1998 SEMIANNUAL REPORT
Janus Income Funds
JANUS FLEXIBLE INCOME FUND
JANUS HIGH-YIELD FUND
JANUS FEDERAL TAX-EXEMPT FUND
JANUS SHORT-TERM BOND FUND
JANUS MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
[Logo] JANUS
TABLE OF CONTENTS
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Our Message to You 1
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Portfolio Manager's Commentary and Schedule of Investments
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Janus Flexible Income Fund 2
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Janus High-Yield Fund 7
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Janus Federal Tax-Exempt Fund 11
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Janus Short-Term Bond Fund 15
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Janus Money Market Fund 18
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Janus Government Money Market Fund 21
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Janus Tax-Exempt Money Market Fund 22
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Statements of Operations - Bond Funds 24
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Statements of Assets and Liabilities - Bond Funds 25
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Statements of Changes in Net Assets - Bond Funds 26
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Financial Highlights - Bond Funds 27
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Statements of Operations - Money Market Funds 29
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Statements of Assets and Liabilities - Money Market Funds 29
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Statements of Changes in Net Assets - Money Market Funds 30
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Financial Highlights - Money Market Funds 31
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Notes to Schedules of Investments 33
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Notes to Financial Statements 33
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An Explanation of Performance Information
Performance overview graphs on the following pages compare the performance
of a $10,000 investment in each fund since its inception to one or more widely
used market indexes. Each graph reflects the lifetime performance of the fund
through April 30, 1998.
When comparing the performance of a fund to an index, keep in mind that
market indexes do not take into account brokerage commissions that would be
incurred if you purchased the individual securities in the index. They also do
not include taxes payable on dividends, interest payments, or operating expenses
necessary to maintain a portfolio investing in the index.
Average annual total returns are quoted for each fund. Average annual total
return is calculated by taking the growth or decline in value of an investment
over a period of time, including reinvestment of dividends and distributions,
and then calculating the annual compound percentage rate that would have
produced the same result had the rate of growth been constant throughout the
period.
An Explanation of the Schedule of Investments
Following the performance overview is each fund's Schedule of Investments.
This schedule reports the industry concentrations and the different types of
securities held in the fund's portfolio on the last day of the reporting period.
Securities are usually listed by type (common stock, corporate bonds, U.S.
government obligations, etc.) and by industry classification (banking,
communications, insurance, etc.).
The market value of each security represents its value on the last day of
the reporting period. The value of securities denominated in foreign currencies
is converted into U.S. dollars.
An Explanation of the Forward Currency Contract Table
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, 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.
<PAGE>
OUR MESSAGE TO YOU
Dear Shareholders:
A strong U.S. economy with few signs of inflation, a downturn in Asia's
economy, and lower commodity prices worldwide teamed up to create a relatively
benign U.S. bond market during the first half of our fiscal year (November 1,
1997, to April 30, 1998). Interest rates dipped to levels we haven't seen since
the 1960s and, despite some short-term volatility, remained there.
I'm pleased to inform you that our income funds performed well against this
backdrop.
A Consistently Strong U.S. Economy
The U.S. economy continued its impressive expansion over the last six
months. Housing starts, durable goods, and other major manufacturing industries
posted strong results. This was coupled with strong demand for electronic
components and telecommunications driven by the need for new technologies to
combat the Year 2000 problem, new competition, and new opportunities. Gross
domestic product - the sum of all goods and services produced in the country -
climbed from a robust 3.7% in the fourth quarter of 1997 to an even healthier
4.2% in the first three months of '98. And unemployment figures reached a
24-year low.
In fact, our economy was so strong that at times it raised fears of higher
inflation, leading the Federal Reserve to indicate that it may lean toward
raising short-term interest rates in the future. However, inflation so far has
been kept in check by lower prices on commodities and, despite low unemployment
rates, limited upward pressure on wages. A decrease in oil prices, in
particular, offset the effects of the vigorous economy and helped to create a
positive climate for stocks and a benign environment for bonds.
Turmoil in Asia
The decline in commodities was brought about primarily by a general falloff
in Asia's economies and markets. Lingering turmoil overseas reduced demand for
oil and helped to keep the cost of foreign goods low.
Just as important to bond investors, the uncertainty in Asia prompted a
flight to quality investments elsewhere. Money flooded into the U.S. Treasury
and investment-grade corporate markets - generally considered the investment
world's "safe havens" - during the final weeks of 1997. Prices jumped up
quickly, and yields fell dramatically.
A Modest Rise in Yields
In the wake of this change, the U.S. stock market continued to forge ahead,
while the bond market settled into a narrow trading range. Yields on 30-year
U.S. Treasuries moved only modestly, from just over 5.9% on January 1 to about
6% at the end of the period, offering little opportunity to boost returns.
The one area that provided a chance for better yields and even capital
appreciation was high-yield bonds. High-yields, or "junk" bonds, correlate
closely with the U.S. equity market, so the persistent expansion of the U.S.
stock market served them well during the period. New high-yield issues reached
record levels, providing ample opportunity to pick and choose as more companies
turned to this market to finance or refinance their growth. As you read the
attached letters from our portfolio managers, you'll see that several of the
funds took advantage of this, using these securities to increase current yields
while cutting their sensitivity to interest rate changes.
Looking Ahead
I expect the sharp decrease in commodity prices and the lingering impact of
Asia's difficulties to support a positive environment going forward. While the
smaller Asian economies wait for Japan to pull them out of their slump, the
Japanese government has been unsuccessful in stimulating its own economy. More
important, Japanese companies have failed to enact the new policies that would
enhance shareholder value.
While we continue to select securities based on the underlying fundamental
strength of the issuer, we will be watchful for anything - additional shock
waves from Asia for example - that might slow the U.S. economy and cause
interest rates to drop. Although such an event could negatively impact the U.S.
stock market and, potentially, our high-yield holdings, it would also make the
higher coupons on these securities more valuable.
I am confident that our fundamental, bottom-up analysis combined with
in-depth, hands-on research will enable us to find the best investment
opportunities for your money, regardless of the direction of interest rates.
Finally, I would like to thank you for investing in our funds. We greatly
appreciate your confidence in us and are committed to proving worthy of it.
Sincerely,
/s/ Tom Bailey
Tom Bailey
Chairman
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Past performance does not guarantee future results.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 1
<PAGE>
JANUS FLEXIBLE INCOME FUND Portfolio Manager, Ronald V. Speaker
I'm pleased to say that for the six months ended April 30, 1998, the Janus
Flexible Income Fund gained 5.69%, considerably better than the 3.64% total
return for the Lehman Brothers Government/ Corporate Bond Index. Both returns
include reinvested dividends.
In addition, for the 12-month period ended April 30, 1998, Janus Flexible
Income Fund ranked fourth out of 28 general bond funds tracked by Lipper
Analytical Services, Inc., a leading mutual fund rating company.(1) I'd like to
explain how the Fund achieved this position in the top 15% of its category.
The international currency crisis that started in Asia last July and
accelerated in October raised concerns about global growth rates and set off a
flight to the relative safety of the U.S. Treasury market. The influx of capital
helped drive yields down dramatically during the final eight weeks of 1997,
thereby pushing up prices of Treasuries and higher-quality corporate bonds.
Since then, rates have remained fairly steady, and the prices of
high-quality corporate bonds and government bonds have changed little.
High-yield bonds, on the other hand, have surged ahead, thanks to low rates, a
strong economy and stock market, and a considerable amount of merger activity.
