Janus | Income Funds
- --------------------------------------------------------------------------------
1998 Annual Report
Janus Flexible Income Fund Janus Money Market Fund
Janus High-Yield Fund Janus Government Money Market Fund
Janus Federal Tax-Exempt Fund Janus Tax-Exempt Money Market Fund
Janus Short-Term Bond Fund
[LOGO] JANUS
<PAGE>
Janus | Income Funds
Table of Contents
To Our Shareholders ...................................... 1
Portfolio Manager's Commentary and Schedule of Investments
Janus Flexible Income Fund ............................ 2
Janus High-Yield Fund ................................. 7
Janus Federal Tax-Exempt Fund ......................... 11
Janus Short-Term Bond Fund ............................ 16
Janus Money Market Fund ............................... 20
Janus Government Money Market Fund .................... 25
Janus Tax-Exempt Money Market Fund .................... 27
Statements of Operations - Bond Funds .................... 30
Statements of Assets and Liabilities -
Bond Funds ............................................ 31
Statements of Changes in Net Assets -
Bond Funds ............................................ 32
Financial Highlights - Bond Funds ........................ 33
Statements of Operations -
Money Market Funds .................................... 35
Statements of Assets and Liabilities -
Money Market Funds .................................... 36
Statements of Changes in Net Assets -
Money Market Funds .................................... 37
Financial Highlights - Money Market Funds ................ 38
Notes to Schedules of Investments ........................ 41
Notes to Financial Statements ............................ 42
Explanation of Charts and Tables ......................... 45
Report of Independent Accountants ........................ 48
Euro-Conversion Discussion ............................... 48
Year 2000 Discussion ..................................... 48
[LOGO] JANUS
<PAGE>
To Our | Shareholders
[PHOTO]
Tom Bailey
chairman
A strong U.S. economy, tempered by the downturn in Asia and showing few signs of
inflation, created a positive climate for the U.S. bond market during the first
half of our fiscal year. Against this backdrop, interest rates started a
dramatic and sustained decline, reaching levels we have not seen since the
1960s.
Our income funds performed well in this environment, although gains were held in
check by a steady supply of new issues. This was especially the case in the
high-yield market, where new issuance during the first half of the year rivaled
levels for all of 1997.
The environment for fixed-income markets became more challenging in the third
quarter, after Russia's financial meltdown heightened investors' awareness of
risk. This crisis, combined with warnings of weaker corporate earnings and
slower overall economic growth, triggered a "flight to quality" that initially
benefited global bond markets. However, this flight to quality quickly escalated
into a "dash for cash" as investors bypassed any risky investments in favor of
the security and liquidity of the U.S. Treasury market. As a result, we saw a
dramatic widening in yield spreads - the premium companies have to pay to lure
investors into riskier debt. In this environment, new issuance dried up and
trading in the secondary market came to a virtual standstill. The Federal
Reserve responded by cutting interest rates twice, its first policy change in
three years. While markets are anticipating additional rate cuts, evidence of
renewed and upward wage pressures may dampen the Fed's willingness to act again.
At Janus, our performance during this latter period was aided by our decision to
upgrade our holdings to only the highest-quality securities while eliminating
our minimal exposure to emerging markets. Looking ahead, we remain cautiously
optimistic on the outlook for fixed-income markets. In many ways, what happened
in 1998 had been on the horizon for quite some time. Eager to believe the rosy
view of the economy, investors were willing to take on additional risk early in
the year. It took the economic concerns of the third quarter to reacquaint
investors with the downside of riskier securities. This has left investors
focused on more established, profitable and liquid names.
Even in this more challenging environment, I'm confident our intensive financial
analysis and hands-on research will enable us to continue finding the best
opportunities for our investors.
In closing, I want to express my appreciation for your continued investment in
our funds. We're committed to proving ourselves worthy of your confidence.
/s/ Tom
Tom Bailey
Janus Income Funds / October 31, 1998 1
<PAGE>
Janus | Flexible Income Fund
[PHOTO]
Ronald V. Speaker
portfolio manager
Janus Flexible Income Fund returned 8.14% for the 12-month period ended October
31, 1998, while its benchmark, the Lehman Brothers Government/Corporate Bond
Index, increased 10.28% for the same period.(1)
The Fund continued to employ a flexible investment strategy, which allows me to
invest broadly across the fixed-income spectrum. During the first three quarters
of the fiscal year, our diversification proved correct, as we compared favorably
with our Index. In the final quarter, however, the bond market encountered a
most difficult and divergent time. Bond investors fled primarily to the safety
of Treasury bonds in response to the falling stock market, well-publicized hedge
fund troubles and a weak U.S. dollar. A global credit crunch ensued, and
corporate bonds underperformed Treasuries.
While I capitalized on the strong performance of Treasury issues, the Fund's
performance was hurt by our weighting in corporate bonds. Spreads, the
difference between yields on corporates and Treasuries, widened across all
sectors of the corporate market, even for the highest-quality investment-grade
bonds. Especially weak during the past few months were high-yield corporate
bonds. The prospect of slowing corporate earnings was especially negative for
high-yield debt because the companies issuing it are typically more leveraged,
making their bonds' prices more sensitive to the economy.
In response to recent market volatility, I reduced our high-yield allocation to
around 30% while increasing Treasuries and agency issues. I focused on the
highest-quality names in the high-yield market (companies with stable cash flow,
proven management and an absence of foreign exposure).
Among our successes were several positions benefiting from consolidation in the
supermarket industry. Fred Meyer, the Fund's single largest corporate bond
holding, recently agreed to be acquired by Kroger, a higher-rated,
less-leveraged credit. This helped the Fred Meyer bond outperform. We also had a
position in Carr-Gottstien Food, an Alaskan supermarket, which was acquired by
higher-quality Safeway.
Another issue that benefited from the consolidation theme was our position in
U.S. Surgical. This strong-performing medical supply company was recently
purchased by investment-grade rated Tyco International.
The Fund's investments in the cable industry aided our performance, especially
our investments in Tele-Communications, Inc. and Time Warner, as well as
high-yield credits such as Galaxy Cable, Jones Intercable and Century
Communications. This sector was one of the best performers as investors saw the
value of stable cash flows and the introduction of new services, which include
Internet access and digital TV.
Also benefiting the Fund were our holdings in yield-to-call corporate bonds.
These bonds have little downside risk but offer an excellent coupon yield. We
expect one newly added position, Marcus Cable, to be called relatively soon.
Until then, we can clip an attractive 117/8% coupon.
A disappointment during the period was our high-yield holding in Penn Corp.
Financial Group, once one of our highest-quality high-yield positions. A
fast-growing insurance consolidator adept at turning around troubled insurance
companies, Penn Corp. encountered problems trying to consolidate recent
Portfolio Asset Mix October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Investment-Grade
Corporate Bonds 32.7% 33.2%
High-Yield/High-Risk
Corporate Bonds 30.3% 38.7%
U.S. Government Bonds 25.4% 14.9%
Foreign Bonds 2.1% 1.2%
Preferred Stock 1.6% 2.1%
Cash & Cash Equivalents 7.9% 9.9%
- --------------------------------------------------------------------------------
Fund Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Weighted Average Maturity 9.1 Yrs. 9.4 Yrs.
Average Modified Duration* 6.1 Yrs. 5.6 Yrs.
30-Day Average Yield** 6.05% 6.61%
Average Rating A BBB
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility.
**Yields will fluctuate.
(1) Both returns include reinvested dividends.
Past performance does not guarantee future results.
2 Janus Income Funds / October 31, 1998
<PAGE>
acquisitions. Upon reporting disappointing second-quarter earnings, its debt was
subsequently downgraded, and we sold the position.
We also suffered from our convertible bond position in Metricom, a wireless
Internet access company. The company's underlying stock price was hurt by the
overall weakness in small caps and by the unexpectedly slow build-out and
financing of its new generation access system. However, I have used Metricom's
system and believe it has considerable consumer value, so I remain invested in
this position.
In the near term, I expect fixed-income markets to remain volatile. While the
risk of recession appears low, the U.S. economy has now transitioned to a period
of slower growth and lower interest rates. As market conditions stabilize, it
seems likely that investors will look beyond Treasuries to other areas of the
fixed-income market as they pursue higher yields.
For this reason, I continue to favor a diversified approach that will allow us
to capitalize on improvement across a wide spectrum of fixed-income securities.
Therefore, I'll look for opportunities to raise our investment-grade and
high-yield weightings back to more normal levels, selectively choosing positions
with stable earnings potential and strong business fundamentals.
In closing, I'd like to express my appreciation for your continued investment in
Janus Flexible Income Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of blue. The
Lehman Brothers Government/Corporate Bond Index is represented by a solid black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, July 7, 1987, through October 31, 1998.
The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Flexible Income Fund ($27,596) as compared to the Lehman
Brothers Government/Corporate Bond Index ($26,755).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 8.14%
Five Year, 8.40%
Ten Year, 9.22%
Since 7/7/87*, 9.36%
Janus Flexible Income Fund - $27,596
Lehman Brothers Gov't/Corporate
Bond Index - $26,755
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends. 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.
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 63.0%
Automotive - Cars and Light Trucks - 0.5%
$ 5,000,000 Ford Motor Co., 7.25%
notes, due 10/1/08 ................... $ 5,537,500
Beverages - Non-Alcoholic - 1.4%
15,000,000 Coca-Cola Enterprises, Inc., 6.95%
debentures, due 11/15/26 ............. 15,412,500
Brewery - 0.9%
10,000,000 Anheuser Busch Co., 5.65%
notes, due 9/15/08 ................... 10,175,000
Broadcast Services and Programming - 0.6%
7,000,000 Fox/Liberty Networks L.L.C., 8.875%
senior notes, due 8/15/07 ............ 6,790,000
Cable Television - 6.4%
3,000,000 Century Communications Corp., 8.75%
senior notes, due 10/1/07 ............ 3,142,500
11,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 11,825,000
9,500,000 Jones Intercable, Inc., 7.625%
senior notes, due 4/15/08 ............ 9,595,000
12,000,000 Lenfest Communications, 7.625%
senior notes, due 2/15/08 ............ 12,000,000
15,325,000 Marcus Cable Co., L.P., 11.875%
debentures, due 10/1/05 .............. 16,187,030
TCI Communications, Inc.:
4,500,000 6.375%, senior notes, due 5/1/03 ..... 4,663,125
13,000,000 6.875%, senior notes, due 2/15/06 .... 13,828,750
71,241,405
Casino Hotels - 0.9%
$ 4,000,000 Santa Fe Hotel, Inc., 11.00%
first mortgage notes, due 12/15/00 ... $ 3,895,000
7,000,000 Venetian Casino Resort L.L.C., 12.25%
company guaranteed notes, due 11/15/04 6,230,000
10,125,000
Casino Services - 0.6%
6,000,000 Isle of Capri Black Hawk L.L.C., 13.00%
first mortgage bonds, due 8/31/04 .... 6,000,000
Cellular Telecommunications - 1.0%
10,000,000 360(degree) Communications Co., 6.65%
notes, due 1/15/08 ................... 10,512,500
Chemicals - Specialty - 0.9%
10,000,000 Praxair, Inc., 6.625%
notes, due 10/15/07 .................. 10,300,000
Commercial Banks - 1.7%
11,000,000 Bank One Texas, 6.25%
subordinated notes, due 2/15/08 ...... 11,233,750
2,500,000 City National Bancshares Corp., 6.375%
subordinated notes, due 1/15/08 ...... 2,556,250
5,000,000 HUBCO, Inc., 8.20%
subordinated debentures, due 9/15/06 . 5,375,000
19,165,000
Computers - Information Technology - 0.2%
2,500,000 Cooperative Computing, 9.00%
senior subordinated notes, due 2/1/08 2,087,500
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 3
<PAGE>
Janus | Flexible Income Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 0.5%
$ 6,375,000 Candescent Technologies Corp., 7.00%
convertible senior subordinated
debentures, due 5/1/03+ .............. $ 5,418,750
Computers - Mainframe - 2.9%
IBM Corp.:
10,000,000 6.45%, notes, due 8/1/07 ............. 10,700,000
10,000,000 5.40%, notes, due 10/1/08 ............ 9,987,500
10,000,000 7.00%, debentures, due 10/30/25 ...... 10,875,000
31,562,500
Consumer Products - 0.6%
3,000,000 Doane Products Co., 10.625%
senior notes, due 3/1/06 ............. 3,472,500
5,000 Spin Cycle, Inc., zero coupon
units, due 5/1/05+ ................... 2,700,000
6,172,500
Containers - Metal and Glass - 0.6%
6,000,000 Crown Cork & Seal Co., Inc., 7.00%
company guaranteed notes,
due 12/15/06 ......................... 6,345,000
Distribution and Wholesale - 0.3%
4,000,000 Aviation Sales Co., 8.125%
company guaranteed notes, due 2/15/08 3,640,000
Electric - Integrated - 1.2%
El Paso Electric Co.:
3,000,000 8.90%, first mortgage bonds, due 2/1/06 3,341,250
9,000,000 9.40%, first mortgage bonds, due 5/1/11 10,192,500
13,533,750
Finance - Auto Loans - 1.4%
Ford Motor Credit Corp.:
2,000,000 5.125%, notes, due 10/15/01 .......... 1,980,000
10,000,000 5.375%, notes, due 10/15/02 .......... 9,937,500
3,500,000 General Motors Acceptance Corp., 6.125%
senior subordinated notes, due 1/22/08 3,543,750
15,461,250
Finance - Other Services - 0.5%
5,500,000 Associates Corp., N.A., 6.25%
senior notes, due 11/1/08 ............ 5,541,250
Food - Diversified - 0.8%
8,000,000 Ralston Purina Co., 7.75%
debentures, due 10/1/15 .............. 8,930,000
Food - Retail - 1.6%
4,500,000 Marsh Supermarkets, Inc., 8.875%
company guaranteed notes, due 8/1/07 . 4,455,000
4,000,000 Pantry, Inc., 10.25%
company guaranteed notes, due 10/15/07 3,960,000
4,500,000 Safeway, Inc., 7.00%
senior notes, due 9/15/07 ............ 4,758,750
4,000,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 4,280,000
17,453,750
Funeral Services and Related Items - 0.5%
4,500,000 Service Corporation International, 7.70%
notes, due 4/15/09 ................... 4,955,625
Gambling - Non-Hotel Casinos - 0.4%
3,000,000 Mohegan Tribal Gaming Authority, 13.50%
senior notes, due 11/15/02 ........... 3,866,250
Home Furnishings - 0.2%
$ 2,000,000 Lifestyle Furnishings International, Inc.,
10.875%, company guaranteed
notes, due 8/1/06 .................... $ 2,140,000
Hotels and Motels - 0.9%
10,000,000 Courtyard By Marriott II, L.P., 10.75%
senior notes, due 2/1/08 ............. 10,025,000
Industrial Audio and Visual Products - 0.2%
2,000,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 ............ 2,040,000
Insurance Brokers - 0.3%
5,000,000 SIG Capital Trust I, 9.50%
company guaranteed notes, due 8/15/27 3,787,500
Life and Health Insurance - 1.1%
11,000,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 ............ 11,907,500
Manufacturing - 0.7%
7,500,000 Day International Group, Inc., 11.125%
senior notes, due 6/1/05 ............. 7,725,000
Medical Products - 0.8%
8,500,000 Dade International, Inc., 11.125%
senior subordinated notes,
Series B, due 5/1/06 ................. 9,095,000
Money Center Banks - 0.7%
8,000,000 BankAmerica Corp., 7.75%
subordinated notes, due 8/15/15 ...... 8,340,000
Multimedia - 4.0%
Time Warner, Inc.:
15,250,000 8.18%, notes, due 8/15/07 ............ 17,461,250
10,000,000 6.95%, company guaranteed notes,
due 1/15/28 .......................... 10,025,000
15,000,000 Walt Disney Co. (The), 6.75%
senior notes, due 3/30/06 ............ 16,181,250
43,667,500
Music/Clubs - 0.3%
7,900 V2 Music Holdings PLC, zero coupon
units, due 4/15/08 ................... 3,792,000
Networking Products - 0.6%
5,000,000 Anixter International, Inc., 8.00%
company guaranteed notes,
due 9/15/03 .......................... 5,350,000
1,000,000 Concentric Network Corp., 12.75%
senior notes, due 12/15/07 ........... 892,500
6,242,500
Optical Supplies - 0.5%
5,000,000 Bausch & Lomb, Inc., 6.75%
notes, due 12/15/04 .................. 5,337,500
Paint and Related Products - 1.0%
10,500,000 Sherwin-Williams Co., 6.85%
notes, due 2/1/07 .................... 11,484,375
Physical Therapy and Rehabilitation Centers - 1.7%
HEALTHSOUTH Corp.:
7,000,000 9.50%, senior subordinated notes,
due 4/1/01 ........................... 7,245,000
12,000,000 7.00%, senior notes, due 6/15/08 ..... 11,160,000
18,405,000
See Notes to Schedules of Investments.
