoretical measure of price volatility.
** Yields will fluctuate
Portfolio Asset Mix
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April 30, 1997 October 31, 1996
Investment-Grade
Corporate Bonds 30.9% 30.0%
High-Yield/High-Risk Bonds 38.8% 47.0%
U.S. Government Bonds 14.3% 9.5%
Foreign Non-Dollar Bonds -- 0.1%
Preferred Stock 4.0% 2.0%
Cash and Cash Equivalents 12.0% 11.4%
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The Portfolio
The Treasury and corporate sectors of the portfolio were little changed
during the first half. Treasuries were kept at ten-year maturities to preserve a
competitive yield and avoid the volatility of longer bonds. Most of our
investment-grade corporate bonds are rated BBB or better by Standard and Poor's
Ratings Services, with selected lower-rated bonds - BB is the lowest - to
enhance yield. Holdings include WorldCom, Conseco, Coca Cola, and Walt Disney.
Allbritton is an example of what we look for in a high-yield cushion bond.
Allbritton owns six television stations on the east coast. According to our
analysis, the company's ABC affiliate in Washington, D.C. provides reasonable
collateral by itself for the debt offering we own, which carries an 11.5% coupon
and is callable in August. Albritton recently issued 9.75% bonds, so we believe
our bonds could be redeemed early.
Ryder Truck Rental is another high-yield issuer with exciting potential.
Ryder is well-managed, has great brand recognition, and is restructuring its
financial operation to increase cash and pay down debt.
Going Forward
We are comfortable with the bond market in its current trading range, where
the Fund's flexibility has proven effective in dealing with interest rate
changes. We intend to continue using the volatility in interest rates to take
advantage of specific opportunities.
We believe the Federal Reserve Board made the correct decision in its
recent interest rate hike. In general, the Federal Reserve has done a very good
job of regulating fiscal policy. Given the flexibility of business and the
current level of consumer debt, it should not take much to slow the economy.
During the period, every time the top of the current trading range was
approached, as it was in April, the economy slowed and rates settled lower. As
long as this equilibrium is in place, the climate for bonds should remain
positive.
Thank you for your continued investment in Janus Flexible Income Fund.
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(1) According to Lipper Analytical Services, Inc., General Bond Funds "Do not
have any quality or maturity restrictions. Intend to keep bulk of assets in
corporate and government debt issues." For the last 3 years, Janus Flexible
Income Fund ranked 89/903 (top 10%) in its Lipper category, and 63/493 (top
13%) over 5 years. The Lipper ranking is based on total return, including
reinvestment of dividends and capital gains for the stated period. Past
performance is not predictive of future results.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 2
<PAGE>
JANUS FLEXIBLE INCOME FUND
Portfolio Managers, Ronald V. Speaker, Sandy R. Rufenacht
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Flexible Income Fund and the Lehman Brothers Government/Corporate Bond
Index. Janus Flexible Income Fund is represented by a solid green line. The
Lehman Brothers Government/Corporate Bond Index is represented by a single
dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, July 2, 1987, through
April 30, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Flexible Income Fund ($23,452) as compared to
the Lehman Brothers Government/Corporate Bond Index ($22,587). There is a legend
in the upper left quadrant of the graph which indicates Janus Flexible Income
Fund's one-year, five-year and since inception (July 2, 1987) average annual
total returns as 8.54%, 9.59% and 9.04%, respectively.
* The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends. Past performance is not predictive of
future performance. Investment return and principal value may fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. The
Fund's portfolio may differ significantly from the securities in the index. The
index is unmanaged and therefore does not reflect the cost of portfolio
management or trading.
JANUS FLEXIBLE INCOME FUND April 30, 1997 (unaudited)
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Principal Amount Market Value
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Corporate Bonds - 69.6%
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Agricultural Operations - 0.8%
$5,000,000 Hines Horticulture, Inc., 11.75%
senior subordinated notes, due 10/15/05 $ 5,200,000
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Airlines - 0.4%
3,000,000 ValuJet, Inc., 10.25%
senior notes, due 4/15/01 2,793,750
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Automotive - Cars and Light Trucks - 3.1%
20,000,000 Ford Motor Co., 7.25%
notes, due 10/1/08 19,775,000
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Beverages - Non - Alcoholic - 1.7%
7,500,000 Coca-Cola Enterprises, 6.75%
debentures, due 9/15/23 6,712,500
4,000,000 Dr. Pepper Bottling Holdings, zero coupon
senior notes, due 2/15/03 3,890,000
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10,602,500
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Building Products - Air and Heating - 0.7%
3,960,000 American Standard Companies, Inc., 11.375%
senior debentures, due 5/15/04 4,207,500
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Cable Television - 0.5%
3,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 3,067,500
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Chemicals - Fibers - 0.8%
5,000,000 Polysindo International Finance Co. B.V.,
11.375% company guaranteed
notes due 6/15/06 5,312,500
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Chemicals - Specialty - 1.5%
10,000,000 Praxair, Inc., 6.90%
notes, due 11/1/06 9,775,000
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Commercial Banks - 3.5%
$10,100,000 First Nationwide Escrow Corp., 10.625%
senior subordinated notes, due 10/1/03 $10,756,500
2,000,000 First Nationwide Holdings, Inc., 12.50%
senior notes, due 4/15/03 2,220,000
5,000,000 HUBCO, Inc., 8.20%
subordinated debentures, due 9/15/06 5,131,250
4,000,000 North Fork Bancorporation, Inc., 8.70%
bonds, due 12/15/26+ 3,975,000
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22,082,750
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Commercial Services - 1.2%
7,000,000 NeoData Services, Inc., 12.00%
senior notes, due 5/1/03 7,455,000
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Computers - Mainframe - 1.3%
8,000,000 IBM Corp., 7.50%
global notes, due 6/15/13 8,050,000
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Containers - Metal and Glass - 1.5%
10,000,000 Crown Cork & Seal Finance PLC,7.00%
company guaranteed notes, due 12/15/06 9,737,500
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Electric - Integrated - 2.0%
El Paso Electric Co.:
3,000,000 8.90%, first mortgage bonds, due 2/1/06 3,135,000
9,000,000 9.40%, first mortgage bonds, due 5/1/11 9,573,750
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12,708,750
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Engineering - Research and Development - 1.0%
6,000,000 Intertek Finance PLC, 10.25%
senior subordinated notes, due 11/1/06 6,150,000
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Fertilizers - 0.2%
1,000,000 Pioneer Americas Acquisition, 13.375%
senior notes, due 4/1/05 1,161,250
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See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 3
<PAGE>
JANUS FLEXIBLE INCOME FUND April 30, 1997 (unaudited)
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Principal Amount Market Value
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Finance - Auto Loans - 1.5%
$10,000,000 General Motors Acceptance Corp., 6.625%
notes, due 10/15/05 $ 9,550,000
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Finance - Leasing Companies - 0.8%
5,000,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 5,037,500
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Food - Diversified - 2.1%
5,000,000 International Home Foods, 10.375%
senior subordinated notes, due 11/1/06+ 5,087,500
8,000,000 Ralston-Ralston Purina Group, 7.875%
debentures, due 6/15/25 8,010,000
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13,097,500
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Food - Retail - 1.8%
2,000,000 Carr-Gottstein Foods Co., 12.00%
senior subordinated notes, due 11/15/05 2,150,000
1,175,000 Pathmark Stores, Inc., 12.625%
subordinated notes, due 6/15/02 1,183,812
7,000,000 Smith's Food & Drug Centers, Inc., 11.25%
senior subordinated notes, due 5/15/07 7,822,500
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11,156,312
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Gambling - Non-Hotel Casinos- 0.9%
2,000,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 2,010,000
3,000,000 Mohegan Tribal Gaming Authority, 13.50%
senior notes, due 11/15/02 3,930,000
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5,940,000
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Home Furnishings - 0.7%
212,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 235,585
4,000,000 Lifestyle Furnishings International, Inc., 10.875%
company guaranteed
notes, due 8/1/06 4,280,000
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4,515,585
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Hotels and Motels - 1.7%
10,000,000 Courtyard By Marriott ll, L.P., 10.75%
senior notes, due 2/1/08 10,450,000
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Industrial Audio and Video Products - 0.3%
2,000,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 2,040,000
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Life and Health Insurance - 2.9%
4,000,000 Conseco Finance Trust, 8.70%
guaranteed notes, due 11/15/26 3,940,000
11,000,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 10,945,000
3,500,000 Penncorp Financial Group, Inc., 9.25%
senior subordinated notes, due 12/15/03 3,640,000
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18,525,000
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Manufacturing - 0.7%
4,000,000 Plastic Specialties & Technologies, Inc., 11.25%
senior secured notes, due 12/1/03 4,240,000
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Medical - Hospitals - 3.4%
Tenet Healthcare Corp.:
10,000,000 10.125%, senior subordinated notes,
due 3/1/05 10,750,000
7,000,000 8.625%, senior notes, due 12/1/03 7,140,000
4,000,000 8.625%, subordinated notes, due 1/15/07 3,960,000
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21,850,000
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Medical Labs and Testing Services - 1.5%
8,500,000 Dade International, Inc., 11.125%
senior subordinated notes, due 5/1/06 9,286,250
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Medical Products - 0.4%
$ 2,500,000 IMED Corp., 9.75%
senior subordinated notes, due 12/1/06+ $ 2,493,750
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Money Center Banks - 3.1%
10,000,000 Chase Manhattan Corp., 6.75%
subordinated notes, due 8/15/08 9,450,000
10,000,000 First National Bank of Boston, 7.375%
subordinated notes, due 9/15/06 9,962,500
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19,412,500
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Multimedia - 3.9%
14,500,000 Time Warner, Inc., 8.11%
notes, due 8/15/06 14,771,875
10,000,000 Walt Disney Co. (The), 6.75%
senior notes, due 3/30/06 9,700,000
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24,471,875
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Oil Companies - Exploration and Production - 1.2%
4,000,000 Gulf Canada Resources, Ltd., 9.25%
senior subordinated debentures, due 1/15/04 4,140,000
3,000,000 Mesa Operating Co., 10.625%
unsecured company guaranteed notes,
due 7/1/06 3,273,750
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7,413,750
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Paint and Related Products - 1.8%
11,500,000 Sherwin-Williams Co., 6.85%
notes, due 2/1/07 11,226,875
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Property and Casualty Insurance - 2.3%
5,000,000 Arkwright CSN Trust, 9.625%
notes, due 8/15/26+ 5,375,000
9,000,000 Orion Capital Corp., 7.25%
senior notes, due 7/15/05 8,865,000
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14,240,000
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Recreation Centers - 1.1%
7,000,000 Six Flags Theme Parks, zero coupon
senior subordinated notes, due 6/15/05 6,868,750
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Reinsurance - 0.8%
5,000,000 Veritas Holdings GMBH, 9.625%
senior notes, due 12/15/03 5,025,000
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Retail - Auto Parts - 0.6%
3,600,000 Federal-Mogul Co., 8.80%
senior notes, due 4/15/07+ 3,631,500
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Retail - Drug Store - 0.5%
3,000,000 Duane Reade Corp., 12.00%
senior notes, due 9/15/02 3,105,000
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Retail - Leisure Products - 1.5%
9,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 9,720,000
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Retail - Music Store - 0.2%
1,333,000 Guitar Center, Inc., 11.00%
senior notes, due 7/1/06 1,444,639
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Retail - Perfume and Cosmetics - 0.5%
3,000,000 Renaissance Cosmetics, Inc., 11.75%
senior notes, due 2/15/04 3,030,000
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Retail - Pet Food and Supplies - 0.5%
3,000,000 Doane Products Co., 10.625%
senior notes, due 3/1/06 3,116,250
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Retail - Regional Department Stores - 0.8%
5,000,000 Federated Department Stores, Inc., 8.50%
senior notes, due 6/15/03 5,193,750
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See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 4
<PAGE>
JANUS FLEXIBLE INCOME FUND April 30, 1997 (unaudited)
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Principal Amount Market Value
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Savings/Loan/Thrifts - 3.6%
$5,000,000 Anchor Bancorp, Inc., 8.9375%
senior notes, due 7/9/03 $ 5,137,500
8,000,000 People's Bank Bridgeport, 7.20%
subordinated notes, due 12/1/06 7,740,000
5,000,000 St. Paul Bancorp, Inc., 7.125%
senior notes, due 2/15/04 4,862,500
5,000,000 Standard Federal Bancorp, 7.75%
subordinated notes, due 7/17/06 5,093,750
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22,833,750
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Super-Regional Banks - 2.8%
8,000,000 NationsBank Corp., 7.75%
subordinated notes, due 8/15/15 7,950,000
10,000,000 Wells Fargo & Co., 7.125%
subordinated notes, due 8/15/06 9,812,500
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17,762,500
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Telecommunication Services - 1.6%
3,000,000 Intermedia Communications of Florida, Inc.,
13.50% senior notes, due 6/1/05 3,315,000
5,000,000 NEXTLINK Communications, L.L.C., 12.50%
senior notes, due 4/15/06 5,150,000
2,000,000 RSL Communications, Ltd., 12.25%
units, due 11/15/06+ 1,980,000
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10,445,000
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Telephone - Long Distance - 0.6%
4,000,000 WorldCom, Inc., 7.55%
notes, due 4/1/04 3,995,000
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Television - 1.3%
2,000,000 Allbritton Communications, 11.50%
senior subordinated debentures,
due 8/15/04 2,100,000
5,500,000 Pegasus Media & Communications, Inc., 12.50%
notes, due 7/1/05 5,912,500
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8,012,500
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Textile - Products - 0.3%
2,000,000 Collins & Aikman Corp., 10.00%
senior subordinated notes, due 1/15/07 1,965,000
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Theaters - 0.6%
3,932,586 United Artists Theatres Circuit, Inc., 9.30%
pass thru certificates, due 7/1/15 3,622,895
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Transportation - Equipment and Leasing - 0.8%
5,000,000 Interpool Capital Trust, 9.875%
bonds, due 2/15/27+ 4,975,000
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Transportation - Services - 0.3%
2,000,000 Atlantic Express Transportation Co., 10.75%
company guaranteed notes, due 2/1/04 2,050,000
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Total Corporate Bonds (cost $437,220,521) 439,822,431
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Convertible Bonds - 0.1%
Oil Companies - Exploration and ProductIon - 0.1%
1,000,000 Lukinter Finance B.V., 3.50%
company guaranteed notes,
due 5/6/02+ (cost $1,000,000) 1,040,000
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Preferred Stock - 4.0%
Real Estate Investment Trust - 0.3%
65,000 Wellsford Residential Property Trust, 7.00% 1,584,375
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Savings/Loan/Thrifts - 3.1%
375,000 California Federal Preferred Capital Corp.,
9.125% $ 9,375,000
350,000 Chevy Chase Savings, 13.00%, Non-Cumulative 10,500,000
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19,875,000
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Telecommunication Services - 0.6%
80,000 NEXTLINK Communications, Inc., 14.00% 3,720,000
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Total Preferred Stock (cost $25,830,902) 25,179,375
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 10.8%
$10,000,000 Bell Atlantic Corp.
5.60%, 5/1/97 10,000,000
30,000,000 General Electric Capital Corp.
5.62%, 5/1/97 30,000,000
28,100,000 Household Finance Corp.
5.58%, 5/1/97 28,100,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $68,100,000) 68,100,000
- --------------------------------------------------------------------------------
U.S. Government Obligation - 14.3%
92,000,000 U.S. Treasury Notes, 6.50%
due 10/15/06** (cost $91,579,815) 90,411,160
- --------------------------------------------------------------------------------
Total Investments (total cost $623,731,238) - 98.8% 624,552,966
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.2% 7,694,040
- --------------------------------------------------------------------------------
Net Assets - 100% $632,247,006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Futures - Short
250 Contracts U.S. Treasury - 10 year note, expires
June 1997, principal amount $26,739,375
value $26,742,188, cumulative depreciation $ 2,813
225 Contracts U.S. Treasury - 30 year bond, expires
June 1997, principal amount $24,257,813,
value $24,588,281, cumulative depreciation 330,468
- --------------------------------------------------------------------------------
$333,281
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 5
<PAGE>
JANUS HIGH-YIELD FUND
Portfolio Managers, Ronald V. Speaker, Sandy R. Rufenacht
Performance Review
During the first half of our fiscal year, October 31, 1996 through April
30, 1997, Janus High-Yield Fund produced a total return of 5.88%, versus a
return of 4.95% for the Lehman Brothers High-Yield Bond Index. Both returns
include reinvested dividends.