The Real Story: High-Yield
My policy is to keep the Fund invested in a combination of investment-grade
corporate bonds, Treasury securities, and carefully chosen high-yield/high-risk
bonds. The goal is to ensure that, as conditions change, at least a portion of
your money is always invested "where the action is" in the fixed-income arena.
During the most recent six months, that meant initially the government bond
market, then the high-yield sector.
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Fund Profile April 30, 1998 October 31, 1997
Weighted Average Maturity 9.8 Yrs. 9.4 Yrs.
Average Modified Duration* 6.1 Yrs. 5.6 Yrs.
30-Day Average Yield** 6.87% 6.61%
Average Rating BBB- BBB
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Portfolio Asset Mix April 30, 1998 October 31, 1997
Investment-Grade
Corporate Bonds 34.4% 33.2%
High-Yield/High-Risk
Corporate Bonds 43.7% 38.7%
U.S. Government Bonds 9.7% 14.9%
Euro Bonds 3.9% 1.2%
Preferred Stock 2.6% 2.1%
Cash & Cash Equivalents 5.7% 9.9%
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*A theoretical measure of price volatility
**Yields will fluctuate.
I'm particularly excited about the changes in the telecommunications
industry. Deregulation has led to alternative choices for voice, data, and
entertainment transmissions and has encouraged merger and takeover activity.
Mergers such as MCI's union with WorldCom help lift the entire sector. We made
select investments in alternative telecommunications providers including
Intermedia, Metronet, Winstar, and McLeod. These companies should benefit from
further consolidation.
Another strong performer was Bally Total Fitness, the nation's largest
owner/operator of fitness clubs. The company is reducing its financial risk
while upgrading its product offering. Bally has remodeled and expanded its
franchise to continue to attract new members.
One idea that did not work as well was Fox Kids Worldwide, a television
cartoon programmer. The bond declined because the company's creditworthiness was
misunderstood and because Disney announced that it would launch its own
competing network. The falloff occurred during a temporary downturn in the
market. When the security showed no signs of recovery, we sold our position.
Within the investment-grade sector, we did well overweighting the banking
industry as consolidation continues. The Travelers Group/Citicorp merger
highlights the cost savings available. We have invested in smaller regional
banks such as Hubco, Union Planters, City National, and St. Paul Bancorp - each
of which would benefit if purchased by a larger, stronger franchise.
Steady as She Goes
At this juncture, inflation and economic growth appear to be under control.
The economy is healthy in many key areas, from autos to telecommunications.
However, commodity prices are weak, so inflation is not rising. I'm also
encouraged by the improvement in the U.S. budget and the possibility of budget
surpluses beginning later this year. Unless the problems in Asia prove to upset
this positive scenario, I look for a domestic bond market that trades within a
narrow range with select opportunities on high-yield securities.
I appreciate your investment in Janus Flexible Income Fund. I will continue
to do my best to maintain a well-diversified portfolio and to keep volatility
low while seeking a competitive return.
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(1) According to Lipper Analytical Services, Inc., general bond funds "do not
have any quality or maturity restrictions. Intend to keep bulk of assets in
corporate and government debt issues." As of April 30, 1998, Janus Flexible
Income Fund ranked 3/22 in its Lipper category for the 3-year period, 1/10
for the 5-year period, and 3/5 for the 10-year period. The Lipper 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 APRIL 30, 1998 SEMIANNUAL REPORT 2
<PAGE>
JANUS FLEXIBLE INCOME FUND Portfolio Manager, Ronald V. Speaker
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Flexible Income Fund and the Lehman Brothers Government/Corporate Bond
Index. Janus Flexible Income Fund is represented by a solid green line. The
Lehman Brothers Government/Corporate Bond Index is represented by a single
dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, July 2, 1987, through
April 30, 1998. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Flexible Income Fund ($26,976) as compared to
the Lehman Brothers Government/Corporate Bond Index ($25,145). There is a legend
in the upper left quadrant of the graph which indicates Janus Flexible Income
Fund's one-year, five-year, ten-year and since inception (July 2, 1987) average
annual total returns as 15.03%, 9.71%, 9.80% and 9.58%, respectively.
*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.
JANUS FLEXIBLE INCOME FUND April 30, 1998 (unaudited)
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Principal Amount Market Value
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Corporate Bonds - 80.2%
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Automotive - Cars and Light Trucks - 2.4%
$ 20,000,000 Ford Motor Co., 7.25%
notes, due 10/1/08 $ 21,225,000
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Automotive - Medium and Heavy Duty Trucks - 0.6%
2,750,000 Navistar International Corp., 8.00%
senior subordinated notes, due 2/1/08 2,739,687
2,500,000 Western Star Truck Holdings, Ltd., 8.75%
senior notes, due 5/1/07+ 2,640,625
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5,380,312
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Beverages - Non-Alcoholic - 1.4%
12,000,000 Coca-Cola Enterprises, Inc., 6.95%
debentures, due 11/15/26 12,210,000
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Broadcast Services and Programming - 1.2%
10,000,000 Fox/Liberty Networks L.L.C., 8.875%
senior notes, due 8/15/07 10,225,000
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Building - Heavy Construction - 0.3%
2,750,000 Iron Age Corp., 9.875%
senior subordinated notes, due 5/1/08+ 2,777,500
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Cable Television - 2.8%
3,000,000 Century Communications Corp., 8.75%
senior notes, due 10/1/07 3,112,500
11,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 12,265,000
9,000,000 TCI Communications, Inc., 6.875%
senior notes, due 2/15/06 9,101,250
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24,478,750
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Casino Hotels - 0.7%
6,000,000 Venetian Casino Resort L.L.C., 12.25%
mortgage bonds, due 11/15/04 6,210,000
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Casino Services - 0.7%
$ 6,000,000 Isle of Capri Black Hawk, L.L.C., 13.00%
first mortgage bonds, due 8/31/04 $ 6,187,500
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Cellular Telecommunications - 4.2%
7,500,000 360 Communications Co., 6.65%
notes, due 1/15/08 7,528,125
8,500,000 American Mobile Satellite Corp., 12.25%
units, due 4/1/08+ 8,797,500
2,085,000 Digital Television Services L.L.C., 12.50%
company guaranteed notes, due 8/1/07 2,384,719
7,000,000 Innova S. de R.L., 12.875%
senior notes, due 4/1/07 7,568,750
10,000,000 Iridium L.L.C./Capital Corp., 11.25%
senior notes, due 7/15/05 10,275,000
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36,554,094
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Chemicals - Specialty - 1.2%
10,000,000 Praxair, Inc., 6.625%
notes, due 10/15/07 10,062,500
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Commercial Banks - 4.4%
11,000,000 Bank One Texas, 6.25%
subordinated notes, due 2/15/08 10,890,000
4,000,000 BankBoston N.A., 6.375%
subordinated notes, due 3/25/08 3,975,000
2,500,000 City National Bancshares Corp., 6.375%
subordinated notes, due 1/15/08 2,459,375
First Nationwide Holdings, Inc.:
2,000,000 12.50% senior notes, due 4/15/03 2,285,000
5,100,000 10.625% senior subordinated notes,
due 10/1/03 5,705,625
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See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 3
<PAGE>
JANUS FLEXIBLE INCOME FUND April 30, 1998 (unaudited)
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Principal Amount Market Value
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Commercial Banks - (continued)
$5,000,000 HUBCO, Inc., 8.20%
subordinated debentures, due 9/15/06 $ 5,393,750
5,000,000 North Fork Bancorporation, Inc., 8.70%
company guaranteed notes, due 12/15/26 5,350,000