4 Janus Income Funds / October 31, 1998
<PAGE>
Principal Amount Market Value
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 2.1%
$ 5,000,000 Arkwright CSN Trust, 9.625%
notes, due 8/15/26+ .................. $ 6,287,500
6,000,000 First American Capital Trust, 8.50%
company guaranteed notes, due 4/15/12 7,035,000
9,000,000 Orion Capital Corp., 7.25%
senior notes, due 7/15/05 ............ 9,562,500
22,885,000
Radio - 0.6%
6,575,000 Chancellor Media Corp., 9.00%
senior subordinated notes, due 10/1/08+ 6,591,438
Recreational Centers - 0.6%
7,310,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 6,706,925
Reinsurance - 0.9%
10,000,000 Veritas Capital Trust, 10.00%
company guaranteed notes, due 1/1/28 . 9,400,000
Retail - Leisure Products - 0.8%
9,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 9,270,000
Retail - Regional Department Stores - 5.2%
Fred Meyer, Inc.:
25,000,000 7.15%, company guaranteed notes,
due 3/1/03 ........................... 25,906,250
30,000,000 7.45%, company guaranteed notes,
due 3/1/08 ........................... 31,425,000
57,331,250
Retail - Restaurants - 1.2%
10,000,000 McDonald's Corp., 6.375%
debentures, due 1/8/28 ............... 10,125,000
3,750,000 ROMACORP Inc., 12.00%
senior notes, due 7/1/06+ ............ 3,487,500
13,612,500
Satellite Telecommunications - 0.8%
2,085,000 Digital Television Services L.L.C., 12.50%
company guaranteed notes, due 8/1/07 . 2,105,850
7,000,000 PanAmSat Corp., 6.375%
notes, due 1/15/08 ................... 7,105,000
9,210,850
Savings/Loan/Thrifts - 1.4%
2,200,000 GS Escrow Corp., 7.125%
senior notes, due 8/1/05+ ............ 2,235,750
8,000,000 People's Bank Bridgeport, 7.20%
subordinated notes, due 12/1/06 ...... 8,020,000
5,000,000 St. Paul Bancorp, Inc., 7.125%
senior notes, due 2/15/04 ............ 5,387,500
15,643,250
Security Services - 0.6%
6,000,000 Protection One Alarm Monitor, Inc., 7.375%
senior notes, due 8/15/05+ ........... 6,195,000
Super-Regional Banks - 0.5%
5,000,000 Mellon Financial Co., 6.375%
subordinated notes, due 2/15/10 ...... 5,050,000
Telecommunication Equipment - 0.2%
$ 2,750,000 Global Tele-Systems, Ltd., 9.875%
senior notes, due 2/15/05 ............ $ 2,351,250
Telecommunication Services - 2.1%
15,000,000 LCI International, Inc., 7.25%
senior notes, due 6/15/07 ............ 15,037,500
3,775,000 Metricom, Inc., 8.00%
convertible subordinated notes,
due 9/15/03 .......................... 1,868,625
3,450,000 MetroNet Communications Corp., 12.00%
senior notes, due 8/15/07 ............ 3,682,875
3,000,000 Talton Holdings, Inc., 11.00%
company guaranteed notes, due 6/30/07 2,921,250
23,510,250
Telephone - Integrated - 1.5%
3,900,000 Dobson Wireline Co., 12.25%
senior notes, due 6/15/08+ ........... 3,480,750
13,275,000 Qwest Communications International, Inc.,
7.50%, senior notes, due 11/1/08+ .... 13,474,125
16,954,875
Telephone - Local - 0.8%
5,000,000 Bellsouth Telecommunication, Inc., 6.375%
debentures, due 6/1/28 ............... 5,100,000
4,000,000 US WEST, Inc., 6.375%
company guaranteed notes, due 7/15/08 4,170,000
9,270,000
Telephone - Long Distance - 1.7%
5,000,000 Esprit Telecom Group PLC, 11.50%
senior notes, due 12/15/07 ........... 4,487,500
MCI WorldCom, Inc.:
5,000,000 6.40%, senior notes, due 8/15/05 ..... 5,187,500
8,000,000 7.75%, notes, due 4/1/07 ............. 8,940,000
18,615,000
Television - 2.2%
8,000,000 Dialog Corp. PLC, 11.00%
senior subordinated notes,
due 11/15/07 ......................... 8,200,000
10,000,000 News America, Inc., 7.30%
debentures, due 4/30/28 .............. 9,912,500
5,500,000 Pegasus Media Communications, 12.50%
notes, due 7/1/05 .................... 5,981,250
24,093,750
Textile - Products - 0.2%
2,000,000 Collins & Aikman Corp., 10.00%
senior subordinated notes, due 1/15/07 2,020,000
Transportation - Services - 0.2%
2,000,000 Atlantic Express, Inc., 10.75%
company guaranteed notes, due 2/1/04 . 2,040,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $686,795,231) ................. 694,967,243
- --------------------------------------------------------------------------------
Foreign Bonds - 2.1%
CAD
24,000,000 Canadian National Government, 6.00%
debentures, due 6/1/08** ............. 16,606,463
DEM
12,000,000 Esprit Telecom Group PLC, 11.50%
senior notes, due 12/15/07** ......... 6,086,306
- --------------------------------------------------------------------------------
Total Foreign Bonds (cost $23,786,668) .................... 22,692,769
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 5
<PAGE>
Janus | Flexible Income Fund
Shares or Principal Amount Market Value
- --------------------------------------------------------------------------------
Preferred Stock - 1.6%
Computer Software - 0.4%
5,877 Concentric Network Corp., 13.50% ....... $ 4,407,750
Savings/Loan/Thrifts - 1.0%
350,000 Chevy Chase Savings, 13.00% ............ 10,850,000
Telecommunication Services - 0.2%
2,643 Nextel Communications, Inc., 11.125% ... 2,087,970
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $19,112,217) .................. 17,345,720
- --------------------------------------------------------------------------------
U.S. Government Agencies - 3.7%
$ 10,000,000 Fannie Mae
5.25%, 1/15/03 ....................... 10,203,000
30,000,000 Federal Home Loan Bank System
5.125%, 9/15/03 ...................... 30,339,000
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $40,478,767) ......... 40,542,000
- --------------------------------------------------------------------------------
U.S. Government Obligations - 21.7%
U.S. Treasury Notes:
40,000,000 5.375%, 6/30/03 ...................... 41,769,359
80,000,000 6.625%, 5/15/07 ...................... 90,793,600
100,000,000 5.625%, 5/15/08 ...................... 107,695,000
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $230,099,600) ..... 240,257,959
- --------------------------------------------------------------------------------
Warrants - 0%
3,450 MetroNet Communications Corp.
- exp. 8/15/07* (cost $0) ............ 13,800
- --------------------------------------------------------------------------------
Repurchase Agreements - 4.7%
$ 46,800,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$46,822,308 collateralized by
$23,429,335 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $21,394,779 in
Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $48,387 in Sallie
Mae, 4.947%, 11/10/98; $37,815,046 in
Government National Mortgage
Association, 4.50%-10.50%,
6/15/13-9/20/28; $872,516 in Federal
Farm Credit, 5.63%- 8.16%,
9/5/00-10/7/09; $3,497,323 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $264,194 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$16,461,279, $16,368,018, $48,958,
$27,066,332, $958,070, $3,568,549,
and $11,591 .......................... 46,800,000
5,500,000 State Street Bank and Trust Co., 4.25%,
dated 10/30/98, maturing 11/2/98 to
be repurchased at $5,501,948
collateralized by $3,980,000 in
U.S.Treasury Bond, 8.50%, 2/15/20
with a value of $5,616,775 ........... 5,500,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $52,300,000) ............ 52,300,000
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 4.5%
$ 50,000,000 Household Finance Co.
5.72%, 11/2/98
(amortized cost $49,992,056) .......... $ 49,992,056
- --------------------------------------------------------------------------------
Total Investments (total cost $1,102,564,539) - 101.3% .... 1,118,111,547
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.3%) (14,520,718)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 1,103,590,829
- --------------------------------------------------------------------------------
Forward Currency Contracts, Open at October 31, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Canadian Dollar 10/8/99 25,450,000 $16,500,259 ($74,804)
German Deutschemark 3/5/99 9,900,000 6,016,408 (432,341)
- --------------------------------------------------------------------------------
Total $22,516,667 ($507,145)
See Notes to Schedules of Investments.
6 Janus Income Funds / October 31, 1998
<PAGE>
Janus | High-Yield Fund
[PHOTO]
Sandy R. Rufenacht
portfolio manager
For the fiscal year ended October 31, 1998, Janus High-Yield Fund returned
(1.45%) while our benchmark, the Lehman Brothers High Yield Bond Index, returned
(0.50%).(1)
As was discussed in Tom Bailey's letter, the environment early in the year was
relatively positive for high-yield bonds, with low interest rates and a healthy
U.S. economy providing support. However, Alan Greenspan warned over a year ago
that spreads in the high-yield market were too narrow. And more recently, a new
round of international economic tensions led to a reassessment of risk across
the fixed-income spectrum. At the same time, the market was having a difficult
time absorbing an oversupply in new high-yield issues, which put additional
pressure on prices. The result was a sharp deterioration in the high-yield
market that culminated in the third quarter of 1998, with yield spreads nearly
doubling.
We continued to limit risk during the period by holding bonds of companies we
know and believe in. At the same time, the Fund benefited from our relative lack
of exposure to emerging markets and to economically sensitive industries such as
chemicals, steel and oil. Instead, approximately 25% of the portfolio was
allocated to three strong U.S.-based industries that are also benefiting from
consolidation: cable, casinos and supermarkets. We continued to focus on
companies with U.S.-based cash flows because they are insulated from foreign
economic turmoil and currency pressures.
The Fund also benefited from a diversified strategy that balances risk and
return across the high-yield spectrum. While many of our aggressive high-yield
positions came under pressure this year, these losses were at least partially
offset by the relatively solid performance of our weighting in less aggressive
yield-to-call bonds. These bonds have less downside risk and helped to cushion
the Fund's overall performance. At the same time, they provided solid coupon
income.
Among our most promising securities is Isle of Capri Black Hawk, a casino under
construction in Black Hawk, Colorado. Among the reasons I like this position is
that Isle of Capri is owned by Casino America (a separate and successful holding
in the Fund) and, unlike Las Vegas casinos, this new venue will not be dependent
on foreign tourism. We got in on the ground floor with this deal and continue to
visit the construction site regularly, keeping tabs on progress. Recently, we
became concerned about traffic congestion near the casino location and
videotaped a crucial intersection to express our concerns to authorities. This
kind of hands-on involvement characterizes the extra mile we will go for our
companies. And it's through this kind of close relationship with management that
we get access to the story behind the numbers.
Our position in Young America proved to be one of the Fund's biggest
disappointments during the period. Young America is a service company that
distributes promotional flyers for large companies
(continued on next page)
Fund Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Weighted Average Maturity 7.4 Yrs. 7.2 Yrs.
Average Modified Duration* 5.2 Yrs. 4.8 Yrs.
30-Day Average Yield** 9.50% 7.87%
30-Day Average Yield
Without Reimbursement** NA 7.87%
Average Rating B B
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility.
**Yields will fluctuate.
(1) Both returns include reinvested dividends.
Past performance does not guarantee future results.
Janus Income Funds / October 31, 1998 7
<PAGE>
such as IBM and General Motors. The company ran into financial trouble after a
major contract with General Motors was delayed. Additionally, through our
travels we discovered that Young America suffered from a shaky management team -
we were getting different stories from two high-ranking officers. I lost
confidence in the company and sold the position at a substantial loss.
Currently, the high-yield market appears to be stabilizing, and the oversupply
problems from earlier in the year are moderating. The potential for further
Federal Reserve interest rate cuts is a near-term positive. However, the extent
to which lower interest rates will help the high-yield market depends on whether
economic and political conditions calm enough to persuade investors to move out
of the safety, but reduced yield, of Treasury positions. I remain very
particular about our investment selection, looking for companies with strong
cash flow, disciplined management and strong business models. And I continue to
rely on the collective capabilities of the entire Janus investment team, as well
as on our extensive and exhaustive on-site research.
In closing, I'd like to express my appreciation for your investment in Janus
High-Yield Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of blue. The Lehman Brothers
High-Yield Bond Index is represented by a solid black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, December 29, 1995, through October 31, 1998. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
High-Yield Fund ($13,781) as compared to the Lehman Brothers High-Yield Bond
Index ($12,268).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, (1.45%)
Since 12/29/95*, 12.01%
Janus High-Yield Fund - $13,781
Lehman Brothers High-Yield Bond Index - $12,268
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends.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.
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 89.3%
Advertising Services - 1.8%
$ 5,000,000 Outsourcing Services Group, 10.875%
senior subordinated notes, due 3/1/06+ $ 4,800,000
Agricultural Operations - 3.1%
6,000,000 Frank's Nursery & Crafts, 10.25%
senior subordinated notes, due 3/1/08 5,625,000
2,600,000 Hines Horticulture, Inc., 11.75%
senior subordinated notes, due 10/15/05 2,652,000
8,277,000
Auto Repair Centers - 0.4%
1,000,000 Diamond Triumph Autoglass, 9.25%
senior notes, due 4/1/08+ ............ 972,500
Building - Heavy Construction - 0.3%
1,000,000 Iron Age Corp., 9.875%
senior subordinated notes, due 5/1/08+ 877,500
Cable Television - 5.7%
2,000,000 Classic Cable, Inc., 9.875%
senior subordinated notes, due
8/1/08+ .............................. 2,015,000
2,000,000 Fundy Cable, Ltd., 11.00%
senior notes, due 11/15/05 ........... 2,120,000
5,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 5,375,000
Cable Television - (continued)
$ 2,500,000 Mediacom L.L.C., 8.50%
senior notes, due 4/15/08 ............ $ 2,475,000
3,000,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 3,225,000
15,210,000
Casino Hotels - 4.5%
5,000,000 Santa Fe Hotel, Inc., 11.00%
first mortgage notes, due 12/15/00 ... 4,868,750
2,000,000 Station Casinos, Inc., 10.125%
senior subordinated notes, due 3/15/06 1,985,000
6,000,000 Venetian Casino Resort, L.L.P., 12.25%
company guaranteed notes, due 11/15/04 5,340,000
12,193,750
Casino Services - 2.0%
5,250,000 Isle of Capri Black Hawk, L.L.C., 13.00%
first mortgage bonds, due 8/31/04 .... 5,250,000
Cellular Telecommunications - 1.7%
5,000,000 Nextel Communications, Inc., zero coupon
senior discount notes, due 8/15/04 ... 4,687,500
Collectibles - 0.1%
500,000 Action Performance Cos., Inc., 4.75%
subordinated notes, due
4/1/05+ .............................. 356,875
See Notes to Schedules of Investments.
8 Janus Income Funds / October 31, 1998
<PAGE>
Janus | High-Yield Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Communications Software - 0.7%
$ 4,000 Onepoint Communications Corp., 14.50%
units, due 6/1/08+ ................... $ 1,800,000
Computers - Information Technology - 1.1%
3,500,000 Cooperative Computing, 9.00%
senior subordinated notes, due 2/1/08 2,922,500
Consumer Products - 0.3%
1,500,000 Diamond Brands, Inc., zero coupon
debentures, due 4/15/09+ ............. 725,625
Containers - Paper and Plastic - 1.3%
3,500,000 Plastic Containers, Inc., 10.00%
senior notes, due 12/15/06 ........... 3,500,000
Diversified Operations - 1.0%
3,000,000 High Voltage Engineering Corp., 10.50%
senior notes, due 8/15/04 ............ 2,722,500
Electric - Integrated - 1.2%
3,000,000 Niagara Mohawk Power Corp., 7.75%
senior notes, due 10/1/08 ............ 3,170,100
Engines - Internal Combustion - 0.7%
2,000,000 Wells Aluminum Corp., 10.125%
senior notes, due 6/1/05 ............. 1,825,000
Finance - Other Services - 0.5%
4,000,000 SF Holdings Group, Inc., zero coupon
senior notes, due 3/15/08 ............ 1,440,000
Food - Diversified - 2.0%
6,000,000 Richmont Marketing Specialists, Inc.,
10.125%, senior subordinated notes,
due 12/15/07+ ........................ 5,295,000
Food - Retail - 2.0%
1,000,000 Randall's Food Markets, Inc., 9.375%
senior subordinated notes, due 7/1/07 1,042,500
4,000,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 4,280,000
5,322,500
Funeral Services and Related Items - 0.9%
2,500,000 Prime Succession Acquisition Co., 10.75%
senior subordinated notes, due 8/15/04 2,321,875
Gambling - Non-Hotel Casinos - 3.5%
5,000,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 ............. 5,387,500
4,000,000 Lady Luck Gaming Corp., 11.875%
first mortgage notes, due 3/1/01 ..... 3,965,000
9,352,500
Gas - Transportation - 0.7%
2,000,000 Navigator Gas Transport PLC, 10.50%
notes, due 6/30/07+ .................. 1,905,000
Hotels and Motels - 3.3%
5,000,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 4,950,000
4,000,000 HMH Properties, Inc., 7.875%
company guaranteed notes, due 8/1/08 . 3,870,000
8,820,000
Human Resources - 0.7%
2,000,000 COMFORCE Corp., 12.00%
senior notes, due 12/1/07 ............ 2,005,000
Instruments - Controls - 1.2%
3,000,000 Imo Industries, Inc., 11.75%
senior subordinated notes, due 5/1/06 3,112,500
Internet Software - 0.7%
$ 2,000,000 Exodus Communications, Inc., 11.25%
senior notes, due 7/1/08+ ............ $ 1,800,000
Manufacturing - 0.7%
Foamex International, Inc.:
80,000 13.50%, senior subordinated notes,
due 8/15/05 .......................... 87,700
1,800,000 9.875%, company guaranteed notes,
due 6/15/07 .......................... 1,885,500
1,973,200
Medical - Hospitals - 1.1%
3,000,000 Tenet Healthcare Corp., 8.125%
senior subordinated notes, due 12/1/08+ 3,031,500
Medical Products - 2.2%
7,000,000 Universal Hospital Service, Inc., 10.25%
senior notes, due 3/1/08 ............. 5,967,500
Music/Clubs - 0.7%
4,000 V2 Music Holdings PLC, zero coupon
units, due 4/15/08 ................... 1,920,000
Racetracks - 1.7%
5,000,000 Hollywood Park, Inc., 9.50%
senior subordinated notes, due 8/1/07 4,612,500
Radio - 1.8%
3,000,000 Radio Unica Corp., zero coupon
senior discount notes, due 8/1/06+ ... 1,590,000
3,000,000 SFX Broadcasting, Inc., 10.75%
senior subordinated notes, due 5/15/06 3,243,750
4,833,750
Real Estate Investment and Management - 1.7%
5,000,000 LNR Property Corp., 9.375%
senior subordinated notes, due 3/15/08 4,500,000
Recreational Centers - 1.7%
5,000,000 Bally Total Fitness Holding Corp.,
9.875% senior subordinated notes,
due 10/15/07 ......................... 4,587,500
Reinsurance - 1.0%
3,000,000 Veritas Capital Trust, 10.00%
company guaranteed notes, due 1/1/28 . 2,820,000
Resorts and Theme Parks - 0.6%
2,000,000 Silverleaf Resorts, Inc., 10.50%
senior subordinated notes, due 4/1/08 1,620,000
Retail - Convenience Stores - 1.8%
5,000,000 Core-Mark International, Inc., 11.375%
senior subordinated notes, due 9/15/03 4,950,000
Retail - Discount - 1.1%
3,000,000 Pamida, Inc., 11.75%
senior subordinated notes, due 3/15/03 2,910,000
Retail - Diversified - 1.3%
4,000,000 Eye Care Centers of America, Inc., 9.125%
senior subordinated notes,
due 5/1/08+ .......................... 3,440,000
Retail - Drug Stores - 1.1%
3,000,000 Community Distributors, Inc., 10.25%
company guaranteed notes, due 10/15/04 2,853,750
Retail - Internet - 1.1%
5,000,000 Amazon.com, Inc., zero coupon
senior discount notes, due 5/1/08 .... 2,850,000
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 9
<PAGE>
Janus | High-Yield Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Retail - Mail Order - 1.6%
$ 4,000,000 Herff Jones, Inc., 11.00%
senior subordinated notes, due 8/15/05 $ 4,225,000
Retail - Regional Department Stores - 1.2%
3,000,000 Fred Meyer, Inc., 7.45%
senior notes, due 3/1/08 ............. 3,142,500
Retail - Restaurants - 1.7%
5,000,000 ROMACORP, Inc., 12.00%
senior notes, due 7/1/06+ ............ 4,650,000
Rubber and Plastics - 0.8%
2,000,000 Applied Extrusion Technologies, Inc.,
11.50%, senior notes, due 4/1/02 ..... 2,042,500
Savings/Loan/Thrifts - 1.5%
4,000,000 Local Financial Corp., 11.00%,
senior notes, due 9/8/04+ ............ 4,000,000
Telecommunication Services - 8.5%
4,000,000 IDT Corp., 8.75%
senior notes, due 2/15/06 ............ 3,520,000
3,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 ............. 2,827,500
3,000,000 Peoples Telephone Co., Inc., 12.25%
senior notes, due 7/15/02 ............ 3,191,250
6,000,000 Pinnacle Holding, Inc., zero coupon
senior discount notes, due 3/15/08 ... 2,692,500
7,000,000 SBA Communications Corp., zero coupon
senior discount notes, due 3/1/08 .... 3,010,000
4,000,000 Talton Holdings, Inc., 11.00%
company guaranteed notes, due 6/30/07 3,895,000
4,500,000 Telegroup, Inc., zero coupon
senior discount notes, due 11/1/04 ... 3,026,250
1,825,000 21st Century Telecom Group, Inc.,
zero coupon, senior discount notes,
due 2/15/08 .......................... 752,812
22,915,312
Telephone - Integrated - 2.1%
2,500,000 Dobson Wireline Co., 12.25%
senior notes, due 6/15/08+ ........... 2,231,250
2,000,000 Facilicom International, Inc., 10.50%
senior notes, due 1/15/08 ............ 1,537,500
2,000,000 Nextlink Communications, Inc., 9.625%
senior notes, due 10/1/07 ............ 1,796,000
5,564,750
Telephone - Local - 1.3%
5,000,000 e.Spire Communications, Inc., zero coupon
senior discount notes, due 4/1/06 .... 3,543,750
Television - 3.0%
5,000,000 Dialog Corp. PLC, 11.00%
senior subordinated notes, due 11/15/07 5,125,000
3,000,000 Price Communications Corp., 11.75%
senior subordinated notes, due 7/15/07 3,075,000
8,200,000
Textile - Products - 1.3%
2,000,000 Glenoit Corp., 11.00%
company guaranteed notes, due 4/15/07 1,897,500
3,500,000 Steel Heddle Group, Inc., zero coupon
debentures, due 6/1/09+ .............. 1,509,375
3,406,875
Transportation - Services - 1.5%
$ 4,000,000 Atlantic Express, Inc., 10.75%
company guaranteed notes, due 2/1/04 . $ 4,080,000
Water - 1.9%
5,000,000 Sparkling Spring Water Group, 11.50%
senior subordinated notes, due 11/15/07 5,000,000
Wire and Cable Products - 1.1%
3,000,000 International Wire Group, Inc., 11.75%
senior subordinated notes, due 6/1/05 3,052,500
Wireless Telecommunications - 0.8%
4,000,000 PTC International Financial, zero coupon
company guaranteed notes, due 7/1/07 . 2,095,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $261,408,767) ................. 239,453,112
- --------------------------------------------------------------------------------
Common Stock - 0%
Finance - Other Services - 0%
8,000 SF Holding Group, Inc.