The Fund outperformed its benchmark index due to careful bond selection and
detailed research. As we have said before, in the high-yield market intensive
equity-style research not only provides a better understanding of a company's
balance sheet, but can also uncover earnings potential and other factors that
make a bond attractive.
During the first half, we continued to focus on companies that were
candidates for rating upgrades, sometimes to investment grade. Also, as prices
rose, we positioned the portfolio more defensively. We were content to let cash
accumulate when we could not find attractive credits, and we added more "cushion
bonds," which have a better chance of being redeemed before they mature. This
strategy proved effective in March and April, when high-yield bonds declined.
Review of the First Half
As the fiscal year began, the high-yield market was poised to continue its
good performance. Interest rates and inflation were low, and the stock market
continued in a strong uptrend. In March, however, faster economic growth
threatened to undermine these near-perfect conditions. Even the high-yield
market, which has been one of the best performing fixed-income asset classes for
more than a year now, came under pressure after Federal Reserve Board Chairman
Alan Greenspan's remarks that high-yield securities were overvalued and the
Federal Reserve Board's subsequent decision to raise short-term interest rates.
High-yield securities are something of a hybrid sector. Performance is
often a mix of both the stock and bond markets, since the same economic
conditions that are conducive to a strong equity market - a favorable business
climate, abundant capital, and low interest rates - are also highly beneficial
to high-yield issuers. In fact, the performance of high-yield bonds is probably
more closely linked to the performance of stocks than to Treasury yields, so
when stocks and bonds declined, high-yield debt followed suit.
Portfolio Strategy
Money has been flooding into the high-yield sector for over a year now, and
certain industries have become overheated, namely, telecommunications, gaming,
and media, where increasing competition is slowing profit growth. Our approach
was to reduce exposure to these companies and focus on supermarkets and other,
less glamorous, industries. However, buy and sell decisions were based on
individual companies. As always, our basic investment discipline is to add value
to the portfolio via detailed, fundamental research of individual ideas.
As mentioned earlier, we increased positions in cushion bonds. A good
example of a cushion bond is Allbritton Communications, one of the larger
positions in the portfolio. Our Allbritton debt carries an 11.5% coupon and can
be redeemed as early as August. The company recently issued obligations yielding
9.75%, so Allbritton will probably tender for its more expensive debt early.
This should lower the bond's price volatility while still providing an
attractive yield.
Fund Data
- ------------------------------------------------------------
April 30, 1997 October 31, 1996
Weighted Avg. Maturity 6.2 Yrs. 8.1 Yrs.
Avg. Modified Duration* 4.08 Yrs. 5.05 Yrs.
Avg. 30-Day Yield** 8.59% 9.04%
Avg. Rating BB B+
- ------------------------------------------------------------
* A theoretical measure of price volatility.
**Yields will fluctuate.
Cobblestone Golf Group is another exciting holding. Our Cobblestone bond
also carries an 11.5% coupon. Cobblestone owns approximately 25 golf courses,
mostly concentrated in the Phoenix, Dallas, and San Diego areas. By focusing on
individual cities, Cobblestone is able to develop economies of scale, including
discounts on equipment and overlapping personnel in such areas as maintenance.
The continuing shortage of golf courses is also working in Cobblestone's favor.
Its course utilization rates are excellent and it is an attractive acquisition
candidate as larger competitors look to increase market share.
Going Forward
We remain optimistic about the high-yield bond sector. In spite of Mr.
Greenspan's remarks, the high-yield market has some very favorable risk-reward
characteristics. In the 1990s, interest rates have been extremely volatile, but
the higher coupons and shorter maturities on high-yield debt have tended to keep
prices less volatile than in much of the Treasury market.
So long as the economy remains healthy and stocks hold their own, the
attractive coupons on high-yield bonds should continue to help mitigate changes
in interest rates. However, detailed research - including firsthand, on-site
visits with senior management - and careful investment discipline will continue
to be the performance keys in this very exciting market.
Thank you for your investment in Janus High-Yield Fund.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 6
<PAGE>
JANUS HIGH-YIELD FUND
Portfolio Managers, Ronald V. Speaker, Sandy R. Rufenacht
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus High-Yield Fund and the Lehman Brothers High-Yield Bond Index. Janus
High-Yield Fund is represented by a solid green line. The Lehman Brothers
High-Yield Bond Index is represented by a single dashed black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, December 29, 1995, through April 30, 1997. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
High-Yield Fund ($12,670) as compared to the Lehman Brothers High-Yield Bond
Index ($11,370). There is a legend in the upper left quadrant of the graph which
indicates Janus High-Yield Fund's one-year and since inception (December 29,
1995) average annual total returns as 15.12% and 19.46%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends. Past performance is not predictive of
future performance. Investment return and principal value may fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. The
Fund's portfolio may differ significantly from the securities in the index. The
index is unmanaged and therefore does not reflect the cost of portfolio
management or trading.
JANUS HIGH-YIELD FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 78.3%
- --------------------------------------------------------------------------------
Airlines - 0.8%
$2,000,000 ValuJet, Inc., 10.25% senior notes, due 4/15/01 $1,862,500
- --------------------------------------------------------------------------------
Automotive - Medium and Heavy Duty Trucks - 0.9%
2,000,000 Blue Bird Body Co., 10.75%
senior subordinated notes, due 11/15/06 2,090,000
- --------------------------------------------------------------------------------
Beverages - Non-Alcoholic - 1.7%
4,000,000 Dr. Pepper Bottling Holdings, zero coupon
senior notes, due 2/15/03 3,890,000
- --------------------------------------------------------------------------------
Building - Residential and Commercial - 1.4%
3,000,000 Fortress Group, Inc., 13.75%
senior notes, due 5/15/03 3,090,000
- --------------------------------------------------------------------------------
Building Products - Air and Heating - 1.0%
2,000,000 American Standard Companies, Inc., 11.375%
senior debentures, due 5/15/04 2,125,000
- --------------------------------------------------------------------------------
Cable Television - 4.1%
4,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 4,090,000
2,000,000 Intermedia Capital Partners, 11.25%
senior notes, due 8/1/06 2,060,000
3,000,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 3,060,000
- --------------------------------------------------------------------------------
9,210,000
- --------------------------------------------------------------------------------
Casino Hotels - 0.9%
2,000,000 California Hotel Financial, 11.00%
senior subordinated notes, due 12/1/02 2,060,000
- --------------------------------------------------------------------------------
Cellular Telecommunications - 1.4%
3,000,000 PriCellular Wireless Corp., 10.75%
senior notes, due 11/1/04 3,090,000
- --------------------------------------------------------------------------------
Chemicals - Diversified - 0.9%
$2,000,000 Harris Chemical North America, Inc., 10.75%
senior subordinated notes, due 10/15/03 $1,970,000
- --------------------------------------------------------------------------------
Chemicals - Fibers - 1.0%
2,000,000 Polysindo International Finance Co. B.V., 11.375%
company guaranteed notes, 6/15/06 2,125,000
- --------------------------------------------------------------------------------
Chemicals - Specialty - 1.5%
3,000,000 Laroche Industries, 13.00%
senior subordinated notes, due 8/15/04 3,285,000
- --------------------------------------------------------------------------------
Commercial Banks - 2.0%
2,000,000 First Nationwide Escrow Corp., 10.625%
senior subordinated notes, due 10/1/03 2,130,000
2,000,000 First Nationwide Holdings, Inc., 12.50%
senior notes, due 4/15/03 2,220,000
- --------------------------------------------------------------------------------
4,350,000
- --------------------------------------------------------------------------------
Commercial Services - 1.0%
2,000,000 NeoData Services, Inc., 12.00%
senior notes, due 5/1/03 2,130,000
- --------------------------------------------------------------------------------
Electronic Components - 1.5%
5,000,000 Electronic Retailing Systems International, Inc.,
zero coupon senior discount notes,
due 2/1/04+ 3,387,500
- --------------------------------------------------------------------------------
Engineering - Research and Development - 0.9%
2,000,000 Intertek Finance PLC, 10.25%
senior subordinated notes, due 11/1/06 2,050,000
- --------------------------------------------------------------------------------
Environmental Consulting and Engineering - 0.9%
2,000,000 ICF Kaiser International, Inc., 13.00%
units, due 12/31/03 1,900,000
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 1.8%
4,000,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 4,030,000
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 7
<PAGE>
JANUS HIGH-YIELD FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Food - Retail - 6.6%
$3,000,000 Jitney-Jungle Stores of America, Inc., 12.00%
senior notes, due 3/1/06 $ 3,255,000
Pathmark Stores, Inc.:
2,000,000 11.625% subordinated notes, due 6/15/02 1,980,000
2,000,000 12.625% subordinated notes, due 6/15/02 2,015,000
4,000,000 Smith's Food &
Drug Centers, Inc., 11.25%
senior subordinated notes, due 5/15/07 4,470,000
3,000,000 Supermercados Norte, 10.875%
bonds, due 2/9/04+ 3,000,000
- --------------------------------------------------------------------------------
14,720,000
- --------------------------------------------------------------------------------
Funeral Services and Related Items - 1.2%
2,500,000 Prime Succession Acquisition Co., 10.75%
senior subordinated notes, due 8/15/04 2,675,000
- --------------------------------------------------------------------------------
Gambling - Non-Hotel Casinos - 3.2%
3,000,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 3,015,000
2,000,000 Lady Luck Gaming Corp., 11.875%
first mortgage notes, due 3/1/01 1,982,500
2,000,000 Majestic Star Casino L.L.C., 12.75%
senior notes, due 5/15/03 2,155,000
- --------------------------------------------------------------------------------
7,152,500
- --------------------------------------------------------------------------------
Home Furnishings - 2.8%
2,700,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 3,000,375
3,000,000 Lifestyle Furnishings International, Inc., 10.875%
company guaranteed notes, due 8/1/06 3,210,000
- --------------------------------------------------------------------------------
6,210,375
- --------------------------------------------------------------------------------
Industrial Audio and Video Products - 1.4%
3,000,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 3,060,000
- --------------------------------------------------------------------------------
Machine Tools and Related Products - 1.8%
4,000,000 International Knife & Saw, Inc., 11.375%
senior subordinated notes, due 11/15/06 4,090,000
- --------------------------------------------------------------------------------
Manufacturing - 2.4%
5,000,000 Plastic Specialties & Technologies, Inc., 11.25%
senior secured notes, due 12/1/03 5,300,000
- --------------------------------------------------------------------------------
Marine Services - 2.4%
3,000,000 Moran Transportation Co., 11.75%
notes, due 7/15/04 3,217,500
2,000,000 Stena Rederi A.B., 10.50%
senior notes, due 12/15/05 2,130,000
- --------------------------------------------------------------------------------
5,347,500
- --------------------------------------------------------------------------------
Office Supplies and Forms - 1.0%
2,000,000 American Pad & Paper, 13.00%
senior subordinated notes, due 11/15/05 2,322,500
- --------------------------------------------------------------------------------
Oil Company - Exploration and Production - 2.4%
2,000,000 Forcenergy, Inc., 9.50%
senior subordinated notes, due 11/1/06 2,030,000
3,000,000 Mesa Operating Co., 10.625%
company guaranteed notes, due 7/1/06 3,276,069
- --------------------------------------------------------------------------------
5,306,069
- --------------------------------------------------------------------------------
Physical Therapy and Rehabilitation Centers - 0.9%
2,000,000 HEALTHSOUTH Corp., 9.50%
senior subordinated notes, due 4/1/01 2,095,000
- --------------------------------------------------------------------------------
Pollution Control - 0.8%
2,000,000 Envirosource, Inc., 9.75%
senior notes, due 6/15/03 1,890,000
- --------------------------------------------------------------------------------
Recreational Centers - 3.6%
$3,000,000 Cobblestone Golf Group, Inc., 11.50%
senior notes, due 6/1/03 $3,127,500
5,000,000 Six Flags Theme Parks, zero coupon
senior subordinated notes, due 6/15/05 4,906,250
- --------------------------------------------------------------------------------
8,033,750
- --------------------------------------------------------------------------------
Retail - Discount - 0.8%
2,000,000 Hills Stores Co., 12.50%
senior notes, due 7/1/03 1,770,000
- --------------------------------------------------------------------------------
Retail - Diversified - 3.3%
4,000,000 Core-Mark International, Inc., 11.375%
senior subordinated notes, due 9/15/03 4,125,000
3,000,000 Eye Care Centers of America, 12.00%
senior notes, due 10/1/03 3,247,500
- --------------------------------------------------------------------------------
7,372,500
- --------------------------------------------------------------------------------
Retail - Drug Store - 0.9%
2,000,000 Duane Reade Corp., 12.00%
senior notes, due 9/15/02 2,070,000
- --------------------------------------------------------------------------------
Retail - Leisure Products - 1.0%
2,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 2,160,000
- --------------------------------------------------------------------------------
Retail - Music Store - 0.6%
1,333,000 Guitar Center, Inc., 11.00%
senior notes, due 7/1/06 1,444,639
- --------------------------------------------------------------------------------
Retail - Perfume and Cosmetics - 1.4%
3,000,000 Renaissance Cosmetics, Inc., 11.75%
senior notes, due 2/15/04 3,030,000
- --------------------------------------------------------------------------------
Satellite Telecommunications - 0.4%
1,000,000 Echostar Communications Corp., zero coupon
senior discount notes, due 6/1/04 823,750
- --------------------------------------------------------------------------------
Steel - Producers - 2.8%
3,000,000 Weirton Steel Corp., 11.375%
senior notes, due 7/1/04 3,075,000
3,000,000 Ivaco, Inc., 11.50%
senior notes, due 9/15/05 3,165,000
- --------------------------------------------------------------------------------
6,240,000
- --------------------------------------------------------------------------------
Telecommunication Services - 3.5%
2,000,000 NEXTLINK Communications, L.L.C., 12.50%
senior notes, due 4/15/06 2,060,000
1,500,000 Peoples Telephone Co., Inc., 12.25%
senior notes, due 7/15/02 1,571,250
2,000,000 RSL Communications, Ltd., 12.25%
units, due 11/15/06+ 1,980,000
2,000,000 Teleport Communications Group, Inc., 9.875%
senior notes, due 7/1/06 2,080,000
- --------------------------------------------------------------------------------
7,691,250
- --------------------------------------------------------------------------------
Television - 3.3%
5,000,000 Allbritton Communications, 11.50%
senior subordinated debentures, due 8/15/04 5,250,000
2,000,000 Sinclair Broadcast Group, Inc., 10.00%
senior subordinated notes, due 9/30/05 2,025,000
- --------------------------------------------------------------------------------
7,275,000
- --------------------------------------------------------------------------------
Textile - Products - 1.4%
3,000,000 Glenoit Corp., 11.00%
senior subordinated notes, due 4/15/07 3,037,500
- --------------------------------------------------------------------------------
Tobacco - 0.9%
2,000,000 Consolidated Cigar Acquistion Corp., 10.50%
senior subordinated notes, due 3/1/03 2,105,000
- --------------------------------------------------------------------------------
Transportation - Services - 0.9%
2,000,000 Atlantic Express Transporation Co., 10.75%
company guaranteed notes, due 2/1/04 2,050,000
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 8
<PAGE>
JANUS HIGH-YIELD FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Wire and Cable Products - 1.4%
$3,000,000 International Wire Group, 11.75%
senior subordinated notes, due 6/1/05 $ 3,157,500
- --------------------------------------------------------------------------------
Wireless Telecommunications - 1.5%
3,385,000 GST Acquisition Corp., 10.50%
senior subordinated notes, due 5/1/07 3,410,388
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $172,776,575) 174,485,221
- --------------------------------------------------------------------------------
U.S. Government Obligation - 2.2%
5,000,000 U.S. Treasury Notes
6.25%, due 2/15/07 (cost $4,820,348) 4,833,100
- --------------------------------------------------------------------------------
Preferred Stock - 0.3%
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 0.3%
25,000 Chevy Chase Savings, 13.00%, Non-Cumulative
(cost $788,750) 750,000
- --------------------------------------------------------------------------------
Repurchase Agreement - 11.2%
$25,000,000 Bankers Trust Securities Corp., 5.70%,
dated 4/30/97, maturing 5/1/97, to
be repurchased at $25,003,958,
collateralized by $10,000,000 in
General American Transportation Corp.