2,500,000 Union Planters Corp., 6.50%
subordinated notes, due 3/15/18 2,475,000
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38,533,750
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Commercial Services - 0.7%
5,575,000 Neodata Services, Inc., 12.00%
senior notes, due 5/1/03 5,979,188
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Computers - Information Technology - 0.2%
2,000,000 Cooperative Computing, 9.00%
senior subordinated notes, due 2/1/08+ 1,920,000
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Computers - Integrated Systems - 0.7%
6,375,000 Candescent Technologies Corp., 7.00%
senior subordinated debentures,
due 5/1/03+ 6,375,000
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Computers - Mainframe - 2.4%
IBM Corp.:
10,000,000 6.45% notes, due 8/1/07 10,162,500
10,000,000 7.00% debentures, due 10/30/25 10,375,000
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20,537,500
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Consumer Products - 0.8%
3,000,000 Doane Products Co., 10.625%
senior notes, due 3/1/06 3,236,250
5,000,000 Spin Cycle, Inc., zero coupon
units, due 5/1/05+ 3,500,000
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6,736,250
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Containers - Metal and Glass - 1.0%
8,000,000 Crown Cork & Seal Co., Inc., 7.00%
company guaranteed notes, due 12/15/06 8,270,000
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Cosmetics and Toiletries - 0.9%
7,500,000 Revlon, Inc., 8.625%
senior subordinated notes, due 2/1/08+ 7,481,250
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Distribution and Wholesale - 0.9%
8,250,000 Aviation Sales Co., 8.125%
senior subordinated notes, due 2/15/08 8,085,000
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Drug Delivery Systems - 0.1%
1,000,000 Atrix Laboratories, Inc., 7.00%
subordinated notes, due 12/1/04+ 1,147,500
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Electric - Integrated - 1.6%
El Paso Electric Co.:
3,000,000 8.90% first mortgage bonds, due 2/1/06 3,326,250
9,000,000 9.40% first mortgage bonds, due 5/1/11 10,260,000
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13,586,250
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Electric Products - 0.8%
6,500,000 Viasystems, Inc., 9.75%
senior subordinated notes, due 6/1/07 6,792,500
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Engineering - Research and Development - 0.7%
6,000,000 Intertek Finance PLC, 10.25%
company guaranteed notes, due 11/1/06 6,367,500
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Finance - Auto Loans - 1.1%
10,000,000 General Motors Acceptance Corp., 6.125%
senior subordinated notes, due 1/22/08 9,762,500
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Finance - Other Services - 0.5%
4,000,000 Mellon Financial Co., 6.375%
subordinated notes, due 2/15/10 3,940,000
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Food - Diversified - 1.6%
$5,000,000 International Home Foods, Inc., 10.375%
company guaranteed notes, due 11/1/06 $ 5,543,750
8,000,000 Ralston Purina Co., 7.75%
debentures, due 10/1/15 8,750,000
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14,293,750
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Food - Retail - 1.2%
2,000,000 Carr-Gottstein Foods Co., 12.00%
senior subordinated notes, due 11/15/05 2,237,500
5,000,000 Pantry, Inc., 10.25%
company guaranteed notes, due 10/15/07 5,150,000
3,000,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 3,405,000
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10,792,500
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Funeral Services and Related Items - 0.6%
4,500,000 Service Corporation International, 7.70%
notes, due 4/15/09 4,882,500
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Gambling - Non-Hotel Casinos - 0.4%
3,000,000 Mohegan Tribal Gaming Authority, 13.50%
senior notes, due 11/15/02 3,873,750
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Home Furnishings - 0.5%
212,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 231,080
4,000,000 Lifestyle Furnishings International, Inc., 10.875%
company guaranteed notes, due 8/1/06 4,470,000
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4,701,080
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Hotels and Motels - 1.3%
10,000,000 Courtyard By Marriott, 10.75%
senior notes, due 2/1/08 11,025,000
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Industrial Audio and Video Products - 0.2%
2,000,000 Unifrax Investment Corp., 10.50%
senior notes, due 11/1/03 2,085,000
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Insurance Brokers - 0.6%
5,000,000 SIG Capital Trust I, 9.50%
company guaranteed notes, due 8/15/27 5,143,750
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Internet Software - 0.3%
2,450,000 PSINet, Inc., 10.00%
senior notes, due 2/15/08+ 2,517,375
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Life and Health Insurance - 2.4%
11,000,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 11,453,750
5,000,000 Life Re Capital Trust I, 8.72%
company guaranteed notes, due 6/15/27+ 5,412,500
3,500,000 Penncorp Financial Group, Inc., 9.25%
senior subordinated notes, due 12/15/03 3,666,250
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20,532,500
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Manufacturing - 1.0%
7,500,000 Day International Group, Inc., 11.125%
senior notes, due 6/1/05 8,325,000
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Medical - Hospitals - 0.9%
7,000,000 Tenet Healthcare Corp., 10.125%
senior subordinated notes, due 3/1/05 7,796,250
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Medical Instruments - 1.6%
14,000,000 United States Surgical Corp., 7.25%
senior notes, due 3/15/08 13,965,000
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Medical Nursing Home - 0.3%
2,500,000 Extendicare Health Services, Inc., 9.35%
senior subordinated notes, due 12/15/07+ 2,596,875
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See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 4
<PAGE>
JANUS FLEXIBLE INCOME FUND April 30, 1998 (unaudited)
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Principal Amount Market Value
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Medical Products - 1.4%
$2,500,000 ALARIS Medical, Inc., 9.75%
company guaranteed notes, due 12/1/06 $ 2,646,875
8,500,000 Dade International, Inc., 11.125%
senior subordinated notes,
Series B, due 5/1/06 9,445,625
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12,092,500
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Metal Processors and Fabricators - 0.5%
4,000,000 Hawk Corp, 10.25%
senior notes, due 12/1/03 4,295,000
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Money Center Banks - 0.6%
5,000,000 Chase Manhattan Corp., 6.75% subordinated
notes, due 8/15/08 5,118,750
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Multimedia - 3.7%
15,250,000 Time Warner, Inc., 8.18%
notes, due 8/15/07 16,794,063
15,000,000 Walt Disney Co. (The), 6.75%
senior notes, due 3/30/06 15,506,250
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32,300,313
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Networking Products - 0.6%
5,000,000 Anixter International, Inc., 8.00%
company guaranteed notes, due 9/15/03 5,268,750
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Oil Companies - Exploration and Production - 0.2%
2,000,000 Magnum Hunter Resources, Inc., 10.00%
company guaranteed notes, due 6/1/07 1,982,500
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Optical Supplies - 0.6%
5,000,000 Bausch & Lomb, Inc., 6.75%
notes, due 12/15/04 5,062,500
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Paint and Related Products - 1.3%
10,500,000 Sherwin-Williams Co., 6.85%
notes, due 2/1/07 10,933,125
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Property and Casualty Insurance - 2.5%
5,000,000 Arkwright CSN Trust, 9.625%
notes, due 8/15/26+ 6,000,000
6,000,000 First American Capital Trust, 8.50%
company guaranteed notes, due 4/15/12 6,630,000
9,000,000 Orion Capital Corp., 7.25%
senior notes, due 7/15/05 9,348,750
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21,978,750
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Recreational Centers - 1.0%
8,000,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 8,370,000