(cost $0)* ........................... 0
- --------------------------------------------------------------------------------
U.S. Government Obligation - 2.0%
$ 5,000,000 U.S. Treasury Note
5.625%, due 5/15/08
(cost $5,393,794) .................... 5,387,806
- --------------------------------------------------------------------------------
Repurchase Agreement - 4.7%
12,500,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$12,505,958 collateralized by
$6,257,835 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $5,714,418 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $12,924 in Sallie Mae,
4.947%, 11/10/98; $1,777,630 in
Government National Mortgage
Association, 4.50%-10.50%,
6/15/13-9/20/28; $233,044 in Federal
Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $934,114 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $70,565 in Tennessee
Valley Authority, 0%, 5/1/13; with
respective values of $4,396,709,
$4,371,800, $13,076, $7,229,255,
$255,895, $953,138, and $3,096 (cost
$12,500,000) ......................... 12,500,000
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 4.8%
Pennzoil Corp.
13,000,000 5.80%, 11/2/98
(amortized cost $12,997,906) ......... 12,997,906
- --------------------------------------------------------------------------------
Total Investments (total cost $292,300,467) - 100.8% ...... 270,338,824
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.8%) (2,122,141)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 268,216,683
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
10 Janus Income Funds / October 31, 1998
<PAGE>
Janus | Federal Tax-Exempt Fund
[PHOTO]
Darrell W. Watters
portfolio manager
Janus Federal Tax-Exempt Fund returned 7.65% for the fiscal year ended October
31, 1998, underperforming its benchmark, the Lehman Brothers Municipal Bond
Index, which gained 8.02%.(1) However, I'm pleased to report that the Fund
achieved first-quartile status during the 12-month period, ranking 58th out of
239 general municipal debt bond funds tracked by Lipper Analytical Services,
Inc., a mutual fund rating company.(2)
Interest rates reached historic lows in 1998 against a backdrop of benign
inflation, moderating economic growth and heightened global financial tensions
that sent investors fleeing into the safe haven of U.S. Treasury markets.
Because this flight to quality was fed by foreign investors who cannot
capitalize on tax-exempt status, municipal bonds generally failed to participate
in this rally. Consequently, yield spreads between municipals and Treasuries
widened. Nonetheless, municipal bonds outperformed other areas of the
fixed-income market, including agencies, convertibles and some corporates.
We continue to adhere to our flexible strategy, focusing on maximizing current
yield while limiting price volatility. This strategy has worked well for us so
far this year, supported by our decision to keep the Fund's duration in line
with that of the Index.
Additionally, our results reflected the care and attention I put into choosing
each position. First and foremost, I'm concerned with management and how they
present their ideas. I look for management teams that are responsive to my
telephone calls, that are candid and forthcoming in their comments, and that are
knowledgeable enough about their credit so they can answer any questions I might
ask. Then I take a closer look at the site and the project. Is the project
something the community is going to use? Is it centrally located? Is there
enough parking? At the end of the day, I want to look at every possible variable
that can affect the success of an offering.
For this reason, we've retained roughly one-third of our exposure in Colorado
double tax-exempt bonds. The state has a relatively high 5% interest tax rate,
so Colorado double tax-exempt bonds trade well on a national basis.
Additionally, Colorado and its municipalities tend to be fiscally responsible,
and the probability of credit problems is low. Finally, the proximity of these
projects allows me to monitor the progress of the high-yield credits on a
regular basis.
One position that has been very successful for us is an Eagle County bond. This
bond was issued to finance the reconditioning of an existing building into
much-needed employee housing for nearby Vail Resort. Before investing, I drove
to Vail to examine the building and talked to an engineer to make sure it was
structurally sound. Then, I checked into demand for the units and found there
was already a huge waiting list. Most important, I found out the property sits
right on a river, making it prime real estate. Needless to say, I came away with
a positive outlook for the project.
(continued on next page)
Fund Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Weighted Average Maturity 10.7 Yrs 17.1 Yrs.
Average Modified Duration* 6.7 Yrs 10.3 Yrs.
30-Day Average Yield** 4.78% 4.79%
30-Day Average Yield
Without Reimbursement** 4.50% 4.36%
Average Rating AA AA2
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility.
**Yields will fluctuate.
Portfolio Asset Mix October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
General Obligation Bonds 20.0% 30.0%
Essential Service Revenue Bonds 80.0% 70.0%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
(2) A general municipal debt bond fund is defined by Lipper as "a fund that
invests at least 65% of its assets in municipal debt issues in the top four
credit ratings." As of October 31, 1998, Janus Federal Tax-Exempt Fund
ranked 91/138 for the 5-year period. The ranking is based on total return,
including reinvestment of dividends and capital gains for the stated
period.
Past performance does not guarantee future results.
Janus Income Funds / October 31, 1998 11
<PAGE>
Looking ahead, the outlook for municipals depends to some extent on the outlook
for other assets. With the Fed moving to resolve the perceived credit crunch by
cutting the federal funds rate, I believe we're close to the low point for
yields in most credit markets. I expect 1999 to bring with it more stable
interest rates, backed by benign inflation and a more moderate pace of economic
growth that is acceptable for both investors and the Federal Reserve. This
outlook suggests that municipals will continue to trade in a narrow range.
However, substantial deterioration in the equities market could unleash a flood
of U.S.-based investment money into municipals, which offer a combination of
security and attractive after-tax returns.
Additionally, I anticipate that talk of federal tax cuts will fade after the
November elections, with little or no cuts actually materializing. This bodes
well for municipal debt markets. Meanwhile, issuance of new municipal paper
should continue to intensify as long as rates are low and states are fiscally
sound. While this issuance ensures a steady supply of attractive opportunities,
it should also contain price increases in the municipals market while
contributing to higher yields.
In closing, I would like to express my appreciation for your continued
investment in Janus Federal Tax-Exempt Fund.
Performance Overview
[Graphic Omitted]
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 shaded area of blue. The
Lehman Brothers Municipal Bond Index is represented by a solid black line. The
"y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 3, 1993, through October 31, 1998. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Federal Tax-Exempt Fund ($13,732) as compared to the Lehman Brothers
Municipal Bond Index ($14,408).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 7.65%
Five Year, 5.25%
Since 5/3/93*, 5.94%
Janus Federal Tax-Exempt Fund - $13,732
Lehman Brothers Municipal Bond Index - $14,408
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends.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.
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 0.5%
Gambling - Non-Hotel Casinos - 0.5%
$ 500,000 Lady Luck Gaming Corp., 11.875%
first mortgage notes, due 3/1/01
(cost $515,397) ...................... $ 495,625
- --------------------------------------------------------------------------------
Municipal Securities - 102.0%
Alabama - 0.2%
200,000 Stevenson Industrial Development
Board Environmental Improvements
Revenue, (Mead Corp. Project),
(Credit Suisse Insured), Variable Rate,
3.60%, 11/1/16 ....................... 200,000
California - 6.5%
2,000,000 East Bay Municipal Utilities District Water
System Revenue, (MBIA Insured), 6.00%,
6/1/12 ............................... 2,177,500
Los Angeles Regional Airport
Improvements Corp. Lease Revenue,
(American Airlines - L.A. International),
(Wachovia Bank of Georgia Insured),
Variable Rate:
700,000 Series A, 3.65%, 12/1/24 ............. 700,000
500,000 Series C, 3.65%, 12/1/24 ............. 500,000
California - (continued)
$ 200,000 Los Angeles Regional Airport
Improvements Corp. Lease Revenue,
(Sublease - L.A. International),
(Societe Generale Insured), Variable
Rate, 3.65%, 12/1/25 ................. $ 200,000
1,000,000 M-S-R Public Power Agency Revenue
(San Juan Project), (MBIA
Insured), Series E, 6.50%, 7/1/17 .... 1,081,250
1,000,000 Metropolitan Water District Southern
California Waterworks Revenue, 5.50%,
7/1/13 ............................... 1,055,000
200,000 Orange County Water District Certificates
of Participation, (Project B), Variable
Rate, 3.45%, 8/15/15 ................. 200,000
5,913,750
See Notes to Schedules of Investments.
12 Janus Income Funds / October 31, 1998
<PAGE>
Janus | Federal Tax-Exempt Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Colorado - 34.1%
$ 1,080,000 Bachelor Gulch Metropolitan District,
6.80%, 12/1/06 ....................... $ 1,143,450
500,000 Black Hawk, 5.70%, 12/1/12 ............. 523,125
Black Hawk Device Tax Revenue:
500,000 6.00%, 12/1/11 ....................... 526,875
650,000 5.50%, 12/1/12 ....................... 650,000
1,250,000 5.625%, 12/1/21 ...................... 1,231,250
Boulder County Hospital Revenue
Development, (Longmont United
Hospital Project):
1,000,000 5.50%, 12/1/12 ....................... 1,026,250
1,000,000 5.60%, 12/1/17 ....................... 1,025,000
1,000,000 Castle Rock Golf Enterprise
Revenue, 6.50%, 12/1/16 .............. 1,047,500
Colorado Housing Finance Authority,
(Single Family Program):
1,000,000 Series C-2, 7.10%, 5/1/15 ............ 1,127,500
1,000,000 Series B-3, 6.80%, 11/1/28 ........... 1,126,250
1,000,000 Denver City and County Airport Revenue
(MBIA Insured), Series D, 5.50%,
11/15/25 ............................. 1,046,250
Denver Health and Hospital Revenue:
635,000 Series A, 5.25%, 12/1/13 ............. 636,588
1,000,000 Series A, 5.375%, 12/1/18 ............ 1,001,250
Denver West Metropolitan District:
590,000 Series B, 5.60%, 12/1/12 ............. 613,600
265,000 6.15%, 12/1/13 ....................... 283,550
750,000 6.50%, 12/1/16 ....................... 810,938
615,000 6.20%, 6/1/17 ........................ 648,825
775,000 Series B, 5.70%, 12/1/17 ............. 793,406
E-470 Public Highway Authority Revenue,
(MBIA Insured), Series A:
2,000,000 4.75%, 9/1/23 ........................ 1,917,500
1,000,000 5.00%, 9/1/26 ........................ 985,000
Eaglebend Affordable Housing Corp.
Multifamily Revenue, (Housing Project):
1,000,000 Series A, 6.40%, 7/1/17 .............. 1,050,000
1,300,000 Series B, 7.40%, 7/1/21 .............. 1,343,875
1,000,000 Erie Water Enterprise Revenue, Series B,
6.00%, 12/1/17 ....................... 1,018,750
2,000,000 Fort Collins Pollution Control Revenue,
(Anheuser Busch Project), 6.00%,
9/1/31 ............................... 2,135,000
Hyland Hills Metropolitan Parks and
Recreation District Special Revenue,
850,000 (ACA Insured), 6.20%, 12/15/06 ....... 882,937
410,000 Series A, 6.10%, 12/15/09 ............ 424,350
1,000,000 Mountain Village Metropolitan District
San Miguel County, 8.10%, 12/1/11 .... 1,152,563
175,000 Plains Metropolitan District, 5.85%,
12/1/05 .............................. 176,832
Colorado - (continued)
Sand Creek Metropolitan District:
$ 1,000,000 7.125%, 12/1/16 ...................... $ 1,031,250
1,000,000 6.625%, 12/1/17 ...................... 1,003,750
100,000 Telluride Excise Tax Revenue, 5.75%,
12/1/12 .............................. 107,125
Telluride Housing Authority Housing
Revenue, (Shandoka Apartments
Project):
100,000 7.50%, 6/1/12 ........................ 107,625
1,500,000 7.50%, 6/1/23 ........................ 1,629,375
Upper Cherry Creek Metropolitan District:
500,000 6.20%, 12/1/05 ....................... 528,750
400,000 6.75%, 12/1/11 ....................... 444,000
31,200,289
Georgia - 3.4%
1,000,000 Atlanta Airport Facilities Revenue,
(AMBAC Insured), 5.00%, 1/2/03 ....... 1,050,000
400,000 Burke County Development Authority
Pollution Control Revenue,
(Power Company Plant-Vogtle),
Variable Rate, 3.60%, 7/1/24 ......... 400,000
1,400,000 Georgia Municipal Electric
Authority Power Revenue, (MBIA
Insured), Series Y, 6.50%, 1/1/17 .... 1,671,250
3,121,250
Illinois - 5.5%
1,500,000 Cook County, (MBIA Insured), Series B,
5.375%, 11/15/18 ..................... 1,533,750
1,000,000 Metropolitan Pier and Exposition
Authority Hospitality Facilities
Revenue, (McCormick Place
Convention Center Project), 7.00%,
7/1/26 ............................... 1,247,500
2,000,000 Regional Transportation Authority,
(FGIC Insured), 6.00%, 6/1/23 ........ 2,295,000
5,076,250
Massachusetts - 2.5%
2,100,000 Massachusetts Water Resources
Authority, Series A, 6.50%, 12/1/19 .. 2,313,339
Minnesota - 2.6%
440,000 Maplewood Multifamily Revenue,
(Hazel Ridge Project), Series
B, 7.50%, 12/15/32 ................... 443,300
2,000,000 Northern Municipal Power Agency
Electric System Revenue,
(AMBAC Insured), Series B,
4.75%, 1/1/20 ........................ 1,947,840
2,391,140
Missouri - 3.1%
1,000,000 Cape Girardeau County Industrial
Development Authority Health
Care Facilities Revenue, (Southeast
Missouri Hospital Association),
(MBIA Insured), 5.25%, 6/1/16 ........ 1,043,750
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 13
<PAGE>
Janus | Federal Tax-Exempt Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Missouri - (continued)
$ 740,000 Harrison County School District
State Aid Capital Improvement,
(FSA Insured), 6.25%, 8/1/02 ......... $ 804,750
1,000,000 Kansas City Municipal Assistance Corp.
Leasehold Refunding Revenue,
(H. Roe Bartle Convention Center
Project), (MBIA Insured), Series A,
5.00%, 4/15/20 ....................... 996,250
2,844,750
Montana - 3.1%
1,000,000 Montana State Board of Investment
Workers Compensation Program,
(MBIA Insured), 6.875%, 6/1/20 ....... 1,083,750
1,000,000 Montana State Health Facilities Authority
Facilities Revenue, (Kalispell
Regional Hospital Project),
(AMBAC Insured), 5.00%, 7/1/18 ....... 996,250
750,000 Montana State Health Facilities
Authority Facilities Revenue,
(St. Peters Community Hospital
Project), 5.50%, 6/1/11 .............. 783,750
2,863,750
Nebraska - 3.1%
2,800,000 Douglas County Nebraska Zoo
Facilities Revenue, (Henry Doorly
Zoo Aquarium Project), 6.00%, 6/1/03 . 2,805,404
New Jersey - 1.3%
1,000,000 New Jersey State Turnpike Authority
Turnpike Revenue, (FSA Insured),
Series C, 6.50%, 1/1/16 .............. 1,223,750
New Mexico - 4.1%
1,500,000 New Mexico Financing Authority
Revenue, (Federal Highway Grant),
(AMBAC Insured), Series A, 4.25%,
9/1/06 ............................... 1,500,000
2,000,000 University of New Mexico University
Revenue, Series A, 6.00%, 6/1/21 ..... 2,280,000
3,780,000
New York - 12.6%
Long Island Power Authority Electric
System Revenue:
3,000,000 Series A, 5.25%, 12/1/26 ............. 3,018,750
2,600,000 Series A, 5.50%, 12/1/29 ............. 2,681,250
1,400,000 New York Energy Research and
Development Authority Pollution
Control Revenue, (New York Electric
and Gas), Series C, Variable Rate,
3.60%, 6/1/29 ........................ 1,400,000
2,000,000 New York Local Government Assistance
Corp., (MBIA Insured), Series B, 4.75%,
4/1/14 ............................... 1,995,000
New York - (continued)
$ 1,000,000 New York State Dormitory Authority
Revenue, (State University
Educational Facilities), Series A,
5.50%, 5/15/19 ....................... $ 1,058,750
1,345,000 St. Lawrence County Industrial
Development Civic Facilities
Revenue, (St. Lawrence University
Project), (MBIA Insured), Series A,
5.375%, 7/1/18 ....................... 1,402,162
11,555,912
North Dakota - 1.7%
1,500,000 Grand Forks Senior Housing Revenue,
Special Term, (4000 VY Square
Project), 6.375%, 12/1/34 ............ 1,522,500
Ohio - 3.6%
100,000 Cuyahoga County Hospital Revenue,
(University Hospitals - Cleveland),
(Dai-Ichi Kangyo Insured), Variable
Rate, 4.05%, 1/1/16 .................. 100,000
2,000,000 Ohio Turnpike Commission Turnpike Revenue,
(FGIC Insured), Series B,
4.75%, 2/15/28 ....................... 1,902,500
1,250,000 Toledo-Lucas County Port Authority
Port Revenue, (Cargill Income Project),
5.90%, 12/1/15 ....................... 1,323,438
3,325,938
Oklahoma - 2.4%
500,000 McGee Creek Authority Water Revenue,
(MBIA Insured), 6.00%, 1/1/23 ........ 576,250
500,000 Oklahoma County Finance Authority
Multifamily Housing Revenue
First Mortgage, (Multiple Apartments
Project), Series A, 7.00%, 4/1/18 .... 500,625
1,000,000 Tulsa Industrial Authority Revenue,
(University of Tulsa), (MBIA
Insured), Series A, 6.00%, 10/1/16 ... 1,140,000
2,216,875
Oregon - 1.1%
1,000,000 Medford Hospital Facilities Authority
Revenue, (Asante Health System),
(MBIA Insured), Series B, 5.125%,
8/15/28 .............................. 1,012,500
Pennsylvania - 2.8%
2,300,000 Pennsylvania Industrial Development
Authority Revenue, (Economic
Development), Series A, 7.00%, 1/1/11 2,535,152
Tennessee - 0.6%
500,000 Sullivan County Tennessee Industrial
Development Board Pollution
Control Revenue, (Mead Corp. Project),
Variable Rate, 3.60%, 10/1/16 ........ 500,000
See Notes to Schedules of Investments.