Commercial Paper, 5.71%, 5/20/97;
$5,830,000 in Nissan Capital Corp.
Commercial Paper, 5.75%, 5/20/97;
$10,000,000 in Super Valu, Inc.
Commericial Paper, 5.68%, 5/13/97;
with respective values of $9,968,389;
$5,821,663 and $9,979,525 (cost $25,000,000) 25,000,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 6.9%
10,000,000 CIT Group Holdings, Inc.
5.62%, 5/1/97 10,000,000
5,300,000 General Electric Capital Corp.
5.62%, 5/1/97 5,300,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $15,300,000) 15,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $218,685,673) - 98.9% 220,368,321
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.1% 2,400,724
- --------------------------------------------------------------------------------
Net Assets - 100% $222,769,045
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 9
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND
Portfolio Manager, Darrell W. Watters
Performance Review
Janus Federal Tax-Exempt Fund outperformed its benchmark index for the six
months ended April 30, 1997, gaining 2.10%, compared to 2.01% for the Lehman
Brothers Municipal Bond Index. Both returns include reinvested dividends.
The municipal bond market remained volatile over the last six months.
Fixed-income markets in general have experienced unusual volatility for the last
five years. One cause is the Federal Reserve Board, which has adjusted interest
rates to slow or encourage economic growth. But perhaps even more influential
has been the bond market itself, which has pushed longer-term rates up or down
in anticipation of the Federal Reserve's next move. In the tax-exempt market,
another influential factor over the last few years has been the relatively
scarce supply of tax-exempt debt.
Given this environment, my goal has been to build a portfolio that is
consistent and flexible, and that seeks to provide a competitive yield. To this
end, I have accumulated positions in high-quality, long-term bonds. As you can
see in the table on this page, the portfolio carries a high overall rating, has
a weighted average maturity of more than 20 years, and a 30-day yield of 5.30%,
which is the taxable equivalent of 7.57% for an investor who pays 31% in federal
taxes. (In 1996, the average federal tax bill was actually 35%.)
A bond's marketability - or liquidity - is also important. The Fund
contains bonds that have good demand characteristics. These bonds often come
from states with higher income taxes, such as Colorado, New York, and
California. Colorado bonds are currently the largest portion of the portfolio,
at approximately 25% as of April 30. Purchasing bonds that have strong demand
builds flexibility and stability into the portfolio because it lowers the risk
that a position might have to be sold at a discount in a difficult market.
My goal is to keep portfolio holdings stable and avoid buying and selling
positions unnecessarily. This also has the benefit of lowering transaction
costs. Perhaps the greatest challenge to this strategy, however, is to lessen
interest rate risk - a tough assignment in a volatile interest rate environment.
When interest rates are rising, the most flexible and least expensive way that I
have found to mitigate the risk to the Fund's net asset value (NAV) is to hedge
the portfolio with interest rate futures. Of course, no strategy can entirely
escape the risk of an interest rate change, but hedging with futures can be a
very flexible means of lowering it. This strategy has generally proven effective
since I took over the Fund's management more than a year ago.
Portfolio Composition
- --------------------------------------------------------------
Portfolio Asset Mix April 30, 1997 October 31, 1996
District General Obligation Bonds 30.0% 37.0%
Essential Service Revenue Bonds 70.0% 63.0%
- --------------------------------------------------------------
- --------------------------------------------------------------
Fund Data April 30, 1997 October 31, 1996
Weighted Avg. Maturity 20.1 Yrs. 17.0 Yrs.
Avg. Modified Duration* 10.8 Yrs 7.5 Yrs.
Avg. Rating AA3 AA3
30-Day Avg. Yield** 5.30% 5.08%
- --------------------------------------------------------------
* A theoretical measure of price volatility.
**Yield will fluctuate.
Going Forward
My outlook for the bond market remains cautiously optimistic. Inflation is
nowhere in sight and of course inflation is the bond market's number one
concern. Federal Reserve Board Chairman Alan Greenspan has indicated that the
potential for inflation may exist and has taken appropriate action to arrest any
problem that may present itself. Our job at Janus is not to question whether Mr.
Greenspan is right or wrong, but to manage risk in the marketplace around the
Central Bank's actions. Rather than argue with the Federal Reserve, we focus on
managing the interest rate risk that comes naturally with Federal Reserve
activity.
Thank you for your continued investment in Janus Federal Tax-Exempt Fund.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 10
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND
Portfolio Manager, Darrell W. Watters
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Federal Tax-Exempt Fund and the Lehman Brothers Municipal Bond Index.
Janus Federal Tax-Exempt Fund is represented by a solid green line. The Lehman
Brothers Municipal Bond Index is represented by a single dashed black line. The
"y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 3, 1993, through April 30, 1997. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Federal Tax-Exempt Fund ($12,092) as compared to the Lehman Brothers
Municipal Bond Index ($12,542). There is a legend in the upper left quadrant of
the graph which indicates Janus Federal Tax-Exempt Fund's one-year and since
inception (May 3, 1993) average annual total returns as 4.08% and 4.86%,
respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends. Past performance is not predictive of
future performance. Investment return and principal value may fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. The
Fund's portfolio may differ significantly from the securities in the index. The
index is unmanaged and therefore does not reflect the cost of portfolio
management or trading.
JANUS FEDERAL TAX-EXEMPT FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Municipal Securities - 96.3%
- --------------------------------------------------------------------------------
California - 14.6%
$1,000,000 Anaheim Public Financing Authority Lease
Revenue, (Public Improvements),
(FSA Insured), Series A, 5.00%, 3/1/37 $ 871,250
2,000,000 Foothill/Eastern Transportation Revenue,
(Corridor Agency Toll Road), Senior Lien,
Series A, 6.00%, 1/1/34 1,932,500
1,000,000 Los Angeles County Public Works Financing
Authority Lease Revenue, (MBIA Insured),
Series B, 5.25%, 9/1/14 951,250
1,000,000 Metropolitan Water District Waterworks
Revenue, Series C, 5.00%, 7/1/27 885,000
1,000,000 Rio Linda United School District, (FSA Insured),
5.25%, 8/1/17 936,250
2,000,000 San Diego Public Facilities Financing Authority
Sewer Revenue, (FGIC Insured), Series B,
5.25%, 5/15/27 1,847,500
- --------------------------------------------------------------------------------
7,423,750
- --------------------------------------------------------------------------------
Colorado - 22.0%
1,080,000 Bachelor Gulch Metropolitan District,
6.80%, 12/1/06 1,105,650
500,000 Black Hawk Device Tax Revenue,
6.00%, 12/1/11 490,625
1,000,000 Castle Rock Golf Enterprise Revenue,
6.50%, 12/1/16 975,000
1,240,000 Central City Excise Tax Revenue,
6.20%, 12/1/06 1,250,850
1,000,000 Colorado Housing Financing Authority,
(Multifamily Housing Insured Mortgage),
(FHA Insured) Series A, 5.57%, 10/1/17 982,500
1,000,000 Colorado Housing Financing Authority,
(Single Family Program), 7.10%, 5/1/15 1,086,250
- --------------------------------------------------------------------------------
Colorado - (continued)
$750,000 Denver West Metropolitan District,
6.50%, 12/1/16 $ 758,438
1,000,000 Douglas County School District, (No. 1),
(MBIA Insured), 5.125%, 12/15/16 933,750
1,000,000 Meridian Metropolitan District,
7.50%, 12/1/11** 1,088,750
1,000,000 Mountain Village Metropolitan District,
(San Miguel County), 8.10%, 12/1/11 1,110,000
Telluride Excise Tax Revenue:
100,000 5.75%, 12/1/12 98,375
400,000 5.90%, 12/1/16 392,500
Upper Cherry Creek Metropolitan District:
500,000 6.20%, 12/1/05 513,125
400,000 6.75%, 12/1/11 414,000
- --------------------------------------------------------------------------------
11,199,813
- --------------------------------------------------------------------------------
Delaware - 3.8%
2,000,000 Delaware River Port Authority Pennsylvania
and New Jersey Revenue, (FGIC Insured),
5.50%, 1/1/26 1,930,000
- --------------------------------------------------------------------------------
Florida - 3.6%
2,000,000 Dade County, (Seaport), (MBIA Insured),
5.125%, 10/1/21 1,832,500
- --------------------------------------------------------------------------------
Illinois - 4.1%
1,000,000 Chicago Park District, (MBIA Insured),
5.60%, 1/1/21 958,750
1,000,000 Metropolitan Pier and Exposition Authority
Hospitality Facilities Revenue, (McCormick
Place Convention Center Project),
7.00%, 7/1/26 1,105,000
- --------------------------------------------------------------------------------
2,063,750
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 11
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Massachusetts - 3.7%
$1,000,000 Massachusetts Bay Transportation Authority,
(General Transportation System),
(FSA Insured), Series B, 5.25%, 3/1/20 $ 923,750
1,000,000 Massachusetts Water Resevoir Authority,
(FGIC Insured), Series A, 5.50%, 11/1/21 953,750
- --------------------------------------------------------------------------------
1,877,500
- --------------------------------------------------------------------------------
Missouri - 8.9%
1,425,000 Carthage Waterworks and Wastewater
Treatment System Revenue, Series B,
6.50%, 7/1/16 1,462,406
2,000,000 Sikeston Electric Revenue, (MBIA Insured),
6.00%, 6/1/14 2,117,500
1,000,000 St. Louis Parking Facilities Revenue,
(MBIA Insured), 5.375%, 12/15/16 961,250
- --------------------------------------------------------------------------------
4,541,156
- --------------------------------------------------------------------------------
Montana - 3.6%
750,000 Montana Health Facilities Authority Facilities
Revenue, (St. Peters Community Hospital),
5.50%, 6/1/11 730,312
1,000,000 Montana State Board of Investment Workers
Compensation Program, (MBIA Insured),
6.875%, 6/1/20 1,083,750
- --------------------------------------------------------------------------------
1,814,062
- --------------------------------------------------------------------------------
Nevada - 1.8%
1,000,000 Washoe County, (MBIA Insured),
5.00%, 6/1/17 911,250
- --------------------------------------------------------------------------------
New Jersey - 2.2%
1,000,000 New Jersey Turnpike Authority, Turnpike
Revenue, (FSA Insured), Series C,
6.50%, 1/1/16 1,101,250
- --------------------------------------------------------------------------------
New Mexico - 4.0%
2,000,000 University of New Mexico University Revenue,
Series A, 6.00%, 6/1/21 2,057,500
- --------------------------------------------------------------------------------
New York - 11.2%
1,000,000 Metropolitan Transportation Authority
Dedicated Tax Fund, (MBIA Insured),
Series A, 5.25%, 4/1/26 923,750
2,000,000 Metropolitan Transportation Authority,
(Transportation Facilities), Series O,
5.50%, 7/1/17 1,885,000
1,000,000 New York State Dorm Authority Revenue,
(State University Educational Facilities),
Series A, 5.50%, 5/15/19** 943,750
1,000,000 New York State Urban Development
Corporation Revenue, (University Facilities
Grants), 5.875%, 1/1/21 985,000
1,000,000 New York, Series G, 6.00%, 10/15/26 967,500
- --------------------------------------------------------------------------------
5,705,000
- --------------------------------------------------------------------------------
North Carolina - 1.9%
1,000,000 North Carolina Medical Care Community
Hospital Revenue, (Wake County Hospital
System), (MBIA Insured), 5.25%, 10/1/17 941,250
- --------------------------------------------------------------------------------
Oklahoma - 3.1%
1,000,000 Grand River Dam Authority Revenue,
(AMBAC Insured), 6.25%, 6/1/11** 1,083,750
500,000 McGee Creek Authority Water Revenue,
(MBIA Insured), 6.00%, 1/1/23 518,750
- --------------------------------------------------------------------------------
1,602,500
- --------------------------------------------------------------------------------
Puerto Rico - 1.9%
1,000,000 Puerto Rico Commonwealth Highway and
Transportation Authority Highway Revenue,
Series Y, 5.50%, 7/1/26 947,500
- --------------------------------------------------------------------------------
Texas - 3.9%
$1,000,000 Houston Water & Sewer System Revenue,
(FGIC Insured), Series C, 5.375%, 12/1/27 $ 940,000
1,000,000 Orange County Naval and Port District
Industrial Development Corp. Revenue,
(North Star Steel Texas), 6.375%, 2/1/17 1,042,500
- --------------------------------------------------------------------------------
1,982,500
- --------------------------------------------------------------------------------
Wyoming - 2.0%
1,000,000 Sweetwater County Pollution Control
Revenue, (Idaho Power Co.), Series A,
6.05%, 7/15/26 1,012,500
- --------------------------------------------------------------------------------
Total Municipal Securities (total cost $48,818,131) 48,943,781
- --------------------------------------------------------------------------------
Financial Options - Long Call - 0.1%
100 Contracts June 1997 U.S. Treasury Future
Call @ strike price 110
expires May 17, 1997,
(cost $33,513) 46,875
- --------------------------------------------------------------------------------
Total Investments (total cost $48,851,644) - 96.4% 48,990,656
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 3.6% 1,847,211
- --------------------------------------------------------------------------------
Net Assets - 100% $50,837,867
- --------------------------------------------------------------------------------
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
FHA - Federal Housing Authority Corp.
FSA - Financial Security Assurance Corp.
MBIA - Municipal Bond Insurance Association Corp.
- --------------------------------------------------------------------------------
Financial Futures - Long
468 Contracts U.S. Treasury - 20 year bond,
expires June 1997,
principal amount $50,856,063,
value $51,143,625, cumulative appreciation $ 287,562
250 Contracts U.S. Treasury - 20 year bond,
expires December 1997,
principal amount $27,242,188,
value $27,117,188, cumulative depreciation (125,000)
Financial Futures - Short
618 Contracts U.S. Treasury - 20 year bond,
expires June 1997,
principal amount $68,495,813,
value $67,535,813, cumulative appreciation 960,000
175 Contracts U.S. Treasury - 20 year bond,
expires September 1997,
principal amount $19,231,250,
value $19,047,656, cumulative appreciation 183,594
- --------------------------------------------------------------------------------
$1,306,156
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 12
<PAGE>
JANUS SHORT-TERM BOND FUND
Portfolio Manager, Sandy R. Rufenacht
Performance Review
The Janus Short-Term Bond Fund had a total return of 3.76% for the first
half of our fiscal year ended April 30, 1997. The Lehman Brothers
Government/Corporate 1-3 Year Bond Index returned 3.39% for the same period.
Both results include reinvested dividends.
For the last 12 months, Janus Short-Term Bond Fund ranked number one out of
the 96 Short-Term Investment Grade Debt Funds tracked by Lipper Analytical
Services, Inc., a mutual fund rating company.(1)
The Fund outperformed the Index because we were able to add value via
credit research on investment-grade and high-yield corporate bonds. In addition,
our large cash position enabled us to take advantage of investment opportunities
when interest rates became volatile. The portfolio's current configuration has
increased flexibility without compromising quality, as the average portfolio
ratings in the table below indicate.