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Reinsurance - 1.2%
10,000,000 Veritas Capital Trust, 10.00%
company guaranteed notes, due 1/1/28 10,487,500
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Rental Auto/Equipment - 0.6%
5,000,000 Ryder TRS, Inc., 10.00%
senior subordinated notes, due 12/1/06 5,362,500
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Retail - Leisure Products - 1.1%
9,000,000 Selmer Co., Inc., 11.00%
senior subordinated notes, due 5/15/05 9,933,750
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Retail - Music Store - 0.7%
Musicland Group:
3,500,000 9.00% senior subordinated notes,
due 6/15/03 3,421,250
2,800,000 9.875% company guaranteed notes,
due 3/15/08+ 2,793,000
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6,214,250
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Retail - Regional Department Stores - 2.9%
25,000,000 Fred Meyer, Inc., 7.45%
senior notes, due 3/1/08 24,937,500
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Retail - Restaurants - 0.7%
$ 6,000,000 McDonald's Corp., 6.375%
debentures, due 1/8/28 $ 5,872,500
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Satellite Telecommunications - 1.0%
7,000,000 PanAmSat Corp., 6.375%
notes, due 1/15/08+ 6,816,250
2,250,000 Satelites Mexicanos S.A., 10.125%
senior notes, due 11/1/04 2,292,187
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9,108,437
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Savings/Loan/Thrifts - 1.5%
8,000,000 People's Bank Bridgeport, 7.20%
subordinated notes, due 12/1/06 8,170,000
5,000,000 St. Paul Bancorp, Inc., 7.125%
senior notes, due 2/15/04 5,106,250
- --------------------------------------------------------------------------------
13,276,250
- --------------------------------------------------------------------------------
Super-Regional Banks - 1.0%
8,000,000 NationsBank Corp., 7.75%
subordinated notes, due 8/15/15 8,790,000
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.5%
4,500,000 Global Tele-Systems Ltd., 9.875%
senior notes, due 2/15/05 4,651,875
- --------------------------------------------------------------------------------
Telecommunication Services - 4.9%
15,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 14,850,000
3,000,000 McLeodUSA, Inc., 8.375%
senior notes, due 3/15/08+ 3,045,000
3,775,000 Metricom, Inc., 8.00%
subordinated notes, due 9/15/03 3,676,473
MetroNet Communications Corp.:
3,450,000 12.00% senior notes, due 8/15/07 3,971,812
2,750,000 zero coupon senior discount notes,
due 11/1/07+ 1,852,812
5,000,000 Netia Holdings B.V., zero coupon
company guaranteed notes, due 11/1/07 3,556,250
3,000,000 Pathnet, Inc., 12.25%
units, due 4/15/08+ 3,075,000
3,000,000 Talton Holdings, Inc., 11.00%
company guaranteed notes, due 6/30/07 3,262,500
6,500,000 WinStar Communications, Inc., zero coupon
senior discount notes, due 10/15/05 5,240,625
- --------------------------------------------------------------------------------
42,530,472
- --------------------------------------------------------------------------------
Telephone - Integrated - 1.4%
Intermedia Communications, Inc.:
3,000,000 13.50% senior notes, due 6/1/05 3,626,250
10,000,000 zero coupon senior discount notes,
due 5/15/06 8,162,500
- --------------------------------------------------------------------------------
11,788,750
- --------------------------------------------------------------------------------
Telephone - Local - 0.8%
6,500,000 Bell Atlantic Corp., 5.75%
bonds, due 4/1/03+ 6,760,000
- --------------------------------------------------------------------------------
Telephone - Long Distance - 1.0%
8,000,000 WorldCom, Inc., 7.75%
notes, due 4/1/07 8,620,000
- --------------------------------------------------------------------------------
Television - 1.7%
8,000,000 Dialog Corp. PLC, 11.00%
senior subordinated notes, due 11/15/07 8,820,000
5,500,000 Pegasus Media Communications, 12.50%
notes, due 7/1/05 6,297,500
- --------------------------------------------------------------------------------
15,117,500
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 5
<PAGE>
JANUS FLEXIBLE INCOME FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Textile - Products - 1.4%
$ 2,000,000 Collins & Aikman Corp., 10.00%
senior subordinated notes, due 1/15/07 $ 2,095,000
10,000,000 WestPoint Stevens, Inc., 8.75%
senior notes, due 12/15/01 10,387,500
- --------------------------------------------------------------------------------
12,482,500
- --------------------------------------------------------------------------------
Transportation - Services - 0.2%
2,000,000 Atlantic Express, Inc., 10.75%
company guaranteed notes, due 2/1/04 2,137,500
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $676,178,188) 698,828,646
- --------------------------------------------------------------------------------
U.S. Government Obligation - 9.7%
80,000,000 U.S. Treasury Note, 6.625%
due 5/15/07 (cost $82,279,227) 84,819,200
- --------------------------------------------------------------------------------
Foreign Bonds - 1.8%
DEM
9,000,000 Esprit Telecom Group PLC, 11.50%
senior notes, due 12/15/07** 5,466,713
DEM
13,000,000 Fresenius Medical Capital Trust III, 7.375%
company guaranteed notes, due 2/1/08**,+ 7,389,257
DEM
4,500,000 Texon International PLC, 10.00%
senior notes, due 2/1/08** 2,564,089
- --------------------------------------------------------------------------------
Total Foreign Bonds (cost $14,755,630) 15,420,059
- --------------------------------------------------------------------------------
Preferred Stock - 2.6%
- --------------------------------------------------------------------------------
Electric - Integrated - 0.8%
100,000 Houston Industries, Inc., 7.00% 6,937,500
- --------------------------------------------------------------------------------
Medical Nursing Home - 0.3%
100,000 Sun Financing I, 7.00%+ 2,637,500
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 1.2%
350,000 Chevy Chase Savings, 13.00% 10,850,000
- --------------------------------------------------------------------------------
Telecommunication Services - 0.3%
2,500 Nextel Communications, Inc., 11.125% 2,675,000
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $22,675,413) 23,100,000
- --------------------------------------------------------------------------------
Warrants - 0%
3,450 MetroNet Communications Corp.
- exp. 8/15/07* (cost $0) 6,900
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 3.2%
Household Finance Corp.
$ 27,600,000 5.51%, 5/1/98 (amortized cost $27,600,000) 27,600,000
- --------------------------------------------------------------------------------
Total Investments (total cost $823,488,458) - 97.5% 849,774,805
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 2.5% 21,990,763
- --------------------------------------------------------------------------------
Net Assets - 100% $ 871,765,568
- --------------------------------------------------------------------------------
Summary of Investments by Country
April 30, 1998
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 1.0% $ 8,472,150
Mexico 1.2% 9,860,938
Poland 0.4% 3,556,250
United Kingdom 2.7% 23,218,304
United States++ 94.7% 804,667,163
- --------------------------------------------------------------------------------
Total 100.0% $ 849,774,805
================================================================================
++Includes Short-Term Securities (91.4% excluding Short-Term Securities)
Forward Currency Contracts
Open at April 30, 1998
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
German Deutschemark 3/5/99 24,210,000 $ 13,701,964 ($168,137)
- --------------------------------------------------------------------------------
Total $ 13,701,964 ($168,137)
================================================================================
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 6
<PAGE>
JANUS HIGH-YIELD FUND Portfolio Manager, Sandy R. Rufenacht
Six months ago, we said that as long as the underpinnings of strong
economic growth remained intact, we expected to see good relative performance
for Janus High-Yield Fund. I'm pleased to report that, despite some volatility,
our expectations were fulfilled. For the six-month period ended April 30, 1998,
the Fund chalked up a total return of 7.65% versus a return of 5.68% for the
Lehman Brothers High-Yield Bond Index. Both results include reinvested
dividends.