14 Janus Income Funds / October 31, 1998
<PAGE>
Principal Amount Market Value
- --------------------------------------------------------------------------------
Texas - 5.4%
Grapevine Industrial Development
Corp. Revenue, (American Airlines):
$ 300,000 Series A-2, Variable Rate, 3.65%,
12/1/24 .............................. $ 300,000
200,000 Series A-4, Variable Rate, 3.65%,
12/1/24 .............................. 200,000
1,800,000 Harris County Health Facilities and
Development Corp. Revenue, (St. Lukes
Episcopal Hospital), Series A, Variable
Rate, 3.65%, 2/15/27 ................. 1,800,000
500,000 Lone Star Airport Improvement Authority,
Series A-1, Variable Rate, 3.65%, 12/1/14 500,000
1,000,000 Orange County Naval and Port District
Industrial Development Corp. Revenue,
(North Star Steel Texas Project), 6.375%,
2/1/17 ............................... 1,107,500
1,000,000 Texas State Public Financial Authority,
Series C, 4.70%, 10/1/03 ............. 1,041,250
4,948,750
Wisconsin - 1.1%
1,000,000 Wisconsin, Series D, 4.25%, 5/1/05 ..... 1,012,500
Wyoming - 1.2%
1,000,000 Sweetwater County Pollution Control
Revenue, (Idaho Power Co.), Series A,
6.05%, 7/15/26 ....................... 1,081,250
- --------------------------------------------------------------------------------
Total Municipal Securities (cost $91,259,117) ............. 93,445,049
- --------------------------------------------------------------------------------
Total Investments (total cost $91,774,514) - 102.5% ....... 93,940,674
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.5%) (2,315,445)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 91,625,229
- --------------------------------------------------------------------------------
ACA - American Capital Access Corp.
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
FSA - Financial Security Assurance Corp.
MBIA - Municipal Bond Insurance Association Corp.
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 15
<PAGE>
Janus | Short-Term Bond Fund
[PHOTO]
Sandy R. Rufenacht
portfolio manager
For the 12-month period ended October 31, 1998, Janus Short-Term Bond Fund
returned 6.49%, while its benchmark, the Lehman Brothers 1-3 Year
Government/Corporate Bond Index, gained 7.54%.(1)
Throughout the year, a flexible investment approach allowed the Fund to respond
to changes in interest rates. This flexibility was achieved by maintaining a
sizable weighting in investment-grade bonds, combined with holdings in
Treasuries and cash equivalents. We also owned a relatively small position in
high-yield bonds, which involve slightly higher credit risk than
investment-grade bonds but offer generous yields.
Unfortunately, this strategy of balancing Treasury, corporate and high-yield
positions had mixed results during the past year as the market transitioned
through several distinct periods. Early in 1998, market attention shifted from
the crisis in Asia to renewed concerns that rapid growth at home could spark
higher inflation and prompt a potential Federal Reserve interest rate hike.
Although there was no evidence of inflation, long-term rates moved higher.
During this time, the combination of our shorter maturity holdings and our
weighting in high-yield bonds allowed the Fund to hold its ground.
As problems in Asia once again reasserted themselves in the second quarter,
investor focus shifted back to credit risk. Amid heightened tensions abroad and
political uncertainty at home, U.S. government debt became a safe haven. The
inflows of capital into longer-dated Treasuries helped drive rates down,
flattening the yield curve. During this period, the Fund's performance benefited
from our substantial Treasury holdings. Unfortunately, our short-term
investment-grade securities were unable to keep pace with this rally, and their
spreads relative to Treasuries widened. These corporate bonds traded at their
widest spreads in years relative to Treasuries, reflecting investors' concerns
over weaker domestic profits and turmoil abroad.
The Fund's high-yield positions had a particularly difficult time during this
period. The good news is that we were able to avoid the worst problems in the
high-yield market because of the quality of our positions. We continued to
concentrate on yield-to-call bonds, which offer solid performance and limited
downside risk. The bad news is that these bonds have little sensitivity to
falling interest rates. Consequently, these positions failed to participate in
the Treasury market rally, and yield spreads widened considerably.
Despite the underperformance by high-yield debt, we remain upbeat on many of our
holdings. With interest rates near an all-time low, more companies are calling
in their existing bonds to refinance their debt at a lower cost. In particular,
we look for companies whose improving fundamentals make them candidates for
credit upgrades. Our position in HEALTHSOUTH serves as a good example. The
company runs rehabilitation centers (a business that provides impressive cash
flow). HEATHSOUTH's debt has been upgraded from junk status to investment grade,
and the company's debt costs have
Fund Profile October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Weighted Average Maturity 2.6 Yrs. 2.4 Yrs.
Average Modified Duration* 2.3 Yrs. 2.0 Yrs.
30-Day Average Yield** 4.89% 6.04%
30-Day Average Yield
Without Reimbursement** 4.44% 5.57%
Average Rating A+ A
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility.
**Yields will fluctuate.
Portfolio Asset Mix October 31, 1998 October 31, 1997
- --------------------------------------------------------------------------------
Investment-Grade
Corporate Bonds 60.2% 56.2%
High-Yield/High-Risk
Corporate Bonds 12.4% 16.5%
U.S. Treasury Bonds 24.4% 21.7%
Cash & Cash Equivalents 3.0% 5.6%
- --------------------------------------------------------------------------------
(1) Both returns include reinvested dividends.
Past performance does not guarantee future results.
16 Janus Income Funds / October 31, 1998
<PAGE>
moved lower. While we expect this higher-yield bond to be called sometime soon,
for right now the Fund is collecting a lucrative 91/2% yield.
In the near term, the prospect of lower interest rates and the potential for
additional interest rate cuts are positives for the market. However, I'm less
certain on the longer-term outlook for interest rates. I believe the recent
decline in rates has been fed more by global uncertainty than by fears of
recession. As this uncertainty subsides, we may see rates bottom out as
investors move back into other areas of the fixed-income market, pursuing higher
yields.
While the Fund's high-yield weighting has been reduced slightly, I have not
substantially changed our strategy of balancing investment-grade and high-yield
positions. This approach has worked successfully over the past three years and
should produce solid results over the long term. In particular, once interest
rates stabilize, I remain confident that the higher coupon paid by the Fund's
high-yield positions will again enhance its performance.
In closing, I'd like to thank you for your investment in Janus Short-Term Bond
Fund.
Performance Overview
[Graphic Omitted]
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
shaded area of blue. The Lehman Brothers 1-3 Year Government/Corporate Bond
Index is represented by a solid black line. The "y" axis reflects the value of
the investment. The "x" axis reflects the computation periods from inception,
September 1, 1992, through October 31, 1998. The upper right quadrant reflects
the ending value of the hypothetical investment in Janus Short-Term Bond Fund
($13,834) as compared to the Lehman Brothers 1-3 Year Government/Corporate Bond
Index ($14,237).
Average Annual Total Return
for the periods ended October 31, 1998
One Year, 6.49%
Five Year, 5.47%
Since 9/1/92*, 5.40%
Janus Short-Term Bond Fund - $13,834
Lehman Brothers 1-3 Year
Government/Corporate Bond Index- - $14,237
*The Fund's inception date.
Source - Lipper Analytical Services, Inc. 1998.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. All returns reflect reinvested dividends.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.
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Notes - 72.6%
Aerospace and Defense - 0.1%
$ 100,000 CHC Helicopter Corp., 11.50%
senior subordinated notes, due 7/15/02 $ 105,125
Building - Residential and Commercial - 0.4%
500,000 Toll Corp., 9.50%
senior subordinated notes, due 3/15/03 506,250
Cable Television - 1.4%
2,000,000 TCI Communications, Inc., 6.375%
senior notes, due 9/15/99 ............ 2,020,000
Computers - Mainframe - 2.5%
3,500,000 IBM Corp., 6.375%
notes, due 6/15/00 ................... 3,578,750
Containers - Paper and Plastic - 0.7%
1,000,000 Plastic Containers, Inc., 10.00%
senior notes, due 12/15/06 ........... 1,000,000
Diversified Financial Services - 3.8%
1,500,000 American Express Credit Corp., 6.125%
senior notes, due 11/15/01 ........... 1,550,625
3,750,000 Associates Corp. N.A., 5.85%
senior notes, due 1/15/01 ............ 3,778,125
5,328,750
Educational Software - 0.3%
350,000 Herff Jones, Inc., 11.00%
senior subordinated notes, due 8/15/05 369,688
Electric - Generation - 1.1%
$ 1,500,000 Niagara Mohawk Power Corp., 6.50%
senior notes, due 7/1/99 ............. $ 1,511,250
Electric - Integrated - 2.5%
3,500,000 Southern Cal Edison Co., 5.875%
notes, due 1/15/01 ................... 3,565,625
Finance - Auto Loans - 6.0%
Ford Motor Credit Corp.:
3,750,000 6.25%, notes, due 11/8/00 ............ 3,820,312
2,000,000 5.125%, notes, due 10/15/01 .......... 1,980,000
2,500,000 General Motors Acceptance Corp., 6.375%
notes, due 12/1/01 ................... 2,575,000
8,375,312
Finance - Investment Bankers/Brokers - 2.7%
3,750,000 Merrill Lynch & Co., Inc., 6.00%
notes, due 3/1/01 .................... 3,773,437
Finance - Leasing Companies - 1.2%
1,750,000 International Lease Finance Corp., 6.625%
notes, due 4/1/99 .................... 1,761,305
Finance - Other Services - 2.6%
3,500,000 Sears Roebuck Acceptance Corp., 6.00%
notes, due 3/20/03 ................... 3,587,500
Food - Flour and Grain - 2.6%
3,500,000 Archer Daniels Co., 6.25%
notes, due 5/15/03 ................... 3,666,250
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 17
<PAGE>
Janus | Short-Term Bond Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Food - Retail - 2.5%
$ 2,000,000 Racers-Kellogg, 5.75%
notes, due 2/2/01+ ................... $ 2,042,500
1,310,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 1,401,700
3,444,200
Gambling - Non-Hotel Casinos - 1.5%
1,500,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 ............. 1,616,250
500,000 Lady Luck Gaming Corp.,
11.875% first mortgage notes, due
3/1/01 ............................... 495,625
2,111,875
Hotels and Motels - 2.0%
1,500,000 Host Marriott Corp., 9.50%
senior notes, due 5/15/05 ............ 1,541,250
1,250,000 Hyatt Equities, L.L.C., 6.80%
notes, due 5/15/00+ .................. 1,281,250
2,822,500
Machinery - General Industrial - 0.7%
1,000,000 Fairfield Manufacturing Co., Inc., 11.375%
senior subordinated notes, due 7/1/01 1,025,000
Manufacturing - 0.9%
1,200,000 Foamex International, Inc., 13.50%
company guaranteed notes, due 8/15/05 1,315,500
Medical - Drugs - 4.1%
2,550,000 SmithKline Beecham PLC, 6.75%
company guaranteed notes, due
10/30/01 ............................. 2,683,875
3,000,000 Warner-Lambert Co., 5.75%
notes, due 1/15/03 ................... 3,101,250
5,785,125
Metal - Aluminum - 0.7%
1,000,000 Kaiser Aluminum and Chemical Corp.,
12.75%, senior subordinated notes,
due 2/1/03 ........................... 931,250
Metal Processors and Fabricators - 0.7%
1,000,000 Haynes International, Inc. 11.625%
senior notes, due 9/1/04 ............. 1,000,000
Money Center Banks - 7.0%
BankAmerica Corp.:
3,750,000 5.75%, senior notes, due 3/15/01 ..... 3,815,625
3,000,000 6.65%, senior notes, due 5/1/01 ...... 3,090,000
3,000,000 Chase Manhattan Corp., 5.50%
notes, due 2/15/01 ................... 3,018,750
9,924,375
Multimedia - 3.8%
1,750,000 Time Warner, Inc. , 4.90%
notes, due 7/29/99+ .................. 1,745,625
3,500,000 Walt Disney Co. (The), 6.375%
senior notes, due 3/30/01 ............ 3,618,125
5,363,750
Paint and Related Products - 1.4%
$ 2,000,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 .................... $ 2,035,000
Physical Therapy and Rehabilitation Centers - 1.5%
2,000,000 HEALTHSOUTH Corp., 9.50%
senior subordinated notes, due 4/1/01 2,070,000
Pipelines - 1.8%
2,500,000 Enron Corp., 6.45%
notes, due 11/15/01 .................. 2,581,250
Retail - Discount - 1.3%
1,750,000 TJX Companies, Inc., 6.625%
notes, due 6/15/00 ................... 1,793,750
Retail - Leisure Products - 0.7%
1,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 1,030,000
Retail - Major Department Stores - 2.6%
3,500,000 Wal-Mart Stores, Inc., 6.50%
notes, due 6/1/03 .................... 3,705,625
Retail - Regional Department Stores - 1.1%
1,500,000 Fred Meyer, Inc., 7.15%
senior notes, due 3/1/03 ............. 1,554,375
Retail - Restaurants - 0.7%
1,000,000 Carrols Corp., 11.50%
senior notes, due 8/15/03 ............ 1,040,000
Super-Regional Banks - 2.0%
1,000,000 Mellon Financial Co., 6.30%
senior notes, due 6/1/00 ............. 1,020,000
1,750,000 Norwest Corp., 6.25%
senior notes, due 4/15/99 ............ 1,760,518
2,780,518
Telecommunication Equipment - 2.6%
3,500,000 Lucent Technologies, Inc., 6.90%
notes, due 7/15/01 ................... 3,692,500
Telephone - Long Distance - 4.4%
3,000,000 MCI WorldCom, Inc., 6.125%
senior notes, due 8/15/01 ............ 3,056,250
3,000,000 Southwestern Bell Telephone Corp.,
6.375%, notes, due 4/1/01 ............ 3,093,750
6,150,000
Wire and Cable Products - 0.7%
International Wire Group, Inc.:
350,000 11.75%, company guaranteed notes,
due 6/1/05 ........................... 356,125
650,000 11.75%, senior subordinated notes,
due 6/1/05 ........................... 661,375
1,017,500
- --------------------------------------------------------------------------------
Total Corporate Notes (cost $101,678,280) ................. 102,323,335
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
18 Janus Income Funds / October 31, 1998
<PAGE>
Principal Amount Market Value
- --------------------------------------------------------------------------------
U.S. Government Obligations - 24.4%
U.S. Treasury Notes:
$ 28,000,000 6.375% due 1/15/00** ................. $ 28,670,600
5,500,000 5.25% due 8/15/03 .................... 5,736,885
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $34,219,198) ...... 34,407,485
- --------------------------------------------------------------------------------
Repurchase Agreements - 1.6%
2,200,000 ABN AMRO Securities, Inc.,
5.72%, dated 10/30/98, maturing
11/2/98, to be repurchased at
$2,201,049 collateralized by
$1,101,379 in Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $1,005,737 in
Freddie Mac, 0%-9.00%,
11/9/98-8/15/28; $2,275 in Sallie
Mae, 4.947%, 11/10/98; $1,777,630 in
Government National Mortgage
Association, 4.50%-10.50%,
6/15/13-9/20/28; $41,016 in Federal
Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $164,404 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $12,419 in Tennessee
Valley Authority, 0%, 5/1/13; with
respective values of $773,821,
$769,437, $2,301, $1,272,349,
$45,037, $167,752, and $545 (cost
$2,200,000) .......................... 2,200,000
- --------------------------------------------------------------------------------
Total Investments (total cost $138,097,478) - 98.6% ....... 138,930,820
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.4% 1,974,973
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 140,905,793
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Futures - Short
100 Contracts U.S. Treasury - 5 year bond, expires
December 1998, principal amount
$11,025,000 value $11,464,063,
cumulative depreciation .............. ($439,063)
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 19
<PAGE>
Janus | Money Market Funds
[PHOTO]
Sharon S. Pichler
portfolio manager
For the fiscal year ended October 31, 1998, Janus Money Market Fund ranked 49
out of 309 funds in the U.S. Money Market category as tracked by Lipper
Analytical Services.(1) Janus Government Money Market Fund ranked 27 out of 115
in the U.S. Government Money Market category during the same period,(2) while
Janus Tax-Exempt Money Market Fund ranked 12 out of 132 in the U.S. Tax-Exempt
category.(3)
Currently, the primary factor driving the solid performance of U.S. money
markets has been the Federal Reserve's back-to-back reduction in interest rates.
The Fed first cut rates by 25 basis points in late September, and then matched
that cut on October 15. These moves represented a significant shift in Federal
Reserve policy. The Fed had held interest rates unchanged for an unusually long
period of time, while closely monitoring an economy that seemed to be
successfully combining strong growth and benign inflation. For this reason,
domestic market volatility in the first half of the year was driven primarily by
investor perceptions that the Asian crisis could have a negative impact on U.S.
growth and corporate earnings. Nonetheless, the economic deterioration in the
Far East was generally a positive for the markets early in the year because it
kept global inflationary pressures in check.
As tensions abroad heightened over the summer months, foreign funds flowed into
the safety of the U.S. Treasury market. This flight to quality focused almost
exclusively on the longer end of the market, largely bypassing our investment
universe, which is primarily instruments with maturities of one year or less. On
the positive side, the uncertain international situation contributed to the
shift in Federal Reserve policy.
Early in the year, my strategy was to invest primarily in very short-term
obligations, which are influenced more by changes in the federal funds rate than
by broader market forces. Despite the recent market developments, I haven't
substantially changed this strategy or significantly extended the maturity of
the Funds. However, I did purchase some longer-term paper that will maintain a
higher yield in this declining interest rate environment. Overall, our
performance has benefited from our strict discipline of detailed credit analysis
and our careful evaluation of each company's risk-reward characteristics.
Going forward, we'll continue to invest in shorter-term maturities as long as
the global outlook remains so uncertain. At this time, market consensus is that
the Federal Reserve will probably continue lowering interest rates until the
markets regain some stability. We could see another .25% reduction in rates by
year-end. I believe we're positioned to capitalize on this possibility, while
also retaining the flexibility that will allow us to react to any changes that
might arise in the economic landscape.
In closing, I'd like to thank you for your continued investment in Janus Money
Market Funds.
(1) Lipper Analytical Services defines a U.S. money market fund as one that
invests "in high-quality financial instruments rated in the top two grades
with dollar-denominated average maturities of less than 90 days" and that
intends "to keep constant net asset value." As of October 31, 1998, Janus
Money Market Fund ranked 42/264 U.S. money market funds for the 3-year
period.
(2) 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." As of October 31, 1998, Janus Government Money Market Fund
ranked 22/104 U.S. government money market funds for the 3-year period.
(3) 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."
As of October 31, 1998, Janus Tax-Exempt Money Market Fund ranked 15/123
U.S. tax-exempt money market funds for the 3-year period. Lipper rankings
are based on total return, including reinvestment of dividends and capital
gains.
An investment in the Fund(s) is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund(s) seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund(s).
Past performance does not guarantee future results.
20 Janus Income Funds / October 31, 1998
<PAGE>
Janus | Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 12.3%
Banque et Caisse D'Epargne de L'etat,
$ 76,162,000 5.12%, 1/8/99 ........................ $ 75,425,429
Bear Stearns Companies, Inc.:
50,000,000 5.18%, 1/4/99 ........................ 49,539,556
50,000,000 5.17%, 1/13/99 ....................... 49,475,819
Cogentrix Richmond,
33,662,000 5.40%,11/10/98 ....................... 33,616,556
General Motors Acceptance Corp.