Portfolio Composition
- --------------------------------------------------------------
% of Assets April 30, 1997 October 31, 1996
Investment-Grade Corp. Bonds 63.3% 69.0%
High-Yield/High-Risk(Junk) Bonds 14.0% 5.0%
U.S. Government Securities 13.0% 12.0%
Cash & Cash Equivalents 9.7% 14.0%
- --------------------------------------------------------------
- --------------------------------------------------------------
Portfolio Data April 30, 1997 October 31, 1996
Weighted Avg. Maturity 2.4 Yrs. 2.4 Yrs.
Avg. Modified Duration* 2.0 Yrs. 2.0 Yrs.
Avg. Rating A A
Avg. 30-day Yield** 6.27% 5.51%
- --------------------------------------------------------------
* A theoretical measure of price volatility.
** Yield will fluctuate.
The Treasury portion of the portfolio consists of a single one-year note.
Our investment-grade corporate bonds continue to include familiar names such as
GMAC, Hewlett-Packard Finance Corporation, IBM, and Lockheed Martin. High-yield
holdings are primarily "cushion bonds." These are bonds that are likely to be
called in before they mature. Allbritton is a good example of what we look for
in a cushion bond. Allbritton owns six television stations on the east coast.
Our analysis indicates the company's ABC affiliate in Washington D.C. provides
reasonable collateral by itself for the debt offering we own. These bonds, which
carry an 11.5% coupon, are callable in August of this year. The company recently
issued bonds with a coupon of 9.75%, so we believe Allbritton is likely to
redeem its more expensive debt at the first opportunity.
Portfolio Strategy
The Fund is positioned to respond quickly to changes in interest rates.
This flexibility has been accomplished while still investing primarily in
investment-grade bonds. Our Treasury and cash positions lower credit risk, while
some of our high-yield holdings help mitigate interest rate risk. This mix
allows us to provide a yield that is competitive with a 30-year Treasury
obligation without as much price volatility. It also allows us to avoid
overpaying for short-term paper, which remains in relatively short supply due to
the low level of interest rates. In this environment, companies have tended to
issue more long-term debt in order to lock in cheaper rates. Also, as interest
rate volatility increased, investors have been pulling themselves in on the
yield curve - shortening the maturities of their holdings - which has created
additional demand for short-term obligations and pushed up prices.
Going Forward
The U.S. economy now appears to be sending mixed signals. The Federal
Reserve's recent interest rate hike was a step in the right direction, even
though more rate increases may be necessary to slow economic growth to more
moderate levels and keep a tight rein on inflation. However, the portfolio's
flexibility positions it to respond effectively to changes in interest rates.
Our mix of securities also should keep yields competitive and provide additional
stability for the Fund's net asset value.
Thank you for your continued investment in Janus Short-Term Bond Fund.
- --------------------------------------------------------------------------------
(1) Lipper Analytical Services, Inc. defines Short-Term Investment Grade Debt
Funds as investing "at least 65% of assets in investment grade debt issues
(rated in top four grades) with dollar-weighted average maturities of 5
years or less." The Lipper ranking is based on total return, including
reinvestment of dividends and capital gains for the stated period. Past
performance is not predictive of future results.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 13
<PAGE>
JANUS SHORT-TERM BOND FUND
Portfolio Manager, Sandy R. Rufenacht
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Short-Term Bond Fund and the Lehman Brothers 1-3 Year
Government/Corporate Bond Index. Janus Short-Term Bond Fund is represented by a
solid green line. The Lehman Brothers 1-3 Year Government/Corporate Bond Index
is represented by a single dashed black line. The "y" axis reflects the value of
the investment. The "x" axis reflects the computation periods from inception,
September 1, 1992, through April 30, 1997. The upper right quadrant reflects the
ending value of the hypothetical investment in Janus Short-Term Bond Fund
($12,515) as compared to the Lehman Brothers 1-3 Year Government/Corporate Bond
Index ($12,711). There is a legend in the upper left quadrant of the graph which
indicates Janus Short-Term Bond Fund's one-year and since inception (September
1, 1992) average annual total returns as 8.36% and 4.92%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends. Past performance is not predictive of
future performance. Investment return and principal value may fluctuate so that
shares, when redeemed, may be worth more or less than their original cost. The
Fund's portfolio may differ significantly from the securities in the index. The
index is unmanaged and therefore does not reflect the cost of portfolio
management or trading.
JANUS SHORT-TERM BOND FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 77.3%
- --------------------------------------------------------------------------------
Aerospace and Defense - 3.8%
$1,750,000 Lockheed Martin Corp., 6.55% company
guaranteed unsecured notes, due 5/15/99 $1,750,000
- --------------------------------------------------------------------------------
Building Products - Air and Heating - 2.3%
1,000,000 American Standard Companies, Inc., 11.375%
senior debentures, due 5/15/04 1,062,500
- --------------------------------------------------------------------------------
Commercial Banks- 3.7%
1,750,000 First USA Bank, Inc., 5.75%
notes, due 1/15/99 1,728,125
- --------------------------------------------------------------------------------
Computers - Mainframe - 3.8%
1,750,000 IBM Corp., 6.375%
global notes, due 6/15/00 1,734,687
- --------------------------------------------------------------------------------
Computers - Mini - 5.4%
2,500,000 Hewlett-Packard, Inc., 6.50%
senior unsubordinated notes, due 12/30/99 2,490,625
- --------------------------------------------------------------------------------
Containers - Metal and Glass - 3.8%
1,750,000 Crown Cork & Seal Co., Inc., 5.875%
notes, due 4/15/98 1,744,750
- --------------------------------------------------------------------------------
Finance - Auto Loans - 7.6%
1,750,000 Ford Motor Credit Corp., 7.25%
notes, due 5/15/99 1,774,063
1,750,000 General Motors Acceptance Corp., 6.65%
notes, due 5/24/00 1,741,250
- --------------------------------------------------------------------------------
3,515,313
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 3.8%
1,750,000 International Lease Finance Corp., 6.625%
notes, due 4/1/99 1,756,562
- --------------------------------------------------------------------------------
Food - Diversified - 3.9%
1,800,000 Grand Metropolitan Investment Corp., 6.50%
company guaranteed notes,
due 9/15/99 1,795,500
- --------------------------------------------------------------------------------
Food - Retail - 3.3%
$1,500,000 Pathmark Stores, Inc., 12.625%
subordinated notes, due 6/15/02 $1,511,250
- --------------------------------------------------------------------------------
Life and Health Insurance - 0.4%
185,000 Penncorp Financial Group, Inc., 9.25%
senior subordinated notes, due 12/15/03 192,400
- --------------------------------------------------------------------------------
Medical - Hospitals - 4.2%
1,950,000 Columbia/HCA Healthcare Corp., 6.50%
notes, due 3/15/99 1,950,000
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 3.8%
1,750,000 Texaco Capital, Inc., 6.875%
notes, due 7/15/99 1,760,938
- --------------------------------------------------------------------------------
Paint and Related Products - 4.3%
2,000,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 1,977,500
- --------------------------------------------------------------------------------
Physical Therapy and Rehabilitation Centers - 3.4%
1,500,000 HEALTHSOUTH Corp., 9.50%
senior subordinated notes, due 4/1/01 1,571,250
- --------------------------------------------------------------------------------
Retail - Discount - 3.8%
1,750,000 TJX Companies, Inc., 6.625%
notes, due 6/15/00 1,730,312
- --------------------------------------------------------------------------------
Retail - Diversified - 2.3%
1,000,000 Eye Care Centers of America, 12.00%
senior notes, due 10/1/03 1,082,500
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 3.8%
1,750,000 Great Western Financial Corp., 6.125%
notes, due 6/15/98 1,745,485
- --------------------------------------------------------------------------------
Super-Regional Banks - 3.8%
1,750,000 Norwest Corp., 6.25%
senior notes, due 4/15/99 1,743,438
- --------------------------------------------------------------------------------
Television - 2.3%
1,000,000 Allbritton Communications, 11.50%
senior subordinated debentures,
due 8/15/04 1,050,000
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 14
<PAGE>
JANUS SHORT-TERM BOND FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Transportation - Railroad - 3.8%
$1,750,000 Union Pacific Corp., 6.25%
notes, due 3/15/99 $ 1,736,875
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $35,698,104) 35,630,010
- --------------------------------------------------------------------------------
U.S. Government Obligations - 13.0%
6,000,000 U.S. Treasury Notes, 6.125%
due 8/31/98 (cost $6,018,424) 6,000,420
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 8.0%
2,000,000 General Electric Capital Corp.,
5.62%, 5/1/97 2,000,000
1,700,000 Household Finance Corp.,
5.58%, 5/1/97 1,700,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $3,700,000) 3,700,000
- --------------------------------------------------------------------------------
Total Investments (total cost $45,416,528) - 98.3% 45,330,430
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.7% 756,814
- --------------------------------------------------------------------------------
Net Assets - 100% $46,087,244
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 15
<PAGE>
JANUS MONEY MARKET FUNDS
Portfolio Manager, Sharon S. Pichler
Review of the First Half
During the six months ended April 30, 1997, short-term interest rates
remained relatively flat until the Federal Reserve Board boosted rates in late
March. Between October 31, 1996 and February 25, 1997, yield on the one-year
Treasury varied between a low of 5.35% and a high of 5.65%. Then, when the
Federal Reserve was sufficiently worried about stronger economic growth (and the
outlook for inflation) to justify raising its target for short-term rates, yield
on the one-year climbed to 6.07% on April 25.
Federal Reserve Chairman Alan Greenspan had been trying to talk financial
markets into slowing down - a practice known as "jawboning" - since last fall.
He repeatedly warned investors that, in his opinion, financial assets were
overvalued. He also provided ample warning a rate hike was coming the week
before he took action. Longer-term interest rates had already moved up in
anticipation of an increase. As a result, our funds were well-prepared. The
Federal Reserve's warning, plus our commitment to flexibility, allowed us to
respond quickly to the new environment.
In my view, financial markets had become a bit frothy, and Greenspan's
action was timely. However, consumer spending, which is the economy's most
powerful growth engine, is likely to push gross domestic product higher still,
due to the historically unparalleled availability of consumer credit. In the
current, free-wheeling environment, consumers are less price-sensitive and
consider only whether they can afford a monthly payment. We see this in
credit-card debt, consumer loans, and even in college tuition. Therefore, I
expect more Fed raises ahead. And the increases may be larger and carry farther
than most market participants expect.
Janus Money Market Fund
For much of the six months, assets remained primarily in very short
obligations, with only a modest weighting in longer-term debt (6 months to one
year). The Fund's weighted average maturity was shortened slightly, in
anticipation of the interest rate hike that occurred on March 25. As of April
30, the Fund's weighted average maturity remained at just 43 days.
Janus Money Market Fund is rated Aa by Moody's Investors Services, Inc.
("Moody's"). Our conservative stance when it comes to credit profiles enabled us
to dodge at least one bullet during the period. Our strict discipline of
detailed credit analysis and careful evaluation of each company's risk-reward
characteristics stood us in good stead once again.
For the 12 months ended April 30, 1997, Janus Money Market Fund ranked 49
out of 293 funds (top 17%) in the U.S. Money Market category defined by Lipper
Analytical Services, Inc. ("Lipper"), a mutual fund rating company.(1)
Janus Government Money Market Fund
As I have mentioned before, government money market instruments operate in
highly efficient markets. It is difficult to get an edge. During the period, our
investment strategy was unchanged. We continued to maintain high levels of
liquidity and safety by stressing low-risk (from interest rate volatility),
short-term paper. And we continued to fight for every basis point (.01%, or one
hundredth of one percent) by being opportunistic in longer-term securities.
All government debt in the Fund is rated AAA, the highest credit quality
available. Janus Government Money Market Fund also has a rating of Aaa from
Moody's. Moody's analyzes the Fund's credit quality, market price exposure, and
management. The portfolio had a weighted average maturity of 31 days on April
30, 1997.
For the 12 months ended April 30, Janus Government Money Market Fund ranked
22 of 115 funds (top 19%) in the U.S. Government Money Market category defined
by Lipper.(1)
Janus Tax-Exempt Money Market Fund
We have just come through a period when a plethora of investment dollars
drove tax-exempt rates down as shareholders built assets in their tax-exempt
money market funds. At the same time, there was no change in supply, and so the
abundance of demand allowed issuers to offer lower tax-exempt yields. This
resulted in a decline in tax-exempt interest rates despite the Federal Reserve's
rate increase. April 15 through April 30, however, the opposite effect was being
felt as tax-exempt shareholders pulled dollars from their money market funds to
pay tax bills.
Long-term and short-term rates were almost identical for much of the
period, so we continued to opt for the greater flexibility of short-term
securities. The Fund's weighted average maturity was 26 days as of April 30,
1997.
For the 12 months ended April 30, Janus Tax-Exempt Money Market Fund ranked
15 of 136 funds (top 11%) in the U.S. Tax-Exempt Money Market category defined
by Lipper Analytical Services, a mutual fund rating company.(1)
Thank you for your investment in Janus money market funds.
- --------------------------------------------------------------------------------
(1) Lipper Analytical Services, Inc. defines a U.S. Money Market Fund as one
that invests "in high-quality financial instruments rated in the top two
grades with dollar-weighted average maturities of less than 90 days" and
that intends "to keep constant net asset value." Lipper defines a U.S.
Government Money Market Fund as one that "invests principally in financial
instruments issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, with dollar-weighted average maturities of less than 90
days," and that intends "to keep constant net asset value." Lipper defines
a Tax-Exempt Money Market Fund as one that "invests in high quality
municipal obligations with dollar-weighted average maturities of less than
90 days," and that intends "to keep constant net asset value." Past
performance is no guarantee of future results. Lipper rankings are based on
total return, including reinvestment of dividends and capital gains.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 16
<PAGE>
JANUS MONEY MARKET FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 17.0%
$7,700,000 Alabama State Industrial
Development Authority 5.5101%, 5/16/97+ $7,700,000
50,000,000 American Honda Finance Corp.
5.6806%, 6/23/97 50,000,000
7,500,000 Associates Corp. of North America 8.125%,
senior notes, 1/15/98 7,616,984
11,000,000 Casio Phonemaker, Inc.
5.65%, 5/7/97 10,989,642
14,144,000 Cogentrix of Richmond, Inc.
5.65%, 5/16/97 14,110,703
13,500,000 Epson America, Inc.
5.80%, 5/14/97 13,471,725
General Motors Acceptance Corp.:
50,000,000 5.82%, 10/22/97 48,593,500
11,000,000 5.8125%, 2/2/98 11,019,557
Hanover Direct, Inc.:
7,600,000 Series A, 5.5101%, 5/16/97+ 7,600,000
6,500,000 Series B, 5.5101%, 5/16/97+ 6,500,000
Heller International Corp.:
35,000,000 5.75%, 5/5/97 34,977,639
15,000,000 5.66%, 5/12/97 14,974,058
10,000,000 5.67%, 5/20/97 9,970,075
15,000,000 5.67%, 5/23/97 14,948,025
IBM Credit Corp.
25,000,000 5.80%, 10/7/97 24,999,671
18,500,000 Los Angeles County California Metropolitan
Transit Authority, Series A,
5.91%, 6/24/97+ 18,500,000
15,000,000 Nichimen America, Inc.
5.55%, 6/11/97 14,905,187
50,000,000 Sanwa Business Credit 5.51%, 5/19/97 50,000,247
Sumitomo Bank of New York:
15,000,000 5.66%, 5/15/97 14,966,983
50,000,000 5.70%, 5/19/97 49,857,500
35,000,000 5.65%, 5/20/97 34,895,632
10,000,000 5.68%, 5/20/97 9,970,022
20,000,000 5.67%, 5/21/97 19,937,000
12,000,000 5.66%, 5/22/97 11,960,380
Tsumura International, Inc.