Thanks to this above-average result, the Fund ranked 46th, or in the top
23%, of the 203 high current yield funds tracked by Lipper Analytical Services,
Inc. during the 12 months ended April 30, 1998. Lipper is a leading mutual fund
rating company.(1)
Off to a Strong Start
Currency problems in Southeast Asia disturbed markets and economies
worldwide late last fall. However, the short-term impact on the U.S.
high-yield/high-risk bond market was negligible, and the longer-term impact has
actually been quite positive.
Upheaval overseas has helped to keep our own economy from overheating,
while heightening interest in "flight to quality" investments such as U.S.
Treasury issues. As a result, interest rates continued at very low levels, and
investors eagerly sought the more attractive yields available in the high-yield
marketplace.
- --------------------------------------------------------------------------------
Fund Profile April 30, 1998 October 31, 1997
Weighted Average Maturity 8.1 Yrs. 7.2 Yrs.
Average Modified Duration* 5.7 Yrs. 4.8 Yrs.
30-Day Average Yield** 7.57% 7.87%
30-Day Average Yield
Without Reimbursement** N/A 7.87%
Average Rating B B
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility
**Yields will fluctuate.
A Boost from Called Bonds
Our strategy of owning bonds with strong potential to be called worked well
in this environment. We were able to collect relatively high coupon payments and
captured some appreciation as well when bonds such as Ralph's Grocery,
Allbritton Communications, Inc., and Plastic Specialties & Technologies, Inc.,
among others, were called by their corporate issuers. Some of these companies
went back to the markets to refinance their debt at the current lower levels
and, in effect, gave bondholders a premium to surrender the older, higher-paying
securities.
Another area of focus was companies in the telecommunications field, where
significant merger and takeover activity is occurring. Local exchange carriers,
the established regional Bell operators and the long-distance companies are now
competing head-to-head to provide local service, and the intense competition is
creating pressure to consolidate.
We added Teleport Communications Group, Inc. and Nextel Communications to
the Fund. The former is a local, independent competitive access provider that
was acquired by AT&T. The latter is an all-in-one (pager, cellular phone and
two-way radio) nationwide network that is heavily backed by industry visionary
Craig McCaw, who has already sold one business to AT&T.
Record New Issues and Research
Many companies are looking to the high-yield market for financing, and the
number of new high-yield issues reached a record pace in the past year. In
contrast to just a few years ago, we are able to pick and choose among a handful
of possible investments daily rather than weekly.
One drawback of the heavy supply is that an issue may be overlooked or
misunderstood by the market. Such was the case with Cooperative Computing, a
software solutions company serving the automotive parts industry which, so far,
has not performed to our expectations. We trimmed our position, but believe our
patience will be rewarded down the road.
At the same time, we must keep in mind two facts. The high-yield sector has
attracted record sums from investors for some time now, so issues in certain
industries have become overvalued. Also, junk bonds correlate very closely with
the equity markets and, therefore, are not immune to the volatility surrounding
stocks.
The rapid growth in supply and demand has made it more important than ever
that we apply the stringent fundamental analysis for which Janus is known.
Therefore, we've added to our analyst and trading staff and increased the number
of on-site meetings and inspections each month. Both are essential to gaining a
better understanding of a company's balance sheet and the true risks associated
with its business. Intensive, hands-on research also enables us to uncover
earnings potential and other factors that make a bond attractive, such as the
likelihood of an upgrade in the company's credit rating.
Research truly is the key to our strategy, and we will use our strengths in
this area to look for more opportunities to capture above-average yields while
controlling overall risk.
Thank you, as always, for your continued investment in Janus High-Yield
Fund.
- --------------------------------------------------------------------------------
(1) A high current yield fund is defined by Lipper as "a fund that aims at high
(relative) current yield from fixed income securities, has no quality or
maturity restrictions, and tends to invest in lower grade debt issues."
Lipper's 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 APRIL 30, 1998 SEMIANNUAL REPORT 7
<PAGE>
JANUS HIGH-YIELD FUND Portfolio Manager, Sandy R. Rufenacht
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus High-Yield Fund and the Lehman Brothers High-Yield Bond Index. Janus
High-Yield Fund is represented by a solid green line. The Lehman Brothers
High-Yield Bond Index is represented by a single dashed black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, December 29, 1995, through April 30, 1998. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
High-Yield Fund ($15,098) as compared to the Lehman Brothers High-Yield Bond
Index ($13,029). There is a legend in the upper left quadrant of the graph which
indicates Janus High-Yield Fund's one-year and since inception (December 29,
1995) average annual total returns as 18.90% and 19.20%, respectively.
*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.
JANUS HIGH-YIELD FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 87.6%
- --------------------------------------------------------------------------------
Advertising Services - 1.9%
$3,000,000 Outsourcing Services Group, 10.875%
senior subordinated notes, due 03/1/06+ $ 3,060,000
5,000,000 Young America Corp., 11.625%
senior subordinated notes, due 2/15/06 5,025,000
- --------------------------------------------------------------------------------
8,085,000
- --------------------------------------------------------------------------------
Agricultural Operations - 1.6%
4,000,000 Frank's Nursery & Crafts, 10.25%
senior subordinated notes, due 3/1/08 4,000,000
2,300,000 Hines Horticulture, Inc., 11.75%
senior subordinated notes, due 10/15/05 2,530,000
- --------------------------------------------------------------------------------
6,530,000
- --------------------------------------------------------------------------------
Building - Heavy Construction - 1.0%
4,000,000 Iron Age Corp., 9.875%
senior subordinated notes, due 5/1/08+ 4,040,000
- --------------------------------------------------------------------------------
Building and Construction - 0.7%
3,000,000 Reliant Building Products, 10.875%
senior subordinated notes, due 5/1/04 3,082,500
- --------------------------------------------------------------------------------
Cable Television - 3.6%
4,000,000 Adelphia Communications Corp., 8.375%
senior notes, due 2/1/08 3,970,000
2,000,000 Fundy Cable, Ltd., 11.00%
senior notes, due 11/15/05 2,205,000
5,000,000 Galaxy Telecom, L.P., 12.375%
senior subordinated notes, due 10/1/05 5,575,000
3,000,000 Rifkin Acquisition Partners, L.P., 11.125%
senior subordinated notes, due 1/15/06 3,285,000
- --------------------------------------------------------------------------------
15,035,000
- --------------------------------------------------------------------------------
Casino Hotels - 1.2%
$5,000,000 Venetian Casino Resort, L.L.C., 12.25%
mortgage bonds, due 11/15/04 $ 5,175,000
- --------------------------------------------------------------------------------
Casino Services - 1.2%
5,000,000 Isle of Capri Black Hawk, L.L.C., 13.00%
first mortgage bonds, due 8/31/04 5,156,250
- --------------------------------------------------------------------------------
Circuit Boards - 1.0%
4,000,000 Details, Inc., 10.00%
senior subordinated notes, due 11/15/05 4,130,000
- --------------------------------------------------------------------------------