50,000,000 5.06%, 1/22/99 ....................... 49,423,722
Heller Financial, Inc.:
50,000,000 5.30%, 11/2/98 ....................... 49,992,639
50,000,000 5.30%, 11/3/98 ....................... 49,985,278
50,000,000 5.30%, 11/4/98 ....................... 49,977,917
HSBC America, Inc.:
50,000,000 5.57%, 2/12/99 ....................... 49,203,181
25,000,000 5.419%, 5/24/99 ...................... 24,232,308
PHH Corp.,
300,000,000 6.00%, 11/2/98 ....................... 299,950,000
St. Joseph Health Systems of
17,800,000 California, Series A, 5.80%, 7/1/11+ . 17,800,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $798,622,405) ........................... 798,622,405
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - 5.0%
10,110,000 Bannockburn Associates, L.L.C.,
5.25%, 4/1/27 ........................ 10,110,000
15,995,000 California HFA,
5.28%, 8/1/05+ ....................... 15,995,000
13,860,000 Community Health System, Inc.,
Series A, 5.20%, 10/1/03 ............. 13,860,000
15,510,000 Crouse Health Hospital, Inc.,
5.33%, 7/1/17 ........................ 15,510,000
25,000,000 Crozer-Keystone Health Systems,
5.26%, 12/15/21 ...................... 25,000,000
9,100,000 Eagle County, Colorado Housing
Facility Authority, (BC Housing
L.L.C. Project), Series A,
5.2273%, 6/1/27 ...................... 9,100,000
20,000,000 Episcopal Health Services, Inc., New York,
5.35%, 3/1/28 ........................ 20,000,000
15,000,000 Eufaula AL IDA Tax 1998 (Chia Tai Project),
5.44%, 6/1/13 ........................ 15,000,000
12,700,000 Genesys Michigan Health System,
Inc., Series A, 5.20%, 4/1/20 ........ 12,700,000
8,700,000 H/M Partners, L.L.C., 5.45%, 10/1/20 ... 8,700,000
6,300,000 Jackson County, Alabama Industrial
Development, (Beaulieu America
Project), 5.32%, 7/1/10 .............. 6,300,000
20,000,000 Lenexa Kansas IDRB (Lab One, Inc.
Project - A), 5.30%, 9/1/09 .......... 20,000,000
59,000,000 Los Angeles, California Community
Redevelopment Agency, Series A,
5.35%, 12/1/18 ....................... 59,000,000
20,675,000 Louisiana Health Systems Corp. Revenue
1998-B, 5.31%, 10/1/22 ............... 20,675,000
Taxable Variable Rate Demand Notes - (continued)
$ 10,000,000 Patrick Schaumburg Auto,
5.60%, 7/1/08 ........................ $ 10,000,000
25,000,000 Rehau, Inc.,
5.31%, 10/1/19 ....................... 25,000,000
16,990,000 Rockland Financial, Ltd.,
5.25%, 12/1/26 ....................... 16,990,000
15,000,000 T3 Holdings, Inc. (Ocean Spray
Cranberries, Inc.), 5.22%, 5/1/08 .... 15,000,000
5,170,000 Union City, Tennessee Industrial
Development Board, (Cobank Limited,
L.L.C., Project), 5.45%, 1/1/25 ...... 5,170,000
- --------------------------------------------------------------------------------
Total Taxable Variable Rate Demand Notes
(cost $324,110,000) ..................................... 324,110,000
- --------------------------------------------------------------------------------
Floating Rate Notes - 29.9%
Abbey National Treasury Services,
50,000,000 5.0689%, 7/20/99+ .................... 49,953,557
American Express Centurion,
35,000,000 5.4081%, 10/19/99 .................... 35,000,000
American Honda Finance Corp.:
30,000,000 5.2189%, 1/19/99+ .................... 30,000,000
35,000,000 5.20%, 1/21/99+ ...................... 35,000,000
25,000,000 5.1989%, 4/20/99+ .................... 24,998,825
25,000,000 5.1892%, 7/27/99+ .................... 25,000,000
80,000,000 5.6675%, 8/16/99+ .................... 80,000,000
75,000,000 5.22%, 10/28/99 ...................... 75,000,000
25,000,000 5.2698, 10/28/99 ..................... 24,992,582
Army and Air Force Exchange,
58,000,000 5.74%, 5/24/99+ ...................... 58,000,000
Associates First Capital,
50,000,000 5.405%, 4/5/09+ ...................... 50,000,000
Bankers Trust Company of New York:
177,500,000 5.6675%, 2/19/99+ .................... 177,492,586
20,000,000 5.1873%, 2/26/99+ .................... 19,997,495
Bayerische Landesbank New York,
76,000,000 5.2662%, 5/10/99 ..................... 75,948,058
CIT Group Inc:
100,000,000 5.05%, 7/21/99 ....................... 99,891,325
50,000,000 5.18%, 11/2/99 ....................... 49,990,215
Countrywide Home Loan:
50,000,000 5.6875%, 8/30/99 ..................... 50,000,000
50,000,000 5.3125%, 10/6/99 ..................... 49,996,340
CP Trust Certificates, Series 1996-2,
75,000,000 5.415%, 12/28/98 ..................... 75,000,000
Ford Motor Credit Co.,
50,000,000 5.20%, 12/23/98 ...................... 49,997,729
General Motors Acceptance Corp.:
25,000,000 5.19%, 3/5/99 ........................ 24,998,250
52,000,000 5.19%, 10/8/99 ....................... 51,993,240
Generale Bank, New York,
50,000,000 5.2196%, 10/27/99 .................... 49,990,385
Key Bank, N.A.,
50,000,000 5.2298, 4/20/99 ...................... 50,000,000
Merrill Lynch & Co., Inc.:
40,000,000 5.18% medium term notes, 11/10/98 .... 39,999,803
50,000,000 5.20%, medium term notes, 11/23/98 ... 50,000,000
50,000,000 5.23%, medium term notes, 12/21/98 ... 50,000,000
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 21
<PAGE>
Janus | Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Floating Rate Notes - (continued)
Morgan Guaranty Trust Co.:
$ 40,000,000 5.4687%, 6/7/99 ...................... $ 39,979,643
25,000,000 5.1696%, 9/27/99 ..................... 24,989,031
100,000,000 5.20%, 11/29/99 ...................... 100,000,000
Orix America, Inc. (MBIA Insured),
25,000,000 5.40%, 4/16/99+ ...................... 25,016,970
PNC Bank N.A.:
25,000,000 5.4062%, 10/13/99 .................... 24,995,384
50,000,000 5.4262%, 10/13/99 .................... 50,000,000
25,000,000 5.2396%, 10/27/99 .................... 25,000,000
50,000,000 5.2887%, 11/3/99 ..................... 50,000,000
Standard Chartered Bank of New York,
100,000,000 5.1643%, 2/24/99 ..................... 99,983,062
Triangle Funding, Ltd.,
35,000,000 5.3525%, 10/15/99+ ................... 35,000,000
West Labs, Series 1998 - 1, Class A,
17,300,389 5.5273%, 2/26/99 ..................... 17,300,389
- --------------------------------------------------------------------------------
Total Floating Rate Notes (cost $1,945,504,869) ........... 1,945,504,869
- --------------------------------------------------------------------------------
Funding Agreements - 3.6%
General American Life Insurance Co.
(seven day demand):
110,000,000 5.77%, 12/31/98 ...................... 110,000,000
50,000,000 5.77%, 2/19/99 ....................... 50,000,000
Integrity Life (seven day demand),
25,000,000 5.77%, 3/30/99 ....................... 25,000,000
Transamerica Occidental Life Insurance Co.
(seven day demand),
50,000,000 5.3125%, 2/26/99 ..................... 50,000,000
- --------------------------------------------------------------------------------
Total Funding Agreements (cost $235,000,000) .............. 235,000,000
- --------------------------------------------------------------------------------
Certificates of Deposit - 8.0%
Bankers Trust Company of New York:
20,000,000 5.96%, 12/14/98 ...................... 20,005,357
25,000,000 5.60%, 12/24/98 ...................... 25,001,226
20,000,000 5.69%, 1/8/99 ........................ 19,998,572
Bayerische Landesbank, New York,
25,000,000 5.72%, 5/6/99 ........................ 24,988,061
Canadian Imperial Bank of Commerce,
30,000,000 5.75%, 4/1/99 ........................ 29,994,058
Chase Manhattan Bank USA, N.A.,
50,000,000 5.685%, 8/3/99 ....................... 50,329,358
Deutsche Bank,
50,000,000 5.67%, 2/26/99 ....................... 49,993,855
National Bank Canada, New York:
17,000,000 5.76%, 6/10/99 ....................... 17,061,925
30,000,000 5.68%, 7/20/99 ....................... 29,987,668
25,000,000 4.81%, 7/23/99 ....................... 25,001,769
25,000,000 4.69%, 10/25/99 ...................... 24,992,884
Skandinaviska Enskilda Banken:
50,000,000 5.67%, 2/26/99 ....................... 49,993,862
50,000,000 5.68%, 3/2/99 ........................ 49,992,060
50,000,000 5.72%, 3/5/99 ........................ 49,993,491
Standard Chartered Bank of New York:
30,000,000 5.67%, 2/26/99 ....................... 29,996,317
25,000,000 5.68%, 3/5/99 ........................ 24,996,744
- --------------------------------------------------------------------------------
Total Certificates of Deposit (cost $522,327,207) ......... 522,327,207
- --------------------------------------------------------------------------------
Promissory Notes - 9.2%
Goldman Sachs Group, L.P., (same day put)
$300,000,000 5.3432%, 1/19/99 ..................... $ 300,000,000
Lehman Brothers, Inc., (same day put)
300,000,000 5.8875%, 4/21/99 ..................... 300,000,000
- --------------------------------------------------------------------------------
Total Promissory Notes (cost $600,000,000) ................ 600,000,000
- --------------------------------------------------------------------------------
Time Deposit - 0.8%
49,100,000 Merchantile Bank, N.A.,
5.50%, 11/2/98 (cost $49,100,000) .... 49,100,000
- --------------------------------------------------------------------------------
Put Bonds - 0.3%
Bedford County, Virgina Industrial
Development Authority, Series 95D,
18,900,000 5.53%, 12/11/98 (cost $18,900,000) ... 18,900,000
- --------------------------------------------------------------------------------
Bank Notes - 4.1%
FCC National Bank,
50,000,000 5.02%, 2/23/99 ....................... 50,000,000
First Union National Bank,
30,000,000 5.25%, 9/17/99 ....................... 30,000,000
Morgan Guaranty Trust Co:
50,000,000 5.13%, 1/25/99 ....................... 50,000,000
18,000,000 5.75%, 10/8/99 ....................... 18,143,927
NationsBank Corp:
50,000,000 5.10%, 1/20/99 ....................... 50,000,000
50,000,000 5.02%, 2/26/99 ....................... 50,000,000
Toronto Dominion Bank, New York,
20,000,000 5.71%, 5/24/99 ....................... 20,060,334
- --------------------------------------------------------------------------------
Total Bank Notes (cost $268,204,261) ...................... 268,204,261
- --------------------------------------------------------------------------------
Repurchase Agreements - 29.3%
125,000,000 ABN AMRO Securities, Inc.,
5.75% dated 10/30/98 maturing 11/2/98
to be repurchased at $125,059,896
collateralized by $12,500,000 in
California Infrastructure SDG&E-1,
6.19%, 9/25/05; $15,235,388 in
Capital One Master Trust, 6.31%,
6/15/11; $80,000,000 in SLM Student
Loan Trust, 5.392286%-5.432286%,
7/25/09-10/25/10; $19,853,000 in U.S.
Treasury Bill, 4.17%, 1/14/99; with
respective values of $12,540,325,
$16,008,249, $79,272,604, and
$19,679,068 .......................... 125,000,000
See Notes to Schedules of Investments.
22 Janus Income Funds / October 31, 1998
<PAGE>
Principal Amount Market Value
- --------------------------------------------------------------------------------
Repurchase Agreements - (continued)
$461,000,000 ABN AMRO Securities, Inc.,
5.72% dated 10/30/98 maturing
11/2/98, to be repurchased at
$461,219,743 collateralized by
$230,788,960 in Fannie Mae,
0%-13.00%, 11/1/98-9/25/28;
$210,747,720 in Freddie Mac,
0%-9.00%, 11/9/98-8/15/28; $476,634
in Sallie Mae, 4.947%, 11/10/98;
$372,494,363 in Government National
Mortgage Association, 4.50%-10.50%,
6/15/13-9/20/28; $8,594,657 in
Federal Farm Credit, 5.63%-8.16%,
9/5/00-10/7/09; $34,450,122 in
Federal Home Loan Bank System,
1.70%-6.135%, 11/6/98-8/21/28;
$2,602,419 in Tennessee Valley
Authority, 0%, 5/1/13; with
respective values of $162,150,628,
$161,231,970, $482,253, $266,614,935,
$9,437,402, $35,151,731, and $114,181 $ 461,000,000
250,000,000 Barclays Capital, Inc.,
5.78% dated 10/30/98, maturing
11/2/98 to be repurchased at
$250,120,417 collateralized in
$5,000,000 in Resolution Trust Corp.,
7.00%,10/25/24; $20,000,000 in
Residential Funding Mortgage
Securities I, 6.50%, 1/25/28;
$5,007,850 in Prudential Home
Mortgage Securities, 7.033929%,
10/25/08; $31,638,000 in Norwest
Asset Securities Corp., 6.75%-7.00%,
8/25/27-9/25/28; $38,615,477 in
Countrywide Home Loans, 6.75%,
8/25/28; $1,220,000 in Standard
Credit Card Master Trust, 5.95%-
8.25%,11/7/03-10/7/04; $1,000,000 in
Sears Credit Account Master Trust,
7.00%, 10/15/04; $500,000 in Prime
Credit Card Master Trust, 6.75%,
11/15/05; $6,000,000 in Premier Auto
Trust, 5.82%-6.25%, 12/5/00-8/6/01;
$5,000,000 in Navistar Financial
Corp. Owner Trust, 5.94%, 11/15/04;
$6,475,000 in Nationsbank Credit Card
Master Trust, 6.00%-6.45%,
4/15/03-12/15/05; $1,000,000 in
Mellon Bank Home Equity Loan Trust,
5.59859%, 4/15/26; $10,708,998 in
MBNA Master Credit Card Trust,
5.80%-6.60%, 11/15/02-1/15/07;
$1,950,000 in Loop Funding Master
Trust I, 5.8675%, 12/26/06;
$20,000,000 in HFC Revolving Home
Equity Loan Trust, 5.45688%, 9/20/14;
$34,914,000 in General Motors
Acceptance Corp., 7.15%, 3/15/00;
$1,050,000 in Ford Credit Auto Loan
Master Trust, 5.50%, 2/15/03;
$550,000 in Fleetwood Credit Corp.