20,000,000 5.65%, 5/21/97 19,937,222
75th State Street
39,915,000 5.65%, 5/16/97 39,821,033
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $562,222,785) 562,222,785
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - 33.9%
American Honda Finance Corp.:
30,000,000 5.5625%, 8/1/97 29,998,252
25,000,000 5.8225%, 4/6/98 24,995,507
11,000,000 APTC Plastics, Inc., 5.70%, 4/1/17 11,000,000
40,000,000 Bank of America, N.A.,
5.65%, 4/16/98 39,973,151
Bankers Trust Co.:
50,000,000 5.65%, 10/16/97 49,988,875
60,000,000 5.70%, 11/7/97 59,998,742
25,000,000 5.70%, 4/3/98 24,995,233
10,385,000 Bannockburn Associates L.L.C.,
5.90%, 4/1/27 10,385,000
4,100,000 Bayliss Group Partnership,
5.70%, 1/1/10 4,100,000
50,000,000 Boatmens Credit Card Bank of New Mexico,
5.6675%, 8/8/97 49,997,287
48,000,000 Comerica Bank of Detroit
5.67%, senior notes, 4/6/98 47,977,883
15,560,000 Community Health System, Inc., Series A,
5.75%, 10/1/03 15,560,000
35,510,000 Crouse Health Hospital, Inc.,
5.75%, 7/1/17 35,510,000
25,000,000 Crozer - Keystone Health Systems,
5.75%, 12/15/21 25,000,000
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - (continued)
$13,000,000 Downtown Marietta Georgia, Development
Authority Marietta Conference Center
Revenue, Series A, 5.68%, 7/1/21 $ 13,000,000
50,000,000 FCC National Bank of Wilmington, Delaware,
5.62%, 2/20/98 49,968,940
14,500,000 Fontana, California Property Acquisition
Program, 5.90%, 10/1/20 14,500,000
General American Life Insurance Co.:
80,000,000 5.76%, 8/13/97 80,000,000
50,000,000 5.81%, 2/20/98 50,000,000
15,000,000 General Electric Capital Corp.
5.83%, 7/7/97 15,003,133
10,745,000 General Motors Acceptance Corp.,
5.8515%, 4/17/98 10,745,000
12,700,000 Genesys Michigan Health System, Inc.,
Series A, 5.70%, 4/1/20 12,700,000
9,300,000 H/M Partners, L.L.C.,
5.80%, 10/1/20 9,300,000
10,000,000 Illinois Student Assistance Commission,
Student Loan Revenue, Series B,
5.69%, 9/1/31 10,000,000
12,900,000 Jackson County, Alabama Industrial
Development, (Beaulieu America Project),
5.84%, 7/1/10 12,900,000
22,800,000 KBL Capital Fund, Loan Program Notes,
5.75% 5/1/27 22,800,000
4,000,000 Liliha Partners, L.P. of California,
6.00%, 8/1/24 4,000,000
MBNA America Bank:
50,000,000 5.6875%, 7/3/97 50,000,000
40,000,000 5.6875%, 9/12/97 40,000,000
Merrill Lynch Medium Term Notes,
50,000,000 5.72%, 4/17/98 50,000,000
25,000,000 New Jersey Economic
Development Authority Revenue,
Series A, 5.688%, 10/1/21+ 25,000,000
40,000,000 PNC Bank, N.A. of Pittsburgh, Pennsylvania,
5.5875%, 7/1/97 39,993,409
13,800,000 Pasadena California COPS, (Los Robles Avenue
Parking Facility Project), 5.75%, 11/1/12 13,800,000
25,000,000 Rehau, Inc.,
5.84%, 10/1/19 25,000,000
15,530,000 Rockland Financial Ltd.,
5.85%, 12/1/26 15,530,000
SMM Trust:
42,000,000 Series 1996-L, 5.7375%, 6/17/97+ 42,000,000
25,000,000 Series 1996-U, 5.7375%, 6/20/97+ 25,000,000
3,090,000 St. Francis, Hawaii Healthcare Foundation
Revenue, 6.00%, 8/1/12 3,090,000
7,400,000 San Bernardino County, California,
(Capital Improvement Refining Project),
5.90%, 11/1/25 7,400,000
9,365,000 San Jose, California Financing Authority,
(Hayes Mansion Revenue Project),
Series A, 5.75%, 12/1/25 9,365,000
25,000,000 Southtrust Bank of North Carolina,
Medium Term Senior Notes,
5.6875%, 10/16/97 25,000,000
7,955,000 Tyler, Texas Health Facilities
Development Corp.,
(East Texas Medical Center), 6.00%, 11/1/25 7,955,000
5,245,000 Union City, Tennessee Industrial Development
Board, (Cobank Limited, L.L.C., Project),
5.85%, 1/1/25 5,245,000
5,000,000 Venturecor, Inc., Healthcare Revenue,
5.90%, 5/15/35 5,000,000
- --------------------------------------------------------------------------------
Total Taxable Variable Rate Demand Notes
(amortized cost $1,123,775,412) 1,123,775,412
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 17
<PAGE>
JANUS MONEY MARKET FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Certificates of Deposit - 20.2%
$ 50,000,000 Bank of Tokyo 5.60%, 6/10/97 $ 50,000,000
15,000,000 Bankers Trust Co. 5.65%, 9/26/97 14,996,599
48,500,000 Banque Nationale de Paris 5.76%, 2/27/98 48,484,629
25,000,000 Caisse Nationale de Credit Agricole
of Chicago, Illinois 5.89%, 2/4/98 25,000,000
25,000,000 Canadian Imperial Bank, 5.97%, 3/19/98 24,993,604
Fuji Bank, Ltd., New York:
50,000,000 5.84%, 5/2/97 50,000,146
50,000,000 5.66%, 5/14/97 50,000,000
45,000,000 5.69%, 5/22/97 45,000,522
Industrial Bank of Japan:
50,000,000 5.68%, 5/19/97 50,000,000
50,000,000 5.50%, 6/27/97 50,000,000
25,000,000 Midland Bank PLC 5.90%, 11/7/97 25,000,000
50,000,000 Norinchunkin Bank Ltd. 5.58%, 6/3/97 50,000,000
50,000,000 Sanwa Bank 5.54%, 6/30/97 50,000,818
Societe Generale:
10,000,000 5.85%, 10/1/97 10,006,300
50,000,000 5.82%, 1/7/98 50,000,000
25,000,000 5.79%, 1/13/98 24,985,234
50,000,000 5.85%, 3/3/98 49,983,958
- --------------------------------------------------------------------------------
Total Certificates of Deposit (cost $668,451,810) 668,451,810
- --------------------------------------------------------------------------------
Promissory Notes - 7.6%
150,000,000 Goldman Sachs Group, L.P. 5.8359%, 7/21/97 150,000,000
100,000,000 Morgan Stanley Group, Inc. 5.85%, 12/26/97 100,000,000
- --------------------------------------------------------------------------------
Total Promissory Notes (cost $250,000,000) 250,000,000
- --------------------------------------------------------------------------------
Put Bonds - 2.0%
18,900,000 Bedford County Virginia, Industrial
Development Authority, Series 1995D,
5.74%, 5/14/97 18,900,000
Northglenn Colorado Urban Renewal
Authority, (Northglenn Mall Project):
8,700,000 Series A-2, 5.95%, 12/1/13 8,700,000
5,700,000 Series B, 5.95%, 12/1/16 5,700,000
Richmond County, Georgia,
(Monsanto Co. Project),
15,200,000 6.01%, 6/1/20 15,200,000
17,800,000 St. Joseph Health Systems of California,
Series A, 6.09%, 7/1/11+ 17,800,000
- --------------------------------------------------------------------------------
Total Put Bonds (cost $66,300,000) 66,300,000
- --------------------------------------------------------------------------------
Bank Notes - 1.8%
20,000,000 FCC National Bank of Wilmington, Delaware
5.73%, 8/21/97 19,982,227
38,000,000 MBNA American Bank,
N.A. of Newark, Delaware,
5.6875%, 6/13/97 38,000,000
- --------------------------------------------------------------------------------
Total Bank Notes (amortized cost $57,982,227) 57,982,227
- --------------------------------------------------------------------------------
Medium-Term Notes - 0.2%
7,155,000 Household Finance Corp., 7.91%,
medium term notes, 2/6/98
(cost $7,264,481) 7,264,481
- --------------------------------------------------------------------------------
Time Deposit - 5.1%
170,000,000 Banque Paribas
5.6875%, 5/1/97 (cost $170,000,000) 170,000,000
- --------------------------------------------------------------------------------
Repurchase Agreements - 12.1%
$101,700,000 NationsBank,
5.6875%, dated 4/30/97, maturing 5/1/97,
to be repurchased at $101,716,067,
collateralized by $1,750,000 in Treasury
Bills, 7/3/97; $12,182,294 in Tryon
Mortgage Funding, Inc. 7.50%, 3/20/23
and 12/20/25; $100,000 in Student Loan
Marketing Association Notes 9.15%,
12/1/06; $68,360,000 in Residential Funding
Mortgage 6.50% - 7.75%, 12/25/08 -
2/25/27; $6,273,188 in Prudential Home
Mortgage 5/25/09; $5,615,872 in Mid-State
7.625%, 4/1/22; $4,000,000 in GE Capital
Mortgage Services, Inc. 6.50%, 3/25/24;
$4,015,000 in Fannie Mae Notes 5.19% -
8.70%, 6/27/97 - 3/13/06; $1,320,000
in Federal Home Loan Mortgage Corp.
4.95% - 7.405%, 9/3/97 - 5/6/06;
$3,635,000 in Federal Home Loan
Banks 5.265% - 8.70%, 5/28/97 - 4/23/12;
$719,000 in Federal Farm Credit Bank
Notes 5.34% - 9.20%, 6/3/97 - 1/3/06;
$4,984,000 in CMC Securities Corp. 6.00%,
2/25/09 with respective values of
$1,734,429, $12,148,263, $65,244,473,
$3,839,537, $2,603,062, $3,676,144,
$4,041,486, $1,291,658, $3,697,204,
$740,060, $4,599,300 $101,700,000
300,000,000 Lehman Brothers, Inc.,
5.68%, dated 4/30/97, maturing 5/1/97,
to be repurchased at $300,047,333,
collateralized by $20,000,000 in American
Brands, Inc., 5/8/97; $17,377,000 in Avery
Dennison Corp., 5/5/97; $24,200,000 in
Bemis Company, Inc., 5/5/97 and 5/28/97;
$30,400,000 in Certain Funding Corp., 8/1/97;
$18,600,000 in CSW Credit, Inc., 6/6/97;
$5,100,000 in Dillard Investment Co.,
5/5/97; $26,800,000 in The Dun and
Bradstreet Corp., 6/10/97; $30,000,000 in
Henkel Corp., 10/20/97; $11,640,000 in
McKenna Triangle National Corp., 5/5/97;
$20,021,000 in Monte Rosa Capital Corp.,
5/23/97; $18,449,000 in Peacock Funding
Corp., 5/28/97; $19,239,000 in Repsol
International, 5/23/97; $30,000,000 in
RTZ America, Inc., 8/4/97; $16,000,000 in
Sigma Finance, Inc., 7/25/97; $10,000,000
in Tulip Funding Corp., 6/4/97; $11,849,000
in Windmill Funding Corp., 5/20/97 with
respective values of $19,981,567,
$17,369,050, $24,146,122, $29,961,987,
$18,498,372, $5,097,663, $26,637,413,
$29,180,625, $11,634,714, $19,955,598,
$18,374,517, $19,177,387, $29,555,850,
$15,786,453, $9,948,208, $11,816,119 300,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $401,700,000) 401,700,000
- --------------------------------------------------------------------------------
Total Investments (total cost $3,307,696,715) - 99.9% 3,307,696,715
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.1% 4,219,665
- --------------------------------------------------------------------------------
Net Assets - 100% $3,311,916,380
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 18
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
U.S. Government Agency Discount Notes - 23.4%
Fannie Mae
$ 5,000,000 5.53%, 8/4/97 $ 4,927,035
Federal Farm Credit Bank:
2,000,000 5.60%, 6/13/97 1,999,886
5,000,000 5.55%, 2/20/98 4,997,271
Federal Home Loan Bank System:
2,265,000 5.30%, 6/24/97 2,246,993
1,350,000 5.27%, 7/24/97 1,333,400
575,000 5.27%, 9/24/97 562,711
565,000 5.27%, 10/6/97 551,932
720,000 5.27%, 10/10/97 702,925
5,585,000 5.265%, 11/24/97 5,415,921
3,000,000 5.38%, 12/15/97 2,897,780
5,000,000 5.50%, 2/13/98 4,780,000
10,000,000 5.409%, 3/4/98 9,998,910
Federal Home Loan Mortgage Corp.