Computers - Information Technology - 0.7%
3,000,000 Cooperative Computing, 9.00%
senior subordinated notes, due 2/1/08+ 2,880,000
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 0.9%
3,500,000 Plastic Containers, Inc., 10.00%
senior notes, due 12/15/06 3,797,500
- --------------------------------------------------------------------------------
Distribution and Wholesale - 1.4%
6,000,000 Aviation Sales Co., 8.125%
senior subordinated notes, due 2/15/08 5,880,000
- --------------------------------------------------------------------------------
Educational Software - 0.7%
2,500,000 Herff Jones, Inc., 11.00%
senior subordinated notes, due 8/15/05 2,756,250
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 1.0%
4,000,000 Elgar Holdings, Inc., 9.875%
senior notes, due 02/1/08+ 4,080,000
- --------------------------------------------------------------------------------
Engines - Internal Combustion - 0.5%
2,000,000 Wells Aluminum Corp., 10.125%
senior notes, due 6/1/05 2,120,000
- --------------------------------------------------------------------------------
Finance - Other Services - 0.5%
4,000,000 SF Holdings Group, Inc., zero coupon
units, due 3/15/08+ 2,240,000
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 8
<PAGE>
JANUS HIGH-YIELD FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Food - Diversified - 1.9%
$6,000,000 Richmont Marketing Specialists, 10.125%
senior subordinated notes, due 12/15/07 $ 6,195,000
1,780,000 Specialty Foods Corp., 11.125%
senior notes, due 10/1/02 1,806,700
- --------------------------------------------------------------------------------
8,001,700
- --------------------------------------------------------------------------------
Food - Retail - 3.0%
4,000,000 Eagle Family Foods, 8.75%
senior subordinated notes, due 01/15/08 3,960,000
4,000,000 Marsh Supermarkets, Inc., 8.875%
company guaranteed notes, due 8/1/07 4,130,000
4,000,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 4,540,000
- --------------------------------------------------------------------------------
12,630,000
- --------------------------------------------------------------------------------
Funeral Services and Related Items - 0.7%
2,500,000 Prime Succession Acquisition Co., 10.75%
senior subordinated notes, due 8/15/04 2,743,750
- --------------------------------------------------------------------------------
Gambling - Non-Hotel Casinos - 2.3%
5,000,000 Casino America, Inc., 12.50%
senior notes, due 8/1/03 5,600,000
4,000,000 Lady Luck Gaming Corp., 11.875%
first mortgage notes, due 3/1/01 4,150,000
- --------------------------------------------------------------------------------
9,750,000
- --------------------------------------------------------------------------------
Gas - Transportation - 0.5%
2,000,000 Navigator Gas Transport, 10.50%
notes, due 6/30/07 2,090,000
- --------------------------------------------------------------------------------
Home Furnishings - 0.8%
3,000,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 3,270,000
- --------------------------------------------------------------------------------
Hotels and Motels - 1.2%
5,000,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 5,106,250
- --------------------------------------------------------------------------------
Human Resources - 0.5%
1,975,000 COMFORCE Corp., 12.00%
senior notes, due 12/1/07 2,103,375
- --------------------------------------------------------------------------------
Instruments - Controls - 1.2%
4,500,000 Imo Industries, Inc., 11.75%
senior subordinated notes, due 5/1/06 5,130,000
- --------------------------------------------------------------------------------
Internet Software - 0.3%
1,375,000 PSINet, Inc., 10.00%
senior notes, due 2/15/08 1,412,812
- --------------------------------------------------------------------------------
Leisure and Recreation Products - 0.9%
4,500,000 CLN Holdings, Inc., zero coupon
company guaranteed note, due 5/15/01 3,667,500
- --------------------------------------------------------------------------------
Machinery - Print Trade - 0.8%
3,000,000 Goss Graphic Systems, Inc., 12.00%
senior subordinated notes, due 10/15/06 3,386,250
- --------------------------------------------------------------------------------
Manufacturing - 1.0%
4,000,000 Foamex International, Inc., 9.875%
company guaranteed notes, due 6/15/07 4,320,000
- --------------------------------------------------------------------------------
Medical Products - 1.0%
4,000,000 Universal Hospital Services, Inc., 10.25%
senior notes, due 3/1/08+ 4,100,000
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 0.8%
3,500,000 Chiles Offshore Corp., 10.00%
senior notes, due 5/1/08 3,508,750
- --------------------------------------------------------------------------------
Racetracks - 1.2%
5,000,000 Hollywood Park, Inc., 9.50%
senior subordinated notes, due 8/1/07 5,237,500
- --------------------------------------------------------------------------------
Radio - 4.8%
$ 5,000,000 Chancellor Media Corp., 8.125%
senior subordinated notes, due 12/15/07 $ 5,006,250
11,250,000 Jacor Communications, Inc., zero coupon
senior notes, due 6/12/11 8,704,688
6,000,000 SFX Broadcasting, Inc., 10.75%
senior subordinated notes, due 5/15/06 6,652,500
- --------------------------------------------------------------------------------
20,363,438
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 0.5%
2,090,000 LNR Property Corp., 9.375%
senior subordinated notes, due 3/15/08 2,103,062
- --------------------------------------------------------------------------------
Recreational Centers - 1.8%
3,000,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 3,160,200
4,000,000 Cobblestone Golf Group, Inc., 11.50%
senior notes, due 6/1/03 4,495,000
- --------------------------------------------------------------------------------
7,655,200
- --------------------------------------------------------------------------------
Reinsurance - 0.8%
3,000,000 Veritas Capital Trust, 10.00%
company guaranteed notes, due 1/1/28 3,146,250
- --------------------------------------------------------------------------------
Rental Auto/Equipment - 1.0%
4,000,000 Ryder TRS, Inc., 10.00%
senior subordinated notes, due 12/1/06 4,290,000
- --------------------------------------------------------------------------------
Resorts and Theme Parks - 0.5%
2,000,000 Silverleaf Resorts, Inc., 10.50%
senior subordinated notes, due 4/1/08 2,000,000
- --------------------------------------------------------------------------------
Retail - Auto Parts - 0.7%
2,800,000 MSX International, Inc., 11.375%
senior subordinated notes, due 1/15/08 2,870,000
- --------------------------------------------------------------------------------
Retail - Convenience Stores - 2.0%
8,000,000 Core-Mark International, Inc., 11.375%
senior subordinated notes, due 9/15/03 8,560,000
- --------------------------------------------------------------------------------
Retail - Discount - 0.4%
1,500,000 Pamida, Inc., 11.75%
senior subordinated notes, due 3/15/03 1,561,500
- --------------------------------------------------------------------------------
Retail - Diversified - 1.7%
3,585,000 Eye Care Centers of America, Inc., 9.125%
senior subordinated notes, due 5/1/08+ 3,585,000
3,500,000 Falcon Holding Group, L.P., 8.375%
debentures, due 4/15/10+ 3,478,125
- --------------------------------------------------------------------------------
7,063,125
- --------------------------------------------------------------------------------
Retail - Drug Store - 0.7%
3,000,000 Community Distributors, Inc., 10.25%
company guaranteed notes, due 10/15/04 3,112,500
- --------------------------------------------------------------------------------
Retail - Music Store - 0.9%
4,000,000 MTS, Inc., 9.375%
senior subordinated notes, due 5/1/05+ 4,000,000
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 1.2%
5,000,000 Fred Meyer, Inc., 7.45%
senior notes, due 3/1/08 4,987,500
- --------------------------------------------------------------------------------
Rubber and Plastics - 0.5%