Grantor Trust, 6.40%, 5/15/13;
$2,450,000 in First USA Credit Card
Master Trust, 5.60016%-6.42%,
3/17/05-4/10/09; $17,250,000 in First
Chicago Master Trust II, 5.6386%,
2/15/04; $894,000 in Discover Card
Master Trust I, 6.20%- 6.55%,
2/18/03-5/16/06; $1,250,000 in
Deutsche Floorplan Receivables Master
Trust, 5.43266%, 10/15/01; $1,000,000
in Daimler-Benz Auto Grantor Trust,
5.85%, 5/15/02; $4,400,000 in
Citibank Credit Card Master Trust I,
5.75%-5.85%, 1/15/03-2/7/05;
$3,380,000 in Case Equipment Loan
Trust, 5.74%-5.83%, 8/15/02-2/15/05;
$2,360,000 in BankBoston RV Asset
Backed Trust, 6.44%, 1/15/07;
$5,000,000 in American Express Master
Trust, 5.375%, 7/15/01; $120,000 in
American Express Credit Account
Master Trust, 6.40%, 4/15/05;
$5,447,206 in Fannie Mae, 6.00%-
7.00%, 3/25/22-11/1/28; $78,743,898
in Freddie Mac, 6.00%-7.50%,
1/15/07-8/1/28; with the respective
values $2,765,163, $16,526,290,
$5,002,842, $31,722,662, $36,352,001,
$1,229,028, $1,020,744, $515,288,
$6,064,374, $4,373,448, $6,468,940,
$665,023, $10,979,169, $1,950,000,
$4,716,793, $2,120,985, $1,060,637,
$411,606, $2,521,921, $17,239,495,
$900,369, $1,250,250, $121,710,
$4,416,212, $3,420,222, $2,413,855,
$4,939,270, $122,167, $5,837,641, and
$77,872,739 .......................... $ 250,000,000
$ 50,000,000 BT Alex Brown, Inc.,
5.85% dated 10/30/98, maturing
11/2/98 to be repurchased at
$50,024,375, collateralized by
$30,000,000 in Siebe PLC, 5.14%,
12/11/98; $22,010,000 in BAA PLC,
5.11%, 2/9/99; with respective values
of $29,820,100, and $21,911,432 ...... 50,000,000
200,000,000 Chase Manhattan Bank USA, N.A.,
5.70% dated 10/30/98, maturing
11/2/98 to be repurchased at
$200,095,000, collateralized by
$67,672,000 in Premium Finance,
5.25%, 11/5/98; $37,315,000 in TRW,
Inc., 5.11%, 12/28/98; $35,675,000 in
AC Acquisition HD, 5.05%, 2/5/99;
$30,150,000 in National Rural, 0%,
2/11/99; $30,000,000 in American Home
Products, 5.05%, 2/5/99; $10,900,000
in Citizen Utilities, 5.28%,
11/20/98; with the respective values
of $67,613,626, $37,006,255,
$35,195,124, $29,721,321,
$29,596,460, and $10,867,606 ......... 200,000,000
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 23
<PAGE>
Janus | Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Repurchase Agreements - (continued)
$150,000,000 Deutsche Morgan Grenfell, Inc.,
5.78% dated 10/30/98, maturing
11/2/98 to be repurchased at
$150,072,250, collateralized by
$153,768,845 in Newport Funding Co.,
0%, 1/28/99; with a value of
$153,000,001 ......................... $ 150,000,000
675,000,000 Salomon Smith Barney, Inc.,
5.78% dated 10/30/98, maturing
11/2/98 to be repurchased at
$675,325,125, collateralized by
$11,520,580 in Fannie Mae, 5.50% -
10.00%, 7/1/99-11/1/28; $936,465,169
in Freddie Mac, 0%-10.00%,
3/1/01-10/1/28; with the respective
values of $4,042,255 and $685,428,710 675,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $1,911,000,000) ......... 1,911,000,000
- --------------------------------------------------------------------------------
Total Investments (total cost $6,672,768,742) - 102.5% .... 6,672,768,742
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.5%) (164,316,785)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 6,508,451,957
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
24 Janus Income Funds / October 31, 1998
<PAGE>
Janus | Government Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 8.4%
New Hampshire Higher Education Loan
$ 17,738,000 (SLMA), 5.20%, 11/18/98 .............. $ 17,694,443
Private Export Funding Corp. (SLMA):
30,000,000 5.48%, 11/20/98 ...................... 29,274,600
7,000,000 4.85%, 4/23/99 ....................... 6,836,851
33,485,000 4.68%, 5/6/99 ........................ 33,388,154
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes
(amortized cost $87,194,048) ............................ 87,194,048
- --------------------------------------------------------------------------------
U.S. Government Agency Discount Notes - 12.4%
Fannie Mae:
10,000,000 5.37%, 1/15/99 ....................... 9,888,125
2,000,000 5.35%, 2/22/99 ....................... 1,966,414
10,000,000 4.915%, 3/18/99 ...................... 9,812,957
10,000,000 4.85%, 4/1/99 ........................ 9,796,570
10,000,000 4.88%, 4/2/99 ........................ 9,793,956
1,600,000 4.92%, 4/5/99 ........................ 1,566,107
5,000,000 4.43%, 5/14/99 ....................... 4,880,636
5,089,000 4.68%, 5/26/99 ....................... 4,952,717
926,000 4.85%, 6/4/99 ........................ 899,178
5,000,000 4.58%, 6/30/99 ....................... 4,846,697
10,000,000 5.265%, 7/16/99 ...................... 9,624,138
5,000,000 4.48%, 9/29/99 ....................... 4,793,422
Federal Farm Credit Bank
10,000,000 5.23%, 7/9/99 ........................ 9,636,806
Federal Home Loan Bank System:
5,000,000 4.96%, 1/22/99 ....................... 4,943,511
6,000,000 5.26%, 3/1/99 ........................ 5,894,533
2,770,000 5.24%, 3/12/99 ....................... 2,717,182
1,635,000 4.77%, 4/14/99 ....................... 1,599,471
1,625,000 4.75%, 4/28/99 ....................... 1,586,835
10,000,000 5.03%, 10/29/99 ...................... 10,000,000
Freddie Mac:
1,500,000 5.45%, 1/6/99 ........................ 1,486,745
3,383,000 4.80%, 1/8/99 ........................ 3,352,328
5,000,000 5.16%, 2/5/99 ........................ 4,931,200
10,000,000 4.90%, 3/8/99 ........................ 9,827,139
- --------------------------------------------------------------------------------
Total U.S. Government Agency Discount Notes
(amortized cost $128,796,667) ........................... 128,796,667
- --------------------------------------------------------------------------------
U.S. Government Agency Medium Term Notes - 0.4%
4,000,000 Fannie Mae, 7.00%,
medium term notes, 11/13/98
(amortized cost $4,002,111) .......... 4,002,111
- --------------------------------------------------------------------------------
U.S. Government Agency Variable Notes - 13.5%
Fannie Mae:
$ 3,000,000 4.67%, 11/9/98 ....................... $ 2,999,981
5,000,000 5.04%, 1/6/99 ........................ 4,999,470
10,000,000 5.4575%, 2/19/99 ..................... 9,996,453
10,000,000 4.57%, 3/16/99 ....................... 9,998,151
50,000,000 5.0048%, 7/28/99 ..................... 49,958,729
10,000,000 5.32%, 9/17/99 ....................... 9,994,740
Federal Farm Credit Bank
10,000,000 4.98%, 6/22/99 ....................... 9,994,382
Federal Home Loan Bank System:
3,000,000 4.62%, 12/24/98 ...................... 2,999,782
5,000,000 4.53%, 3/11/99 ....................... 4,997,366
4,000,000 4.605%, 3/26/99 ...................... 3,999,285
5,000,000 4.64%, 4/9/99 ........................ 4,998,911
10,000,000 4.61%, 8/12/99 ....................... 9,995,432
Freddie Mac
15,000,000 5.165%, 5/4/99 ....................... 14,991,833
- --------------------------------------------------------------------------------
Total U.S. Government Agency Variable Notes
(amortized cost $139,924,515) ........................... 139,924,515
- --------------------------------------------------------------------------------
U.S. Government Guarantee Notes and Loans - 17.9%
Army and Air Force Exchange:
30,000,000 5.12%, 11/10/98 ...................... 30,000,000
12,000,000 5.70%, 5/21/99 + ..................... 12,000,000
Malev Hungarian Airlines
41,923,946 5.07%, 11/4/98 ....................... 41,923,946
Washington Aircraft Hire
101,852,834 5.07%, 11/4/98 ....................... 101,852,834
- --------------------------------------------------------------------------------
Total U.S. Government Guarantee Notes and Loans
(cost $185,776,780) ..................................... 185,776,780
- --------------------------------------------------------------------------------
Repurchase Agreements - 47.6%
75,000,000 ABN AMRO Securities, Inc., 5.625%
dated 10/30/98, maturing 11/2/98, to
be repurchased at $75,035,156,
collateralized by $132,157,386 in
Fannie Mae, 5.00%-14.00%,
9/1/04-4/1/30; $50,872,448 in Freddie
Mac, 5.95%-8.349%, 1/1/09-2/1/37,
with respective values of $57,329,020
and $19,171,280 ...................... 75,000,000
18,200,000 ABN AMRO Securities, Inc., 5.72%
dated 10/30/98, maturing 11/2/28, to
be repurchased at $18,208,675
collateralized by $9,111,408 in
Fannie Mae, 0%-13.00%,
11/1/98-9/25/28; $8,320,192 in
Freddie Mac, 0%-9.00%, 11/9/98-
8/15/28; $18,817 in Sallie Mae,
4.947%, 11/10/98; $14,705,851 in
Government National Mortgage
Association, 4.50%- 10.50%,
6/15/13-9/20/28; $372,583 in Federal
Farm Credit Bank 5.363%-8.16%,
9/5/00-10/7/09; $1,360,070 in Federal
Home Loan Bank System, 1.70%-6.135%,
11/6/98-8/21/28; $102,742 in
Tennessee Valley Authority, 0%,
5/1/13; with respective values of
$6,401,608, $6,365,340, $19,039,
$10,525,796, $372,583, $1,387,769 and
$4,508 ............................... 18,200,000
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 25
<PAGE>
Janus | Government Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Repurchase Agreements - (continued)
$250,000,000 CS First Boston, Inc., 5.7375%
dated 10/30/98, maturing 11/2/98, to
be repurchased at $250,119,531,
collateralized by $204,329,468 in
Federal Home Loan Mortgage Corp.,
5.50%-8.50%, 3/1/08-10/1/28;
$17,337,000 in Freddie Mac, 0%,
8/1/24 and 4/1/24; $50,296,699 in
Fannie Mae, 0%-9.50%, 7/1/08-9/1/28;
with respective values of
$204,006,888, $12,875,964 and
$39,734,496 .......................... $ 250,000,000
25,100,000 JP Morgan Securities, Inc., 5.15%
dated 10/30/98, maturing 11/2/98, to
be repurchased at $25,110,772,
collateralized by $25,602,000 in
Government National Mortgage
Association, 8.00%, 6/15/25-7/15/28;
with a value of $25,602,002 .......... 25,100,000
125,000,000 Salomon Smith Barney, Inc., 5.78%
dated 10/30/98, maturing 11/2/98, to
be repurchased at $125,060,208,
collateralized by $188,606,054, in
Fannie Mae, 5.50%-9.50%,
4/1/99-10/1/28; $93,912,492 in
Freddie Mac, 6.125%-9.50%, 12/1/99-
10/1/28; with respective values of
$103,855,897 and $24,319,669 ......... 125,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $493,300,000) ........... 493,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $1,038,994,121) - 100.2% .... 1,038,994,121
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.2%) (2,315,559)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................ $ 1,036,678,562
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
26 Janus Income Funds / October 31, 1998
<PAGE>
Janus | Tax-Exempt Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Municipal Securities - 101.1%
Alabama - 2.4%
$ 1,100,000 Athens Industrial Development Board
Revenue, (Coilplus Income Project),
Variable Rate, 4.10%, 9/1/99 ......... $ 1,100,000
2,900,000 North Alabama Environmental Impact
Authority Pollution Control Revenue,
(Reynolds Metals), Variable Rate,
3.65%, 12/1/00 ....................... 2,900,000
4,000,000
Arizona - 3.8%
1,000,000 Pinal County Industrial Development
Authority Hospital Revenue, (Casa
Grande Regional Medical Center),
Variable Rate, 3.30%, 12/1/22 ........ 1,000,000
5,237,000 Tucson Industrial Development Authority
Multifamily Revenue, (Freedom Park
Apartments Project), Variable Rate,
4.30%, 12/1/07 ....................... 5,237,000
6,237,000
California - 4.6%
1,000,000 California Higher Education Loan
Authority, Inc. Student Loan Revenue
Refunding Bonds, Series A, 3.80%,
5/1/99 ............................... 1,000,000
2,900,000 Hayward Housing Authority Multifamily
Revenue, (Huntwood Terrace
Apartments), Variable Rate, 4.45%,
3/1/27 ............................... 2,900,000
1,100,000 Los Angeles Regional Airports Improvement
Corp. Lease Revenue, (American
Airlines - Los Angeles International),
Series F, Variable Rate, 3.65%, 12/1/24 1,100,000
2,500,000 Sacramento County Multifamily Housing
Revenue, Series A, Variable Rate,
4.50%, 4/15/07 ....................... 2,500,000
7,500,000
Colorado - 9.6%
1,100,000 Arapahoe County Multifamily Revenue,
(Stratford Station Project), Variable Rate,
4.40%, 11/1/17 ....................... 1,100,000
3,000,000 Boulder County Revenue, (National
Atmospheric Research Project), 8.25%,
12/1/98 .............................. 3,040,045
6,090,000 Denver City and County Multifamily
Housing Revenue, (Ogden Residences
Project), Variable Rate, 3.80%, 12/1/09 6,090,000
Dove Valley Metropolitan District,
Arapahoe County, Series B:
1,000,000 4.05%, 11/1/98 ....................... 1,000,000
1,000,000 3.375%, 11/1/25 ...................... 1,000,000
Interstate South Metropolitan District
Series B:
1,000,000 4.05%, 11/1/98 ....................... 1,000,000
1,000,000 3.375%, 11/1/14 ...................... 1,000,000
1,555,000 Stapleton Business Center
Metropolitan District 3.65%, 12/1/98 . 1,555,000
15,785,045
Georgia - 1.4%
Burke County Development Authority
Pollution Control Revenue, (Georgia
Power Co.- Vogtle Plant), Variable Rate:
$ 900,000 Second Series, 3.70%, 7/1/24 ......... $ 900,000
1,350,000 Fourth Series, 3.70%, 9/1/25 ......... 1,350,000
2,250,000
Illinois - 6.3%
1,000,000 Hoffman Estates Park District, 3.90%,
12/1/98 .............................. 1,000,000
1,975,000 Lombard Multifamily Housing, (Clover
Creek Apartments Project), 4.00%,
12/15/98 ............................. 1,975,000
2,400,000 Northlake Economic Development
` Revenue, (Dominick's Food), Subseries B,
Variable Rate, 3.50%, 1/1/02 ......... 2,400,000
900,000 Sauget Pollution Control Revenue,
(Monsanto Co. Project), Variable Rate,
3.20%, 5/1/28 ........................ 900,000
4,000,000 Wood Dale Industrial Development
Revenue, (Nippon Express USA, Inc.
Project), Variable Rate, 4.20%, 6/1/00 4,000,000
10,275,000
Iowa - 2.0%
3,300,000 Muscatine County Pollution Control
Revenue, (Monsanto Co. Project),
Variable Rate, 3.20%, 10/1/07 ........ 3,300,000
Kansas - 2.7%
1,045,000 Shawnee Industrial Revenue, (Shawnee
Village Association), Variable Rate,
3.15%, 12/1/09 ....................... 1,045,000
3,400,000 Wichita Revenue, (CSJ Health Systems),
XXV, Variable Rate, 4.20%, 10/1/11 ... 3,400,000
4,445,000
Louisiana - 1.0%
1,600,000 Louisiana Public Facilities Authority
Multifamily Housing Revenue Refunding,
(River View), Variable Rate, 3.80%,
7/1/27 ............................... 1,600,000
Michigan - 1.3%
1,095,000 Huron Valley School District Refunding,
4.50%, 5/1/99 ........................ 1,095,000
1,000,000 Kalamazoo School District State Aid Notes,
Series C, 3.75%, 9/16/99 ............. 1,002,953
2,097,953
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 27
<PAGE>
Janus | Tax-Exempt Money Market Fund
Principal Amount Market Value
- --------------------------------------------------------------------------------
Minnesota - 5.9%
$ 4,100,000 Golden Valley Industrial Development
Revenue, (Unicare Homes, Inc. Project),
Variable Rate, 3.30%, 9/1/14 ......... $ 4,100,000
600,000 New Brighton Industrial Development
Revenue, (Unicare Homes, Inc. Project),
Variable Rate, 3.30%, 12/1/14 ........ 600,000
3,925,000 Northern Municipal Power Agency
Electric System Revenue Refunding,
(Pre-refunded in U.S. Government
Securities to January 1, 1999), Series A,
7.25%, 1/1/99 ........................ 4,027,765
900,000 Robbinsdale Industrial Development
Revenue, (Unicare Homes, Inc. Project),
Variable Rate, 3.30%, 10/1/14 ........ 900,000
9,627,765
Mississippi - 1.8%
Mississippi State Board of Trustees of
Institutions of Higher Learning, Series A:
890,000 3.95%, 11/15/98 ...................... 890,000
925,000 3.90%, 4/1/99+ ....................... 925,000
1,095,000 3.75%, 7/15/99+ ...................... 1,095,000
2,910,000
Missouri - 6.8%
5,000,000 Jackson County Industrial Development
Recreational Facilities Revenue, (YMCA
of Greater Kansas City Project), Series A,
Variable Rate, 3.80%, 11/1/16 ........ 5,000,000
780,000 Kansas City Certificates of Participation,
3.60%, 9/24/99+ ...................... 780,000
Missouri State Environmental
Improvement and Energy Resources
Authority Pollution Control Refunding,
(Union Electric Co.):
1,000,000 Series A, 3.75%, 6/1/14 .............. 1,000,000
1,025,000 Series B, 3.75%, 6/1/14 .............. 1,025,000
300,000 Missouri State Environmental
Improvement and Energy Resources
Authority Pollution Control Refunding
Revenue, (Monsanto Co. Project),
Variable Rate, 3.15%, 9/2/23 ......... 300,000
3,000,000 Missouri State Health and Educational
Facilities Authority Revenue, (St. Louis
University Project), Variable Rate,
3.80%, 12/1/05 ....................... 3,000,000
11,105,000
Nebraska - 1.0%
1,670,000 Grand Island Electric Revenue Refunding,
(Escrowed to maturity in U.S.
Government SLGS), 6.00%, 9/1/99 ...... 1,706,584
New York - 8.2%
$ 5,300,000 New York State Dormitory Authority
Revenue, (St. Francis Center at the
Knolls), Variable Rate, 3.75%, 7/1/23 $ 5,300,000
8,100,000 New York State Housing Finance Agency
Service Contract Obligation Revenue,
Series A, Variable Rate, 2.85%, 3/15/08 8,100,000
13,400,000
North Carolina - 2.4%
500,000 Cumberland County Industrial Facilities
and Pollution Control Financing
Authority Revenue, (Monsanto Co.
Project), Variable Rate, 3.05%, 10/1/14 500,000
3,500,000 Wake County Industrial Facilities and
Pollution Control Financing Authority
Revenue, (Carolina Power and Light Co.),
Series B, Variable Rate, 3.00%, 9/1/15 3,500,000
4,000,000
Ohio - 6.0%
1,000,000 Champaign County Industrial
Development Revenue Variable/Fixed
Refunding, (Allied Signal Project),
Variable Rate, 3.45%, 11/1/07 ........ 1,000,000
2,000,000 Clinton County Hospital Revenue,
(Ohio Hospital Capital, Inc.), Variable
Rate, 3.25%, 6/1/28 .................. 2,000,000
5,200,000 Cuyahoga County Hospital Revenue,
(University Hospitals - Cleveland),
Variable Rate, 4.05%, 1/1/16 ......... 5,200,000
1,700,000 Hamilton County Health Systems Revenue,
(Franciscan Sisters of the Poor), Series A,
Variable Rate, 4.05%, 3/1/17 ......... 1,700,000
9,900,000
Oklahoma - 2.2%
800,000 Oklahoma City Industrial and Cultural
Facilities Trust Revenue, (Oklahoma
Christian College), Variable Rate,
4.35%, 7/1/15 ........................ 800,000
2,840,000 Tulsa County Home Financing Authority
Multifamily Housing Revenue,
(Greenbriar Project), Series B, Variable
Rate, 3.30%, 3/15/05 ................. 2,840,000
3,640,000
See Notes to Schedules of Investments.
28 Janus Income Funds / October 31, 1998
<PAGE>
Principal Amount Market Value
- --------------------------------------------------------------------------------
Pennsylvania - 11.2%
$ 1,000,000 Allegheny County Hospital Development
Authority Revenue, (South Hills Health
System), 4.25%, 4/1/99 ............... $ 1,001,992
1,180,000 Blair County Hospital Authority Hospital
Revenue, (Altoona Hospital Project),
Variable Rate, 3.75%, 7/1/99 ......... 1,180,000
5,800,000 Dauphin County General Authority,
(Allied Health Pooled Financing
Program), Series B, Variable Rate,
3.25%, 10/1/27 ....................... 5,800,000
1,500,000 Dauphin County General Authority
Hospital Revenue, Variable Rate,
3.25%, 10/1/27 ....................... 1,500,000
1,545,000 Erie County Hospital Authority Revenue,
(Hamot Health Foundation), Series A,
4.00%, 5/15/99 ....................... 1,546,653
1,200,000 Pennsylvania State General Obligation
Unlimited Tax Bonds, Second Series,
5.07%, 10/15/99 ...................... 1,218,372
2,900,000 Pennsylvania State Higher Educational
Facilities Authority Revenue, (Carlow
College), Series B1, 2.95%, 11/1/99 .. 2,900,000
1,000,000 Pennsylvania State Higher Educational
Facilities Authority Revenue,
(CICU Financing Program),
Series B1, 4.50%, 11/1/98 ............ 1,000,011
1,000,000 Somerset County Hospital Authority
Revenue, (Somerset County Hospital
Project), Series A, 3.625%, 3/1/99 ... 1,000,000
1,300,000 Venango Industrial Development Authority
(Pennzoil Co. Project), Variable Rate,
3.25%, 12/1/12 ....................... 1,300,000
18,447,028
South Carolina - 4.4%
4,500,000 Piedmont Municipal Power Agency
Electric Revenue Refunding, Series A,
Variable Rate, 3.15%, 1/1/24 ......... 4,500,000
2,790,000 South Carolina Jobs Economic
Development Authority Revenue,
(St. Francis Hospital), Variable Rate,
3.65%, 7/1/22 ........................ 2,790,000
7,290,000
Tennessee - 3.5%
200,000 Hamilton County Industrial Development
Revenue, (Komatsu America
Manufacturing Project), Variable Rate,
4.20%, 11/1/05 ....................... 200,000
5,500,000 Metropolitan Government of Nashville
and Davidson County, Airport Authority
Special Facilities Revenue, (American
Airlines Project), Series B, Variable Rate,
3.15%, 9/1/10 ........................ 5,500,000
5,700,000
Texas - 3.7%
$ 1,100,000 Harris County Health Facilities
Development Corp. Revenue, (St.