5,000,000 5.285%, 5/30/97 4,978,713
- --------------------------------------------------------------------------------
Total U.S. Government Agency Discount Notes
(amortized cost $45,393,477) 45,393,477
- --------------------------------------------------------------------------------
U.S. Government Agency Variable Notes - 24.5%
Fannie Mae:
5,000,000 5.3825%, 9/9/97 4,998,600
5,000,000 5.5275%, 2/13/98 4,997,712
Federal Farm Credit Bank:
5,000,000 5.57%, 8/20/97 4,999,265
3,000,000 5.50%, 11/14/97 2,997,964
Federal Home Loan Bank System:
5,000,000 5.71%, 7/10/97 5,000,705
3,000,000 5.68%, 9/2/97 2,996,927
5,000,000 5.508%, 9/24/97 4,998,420
5,000,000 5.523%, 12/26/97 4,997,446
750,000 6.00%, 6/29/98 752,981
Student Loan Marketing Association:
5,750,000 5.71%, 10/30/97 5,751,752
5,000,000 5.53%, 11/24/97 4,997,983
- --------------------------------------------------------------------------------
Total U.S. Government Agency Variable Notes
(amortized cost $47,489,755) 47,489,755
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 4.1%
Kirksville College of Osteopathic Medicine:
3,533,000 5.30%, 6/12/97 3,511,154
4,564,000 5.55%, 6/25/97 4,525,301
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $8,036,455) 8,036,455
- --------------------------------------------------------------------------------
Repurchase Agreements - 48.0%
$49,000,000 CS First Boston Repurchase Agreement 5.58%,
dated 4/30/97, maturing 5/1/97, to be
repurchased at $49,007,595, collateralized
by $58,642,000 in Federal Home Loan
Mortgage Corp. Floating Rate Bonds 6.08%
and 6.80%, 5/15/23 and 12/15/18; Fannie
Mae Support Bond 6.00% 6/25/09 with
respective values of $26,891,001,
$5,519,136 and $18,847,209 $49,000,000
44,300,000 HSBC Repurchase Agreement 5.55%,
dated 4/30/97, maturing 5/1/97, to be
repurchased at $44,306,830, collateralized
by $25,075,000 in Federal Home Loan Bank
Bonds 5.01% - 6.91%, 1/16/98 - 2/6/03
with a value of $25,390,820; $80,000 in
FICO Strips Zero Coupon 10/6/98 with
value of $73,186; $11,315,000 in Fannie
Mae Bonds .375% - 7.75%, 9/11/97 -
3/27/07 with a value of $11,355,954;
$8,300,000 in Federal Home Loan Mortgage
Corp. Bonds 6.06% - 7.256%, 1/14/00 -
4/1/02 with a value of $8,369,745 44,300,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $93,300,000) 93,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $194,219,687) - 100% 194,219,687
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0%) (45,258)
- --------------------------------------------------------------------------------
Net Assets - 100% $194,174,429
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 19
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Variable Rate Demand Notes - 78.1%
- --------------------------------------------------------------------------------
Alabama - 1.0%
$ 800,000 Athens Industrial Development Board Revenue,
(Coilplus Income Project), 4.70%, 9/1/99 $ 800,000
- --------------------------------------------------------------------------------
California - 5.2%
2,400,000 California Statewide Communities, (Whispering
Winds Apartments), Series D, 4.65%, 12/1/22 2,400,000
1,600,000 Carlsbad Housing and Redevelopment
Community, (Seascape Village Project),
4.75%, 12/1/05 1,600,000
- --------------------------------------------------------------------------------
4,000,000
- --------------------------------------------------------------------------------
Colorado - 11.5%
3,890,000 Denver City and County Multi-Family Housing
Revenue, (Ogden Residences Project),
4.55%, 12/1/09 3,890,000
430,000 Colorado Health Facility Authority Revenue,
(Valley View Hospital Association Project),
5.20%, 10/1/12 430,000
3,300,000 Denver City and County Airport Revenue,
Series B, 4.75%, 12/1/25 3,300,000
1,250,000 Englewood Industrial Development Revenue,
(Swedish Mobility Limited Project),
4.65%, 12/1/10 1,250,000
- --------------------------------------------------------------------------------
8,870,000
- --------------------------------------------------------------------------------
Delaware - 0.4%
300,000 Wilmington Hospital Revenue,
(Dates - Franciscan Health System),
Series A, 4.50%, 7/1/11 300,000
- --------------------------------------------------------------------------------
Florida - 4.1%
3,200,000 Dade County, Apartment Revenue, Series A,
4.80%, 10/1/09 3,200,000
- --------------------------------------------------------------------------------
Georgia - 2.6%
2,000,000 Columbus Development Authority Industrial
Revenue, (Worthington Cylinder Project),
4.75%, 1/1/11 2,000,000
- --------------------------------------------------------------------------------
Hawaii - 4.6%
Hawaii State Housing Finance and Development
Corp. Revenue, (Rental Housing System):
600,000 Series A, 4.65% 7/1/25 600,000
3,000,000 Series B, 4.65% 7/1/25 3,000,000
- --------------------------------------------------------------------------------
3,600,000
- --------------------------------------------------------------------------------
Illinois - 3.1%
649,070 Village of Franklin Park, (AM Castle and
Company Project), 4.80%, 6/1/17 649,070
187,500 Village of Rosemont, (AM Castle and Company
Project), 4.80%, 6/1/17 187,500
1,600,000 Wood Dale Industrial Development Revenue,
(Nippon Express, Inc. Project), 4.70%, 6/1/00 1,600,000
- --------------------------------------------------------------------------------
2,436,570
- --------------------------------------------------------------------------------
Kansas - 4.1%
900,000 Wichita, Kansas XXV Revenue, (CSJ Health
Systems Project), 4.70%, 10/1/02 900,000
2,245,000 Shawnee Industrial Development Revenue,
(Shawnee Village Association Project),
4.75%, 12/1/09 2,245,000
- --------------------------------------------------------------------------------
3,145,000
- --------------------------------------------------------------------------------
Kentucky - 1.3%
1,000,000 Mayfield Multi-City Lease Revenue, (League of
Cities Funding Transportation Project),
4.65%, 7/1/26 1,000,000
- --------------------------------------------------------------------------------
Louisiana - 3.6%
$ 1,400,000 Louisiana Public Facilities Authorization
Revenue Industrial Development,
(Gulf Breeze Project), 4.70%, 12/1/14 $ 1,400,000
1,385,000 Sulphur Industrial Development Revenue,
(La Quinta Inns Project), 4.75%, 12/1/04 1,385,000
- --------------------------------------------------------------------------------
2,785,000
- --------------------------------------------------------------------------------
Maryland - 2.6%
300,000 Frederick General Obligation, 4.15%, 8/1/11 300,000
1,715,000 Baltimore Industrial Development Board
Revenue, (Garamond/Pridemark Press
Project), 4.60%, 12/1/16 1,715,000
- --------------------------------------------------------------------------------
2,015,000
- --------------------------------------------------------------------------------
Minnesota - 4.9%
2,600,000 Golden Valley Industrial Development Revenue,
(Unicare Homes, Inc., Project), 4.80%, 9/1/14 2,600,000
1,200,000 Robbinsdale Industrial Development Revenue,
(Unicare Homes, Inc., Project),
4.80%, 10/1/14 1,200,000
- --------------------------------------------------------------------------------
3,800,000
- --------------------------------------------------------------------------------
Missouri - 2.0%
973,000 Kansas City Industrial Development Authority,
(AM Castle and Company Project),
4.80%, 6/1/10 973,000
600,000 West Plains Industrial Revenue Authority,
(West Plains Manor Project), 3.80%, 11/1/10 600,000
- --------------------------------------------------------------------------------
1,573,000
- --------------------------------------------------------------------------------
New York - 1.2%
900,000 Ontario County Industrial Development
Authority, (Eastman Kodak V Association
Project), 4.55%, 8/1/15 900,000
- --------------------------------------------------------------------------------
Ohio - 5.7%
3,800,000 Cuyahogo County Hospital District Revenue,
(Cleveland University Hospital Improvement
Project), 4.55%, 1/1/16 3,800,000
590,000 Ohio Industrial Development Revenue,
(AM Castle and Company Project),
4.80%, 12/1/06 590,000
- --------------------------------------------------------------------------------
4,390,000
- --------------------------------------------------------------------------------
Oklahoma - 5.3%
1,200,000 Claremore Redevelopment Authority Industrial
Development Revenue, (Worthington Cylinder
Corp. Project), 4.75%, 1/1/11 1,200,000
2,900,000 Tulsa Home Finance Authority, (Greenbriar
Project), Series B, 4.90%, 3/15/05 2,900,000
- --------------------------------------------------------------------------------
4,100,000
- --------------------------------------------------------------------------------
Pennsylvania - 7.4%
1,000,000 Clarion County Industrial Development Authority,
(Meritcare Specialized Development Revenue
Project), Series A , 4.75%, 12/1/12 1,000,000
2,000,000 Northeastern Hospital and Education Authority
Revenue, (Allhealth Pooled Financing
Program), 4.60%, 7/1/26 2,000,000
1,450,000 Philadelphia Authority for Industrial
Development Multifamily Revenue, (Harbor
View Towers), 4.75%, 11/1/27 1,450,000
1,300,000 Venango Industrial Development Authority,
(Pennzoil Company Project),
Series A, 4.80%, 12/1/12 1,300,000
- --------------------------------------------------------------------------------
5,750,000
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 20
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND April 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
South Carolina - 2.3%
$1,750,000 Lexington County, (Charter Rivers Hospital),
4.70%, 6/1/07 $ 1,750,000
- --------------------------------------------------------------------------------
Tennessee - 0.3%
200,000 Hamilton County Industrial Development
Revenue, (Komatsu America Manufacturing
Project), 4.70%, 11/1/05 200,000
- --------------------------------------------------------------------------------
Texas - 1.2%
200,000 Metropolitan Higher Education Authority
Revenue, (University of Dallas Project),
Series B, 4.75%, 12/1/04 200,000
700,000 Brazos Harbor Industrial Development
Revenue Board 1991, (Marine Terminal
Monsato Project), 4.65%, 2/1/04 700,000
- --------------------------------------------------------------------------------
900,000
- --------------------------------------------------------------------------------
Washington - 3.7%
Washington State Housing Finance Community
Nonprofit Housing Revenue,
(YMCA of Greater Seattle),
550,000 4.60%, 1/1/27 550,000
2,325,000 4.45%, 7/1/11 2,325,000
- --------------------------------------------------------------------------------
2,875,000
- --------------------------------------------------------------------------------
Total Variable Rate Notes (amortized cost $60,389,570) 60,389,570
- --------------------------------------------------------------------------------
Bond Anticipation Notes - 3.9%
1,000,000 New Bedford, Massachusetts Bond Anticipation
Notes, 4.25%, 10/10/97 1,001,491
Springfield, Massachusetts Bond
Anticipation Notes:
1,000,000 4.50%, 6/27/97 1,000,750
1,000,000 4.50%, 7/11/97 1,000,934
- --------------------------------------------------------------------------------
Total Bond Anticipation Notes (amortized cost $3,003,175) 3,003,175
- --------------------------------------------------------------------------------
General Obligation Notes - 2.6%
1,000,000 Conyers - Rickdale - Big Haynes, Georgia
Impoundment Authority Revenue,
3.75%, 12/31/97 1,000,453
1,000,000 Haverhill, Massachusetts,
4.50% Bond Anticipation Note, 8/1/97 1,001,606
- --------------------------------------------------------------------------------
Total General Obligation Notes (amortized cost $2,002,059) 2,002,059
- --------------------------------------------------------------------------------
Put Bonds - 6.4%
1,000,000 Dove Valley, Colorado Metropolitan District,
Arapahoe County, Series B, 3.90%, 11/1/25 1,000,000
2,000,000 Tyler, Texas Health Facilities Development
Revenue, (East Texas Regional Health Medical
Center), Series C, 3.75%, 11/1/25 2,000,000
1,000,000 Interstate South Metropolitan District Colorado,
Series B, 3.75%, 11/1/14 1,000,000
1,000,000 Lombard, Illinois Multi-Family Housing-RMK-
(Clover Creek Apartments Project),
3.80%, 12/15/06 999,203
- --------------------------------------------------------------------------------
Total Put Bonds (amortized cost $4,999,203) 4,999,203
- --------------------------------------------------------------------------------
Tax and Revenue Anticipation Notes - 7.8%
$1,000,000 Campbell County, Wyoming School District No.1
Gillette, Tax Anticipation Warrants,
4.50%, 6/30/97 $ 1,000,791
2,000,000 New Bedford, Massachusetts Revenue
Anticipation Notes, 4.50%, 6/30/97 2,001,896
1,000,000 Oxnard, California Unified High School District,
Tax and Revenue Anticipation Notes,
4.50%, 8/7/97 1,001,160
1,000,000 South Coast, California Local Education Agencies
Partnership Pooled Tax and Revenue
Anticipation Notes, Series A, 4.75%, 6/30/97 1,001,073
1,000,000 Texas State Tax and Revenue Anticipation Notes,
4.75%, 8/29/97 1,002,529
- --------------------------------------------------------------------------------
Total Tax and Revenue Anticipation Notes
(amortized cost $6,007,449) 6,007,449
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 0.7%
550,000 Maricopa County Arizona School District No. 11,
(Peoria University Project), 8.00%, 7/1/97
(amortized cost $553,693) 553,693
- --------------------------------------------------------------------------------
Total Investments (total cost $76,955,149) - 99.5% 76,955,149
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.5% 389,750
- --------------------------------------------------------------------------------
Net Assets - 100% $77,344,899
- --------------------------------------------------------------------------------
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 21
<PAGE>
STATEMENTS OF OPERATIONS - BOND FUNDS
<TABLE>
<CAPTION>
Janus Janus
Janus Janus Federal Short-Term
For the six months ended April 30, 1997 (unaudited) Flexible Income High-Yield Tax-Exempt Bond
(all numbers in thousands) Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C>
Interest $24,934 $11,654 $1,401 $1,455
Dividends 770 75 -- 11
- -----------------------------------------------------------------------------------------------------------------------------
25,704 11,729 1,401 1,466
- -----------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 1,856 902 145 142
Transfer agent fees and expenses 712 229 68 65
Registration fees 47 50 18 10
Postage and mailing expenses 38 17 11 9
Custodian fees 39 25 12 12
Printing expenses 11 7 3 3
Audit fees 7 9 5 2
Trustees' fees and expenses 4 1 -- --
Other expenses 20 23 11 10
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 2,734 1,263 273 253
- -----------------------------------------------------------------------------------------------------------------------------
Expense and fee offsets (52) (34) (4) (3)
- -----------------------------------------------------------------------------------------------------------------------------
Net expenses 2,682 1,229 269 250
- -----------------------------------------------------------------------------------------------------------------------------
Less: Excess expense reimbursement -- (27) (111) (108)
- -----------------------------------------------------------------------------------------------------------------------------
2,682 1,202 158 142
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 23,022 10,527 1,243 1,324
- -----------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 4,723 4,693 (505) 515
Net realized gain/(loss) from foreign currency 26 -- -- --
Net realized gain/(loss) from futures or options contracts (711) -- (753) --
Change in net unrealized appreciation or depreciation of investments (12,061) (1,882) 989 (366)
- -----------------------------------------------------------------------------------------------------------------------------
Net gain/(loss) on investments (8,023) 2,811 (269) 149
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $14,999 $13,338 $974 $1,473
=============================================================================================================================
</TABLE>
An Explanation of the Statement of Operations
This financial statement details the Funds' income, expenses, gains and
losses on securities and currency transactions and from appreciation or
depreciation of portfolio holdings. The first section in this statement, called
"Investment Income," reports the dividends earned from stocks and interest
earned from interest-bearing securities in the portfolio.
The next section reports the expenses and expense offsets incurred by the
Funds, including the advisory fee paid to the investment advisor, the transfer
agent fees, shareholder servicing expenses, printing and postage for mailing
statements, financial reports, and prospectuses to investors.
The last section lists the increase or decrease in the value of securities
held in the Funds' portfolios. Funds realize a gain (or loss) when they sell
their position in a particular security. Unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the Funds' portfolio during the
period. This figure is affected by both changes in the market value of portfolio
holdings and by gains (or losses) realized during the reporting period.
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 22
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES - BOND FUNDS
<TABLE>
<CAPTION>
Janus Janus
Janus Janus Federal Short-Term
As of April 30, 1997 (unaudited) Flexible Income High-Yield Tax-Exempt Bond
(all numbers in thousands except net asset value per share) Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at cost $623,731 $218,686 $48,852 $45,417
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Investments at value $624,553 $220,368 $48,991 $45,330
Cash 161 20 37 91
Receivables:
Investments sold 3,875 7,512 969 1,801
Fund shares sold 1,701 7,708 22 105
Interest 11,227 5,148 997 698
Other assets 3 1 24 1
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 641,520 240,757 51,040 48,026
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 6,860 16,997 34 1,795
Fund shares repurchased 973 632 60 94
Dividends 554 152 -- 10
Advisory fee 306 131 25 7
Transfer agent fee 154 32 13 14
Accrued expenses 44 44 43 19
Variation margin-- futures contracts 382 -- 27 --
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 9,273 17,988 202 1,939
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets $632,247 $222,769 $50,838 $46,087
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 66,474 19,961 7,376 16,027
===========================================================================================================================
Net Asset Value Per Share $9.51 $11.16 $6.89 $2.88
===========================================================================================================================
</TABLE>
An Explanation of the Statement of Assets and Liabilities
This financial statement is often referred to as the "balance sheet." It
lists the assets and liabilities of the Fund on the last day of the fiscal
period.
The Funds' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared on stocks owned but not yet received, and the receivable
for Fund shares sold to investors but not yet settled. The Funds' liabilities
include payables for securities purchased but not yet settled, fund shares
redeemed but not yet paid, and expenses owed but not yet paid.
The last line of this schedule reports the Funds' net asset value (NAV) per
share on the last day of the fiscal period. The NAV is calculated by dividing
the Funds' net assets (assets minus liabilities) by the number of shares
outstanding.