2,000,000 Applied Extrusion Technologies, Inc., 11.50%
senior notes, due 4/1/02 2,132,500
- --------------------------------------------------------------------------------
Satellite Telecommunications - 0.9%
3,500,000 American Mobile Satellite Corp., 12.25%
units, due 4/1/08+ 3,622,500
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 1.5%
6,000,000 Local Financial Corp., 11.00%
senior notes, due 9/8/04 6,495,000
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 9
<PAGE>
JANUS HIGH-YIELD FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Steel - Producers - 1.0%
$ 4,000,000 Weirton Steel Corp., 11.375%
senior notes, due 7/1/04 $ 4,270,000
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.9%
6,000,000 GST Telecommunications, Inc., zero coupon
senior discount notes, due 5/1/08+ 3,622,500
- --------------------------------------------------------------------------------
Telecommunication Services - 15.2%
5,000,000 21st Century Telecom Group, Inc., zero coupon
senior discount notes, due 2/15/08+ 2,918,750
2,000,000 Hermes Europe Railtel, B.V., 11.50%
senior notes, due 8/15/07 2,270,000
4,000,000 IDT Corp., 8.75%
senior notes, due 2/15/06 3,960,000
1,950,000 ITC DeltaCom, Inc., 11.00%
senior notes, due 6/1/07 2,218,125
3,250,000 IXC Communications, Inc., 9.00%
senior subordinated notes, due 4/15/08 3,256,500
10,000,000 Level 3 Communications, Inc., 9.125%
senior notes, due 5/1/08 9,900,000
5,000,000 Microcell Telecommunications, Inc.,
zero coupon senior discount notes,
due 6/1/06 3,750,000
2,750,000 MJD Communications, Inc., 9.50%
senior subordinated notes, due 5/01/08+ 2,750,000
7,000,000 Nextel Communications, Inc., zero coupon
senior discount notes, due 8/15/04 6,763,750
3,000,000 Peoples Telephone Co., Inc., 12.25%
senior notes, due 7/15/02 3,195,000
3,000,000 Pinnacle Holdings, Inc., zero coupon
senior discount notes, due 3/15/08 1,890,000
7,000,000 Qwest Communications International, Inc.,
zero coupon senior discount notes,
due 2/1/08 4,803,750
4,000,000 Talton Holdings, Inc., 11.00%
company guaranteed notes, due 6/30/07 4,350,000
5,000,000 Teligent, Inc., zero coupon
senior discount notes, due 3/1/08+ 2,850,000
WinStar Communications, Inc.:
5,000,000 zero coupon senior discount notes,
due 10/15/05 4,031,250
5,000,000 11.00% senior subordinated notes,
due 3/15/08 4,900,000
- --------------------------------------------------------------------------------
63,807,125
- --------------------------------------------------------------------------------
Telephone - Integrated - 3.9%
4,000,000 Facilicom International, 10.50%
senior notes, due 1/15/08 4,120,000
Intermedia Communications, Inc.:
10,000,000 zero coupon senior discount notes,
due 5/15/06 8,162,500
2,000,000 8.875% senior notes, due 11/1/07 2,065,000
2,000,000 8.50% senior notes, due 1/15/08 2,035,000
- --------------------------------------------------------------------------------
16,382,500
- --------------------------------------------------------------------------------
Telephone - Local - 0.9%
5,000,000 e.spire Communications, Inc., zero coupon
senior discount notes, due 4/1/06 4,000,000
- --------------------------------------------------------------------------------
Telephone - Long Distance - 2.6%
$ 3,000,000 Esprit Telecom Group PLC, 11.50%
senior notes, due 12/15/07 $ 3,292,500
3,000,000 Primus Telecommunications Group, Inc., 11.75%
senior notes, due 8/1/04 3,322,500
7,000,000 Viatel, Inc., 12.50%
units, due 4/15/08+ 4,243,750
- --------------------------------------------------------------------------------
10,858,750
- --------------------------------------------------------------------------------
Television - 3.6%
7,000,000 Dialog Corp. PLC, 11.00%
senior subordinated notes, due 11/15/07 7,717,500
4,000,000 LIN Television Corp., 8.375%
senior subordinated notes, due 3/1/08+ 3,995,000
3,000,000 Price Communications Corp., 11.75%
senior subordinated notes, due 7/15/07 3,352,500
- --------------------------------------------------------------------------------
15,065,000
- --------------------------------------------------------------------------------
Textile - Products - 0.6%
2,500,000 Glenoit Corp., 11.00%
senior subordinated notes, due 4/15/07 2,725,000
- --------------------------------------------------------------------------------
Transportation Services - 1.0%
4,000,000 Atlantic Express, Inc., 10.75%
company guaranteed notes, due 2/1/04 4,275,000
- --------------------------------------------------------------------------------
Water - 1.2%
5,000,000 Sparkling Spring Water Group, 11.50%
senior subordinated notes, due 11/15/07 5,250,000
- --------------------------------------------------------------------------------
Wire and Cable Products - 0.8%
3,000,000 International Wire Group, Inc., 11.75%
senior subordinated notes, due 6/1/05 3,330,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $362,505,078) 368,993,837
- --------------------------------------------------------------------------------
Foreign Bonds - 1.0%
ECU
5,500,000 Cellular Communications International, Inc.,
zero coupon senior discount notes,
due 4/1/05+ 4,241,695
- --------------------------------------------------------------------------------
Total Foreign Bonds (cost $4,209,195) 4,241,695
- --------------------------------------------------------------------------------
Preferred Stock - 2.6%
- --------------------------------------------------------------------------------
Electric - Integrated - 1.1%
65,000 Houston Industries, Inc., 7.00% 4,509,375
- --------------------------------------------------------------------------------
Telephone - Local - 1.5%
88,585 US WEST Communications Group, 4.50% 6,599,583
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $10,596,245) 11,108,958
- --------------------------------------------------------------------------------
Warrants - 0.2%
Gothic Energy Corp.:
23,833 - exp. 1/23/03* 23,833
70,000 - exp. 9/1/04* 70,000
2,000 MetroNet Communications Corp.
- exp. 8/15/07* 4,000
20,000 Microcell Telecommunications, Inc.
- exp. 6/1/06*, 500,000
3,000 Primus Telecommunications Group, Inc.
- exp. 8/1/04* 114,000
- --------------------------------------------------------------------------------
Total Warrants (cost $250,000) 711,833
- --------------------------------------------------------------------------------
Total Investments (total cost $377,560,518) - 91.4% 385,056,323
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 8.6% 36,103,455
- --------------------------------------------------------------------------------
Net Assets - 100% $ 421,159,778
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 10
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND Portfolio Manager, Darrell W. Watters
Janus Federal Tax-Exempt Fund turned in strong results for the six-month
period ended April 30, 1998. The Fund outperformed its benchmark index, gaining
2.94% versus 2.77% for the Lehman Brothers Municipal Bond Index. Both returns
include reinvested dividends.
Fed Holds Steady, Markets Don't
Investors continued to anticipate the Federal Reserve Board's every move
during the half, and although the Fed held steady, the financial markets did
not. In spite of the fact that the Fed maintained low interest rates, reactions
spurred by speculation about interest rate adjustments created volatility in the
markets.
Perhaps the most significant event affecting interest rate markets this
period was the downturn in Asian economies. Financial instability in Asia
continues to be of concern to U.S. monetary policy makers in their decision on
U.S. lending rates. Here in the U.S., the economic story is much different.
Demand for goods and services remains at the outer limits of what the Fed
perceives as an "acceptable" rate of growth. Commodity inflation is nonexistent
and has been a key driver to higher bond prices. The benefits of a growing U.S.
budget surplus have been offset by the staggering supply of corporate and
municipal new issue debt in the market. These offsetting forces should enable
the bond market to remain in a moderately narrow range throughout the rest of
the year.