Lukes Episcopal Hospital), Series B,
Variable Rate, 3.65%, 2/15/27 ........ $ 1,100,000
500,000 Lone Star Airport Improvement Authority,
Series B-8, Variable Rate, 3.65%, 12/1/14 500,000
1,075,000 Longview Refunding and Improvement,
4.00%, 6/1/99 ........................ 1,076,199
200,000 Metropolitan Higher Education Authority,
(University of Dallas Project), Variable
Rate, 4.35%, 12/1/04 ................. 200,000
3,200,000 North Central Health Facilities
Development Revenue, (Presbyterian
Medical Center), Series D, Variable Rate,
3.65%, 12/1/15 ....................... 3,200,000
6,076,199
Washington - 3.5%
1,500,000 Washington St. Health Care Facilities
Authority Revenue Refunding,
(Veterans Administration - Mason
Medical Center), Series B, Variable Rate,
3.65%, 2/15/27 ....................... 1,500,000
1,600,000 Washington State Housing Finance
Commission - Non-profit Housing
Revenue, (Emerald Heights Project),
Variable Rate, 3.70%, 1/1/21 ......... 1,600,000
2,550,000 Washington State Public Power Supply
System Nuclear Project No.1
Refunding Revenue, 7.15%, 7/1/99 ..... 2,663,683
5,763,683
Wisconsin - 4.5%
3,000,000 Brown Deer School District Tax and
Revenue Anticipation Promissory Notes,
3.60%, 10/28/99 ...................... 3,005,697
2,000,000 Mukwonago School District Tax and
Revenue Anticipation Promissory Notes,
3.98%, 8/27/99 ....................... 2,003,627
2,295,000 Ripon School District Bond Anticipation
Notes, 4.70%, 9/1/99 ................. 2,314,449
7,323,773
Wyoming - 0.9%
1,500,000 Campbell County School District No.1,
(Gillette), Tax Anticipation Warrants,
4.00%, 6/25/99 ....................... 1,501,864
- --------------------------------------------------------------------------------
Total Investments (total cost $165,881,894) - 101.1% ...... 165,881,894
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.1%) (1,855,532)
- --------------------------------------------------------------------------------
Net Assets - 100% ......................................... $ 164,026,362
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
Janus Income Funds / October 31, 1998 29
<PAGE>
Statements of | Operations - Bond Funds
<TABLE>
<CAPTION>
Janus Janus
Janus Janus Federal Short-Term
For the fiscal year ended October 31, 1998 Flexible Income High-Yield Tax-Exempt Bond
(all numbers in thousands) Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C>
Interest $ 65,763 $ 33,298 $ 4,012 $ 5,879
Dividends 1,177 252 -- --
66,940 33,550 4,012 5,879
Expenses:
Advisory fees 5,211 2,773 445 582
Transfer agent fees and expenses 1,767 729 163 204
Registration fees 178 90 47 67
Postage and mailing expenses 110 35 11 18
Custodian fees 103 68 32 33
Printing expenses 105 49 14 23
Audit fees 26 11 4 7
Trustees' fees and expenses 13 4 5 2
Other expenses 32 24 14 14
Total Expenses 7,545 3,783 735 950
Expense and Fee Offsets (230) (121) (17) (14)
Net Expenses 7,315 3,662 718 936
Less: Excess Expense Reimbursement -- -- (236) (354)
Net Expenses after Expense Reimbursement 7,315 3,662 482 582
Net Investment Income 59,625 29,888 3,530 5,297
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 11,925 (885) 1,016 496
Net realized gain/(loss) from foreign currency 69 (149) -- --
Net realized gain/(loss) from futures
and/or options contracts 1,203 -- (71) (95)
Change in net unrealized appreciation
or depreciation of investments (8,610) (28,168) 701 (14)
Net Gain/(Loss) on Investments 4,587 (29,202) 1,646 387
Net Increase in Net Assets Resulting from Operations $ 64,212 $ 686 $ 5,176 $ 5,684
</TABLE>
See Notes to Financial Statements.
30 Janus Income Funds / October 31, 1998
<PAGE>
Statements of | Assets & Liabilities - Bond Funds
<TABLE>
<CAPTION>
Janus Janus
As of October 31, 1998 Janus Janus Federal Short-Term
(all numbers in thousands except Flexible Income High-Yield Tax-Exempt Bond
net asset value per share) Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C>
Investments at cost $1,102,565 $ 292,300 $ 91,775 $ 138,098
Investments at value $1,118,112 $ 270,339 $ 93,941 $ 138,931
Cash 211 363 140 39
Receivables:
Investments sold 1,047 1,767 2,066 --
Fund shares sold 3,485 5,820 989 549
Dividends -- 8 -- --
Interest 20,081 6,351 1,735 2,502
Due from advisor -- -- 21 54
Other assets 6 2 -- 2
Variation Margin - Futures contract -- -- -- 69
Total Assets 1,142,942 284,650 98,892 142,146
Liabilities:
Payables:
Investments purchased 34,947 15,067 6,924 --
Fund shares repurchased 2,500 903 205 1,089
Dividends 483 230 45 13
Advisory fee 539 172 46 79
Transfer agent fee 180 42 16 25
Accrued expenses 195 19 27 34
Variation margin - futures contracts -- -- 4 --
Forward currency contracts 507 -- -- --
Total Liabilities 39,351 16,433 7,267 1,240
Net Assets $1,103,591 $ 268,217 $ 91,625 $ 140,906
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 111,320 26,156 12,595 48,497
Net Asset Value Per Share $ 9.91 $ 10.25 $ 7.27 $ 2.91
</TABLE>
See Notes to Financial Statements.
Janus Income Funds / October 31, 1998 31
<PAGE>
Statements of | Changes in Net Assets - Bond Funds
<TABLE>
<CAPTION>
Janus Janus Janus Janus
Flexible Income High-Yield Federal Tax-Exempt Short-Term Bond
For the fiscal year ended October 31 Fund Fund Fund Fund
(all numbers in thousands) 1998 1997 1998 1997 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 59,625 $ 46,577 $ 29,888 $ 22,505 $ 3,530 $ 2,680 $ 5,297 $ 2,920
Net realized gain/loss from
investment transactions 13,197 14,875 (1,034) 16,424 945 198 401 407
Change in unrealized net appreciation or
depreciation of investments (8,610) 11,115 (28,168) 2,641 701 1,009 (14) 128
Net Increase in Net Assets
Resulting from Operations 64,212 72,567 686 41,570 5,176 3,887 5,684 3,455
Dividends and Distributions to Shareholders:
Net investment income* (59,616) (46,546) (29,888) (22,392) (3,530) (2,680) (5,297) (2,920)
Net realized gain from
investment transactions (15,666) (1,192) (16,609) (2,396) -- -- -- --
Net Decrease from Dividends and Distributions (75,282) (47,738) (46,497) (24,788) (3,530) (2,680) (5,297) (2,920)
Capital Share Transactions:
Shares sold 693,045 350,811 498,190 446,508 72,196 45,594 174,846 60,336
Reinvested dividends and distributions 65,588 40,664 40,580 22,048 2,930 2,247 4,807 2,720
Shares repurchased (371,073) (292,858) (526,164) 394,849) (47,202) (31,851) (97,042) (46,467)
Net Increase from Capital Share Transactions 387,560 98,617 12,606 73,707 27,924 15,990 82,611 16,589
Net Increase/(Decrease) in Net Assets 376,490 123,446 (33,205) 90,489 29,570 17,197 82,998 17,124
Net Assets:
Beginning of period 727,101 603,655 301,422 210,933 62,055 44,858 57,908 40,784
End of period $1,103,591 $ 727,101 $ 268,217 $301,422 $ 91,625 $ 62,055 $140,906 $ 57,908
Net Assets Consist of:
Capital (par value and paid-in surplus)* $1,075,251 $ 687,691 $ 291,286 $278,679 $ 89,965 $ 62,041 $142,939 $ 60,328
Undistributed net investment income/(loss)* 708 610 (6) 142 -- -- 1 1
Undistributed net realized gain/(loss)
from investments* 12,577 15,135 (1,101) 16,395 (506) (1,451) (2,428) (2,829)
Unrealized appreciation/(depreciation)
of investments 15,055 23,665 (21,962) 6,206 2,166 1,465 394 408
$1,103,591 $ 727,101 $ 268,217 $301,422 $ 91,625 $ 62,055 $140,906 $ 57,908
Transactions in Fund Shares:
Shares sold 69,152 36,058 43,131 39,057 9,960 6,489 60,319 20,891
Reinvested distributions 6,575 4,173 3,557 1,928 405 320 1,658 942
Total 75,727 40,231 46,688 40,985 10,365 6,809 61,977 21,833
Shares Repurchased (37,113) (30,105) (46,003) (34,479) (6,525) (4,535) (33,460) (16,092)
Net Increase in Fund Shares 38,614 10,126 685 6,506 3,840 2,274 28,517 5,741
Shares Outstanding Beginning of Period 72,706 62,580 25,471 18,965 8,755 6,481 19,980 14,239
Shares Outstanding End of Period 111,320 72,706 26,156 25,471 12,595 8,755 48,497 19,980
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $1,189,828 $1,015,048 $1,125,306 $990,668 $161,215 $160,242 $ 99,607 $ 57,906
Proceeds from sales of securities 1,005,118 976,235 1,151,400 931,662 131,902 150,332 40,081 48,107
Purchases of long-term
U.S. government obligations 367,064 302,415 41,042 24,923 25,207 10,028 64,672 17,687
Proceeds from sales of long-term U.S.
government obligations 210,399 260,655 36,070 25,205 28,292 7,045 43,995 10,416
</TABLE>
*See Note 3 in Notes to Financial Statements.
See Notes to Financial Statements.
32 Janus Income Funds / October 31, 1998
<PAGE>
Financial | Highlights - Bond Funds
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Flexible Income Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 9.65 $ 9.55 $ 8.96 $ 10.03
Income from Investment Operations:
Net investment income .67 .69 .73 .72 .74
Net gains or (losses) on securities
(both realized and unrealized) .12 .37 .10 .59 (.86)
Total from Investment Operations .79 1.06 .83 1.31 (.12)
Less Distributions:
Dividends (from net investment income) (.67) (.69) (.73) (.72) (.72)
Distributions (from capital gains) (.21) (.02) -- -- (.23)
Total Distributions (.88) (.71) (.73) (.72) (.95)
Net Asset Value, End of Period $ 9.91 $ 10.00 $ 9.65 $ 9.55 $ 8.96
Total Return* 8.14% 11.48% 9.01% 15.35% (1.26%)
Net Assets, End of Period (in thousands) $1,103,591 $ 727,101 $ 603,655 $ 580,359 $ 377,345
Average Net Assets for the Period (in thousands) $ 892,853 $ 656,422 $ 603,694 $ 450,001 $ 428,962
Ratio of Gross Expenses to Average Net Assets**(1) 0.84% 0.87% 0.88% 0.96% NA
Ratio of Net Expenses to Average Net Assets**(1) 0.82% 0.86% 0.87% 0.96% 0.93%
Ratio of Net Investment Income to Average Net Assets** 6.68% 7.10% 7.60% 7.91% 7.75%
Portfolio Turnover Rate** 148% 207% 214% 250% 137%
<CAPTION>
For a share outstanding throughout Janus Federal Tax-Exempt Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.09 $ 6.92 $ 6.88 $ 6.45 $ 7.30
Income from Investment Operations:
Net investment income .34 .35 .36 .36 .36
Net gains or (losses) on securities
(both realized and unrealized) .18 .17 .04 .43 (.83)
Total from Investment Operations .52 .52 .40 .79 (.47)
Less Distributions:
Dividends (from net investment income) (.34) (.35) (.36) (.36) (.36)
Distributions (from capital gains) -- -- -- -- (.02)
Total Distributions (.34) (.35) (.36) (.36) (.38)
Net Asset Value, End of Period $ 7.27 $ 7.09 $ 6.92 $ 6.88 $ 6.45
Total Return* 7.65% 7.72% 5.94% 12.60% (6.62%)
Net Assets, End of Period (in thousands) $ 91,625 $ 62,055 $ 44,858 $ 32,593 $ 26,464
Average Net Assets for the Period (in thousands) $ 74,133 $ 53,574 $ 36,312 $ 29,318 $ 28,384
Ratio of Gross Expenses to Average Net Assets**(1) 0.67%(2) 0.66%(2) 0.68%(2) 0.70%(2) NA
Ratio of Net Expenses to Average Net Assets**(1) 0.65% 0.65% 0.65% 0.65% 0.65%(2)
Ratio of Net Investment Income to Average Net Assets** 4.76% 5.00% 5.18% 5.43% 5.20%
Portfolio Turnover Rate** 227% 304% 225% 164% 160%
</TABLE>
(1) See "Explanation of the Charts and Tables."
(2) The ratio was 0.99% in 1998, 1.11% in 1997, 1.14% in 1996, 1.31% in 1995,
and 1.41% in 1994 before 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 / October 31, 1998 33
<PAGE>
Financial | Highlights - Bond Funds (continued)
<TABLE>
<CAPTION>
For a share outstanding throughout Janus High-Yield Fund
each fiscal year ended October 31 1998 1997 1996(1)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.83 $ 11.12 $ 10.00
Income from Investment Operations:
Net investment income .90 .97 .80
Net gains or (losses) on securities
(both realized and unrealized) (1.02) .82 1.12
Total from Investment Operations (.12) 1.79 1.92
Less Distributions:
Dividends (from net investment income) (.90) (.97) (.80)
Distributions (from capital gains) (.56) (.11) --
Total Distributions (1.46) (1.08) (.80)
Net Asset Value, End of Period $ 10.25 $ 11.83 $ 11.12
Total Return* (1.45%) 16.94% 19.71%
Net Assets, End of Period (in thousands) $ 268,217 $ 301,422 $ 210,933
Average Net Assets for the Period (in thousands) $ 380,942 $ 266,213 $ 88,126
Ratio of Gross Expenses to Average Net Assets**(2) 0.99% 1.03%(3) 1.01%(3)
Ratio of Net Expenses to Average Net Assets**(2) 0.96% 1.00% 1.00%
Ratio of Net Investment Income to Average Net Assets** 7.85% 8.45% 9.00%
Portfolio Turnover Rate** 336% 404% 324%
<CAPTION>
For a share outstanding throughout Janus Short-Term Bond Fund
each fiscal year ended October 31 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 2.90 $ 2.86 $ 2.84 $ 2.87 $ 3.02
Income from Investment Operations:
Net investment income .17 .17 .16 .18 .18
Net gains or (losses) on securities
(both realized and unrealized) .01 .04 .02 (.03) (.15)
Total from Investment Operations .18 .21 .18 .15 .03
Less Distributions:
Dividends (from net investment income) (.17) (.17) (.16) (.18) (.17)
Distributions (from capital gains) -- -- -- -- (.01)
Total Distributions (.17) (.17) (.16) (.18) (.18)
Net Asset Value, End of Period $ 2.91 $ 2.90 $ 2.86 $ 2.84 $ 2.87
Total Return* 6.49% 7.70% 6.49% 5.55% 1.26%
Net Assets, End of Period (in thousands) $ 140,906 $ 57,908 $ 40,784 $ 48,117 $ 54,285
Average Net Assets for the Period (in thousands) $ 89,556 $ 48,421 $ 42,203 $ 47,383 $ 59,584
Ratio of Gross Expenses to Average Net Assets**(2) 0.67%(4) 0.67%(4) 0.67%(4) 0.66%(4) NA
Ratio of Net Expenses to Average Net Assets**(2) 0.65% 0.65% 0.65% 0.65% 0.65%(4)
Ratio of Net Investment Income to Average Net Assets** 5.91% 6.03% 5.57% 6.67% 6.08%
Portfolio Turnover Rate** 101% 133% 486% 337% 346%
</TABLE>
(1) Fiscal period December 29, 1995 (inception) to October 31, 1996.
(2) See "Explanation of Charts and Tables."
(3) The ratio was 1.04% in 1997 and 1.18% in 1996 before waiver of certain fees
incurred by the Fund.
(4) The ratio was 1.06% in 1998, 1.20% in 1997, 1.23% in 1996, 1.23% in 1995,
and 1.15% in 1994, before 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.
34 Janus Income Funds / October 31, 1998
<PAGE>
Statements of | Operations - Money Market Funds
<TABLE>
<CAPTION>
Janus Janus
Janus Government Tax-Exempt
For the fiscal year ended October 31, 1998 Money Market Money Market Money Market
(all numbers in thousands) Fund Fund Fund
Investment Income:
<S> <C> <C> <C>
Interest $273,633 $ 26,376 $ 4,261
273,633 26,376 4,261
Expenses:
Advisory fee for investor shares 1,124 151 91
Advisory fee for institutional shares 3,621 321 19
Advisory fee for service shares 29 1 3
Administrative fee for investor shares 5,620 753 455
Administrative fee for institutional shares 1,810 161 10
Administrative fee for service shares 15 -- 2
Service fee for service shares 74 2 8
Audit fees 15 8 8
Trustees' fees and expenses 69 3 1
Total Expenses 12,377 1,400 597
Net Investment Income 261,256 24,976 3,664
Net Realized Gain/(Loss) on Investments:
Net realized gain/(loss) from investment transactions 161 10 26
Net Increase in Net Assets Resulting from Operations $261,417 $ 24,986 $ 3,690
</TABLE>
See Notes to Financial Statements.
Janus Income Funds / October 31, 1998 35
<PAGE>
Statements of | Assets & Liabilities - Money Market Funds
<TABLE>
<CAPTION>
Janus Janus
As of October 31, 1998 Janus Government Tax-Exempt
(all numbers in thousands except Money Market Money Market Money Market
net asset value per share) Fund Fund Fund
Assets:
<S> <C> <C> <C>
Investments at amortized cost $6,672,769 $1,038,994 $ 165,882
Cash 173 93 --
Receivables:
Investments sold -- -- 7,215
Fund shares sold 8,891 551 286
Interest 31,655 1,083 950
Total Assets 6,713,488 1,040,721 174,333
Liabilities:
Payables
Due to custodian -- -- 19
Investments purchased 177,403 -- 9,701
Fund shares repurchased 14,296 746 515
Dividends and distributions 11,900 3,077 2
Advisory fees 538 88 15
Administrative fees 856 125 47
Service fees 16 -- 2
Audit fees 12 6 6
Trustees' fees and expenses 15 -- --
Total Liabilities 205,036 4,042 10,307
Net Assets $6,508,452 $1,036,679 $ 164,026
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 6,508,452 1,036,679 164,026
Net Asset Value Per Share $ 1.00 $ 1.00 $ 1.00
</TABLE>
See Notes to Financial Statements.
36 Janus Income Funds / October 31, 1998
<PAGE>
Statements of | Changes in Net Assets - Money Market Funds
<TABLE>
<CAPTION>
Janus Janus Government Janus Tax-Exempt
Money Market Money Market Money Market
For the fiscal year ended October 31 Fund Fund Fund
(all numbers in thousands) 1998 1997(1) 1998 1997(1) 1998 1997(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 261,256 $ 185,899 $ 24,976 $ 9,234 $ 3,664 $ 2,511
Net realized gain/(loss)
from investment transactions 161 98 10 8 26 (2)
Net Increase in Net Assets
Resulting from Operations 261,417 185,997 24,986 9,242 3,690 2,509
Dividends and Distributions to Shareholders:
Net investment income:
Investor Shares (57,683) (44,924) (7,537) (6,112) (2,879) (2,384)
Institutional Shares (202,020) (140,928) (17,406) (3,063) (678) (125)
Service Shares (1,553) (47) (33) (60) (107) --
Net realized gain from investment transactions:
Investor Shares (42) (22) (5) (5) (21) --
Institutional Shares (118) (76) (5) (2) (3) --
Service Shares (1) -- -- -- (2) --
Net Decrease from Dividends and Distributions (261,417) (185,997) (24,986) (9,242) (3,690) (2,509)
Capital Share Transactions:
Shares sold:
Investor Shares 5,447,777 4,205,232 384,359 250,916 330,543 244,419
Institutional Shares 89,394,668 57,798,535 2,152,976 671,494 211,444 37,249
Service Shares 323,786 17,775 2,772 2,557 38,120 10
Reinvested dividends and distributions:
Investor Shares 54,458 42,784 7,176 5,901 2,765 2,281
Institutional Shares 60,862 32,270 3,884 2,569 589 113
Service Shares 1,560 47 28 32 110 --
Shares repurchased:
Investor Shares (5,042,859) (3,989,256) (310,430) (242,091) (309,566) (240,069)
Institutional Shares (87,252,582) (56,765,454) (1,371,965) (697,778) (174,273) (35,750)
Service Shares (293,167) (7,481) (658) (1,961) (20,544) --
Net Increase/(Decrease) from
Capital Share Transactions 2,694,503 1,334,452 868,142 (8,361) 79,188 8,253
Net Increase/(Decrease) in Net Assets 2,694,503 1,334,452 868,142 (8,361) 79,188 8,253
Net Assets:
Beginning of Period 3,813,949 2,479,497 168,537 176,898 84,838 76,585
End of Period $ 6,508,452 $ 3,813,949 $ 1,036,679 $ 168,537 $ 164,026 $ 84,838
Net Assets Consist of:
Capital (par value and paid-in surplus) $ 6,508,452 $ 3,813,949 $ 1,036,679 $ 168,537 $ 164,026 $ 84,838
Transactions in Fund Shares - Investor Shares:
Shares sold 5,447,777 4,205,232 384,359 250,916 330,543 244,419
Reinvested dividends and distributions 54,458 42,784 7,176 5,901 2,765 2,281
Total 5,502,235 4,248,016 391,535 256,817 333,308 246,700
Shares Repurchased (5,042,859) (3,989,256) (310,430) (242,091) (309,566) (240,069)
Net Increase/(Decrease) in Fund Shares 459,376 258,760 81,105 14,726 23,742 6,631
Shares Outstanding Beginning of Period 1,032,647 773,887 132,134 117,408 81,269 74,638
Shares Outstanding End of Period 1,492,023 1,032,647 213,239 132,134 105,011 81,269
Transactions in Fund Shares
- Institutional Shares:
Shares sold 89,394,668 57,798,535 2,152,976 671,494 211,444 37,249
Reinvested dividends and distributions 60,862 32,270 3,884 2,569 589 113
Total 89,455,530 57,830,805 2,156,860 674,063 212,033 37,362
Shares Repurchased (87,252,582) (56,765,454) (1,371,965) (697,778) (174,273) (35,750)
Net Increase/(Decrease) in Fund Shares 2,202,948 1,065,351 784,895 (23,715) 37,760 1,612
Shares Outstanding Beginning of Period 2,770,961 1,705,610 35,775 59,490 3,559 1,947
Shares Outstanding End of Period 4,973,909 2,770,961 820,670 35,775 41,319 3,559
Transactions in Fund Shares - Service Shares:
Shares sold 323,786 17,775 2,772 2,557 38,120 10
Reinvested dividends and distributions 1,560 47 28 32 110 --
Total 325,346 17,822 2,800 2,589 38,230 10
Shares Repurchased (293,167) (7,481) (658) (1,961) (20,544) --
Net Increase/(Decrease) in Fund Shares 32,179 10,341 2,142 628 17,686 10
Shares Outstanding Beginning of Period 10,341 -- 628 -- 10 --
Shares Outstanding End of Period 42,520 10,341 2,770 628 17,696 10
</TABLE>
(1) Fiscal period November 22, 1996, (inception) to October 31, 1997, for
Service Shares.