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - BOND FUNDS
<TABLE>
<CAPTION>
For the six months ended April 30, 1997
(unaudited) and the fiscal year or period Janus Janus Janus Janus
ended October 31, 1996 Flexible Income High-Yield Federal Tax-Exempt Short-Term Bond
(all numbers in thousands) Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996(1) 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $23,022 $45,864 $10,527 $6,672 $1,243 $1,883 $1,324 $2,353
Net realized gain/(loss) from
investment transactions 4,038 12,178 4,693 2,395 (1,258) 260 515 138
Change in unrealized net appreciation or
depreciation of investments (12,061) (7,554) (1,882) 3,565 989 (110) (366) 118
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 14,999 50,488 13,338 12,632 974 2,033 1,473 2,609
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (23,022) (45,865) (10,527) (6,672) (1,237) (1,884) (1,324) (2,352)
Net realized gain from investment transactions (1,193) -- (2,396) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease from dividends and distributions (24,215) (45,865) (12,923) (6,672) (1,237) (1,884) (1,324) (2,352)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 155,969 313,773 206,966 272,508 15,715 26,324 26,013 27,920
Reinvested dividends and distributions 20,436 38,575 11,588 5,896 1,028 1,553 1,222 2,169
Shares repurchased (138,597) (333,675) (207,133) (73,431) (10,500) (15,761) (22,081) (37,679)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
capital share transactions 37,808 18,673 11,421 204,973 6,243 12,116 5,154 (7,590)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets 28,592 23,296 11,836 210,933 5,980 12,265 5,303 (7,333)
Net Assets:
Beginning of period 603,655 580,359 210,933 -- 44,858 32,593 40,784 48,117
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period $632,247 $603,655 $222,769 $210,933 $50,838 $44,858 $46,087 $40,784
====================================================================================================================================
Net Assets consist of:
Capital (par value and paid-in surplus)* $626,884 $589,076 $216,393 $204,973 $52,293 $46,050 $48,892 $43,738
Undistributed net investment income* 394 394 -- -- 6 -- 2 2
Undistributed net realized gain/(loss)
from investments* 4,480 1,635 4,693 2,395 (2,906) (1,648) (2,721) (3,236)
Unrealized appreciation/(depreciation)
of investments 489 12,550 1,683 3,565 1,445 456 (86) 280
- ------------------------------------------------------------------------------------------------------------------------------------
$632,247 $603,655 $222,769 $210,933 $50,838 $44,858 $46,087 $40,784
====================================================================================================================================
Transactions in Fund Shares:
Shares sold 16,156 32,701 18,360 25,145 2,259 3,784 9,029 9,842
Reinvested distributions 2,116 4,031 1,029 538 148 223 424 764
- ------------------------------------------------------------------------------------------------------------------------------------
Total 18,272 36,732 19,389 25,683 2,407 4,007 9,453 10,606
Shares repurchased (14,378) (34,947) (18,393) (6,718) (1,512) (2,263) (7,665) (13,292)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) 3,894 1,785 996 18,965 895 1,744 1,788 (2,686)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period 62,580 60,795 18,965 -- 6,481 4,737 14,239 16,925
Shares outstanding end of period 66,474 62,580 19,961 18,965 7,376 6,481 16,027 14,239
====================================================================================================================================
Purchases and Sales of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $431,565 $1,062,764 $385,006 $431,286 $68,110 $87,631 $40,757 $118,608
Proceeds from Sales of Securities 436,180 1,075,417 414,717 239,819 60,404 79,890 36,745 127,584
Purchases of Long-Term
U.S. Government Obligations 123,987 147,498 7,803 1,115 -- -- 5,162 54,851
Proceeds from Sales of Long-Term
U.S. Government Obligations 91,432 155,967 2,884 1,141 -- -- 4,272 60,549
====================================================================================================================================
</TABLE>
(1) Fiscal period December 29, 1995 (inception) to October 31, 1996
*See Note 3 in Notes to Financial Statements
An Explanation of the Statement of Changes in Net Assets
This financial statement reports the increase or decrease in the Funds' net
assets during the reporting period. Changes in the Funds' net assets are
attributable to investment operations, dividends, distributions, and capital
share transactions. This schedule is of importance to investors because it shows
exactly what caused the Funds' asset size to change during the period. Investors
can use this information to determine if the Funds' growth was a result of
operations or an increase in the number of shares being purchased.
The first section summarizes the information from the Statement of
Operations regarding changes in net assets due to the Funds' investment
performance. The Funds' net assets will also change as a result of dividend and
capital gain distributions to investors. If investors receive their dividends in
cash, money is taken out of the Fund to pay the distribution. If investors
reinvest their dividends, the Funds' net assets will not be affected. If you
compare each Fund's "Net decrease from dividends and distributions" to the
"Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Fund's net assets. This is because the
majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share
Transactions." "Capital Shares" refers to the money investors contribute to the
Fund through purchases or withdraw via redemptions. The Fund's net assets will
increase and decrease in value as investors purchase and redeem shares from the
Fund.
The section titled "Net Assets Consist of" breaks down the components of
the Funds' net assets. Since funds must distribute substantially all earnings,
you'll notice that a significant portion of net assets is shareholder capital.
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 24
<PAGE>
FINANCIAL HIGHLIGHTS - BOND FUNDS
<TABLE>
<CAPTION>
For a share outstanding during the six months
ended April 30, 1997 (unaudited) Janus Flexible Income Fund
and the fiscal year or period ended October 31 1997 1996 1995 1994 1993 1992(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.65 $9.55 $8.96 $10.03 $9.26 $9.09
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .36 .73 .72 .74 .77 .68
Net gains or (losses) on securities
(both realized and unrealized) (.12) .10 .59 (.86) .79 .15
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .24 .83 1.31 (.12) 1.56 .83
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.36) (.73) (.72) (.72) (.77) (.66)
Distributions (from capital gains) (.02) -- -- (.23) (.02) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (.73) (.72) (.95) (.79) (.66)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.51 $9.65 $9.55 $8.96 $10.03 $9.26
===========================================================================================================================
Total return* 2.43% 9.01% 15.35% (1.26%) 17.48% 9.43%
===========================================================================================================================
Net assets, end of period (in thousands) $632,247 $603,655 $580,359 $377,345 $473,116 $205,371
Average net assets for the period (in thousands) $625,784 $603,694 $450,001 $428,962 $337,568 $143,766
Ratio of gross expenses to average net assets** 0.88% 0.88% 0.96% NA NA NA
Ratio of net expenses to average net assets** 0.86% 0.87% 0.96% 0.93% 1.00% (4) 1.00%(4)
Ratio of net investment income to average net assets** 7.42% 7.60% 7.91% 7.75% 7.96% 8.98%
Portfolio turnover rate** 191% 214% 250% 137% 201% 210%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding during the six months
ended April 30, 1997 (unaudited) Janus Federal Tax-Exempt Fund
and the fiscal year or period ended October 31 1997 1996 1995 1994 1993 (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.92 $6.88 $6.45 $7.30 $7.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .18 .36 .36 .36 .14
Net gains or (losses) on securities
(both realized and unrealized) (.03) .04 .43 (.83) .30
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .15 .40 .79 (.47) .44
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.18) (.36) (.36) (.36) (.14)
Distributions (from capital gains) -- -- -- (.02) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.18) (.36) (.36) (.38) (.14)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.89 $6.92 $6.88 $6.45 $7.30
===========================================================================================================================
Total return* 2.10% 5.94% 12.60% (6.62%) 6.33%
===========================================================================================================================
Net assets, end of period (in thousands) $50,838 $44,858 $32,593 $26,464 $27,331
Average net assets for the period (in thousands) $48,825 $36,312 $29,318 $28,384 $16,038
Ratio of gross expenses to average net assets** 0.67%(5) 0.68%(5) 0.70%(5) NA NA
Ratio of net expenses to average net assets** 0.65% 0.65% 0.65% 0.65%(5) 0.75%(5)
Ratio of net investment income to average net assets** 5.14% 5.18% 5.43% 5.20% 4.58%
Portfolio turnover rate** 256% 225% 164% 160% 124%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding during the six months
ended April 30, 1997 (unaudited) Janus High-Yield Fund
and the fiscal year or period ended October 31 1997 1996(3)
- --------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $11.12 $10.00
- --------------------------------------------------------------------------------
Income from investment operations
Net investment income .49 .80
Net gains or (losses) on securities
(both realized and unrealized) .15 1.12
- --------------------------------------------------------------------------------
Total from investment operations .64 1.92
- --------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.49) (.80)
Distributions (from capital gains) (.11) --
- --------------------------------------------------------------------------------
Total distributions (.60) (.80)
- --------------------------------------------------------------------------------
Net asset value, end of period $11.16 $11.12
================================================================================
Total return* 5.88% 19.71%
================================================================================
Net assets, end of period (in thousands) $222,769 $210,933
Average net assets for the period (in thousands) $242,420 $88,126
Ratio of gross expenses to average net assets** 1.03%(6) 1.01%(6)
Ratio of net expenses to average net assets** 1.00% 1.00%
Ratio of net investment income to average net assets** 8.76% 9.00%
Portfolio turnover rate** 376% 324%
- --------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from January 1, 1992 to October 31, 1992
(2) Fiscal period from May 3, 1993 (inception) to October 31, 1993
(3) Fiscal period from December 29, 1995 (inception) to October 31, 1996
(4) The ratio was 1.01% in 1993 and 1.21% in 1992 the Fund.
(5) The ratio was 1.12% in 1997, 1.14% in 1996, 1.31% in 1995, 1.41% in 1994
and 1.60% in 1993 before voluntary waiver of certain fees incurred by the
Fund.
(6) The ratio was 1.05% in 1997 and 1.18% in 1996 before voluntary waiver of
certain fees incurred by before voluntary waiver of certain fees incurred
by the Fund.
* Total return not annualized for periods of less than one year
**Annualized for periods less than one year
NA - Disclosure not required for prior periods
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 25
<PAGE>
FINANCIAL HIGHLIGHTS - BOND FUNDS
<TABLE>
<CAPTION>
For a share outstanding during the six months
ended April 30, 1997 (unaudited) Janus Short-Term Bond Fund
and the fiscal year or period ended October 31 1997 1996 1995 1994 1993 1992(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $2.86 $2.84 $2.87 $3.02 $2.98 $3.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .09 .16 .18 .18 .14 .01
Net gains or (losses) on securities
(both realized and unrealized) .02 .02 (.03) (.15) .04 (.02)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .11 .18 .15 .03 .18 (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.09) (.16) (.18) (.17) (.14) (.01)
Distributions (from capital gains) -- -- -- (.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.09) (.16) (.18) (.18) (.14) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $2.88 $2.86 $2.84 $2.87 $3.02 $2.98
===========================================================================================================================
Total return* 3.76% 6.49% 5.55% 1.26% 6.17% (0.19%)
===========================================================================================================================
Net assets, end of period (in thousands) $46,087 $40,784 $48,117 $54,285 $76,096 $3,472
Average net assets for the period (in thousands) $44,018 $42,203 $47,383 $59,584 $36,794 $779
Ratio of gross expenses to average net assets** 0.67%(2) 0.67%(2) 0.66%(2) NA NA NA
Ratio of net expenses to average net assets** 0.65% 0.65% 0.65% 0.65%((2) 0.83%(2) 1.00%(2)
Ratio of net investment income to average net assets** 6.06% 5.57% 6.67% 6.08% 4.86% 3.22%
Portfolio turnover rate** 209% 486% 337% 346% 372% 7%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from September 1, 1992 (inception) to October 31, 1992
(2) The ratio was 1.16% in 1997, 1.23% in 1996, 1.23% in 1995, 1.15% in 1994,
1.40% in 1993 and 2.50% in 1992 before voluntary waiver of certain fees
incurred by the Fund.
*Total return not annualized for periods of less than one year
**Annualized for periods less than one year
NA - Disclosure not required for prior periods
An Explanation of the Financial Highlights
This schedule provides a per share breakdown of the components that affect
the Funds' NAV for the current and past reporting periods. Not only does this
table provide you with total return, it also reports total distributions, asset
size, expense ratios and portfolio turnover rate.
The first line in the table reflects the Funds' NAV per share at the
beginning of the fiscal period. The next line reports the Funds' net investment
income per share which is comprised of dividends and interest income earned on
securities held by the Fund. Following is the total of gains, realized and
unrealized. Dividends and distributions are then subtracted to arrive at the NAV
per share at the end of the fiscal period.
Also included in the Financial Highlights is the Funds' expense ratio, or
the percentage of net assets that was used to cover operating expenses during
the period. Expense ratios vary across the Funds for a number of reasons
including the differences in management fees, average shareholder account size,
the frequency of dividend payments, and the extent of foreign investments, which
entail greater transaction costs.
The Funds' expenses may be reduced through expense reduction arrangements.
Those arrangements include the use of broker commissions and cash balances
earning interest or balance credits with the Funds' custodian and transfer agent
bank accounts. The Statements of Operations reflect the total expenses before
any offset, the amount of offset and the net expenses. The expense ratios listed
in the Financial Highlights reflect total expenses both prior to any expense
offset and after the offsets, along with any expense reimbursements.
Expense ratios prior to any expense offset are part of disclosure
requirements imposed in 1996. Years prior to 1995 do not reflect this
information.
The next line reports the ratio of net investment income, which is the
income earned divided by the average net assets of the Funds during the
reporting period. Don't confuse this ratio with a Fund's yield. The net
investment income ratio is not a true measure of a Funds' yield because it
doesn't take into account the dividends distributed to the Funds' investors.
The next ratio provided in this table is the portfolio turnover rate, which
measures the amount of buying and selling activity in the Funds' portfolio.
Portfolio turnover is affected by market conditions, changes in the size of a
Fund, the nature of the Funds' investments, and the investment style of the
portfolio manager. A 100% rate implies that an amount equal to the value of the
entire portfolio is turned over in a year; a 50% rate means that an amount equal
to the value of half the portfolio is traded in a year; and a 200% rate would
mean that an amount equal to the value of the portfolio is sold in an average of
six months.
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 26
<PAGE>
STATEMENTS OF OPERATIONS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
For the six months or period Janus Janus Government Janus Tax-Exempt
ended April 30, 1997 (unaudited) Money Market Money Market Money Market
(all numbers in thousands) Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C>
Interest $86,408 $5,174 $1,455
- ---------------------------------------------------------------------------------------------------------------------------
86,408 5,174 1,455
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory Fee for Investor Shares 416 61 39
Advisory Fee for Institutional Shares 1,129 33 1
Advisory Fee for Service Shares* -- -- --
Administrative Fee for Investor Shares 2,076 305 191
Administrative Fee for Institutional Shares 565 17 1
Adminstrative Fee for Service Shares* -- -- --
Audit Fee 7 4 4
Audit and Trustees' Fees and Expenses 18 1 --
- ---------------------------------------------------------------------------------------------------------------------------
4,211 421 236
- ---------------------------------------------------------------------------------------------------------------------------
Net Investment Income: 82,197 4,753 1,219
- ---------------------------------------------------------------------------------------------------------------------------
Net Realized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 4 11 (2)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting
from operations $82,201 $4,764 $1,217
===========================================================================================================================
</TABLE>
*Period November 22, 1996 (inception) to April 30, 1997
STATEMENTS OF ASSETS AND LIABILITIES - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
Janus Janus Government Janus Tax-Exempt
As of April 30, 1997 (unaudited) Money Market Money Market Money Market
(all numbers in thousands except net asset value) Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C>
Investments at amortized cost $3,307,697 $194,220 $76,955
Cash 117 91 82
Receivables:
Investments Sold 99,591 19,639 --
Fund Shares Sold 4,264 225 257
Interest 17,043 519 610
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 3,428,712 214,694 77,904
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables
Investments Purchased 99,527 19,639 --
Fund Shares Repurchased 9,649 766 504
Dividends and Distributions 6,884 39 13
Advisory Fee 261 15 6
Administrative Fee 467 56 32
Audit Fee 7 4 4
Trustees' Expenses 1 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 116,796 20,519 559
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Assets $3,311,916 $194,175 $77,345
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 3,311,914 194,166 77,345
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $1.00 $1.00 $1.00
===========================================================================================================================
</TABLE>
See Notes to Schedule of Investments
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
For the fiscal year or period Janus Janus Government Janus Tax-Exempt
ended April 30, 1997 (unaudited) Money Market Money Market Money Market
(all numbers in thousands) Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1997(1) 1996 1997(1) 1996 1997(1) 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 82,197 $ 81,188 $ 4,753 $ 8,358 $ 1,219 $ 2,279
Net realized gain/(loss) from investment transactions 4 99 11 9 (2) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations 82,201 81,287 4,764 8,367 1,217 2,278
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income:
Investor Shares (20,761) (33,875) (2,968) (5,507) (1,166) (2,211)
Institutional Shares (61,435) (47,313) (1,773) (2,851) (51) (67)
Service Shares -- -- (12) -- -- --
Net realized gain/(loss) from investment transactions:
Investor Shares -- (39) (1) (6) -- --
Institutional Shares (2) (60) (1) (3) -- --
Service Shares -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease from dividends and distributions (82,198) (81,287) (4,755) (8,367) (1,217) (2,278)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold:
Investor Shares 1,273,640 1,457,473 93,635 121,998 102,856 89,300
Institutional Shares 25,814,989 24,946,671 358,939 648,284 10,454 38,832
Service Shares 10 -- 1,985 -- 10 --
Reinvested dividends and distributions:
Investor Shares 19,865 32,696 2,857 5,320 1,112 2,141
Institutional Shares 14,680 15,684 1,679 2,267 44 43
Service Shares -- -- 3 -- -- --
Shares repurchased:
Investor Shares (1,209,118) (1,359,501) (86,306) (129,217) (103,012) (84,282)
Institutional Shares (25,081,650) (23,561,697) (355,524) (635,225) (10,704) (48,120)
Service Shares -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from capital share transactions 832,416 1,531,326 17,268 13,427 760 (2,086)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets 832,419 1,531,326 17,277 13,427 760 (2,086)
Net Assets beginning of period 2,479,497 948,171 176,898 163,471 76,585 78,671
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets end of period $3,311,916 $2,479,497 $194,175 $176,898 $77,345 $76,585
====================================================================================================================================
Net Assets consist of:
Capital (par value and paid-in surplus) $3,311,913 $2,479,497 $194,166 $176,898 $77,345 $76,585
Undistributed net realized gain/(loss) from investments 3 -- 9 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
$3,311,916 $2,479,497 $194,175 $176,898 $77,345 $76,585
====================================================================================================================================
Transactions in Fund Shares - Investor Shares
Shares Sold 1,273,640 1,457,473 93,635 121,998 102,856 89,300
Reinvested dividends and distributions 19,865 32,696 2,857 5,320 1,112 2,141
- ------------------------------------------------------------------------------------------------------------------------------------
Total 1,293,505 1,490,169 96,492 127,318 103,968 91,441
Shares repurchased (1,209,118) (1,359,501) (86,306) (129,217) (103,012) (84,282)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase(decrease) in fund shares 84,387 130,668 10,186 (1,899) 956 7,159
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period 773,887 643,219 117,408 119,307 74,638 67,479
Shares outstanding at end of period 858,274 773,887 127,594 117,408 75,594 74,638
====================================================================================================================================
Transactions in Fund Shares - Institutional Shares
Shares Sold 25,814,989 24,946,671 358,939 648,284 10,454 38,832
Reinvested dividends and distributions 14,680 15,684 1,679 2,267 44 43
- ------------------------------------------------------------------------------------------------------------------------------------
Total 25,829,669 24,962,355 360,618 650,551 10,498 38,875
Shares repurchased (25,081,650) (23,561,697) (355,524) (635,225) (10,704) (48,120)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in fund shares 748,019 1,400,658 5,094 15,326 (206) (9,245)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period 1,705,610 304,952 59,490 44,164 1,947 11,192
Shares outstanding at end of period 2,453,629 1,705,610 64,584 59,490 1,741 1,947
====================================================================================================================================
Transactions in Fund Shares - Service Shares
Shares Sold 10 -- 1,985 -- 10 --
Reinvested dividends and distributions -- -- 3 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 10 -- 1,988 -- 10 --
Shares repurchased -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase(decrease) in fund shares 10 -- 1,988 -- 10 --
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period -- -- -- -- -- --
Shares outstanding at end of period 10 -- 1,988 -- 10 --
====================================================================================================================================
</TABLE>
(1) Fiscal period November 22, 1996 (inception) to April 30, 1997 for Service
Shares
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 28
<PAGE>
FINANCIAL HIGHLIGHTS - MONEY MARKET FUNDS
<TABLE>
<CAPTION>
For a share outstanding during the six
months ended April 30, 1997 (unaudited) Janus Janus Government Janus Tax-Exempt
on through fiscal year or period Money Market Money Market Money Market
ended October 31 Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Investor Shares 1997 1996 1995(1) 1997 1996 1995(1) 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .02 .05 .04 .02 .05 .04 .02 .03 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .02 .05 .04 .02 .05 .04 .02 .03 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.02) (.05) (.04) (.02) (.05) (.04) (.02) (.03) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (.02) (.05) (.04) (.02) (.05) (.04) (.02) (.03) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================================
Total return* 2.50% 5.13% 3.95% 2.44% 5.03% 3.90% 1.52% 3.27% 2.40%
====================================================================================================================================
Net assets at end of period
(in thousands) $858,274 $773,887 $643,219 $127,593 $117,408 $199,307 $75,594 $74,638 $67,479
Average net assets for the period
(in thousands) $837,501 $676,334 $461,311 $122,859 $112,059 $87,906 $77,315 $68,695 $57,366
Ratio of expenses to
average net assets** 0.60%(4) 0.60%(4) 0.60%(4) 0.61%(4) 0.60%(4) 0.60%(4) 0.61%(4) 0.60%(4) 0.60%(4)
Ratio of net investment income to
average net assets** 5.00% 5.01% 5.56% 4.87% 4.91% 5.40% 3.05% 3.22% 3.38%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding during the six
months ended April 30, 1997 (unaudited) Janus Janus Government Janus Tax-Exempt
on through fiscal year or period Money Market Money Market Money Market
ended October 31 Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Shares 1997 1996 1995(2) 1997 1996 1995(2) 1997 1996 1995(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .05 .03 .03 .05 .03 .02 .04 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .03 .05 .03 .03 .05 .03 .02 .04 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.05) (.03) (.03) (.05) (.03) (.02) (.04) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (.03) (.05) (.03) (.03) (.05) (.03) (.02) (.04) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================================
Total return* 2.73% 5.61% 3.25% 2.67% 5.50% 3.20% 1.72% 3.74% 2.09%
====================================================================================================================================
Net assets at end of period
(in thousands) $2,453,629 $1,705,610 $304,952 $64,585 $59,490 $44,164 $1,741 $1,947 $11,192
Average net assets for the period
(in thousands) $2,276,901 $874,431 $202,427 $67,257 $53,398 $24,748 $2,920 $1,754 $1,115
Ratio of expenses to
average net assets** 0.15%(5) 0.15%(5) 0.15%(5) 0.16%(5) 0.15%(5) 0.15%(5) 0.16%(5) 0.15%(5) 0.15%(5)
Ratio of net investment income
to average net assets** 5.44% 5.41% 5.86% 5.32% 5.34% 5.75% 3.48% 3.82% 3.82%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Janus Janus Government Janus Tax-Exempt
For a share outstanding throughout the Money Market Money Market Money Market
fiscal period ended April 30, 1997 (unaudited) Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
Service Shares 1997(3) 1997(3) 1997(3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .02 .02 .01
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .02 .02 .01
- ---------------------------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.02) (.02) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (.02) (.02) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total return* 2.30% 2.22% 1.43%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $10 $1,988 $10
Average net assets for the period (in thousands) $9 $544 $10
Ratio of expenses to average net assets** 0.40%(6) 0.40%(6) 0.40%(6)
Ratio of net investment income to average net assets** 5.21% 4.52% 2.85%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Total return is not annualized for periods of less than one year
**Annualized
(1) Fiscal period February 15, 1995 (inception) to October 31, 1995
(2) Fiscal period April 17, 1995 (inception) to October 31, 1995
(3) Fiscal period November 22, 1996 (inception) to April 30, 1996.
(4) The ratio was .70% before voluntary reduction of fees.
(5) The ratio was .35% before voluntary reduction of fees.
(6) The ratio was .60% before voluntary reduction of fees.
See Notes to Financial Statements
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 29
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
Adjustable Rate Preferred Stock Dividend Rates are as of 4/30/97
*Non-Income producing security
**A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open futures contracts and/or forward
currency contracts.
+Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
1) Variable Rate Notes. The interest rate, which is based on specific, or an
index of, market interest rates, is subject to change. Rates in the
security description are as of April 30, 1997.
2) Money Market Funds may hold securities with stated maturities of greater
than one year, when those securities have features which allow the Fund to
"put" back the security to the issuer or to a third party within a year of
acquisition. The maturity date shown in the security descriptions are the
stated maturity dates.
3) Repurchase Agreements held by the Fund are fully collateralized and such
collateral is in the possession of the Fund's custodian. The collateral is
evaluated daily to ensure its market value exceeds the current market value
of the repurchase agreements including accrued interest.
NOTES TO FINANCIAL STATEMENTS
The following section describes the organization and significant accounting
policies of the funds and provides more detailed information about the schedules
and tables that appear throughout this report. In addition, the Notes explain
how the funds operate and the methods used in preparing and presenting this
report.
1. Organization and Significant Accounting Policies
Janus Investment Fund (the "Trust") is registered under the Investment
Company Act of 1940 (the "1940 Act") as a no-load, open-end management
investment company. Four series of shares (the "Bond Funds") included in this
report invest primarily in income producing securities, and three series of
shares (the "Money Market Funds") invest exclusively in high-quality money
market instruments.
"Investor Shares" are available to the general public and "Institutional
Shares" are available only to investors that meet the $250,000 minimum account
size, and allow wire transactions only.
Effective November 22, 1996 Janus Money Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money Market Fund began offering a new class of
shares - "Service Shares." Service Shares are available exclusively through
banks and other financial institutions.
Effective January 31, 1997 Janus Intermediate Government Securties Fund was
liquidated. A special shareholder meeting was held on January 21, 1997 approving
the liquidation and distribution of proceeds to shareholders.
The following policies have been consistently followed by the Funds and are
in conformity with accounting principles generally accepted in the investment
company industry.
Investment Valuation
Securities are valued at the closing price for securities traded on a
principal exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Funds' Trustees. Short-term investments
maturing within 60 days for the Bond Funds and all money market securities in
the Money Market Funds are valued at amortized cost, which approximates market
value. Foreign securities are converted to U.S. dollars using exchange rates at
the close of the New York Stock Exchange. When market quotations are not readily
available, securities are valued at fair value as determined in good faith by
the Funds' Trustees.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Certain dividends from
foreign securities will be recorded as soon as the Trust is informed of the
dividend if such information is obtained subsequent to the ex-dividend date.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums. Gains and losses are determined on the identified cost
basis, which is the same basis used for federal income tax purposes.
Forward Currency Transactions and Futures Contracts
The Funds enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in foreign currencies. A forward currency
contract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated forward rate. The gain or loss arising from the difference
between the U.S. dollar cost of the original contract and the value of the
foreign currency in U.S. dollars upon closing of such contract is included in
net realized gain or loss on foreign currency transactions.
Forward currency contracts held by the Funds are fully collateralized by
other securities which are denoted in the accompanying schedule of investments.
Such collateral is in the possession of the Fund's custodian. The collateral is
evaluated daily to ensure its market value equals or exceeds the current market
value of the corresponding forward currency contracts.
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 30
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Currency gain and loss is also calculated on payables and receivables that
are denominated in foreign currencies. The payables and receivables are
generally related to security transactions and income.
Futures contracts are marked to market daily and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market for federal income tax purposes at fiscal year end.
Foreign denominated assets and forward currency contracts may involve more
risks than domestic transactions, including: currency risk, political and
economic risk, regulatory risk, and market risk. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
The Funds may enter into "futures contracts" and "options" on securities,
financial indices, and foreign currencies; forward contracts; and interest rate
swaps and swap-related products. The Funds intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities, or that the counterparty will fail to perform its obligations.
Additional Investment Risk
Janus High-Yield Fund and Janus Flexible Income Fund may be invested in
lower-rated debt securities that have a higher risk of default or loss of value
due to changes in the economy or in their respective industry.
Dividend Distributions and Expenses
Dividends are declared daily and distributed monthly. Each Bond Fund bears
expenses incurred specifically on its behalf as well as a portion of general
expenses.
Federal Income Taxes
The Funds intend to distribute to shareholders all taxable investment
income and realized gains and otherwise comply with the Internal Revenue Code
applicable to regulated investment companies. Of the ordinary income
distributions declared for the year ended October 31, 1996, 100% were exempt
from federal income taxes for Janus Federal Tax-Exempt Fund and Janus Tax-Exempt
Money Market Fund.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
2. Investment Advisory Agreement and Other Transactions with Affiliates
The advisory agreement with the Bond Funds spells out the expenses that the
Funds must pay. Each of the Funds are subject to the following schedule:
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- --------------------------------------------------------------------------------
Janus Flexible Income Fund First $300 Million .65 1.00*
Over $300 Million .55
- --------------------------------------------------------------------------------
Janus High-Yield Fund First $300 Million .75 1.00*
Over $300 Million .65
- --------------------------------------------------------------------------------
Janus Federal First $300 Million .60 .65*
Tax-Exempt Fund Over $300 Million .55
- --------------------------------------------------------------------------------
Janus Short-Term Bond Fund First $300 Million .65 .65*
Over $300 Million .55
- --------------------------------------------------------------------------------
*Janus Capital will waive certain fees and expenses to the extent that net
expenses exceed the stated limits.
Each of the Money Market Funds pays Janus Capital .20% of average daily net
assets as an investment advisory fee. Janus Capital has voluntarily agreed to
reduce its advisory fee for the Janus Money Market Funds to .10%. In addition,
each class of shares of each Money Market Fund pays Janus Capital an
administrative fee. This fee is .50%, .40% and .15% of average daily net assets
for the investor shares, service shares, and institutional shares respectively.
Janus Capital has voluntarily agreed to reduce the administrative fee to .05%
and .30% on the institutional shares and service shares respectively. All other
expenses of the Money Market Funds, except Trustees fees and expenses, audit
fees and interest expenses, are paid by Janus Capital.
Janus Service Corporation (Janus Service), a wholly owned subsidiary of
Janus Capital, receives an annual fee of 0.16% of average net assets per fund
plus $4.00 per shareholder account from each Bond Fund for transfer agent
services plus reimbursement of certain out of pocket expenses.
Officers and certain trustees of the Funds are also officers and/ or
directors of Janus Capital; however, they receive no compensation from the
Funds.
DST Systems Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides fund accounting and shareholder accounting systems to
the Funds through Janus Capital and Janus Service. Fees paid to DST for the
period ended April 30, 1997 are noted below.
DST Fees
- --------------------------------------------------------
Janus Flexible Income Fund $136,044
- --------------------------------------------------------
Janus High-Yield Fund 35,267
- --------------------------------------------------------
Janus Federal Tax-Exempt Fund 22,710
- --------------------------------------------------------
Janus Short-Term Bond Fund 25,861
- --------------------------------------------------------
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. Federal Income Tax
The funds have elected to treat gains and losses on forward currency
contracts as capital gains and losses. Other foreign currency gains and losses
on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code.
Net capital loss carryovers noted below as of October 31, 1996, are
available to offset future realized capital gains and thereby reduce future
taxable gains distributions. These carryovers expire between October 31, 2001,
and October 31, 2003. The aggregate cost of investments and the composition of
unrealized appreciation and depreciation of investment securities for federal
income tax purposes as of April 30, 1997, are as follows:
<TABLE>
<CAPTION>
at October 31, 1996 at April 30, 1997
------------------- ----------------------------------------------------------
Net
Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Carryovers Cost Appreciation (Depreciation) (Depreciation)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Flexible Income Fund -- $624,053,656 $8,480,725 $(7,981,415) $ 499,310
- -----------------------------------------------------------------------------------------------------------------------------
Janus High-Yield Fund -- 218,688,758 3,023,575 (1,344,012) 1,679,563
- -----------------------------------------------------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund $(1,524,504) 48,853,272 494,443 (357,059) 137,384
- -----------------------------------------------------------------------------------------------------------------------------
Janus Short-Term Bond Fund (3,229,981) 45,421,627 63,468 (154,665) (91,197)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 32
<PAGE>
THIS SPACE AVAILABLE FOR YOUR NOTES AND COMPUTATIONS
JANUS INCOME FUNDS APRIL 30, 1997 SEMIANNUAL REPORT 33
<PAGE>