See Notes to Financial Statements.
Janus Income Funds / October 31, 1998 37
<PAGE>
Financial | Highlights - Money Market Funds
<TABLE>
<CAPTION>
Janus
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Investor Shares 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .05 .05 .05 .04
Total from Investment Operations .05 .05 .05 .04
Less Dividends and Distributions:
Dividends (from net investment income) (.05) (.05) (.05) (.04)
Total Dividends and Distributions (.05) (.05) (.05) (.04)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 5.25% 5.23% 5.13% 3.95%
Net Assets at End of Period (in thousands) $ 1,492,023 $ 1,032,647 $ 773,887 $ 643,219
Average Net Assets for the Period (in thousands) $ 1,123,991 $ 883,052 $ 676,334 $ 461,311
Ratio of Expenses to Average Net Assets**(2) 0.60%(3) 0.60%(3) 0.60%(3) 0.60%(3)
Ratio of Net Investment Income to Average Net Assets**(2) 5.13% 5.09% 5.01% 5.56%
<CAPTION>
Janus Government
For a share outstanding throughout Money Market
Ended October 31 Fund
Investor Shares 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .05 .05 .05 .04
Total from Investment Operations .05 .05 .05 .04
Less Dividends and Distributions:
Dividends (from net investment income) (.05) (.05) (.05) (.04)
Total Dividends and Distributions (.05) (.05) (.05) (.04)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 5.12% 5.11% 5.03% 3.90%
Net Assets at End of Period (in thousands) $ 213,239 $ 132,133 $ 117,408 $ 199,307
Average Net Assets for the Period (in thousands) $ 150,525 $ 123,193 $ 112,059 $ 87,906
Ratio of Expenses to Average Net Assets**(2) 0.60%(3) 0.60%(3) 0.60%(3) 0.60%(3)
Ratio of Net Investment Income to Average Net Assets**(2) 5.01% 5.42% 4.91% 5.40%
<CAPTION>
Janus
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Institutional Shares 1998 1997 1996 1995(4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .06 .06 .05 .03
Total from Investment Operations .06 .06 .05 .03
Less Dividends and Distributions:
Dividends (from net investment income) (.06) (.06) (.05) (.03)
Total Dividends and Distributions (.06) (.06) (.05) (.03)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 5.72% 5.71% 5.61% 3.25%
Net Assets at End of Period (in thousands) $ 4,973,909 $ 2,770,961 $ 1,705,610 $ 304,952
Average Net Assets for the Period (in thousands) $ 3,620,872 $ 2,545,294 $ 874,431 $ 202,427
Ratio of Expenses to Average Net Assets**(2) 0.15%(5) 0.15%(5) 0.15%(5) 0.15%(5)
Ratio of Net Investment Income to Average Net Assets**(2) 5.58% 5.54% 5.41% 5.86%
<CAPTION>
Janus Government
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Institutional Shares 1998 1997 1996 1995(4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .05 .05 .05 .03
Total from Investment Operations .05 .05 .05 .03
Less Dividends and Distributions:
Dividends (from net investment income) (.05) (.05) (.05) (.03)
Total Dividends and Distributions (.05) (.05) (.05) (.03)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 5.59% 5.58% 5.50% 3.20%
Net Assets at End of Period (in thousands) $ 820,670 $ 35,776 $ 59,490 $ 44,164
Average Net Assets for the Period (in thousands) $ 321,174 $ 56,801 $ 53,398 $ 24,748
Ratio of Expenses to Average Net Assets**(2) 0.15%(5) 0.15%(5) 0.15%(5) 0.15%(5)
Ratio of Net Investment Income to Average Net Assets**(2) 5.42% 6.04% 5.34% 5.75%
</TABLE>
*Total return is not annualized for periods of less than one year.
**Annualized for periods less than one year.
(1) Fiscal period February 15, 1995, (inception) to October 31, 1995.
(2) See "Explanation of Charts and Tables."
(3) The ratio was .70% before waiver of certain fees incurred by the fund.
(4) Fiscal period April 17, 1995, (inception) to October 31, 1995.
(5) The ratio was .35% before waiver of certain fees incurred by the fund.
See Notes to Financial Statements.
38 Janus Income Funds / October 31, 1998
<PAGE>
<TABLE>
<CAPTION>
Janus Janus Government
For a share outstanding throughout Money Market Money Market
each fiscal year ended October 31 Fund Fund
Service Shares 1998 1997(1) 1998 1997(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .05 .05 .05 .05
Total from Investment Operations .05 .05 .05 .05
Less Dividends and Distributions:
Dividends (from net investment income) (.05) (.05) (.05) (.05)
Total Dividends and Distributions (.05) (.05) (.05) (.05)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 5.45% 5.14% 5.33% 5.01%
Net Assets at End of Period (in thousands) $ 42,520 $ 10,341 $ 2,770 $ 628
Average Net Assets for the Period (in thousands) $ 29,322 $ 913 $ 639 $ 1,141
Ratio of Expenses to Average Net Assets**(2) 0.40%(3) 0.40%(3) 0.40%(3) 0.40%(3)
Ratio of Net Investment Income to Average Net Assets**(2) 5.30% 5.02% 5.15% 5.23%
<CAPTION>
Janus Tax-Exempt
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Investor Shares 1998 1997 1996 1995(4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .03 .03 .03 .02
Total from Investment Operations .03 .03 .03 .02
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.03) (.03) (.02)
Total Dividends and Distributions (.03) (.03) (.03) (.02)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 3.23% 3.20% 3.27% 2.40%
Net Assets at End of Period (in thousands) $ 105,011 $ 81,268 $ 74,638 $ 67,479
Average Net Assets for the Period (in thousands) $ 91,058 $ 75,929 $ 68,695 $ 57,366
Ratio of Expenses to Average Net Assets**(2) 0.60%(5) 0.60%(5) 0.60%(5) 0.60%(5)
Ratio of Net Investment Income to Average Net Assets**(2) 3.16% 3.14% 3.22% 3.38%
</TABLE>
*Total return is not annualized for periods of less than one year.
**Annualized for periods less than one year.
(1) Fiscal period November 22, 1996, (inception) to October 31, 1997.
(2) See "Explanation of Charts and Tables."
(3) The ratio was .60% before waiver of certain fees incurred by the fund.
(4) Fiscal period February 15, 1995, (inception) to October 31, 1995.
(5) The ratio was .70% before waiver of certain fees incurred by the fund.
See Notes to Financial Statements.
Janus Income Funds / October 31, 1998 39
<PAGE>
Financial | Highlights - Money Market Funds (continued)
<TABLE>
<CAPTION>
Janus Tax-Exempt
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Institutional Shares 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .04 .04 .04 .02
Total from Investment Operations .04 .04 .04 .02
Less Dividends and Distributions:
Dividends (from net investment income) (.04) (.04) (.04) (.02)
Total Dividends and Distributions (.04) (.04) (.04) (.02)
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return* 3.67% 3.67% 3.74% 2.09%
Net Assets at End of Period (in thousands) $ 41,319 $ 3,560 $ 1,947 $ 11,192
Average Net Assets for the Period (in thousands) $ 18,859 $ 3,466 $ 1,754 $ 1,115
Ratio of Expenses to Average Net Assets**(2) 0.15%(3) 0.15%(3) 0.15%(3) 0.15%(3)
Ratio of Net Investment Income to Average Net Assets**(2) 3.60% 3.94% 3.82% 3.82%
<CAPTION>
Janus Tax-Exempt
For a share outstanding throughout Money Market
each fiscal year ended October 31 Fund
Service Shares 1998 1997(4)
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value at Beginning of Period $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income .03 .03
Total from Investment Operations .03 .03
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.03)
Total Dividends and Distributions (.03) (.03)
Net Asset Value at End of Period $ 1.00 $ 1.00
Total Return* 3.44% 3.22%
Net Assets at End of Period (in thousands) $ 17,696 $ 10
Average Net Assets for the Period (in thousands) $ 3,215 $ 10
Ratio of Expenses to Average Net Assets**(2) 0.40%(5) 0.40%(5)
Ratio of Net Investment Income to Average Net Assets**(2) 3.32% 3.17%
</TABLE>
*Total return is not annualized for periods of less than one year.
**Annualized for periods less than one year.
(1) Fiscal period April 17, 1995, (inception) to October 31, 1995.
(2) See "Explanation of Charts and Tables."
(3) The ratio was .35% before waiver of certain fees incurred by the fund.
(4) Fiscal period November 22, 1996, (inception) to October 31, 1997.
(5) The ratio was .60% before waiver of certain fees incurred by the fund.
See Notes to Financial Statements.
40 Janus Income Funds / October 31, 1998
<PAGE>
Notes to | Schedules of Investments
CAD Canadian Dollar
DEM German Deutschemark
*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 October 31, 1998.
2) Money market funds may hold securities with stated maturities of greater
than 397 days when those securities have features that allow a fund to "put"
back the security to the issuer or to a third party within 397 days of
acquisition. The maturity dates shown in the security descriptions are the
stated maturity dates.
3) Repurchase Agreements held by a 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. In the event of
default on the obligation to repurchase, the fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. In
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject to
legal proceedings.
Janus Income Funds / October 31, 1998 41
<PAGE>
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. Each of the Money Market Funds offers three classes of
shares.
"Investor Shares" are available to the general public, and "Institutional
Shares" are available only to investors that meet certain minimum account
sizes. "Service Shares" are available through banks and other financial
institutions.
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 Bond Funds may 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 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.
Currency gain and loss are 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 Bond Funds may enter into "futures contracts" and "options" on
securities, financial indexes, foreign currencies, forward contracts and
interest rate swaps and swap-related products. The Bond 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
42 Janus Income Funds / October 31, 1998
<PAGE>
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 because of 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, 1998, 100% were exempt
from federal income taxes for Janus Federal Tax-Exempt Fund and Janus
Tax-Exempt Money Market Fund.
For the fiscal year ended October 31, 1998, the following percentage of
fiscal year distributions were considered long-term gains: Janus Tax-Exempt
Money Market Fund - 0.27%.
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 AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The advisory agreements with the Bond Funds spells out the fee that the Funds
must pay. Each of the Bond 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 First $300 Million .65 .65*
Bond Fund 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 agreed to reduce its
advisory fee for each of 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%, .15%, and .40% of average daily net
assets for the Investor Shares, Institutional Shares, and Service Shares,
respectively. Janus Capital has 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 October 31, 1998, are noted below.
DST FEES
Janus Flexible Income Fund $189,987
Janus High-Yield Fund 81,233
Janus Federal Tax-Exempt Fund 36,079
Janus Short-Term Bond Fund 44,909
Janus Income Funds / October 31, 1998 43
<PAGE>
Notes to | Financial Statements (continued)
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, 1998, are available
to offset future realized capital gains and thereby reduce future taxable
gains distributions. These carryovers expire between October 31, 2002, and
October 31, 2006. The aggregate cost of investments and the composition of
unrealized appreciation and depreciation of investment securities for federal
income tax purposes as of October 31, 1998, are listed below. The federal tax
cost for the Money Market Funds is the same as listed in the Statement of
Assets and Liabilities.
<TABLE>
<CAPTION>
Net
Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Carryovers Cost Appreciation (Depreciation) (Depreciation)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income Fund -- $1,102,748,097 $33,864,195 ($18,500,745) $ 15,363,450
Janus High-Yield Fund -- 293,006,943 1,044,408 (23,712,527) (22,668,119)
Janus Federal Tax-Exempt Fund ($ 504,402) 91,776,142 2,380,484 (215,952) 2,164,532
Janus Short-Term Bond Fund (2,861,783) 138,102,431 1,640,058 (811,669) 828,389
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to
differing treatments for items such as deferral of wash sales, foreign
currency transactions, net operating losses, and capital loss carryforwards.
Permanent items identified in the period ended October 31, 1998, have been
reclassified among the components of net assets as follows:
Undistributed Undistributed
Net Investment Net Realized Paid-In
Income Gains and Losses Capital
-----------------------------------------------------------------------------
Janus Flexible Income Fund $ 89,395 ($ 89,385) --
Janus High-Yield Fund (149,172) 149,203 ($31)
Janus Federal Tax-Exempt Fund -- -- --
Janus Short-Term Bond Fund -- -- --
-----------------------------------------------------------------------------
44 Janus Income Funds / October 31, 1998
<PAGE>
Explanation of | Charts and Tables
1. PERFORMANCE OVERVIEWS
Performance overview graphs on the previous pages compare the performance of
a $10,000 investment in each Fund (from inception) to one or more widely used
market indexes through October 31, 1998.
When comparing the performance of a Fund with an index, keep in mind that
market indexes do not include brokerage commissions that would be incurred if
you purchased the individual securities in the index. They also do not
include taxes payable on dividends and interest or operating expenses
incurred if you maintained a portfolio invested in the index.
Average annual total returns are also 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, then calculating the annual compounded percentage rate that
would have produced the same result had the rate of growth been constant
throughout the period.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Fund's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each Fund's portfolio on the last day of the reporting
period. Securities are usually listed by type (common stock, corporate bonds,
U.S. government obligations, etc.) and by industry classification (banking,
communications, insurance, etc.).
The market value of each security is quoted as of the last day of the
reporting period. The value of securities denominated in foreign currencies
is converted into U.S. dollars.
Funds that invest in foreign securities also provide a summary of investments
by country. This summary reports the Fund's exposure to different countries
by providing the percentage of securities invested in each country.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Fund's Schedule of
Investments (if applicable). Forward currency contracts are 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 name of the foreign currency, the settlement date of
the contract, the amount of the contract, 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.
3. STATEMENT OF OPERATIONS
This statement details the Funds' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current portfolio holdings.
The first section in this statement, entitled "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, transfer
agent fees, shareholder servicing expenses, and printing and postage for
mailing statements, financial reports and prospectuses.
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. An unrealized gain (or loss) refers
to the change in net appreciation or depreciation of the Funds' portfolios
during the period. "Net Gain/(Loss) on Investments" is affected both by
changes in the market value of portfolio holdings and by gains (or losses)
realized during the reporting period.
Janus Income Funds / October 31, 1998 45
<PAGE>
Explanation of | Charts and Tables (continued)
4. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the
assets and liabilities of the Funds on the last day of the reporting 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 but not yet received on stocks owned 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. Additionally,
there may be other assets and liabilities such as forward currency contracts.
The last line of this statement reports the Funds' net asset value (NAV) per
share on the last day of the reporting period. The NAV is calculated by
dividing the Funds' net assets (assets minus liabilities) by the number of
shares outstanding.
5. STATEMENT OF CHANGES IN NET ASSETS
This 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 is important to investors because it shows exactly
what caused the Funds' net asset size to change during the period.
The first section summarizes the information from the Statement of Operations
regarding changes in net assets because of the Funds' investment performance.
The Funds' net assets may also change as a result of dividend and capital
gains 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 Funds
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 entitled "Net Assets Consist of" breaks down the components of
the Funds' net assets. Because Funds must distribute substantially all
earnings, you'll notice that a significant portion of net assets is
shareholder capital.
46 Janus Income Funds / October 31, 1998
<PAGE>
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect
the Funds' net asset value (NAV) for 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 reporting period. The next line reports the Funds' net
investment income per share, which comprises dividends and interest income
earned on securities held by the Funds. 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 period.
Also included are the Funds' expense ratios, 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.
These arrangements include the use of brokerage commissions, uninvested cash
balances earning interest or balance credits. The Statement of Operations
reflects total expenses before any such 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.
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 ratio of net investment income summarizes the income earned divided by
the average net assets of a Fund 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 Fund's yield because it doesn't take into account the dividends
distributed to the Fund's investors.
The next ratio is the portfolio turnover rate, which measures the buying and
selling activity in the Funds' portfolios. Portfolio turnover is affected by
market conditions, changes in the size of a fund, the nature of the Fund's
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 means that an amount equal
to the value of the portfolio is sold every six months.
Janus Income Funds / October 31, 1998 47
<PAGE>
Report of | Independent Accountants
To the Trustees and Shareholders of
Janus Investment Fund:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Janus Flexible Income Fund, Janus
High-Yield Fund, Janus Federal Tax-Exempt Fund, Janus Short-Term Bond Fund,
Janus Money Market Fund, Janus Government Money Market Fund, and Janus
Tax-Exempt Money Market Fund (seven of the portfolios constituting the Janus
Investment Fund, hereafter referred to as the "Funds") at October 31, 1998, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
December 1, 1998
Euro-Conversion | Discussion (unaudited)
On January 1, 1999, eleven European countries will convert to a common currency:
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
Netherlands, Portugal, and Spain. Investments traded in the markets of these
countries will be denominated in the new currency, referred to as the "Euro."
Conversion to the Euro may present certain risks to investments of the Funds
held in one of the currencies that is being replaced. Janus Capital, however,
does not believe that the conversion will have a material impact on the Funds'
investments.
Year 2000 | Discussion (unaudited)
Preparing for Year 2000 is a high priority for Janus Capital, which has
established a dedicated group to address this issue. Janus Capital has devoted
considerable internal resources and has engaged one of the foremost experts in
the field to help achieve Year 2000 readiness. Janus Capital does not anticipate
that Year 2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels; however, Janus
Capital cannot make any assurances that the steps it has taken to ensure Year
2000 readiness will be successful. In addition, there can be no assurance that
Year 2000 issues will not affect the companies in which the Funds invest or
worldwide markets and economies.
48 Janus Income Funds / October 31, 1998
<PAGE>
Janus Income Funds / October 31, 1998 49
<PAGE>
[LOGO] JANUS
100 Fillmore Street
Denver, Colorado 80206-4923
1-800-525-3713
Funds distributed by Janus Distributors, Inc. Member NASD.
[LOGO] Recycled Paper