Strategy Seeks High Yield, Moderate Risk
Janus Federal Tax-Exempt Fund was positioned neutral to its index
throughout the period. We continue to focus on high current yield and minimizing
exposure to interest-rate risk. This supports our strategy of building a fund
that seeks a high current yield, yet is competitive and flexible. The table on
this page also shows that the Fund carries a high overall rating, has a weighted
average maturity of 11.69 years, and a 30-day average yield of 4.90%.
Colorado municipal bonds continue to be a large component of the portfolio
at 32.1% of the holdings. There are two reasons for a large Colorado component.
In keeping with the Janus core philosophy of exhaustive research, we can access
the properties anywhere in the state within a few hours and continually monitor
progress. Colorado's relatively high 5% state tax rate and the conservative debt
guidelines Colorado municipalities are forced to operate under create intense
demand for double tax-free bonds by in-state residents, enhancing liquidity
premiums.
- --------------------------------------------------------------------------------
Fund Profile April 30, 1998 October 31, 1997
Weighted Average Maturity 11.69 Yrs. 17.1 Yrs.
Average Modified Duration* 7.52 Yrs. 10.3 Yrs.
30-Day Average Yield** 4.90% 4.79%
30-Day Average Yield
Without Reimbursement** 4.44% 4.36%
Average Rating AA2 AA2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Asset Mix April 30, 1998 October 31, 1997
General Obligation Bonds 20.0% 30.0%
Essential Service Revenue Bonds 80.0% 70.0%
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility
**Yields will fluctuate.
Looking Ahead
I believe benign inflation and low interest rates will continue to support
a healthy economy, but I remain cautiously optimistic about the bond market. Any
sign of inflation could upset the market, sending yields higher. Our intensive
analysis of credit fundamentals and effective management of market risks will
enable us to obtain a competitive yield while limiting the effect of interest
rate market fluctuations on the Fund.
Thank you for you continued investment in Janus Federal Tax-Exempt Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 11
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND Portfolio Manager, Darrell W. Watters
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Federal Tax-Exempt Fund and the Lehman Brothers Municipal Bond Index.
Janus Federal Tax-Exempt Fund is represented by a solid green line. The Lehman
Brothers Municipal Bond Index is represented by a single dashed black line. The
"y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 3, 1993, through April 30, 1998. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Federal Tax-Exempt Fund ($13,183) as compared to the Lehman Brothers
Municipal Bond Index ($13,708). There is a legend in the upper left quadrant of
the graph which indicates Janus Federal Tax-Exempt Fund's one-year and since
inception (May 3, 1993) average annual total returns as 8.60% and 5.60%,
respectively.
*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.
JANUS FEDERAL TAX-EXEMPT FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Municipal Securities - 98.8%
California - 9.6%
$1,500,000 California Health Facilities Financing
Authority Revenue, (Kaiser Permanente),
Series A, 6.50%, 12/1/20 $ 1,593,750
2,000,000 East Bay Municipal Utilities District Water
System Revenue, (MBIA Insured), 6.00%,
6/1/12 2,132,500
400,000 Los Angeles Regional Airports Improvement
Corp. Lease Revenue, (American Airlines -
Los Angeles International), Variable Rate,
4.25%, 12/1/24 400,000
1,000,000 M-S-R Public Power Agency Revenue, (San
Juan Project), (MBIA Insured), Series E,
6.50%, 7/1/17 1,073,750
1,000,000 Metropolitan Water District Southern
California Waterworks Revenue, 5.50%,
7/1/13 1,026,250
600,000 Orange County Water District Certificates of
Participation, (Project B), Variable Rate,
4.05%, 8/15/15 600,000
- --------------------------------------------------------------------------------
6,826,250
- --------------------------------------------------------------------------------
Colorado - 32.1%
1,080,000 Bachelor Gulch Metropolitan District, 6.80%,
12/1/06 1,136,700
500,000 Black Hawk, 5.70%, 12/1/12 505,625
Black Hawk Device Tax Revenue:
500,000 6.00%, 12/1/11 515,625
650,000 5.50%, 12/1/12 640,250
1,250,000 5.625%, 12/1/21 1,214,063
1,000,000 Boulder County Hospital Revenue
Development, (Longmont United Hospital
Project), 5.50%, 12/1/12 1,005,000
- --------------------------------------------------------------------------------
Colorado - (continued)
$1,000,000 Castle Rock Golf Enterprise Revenue,
6.50%, 12/1/16 $ 1,017,500
400,000 Colorado Health Facilities Authority Revenue,
(National Benevolent Association),
Series A, 5.15%, 1/1/12 395,000
Colorado Housing Finance Authority,
(Single Family Program):
1,000,000 Series C-2, 7.10%, 5/1/15 1,125,000
1,000,000 Series B-3, 6.80%, 11/1/28 1,125,000
Denver West Metropolitan District:
590,000 Series B, 5.60%, 12/1/12 594,425
265,000 6.15%, 12/1/13 272,288
750,000 6.50%, 12/1/16 789,375
615,000 6.20%, 6/1/17 631,913
775,000 Series B, 5.70%, 12/1/17 780,812
Eaglebend Affordable Housing Corp.
Multifamily Revenue, (Housing Project):
1,000,000 Series A, 6.40%, 7/1/17 1,057,500
1,300,000 Series B, 7.40%, 7/1/21 1,358,500
1,000,000 Erie Water Enterprise Revenue,
Series B, 6.00%, 12/1/17 1,015,000
2,000,000 Fort Collins Pollution Control Revenue,
(Anheuser Busch Project), 6.00%, 9/1/31 2,102,500
410,000 Hyland Hills Metropolitan Parks and
Recreational District Special Revenue,
Series A, 6.10%, 12/15/09 420,762
1,000,000 Mountain Village Metropolitan District,
(San Miguel County), 8.10%, 12/1/11 1,146,573
175,000 Plains Metropolitan District, 5.85%, 12/1/05 176,762
1,000,000 Sand Creek Metropolitan District,
7.125%, 12/1/16 1,022,500
100,000 Telluride Excise Tax Revenue, 5.75%, 12/1/12 103,250
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 12
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Colorado - (continued)
Telluride Housing Authority Housing Revenue,
(Shandoka Apartments Project):
$ 100,000 7.50%, 6/1/12 $ 108,250
1,500,000 7.50%, 6/1/23 1,636,875
Upper Cherry Creek Metropolitan District:
500,000 6.20%, 12/1/05 526,250
400,000 6.75%, 12/1/11 426,000
- --------------------------------------------------------------------------------
22,849,298
- --------------------------------------------------------------------------------
Florida - 2.8%
1,960,000 Tampa Utility Tax, (AMBAC Insured),
5.00%, 10/1/12 1,969,800
- --------------------------------------------------------------------------------
Georgia - 5.0%
1,000,000 Atlanta Airport Facilities Revenue,
(AMBAC Insured), 5.00%, 1/2/03 1,025,000
1,000,000 Dalton Development Authority Revenue
Certificates, (HLTC, Inc. Project), (MBIA
Insured), 5.00%, 8/15/28 941,250
1,400,000 Georgia Municipal Electric Authority Power
Revenue, (MBIA Insured), Series Y, 6.50%,
1/1/17 1,608,250
- --------------------------------------------------------------------------------
3,574,500
- --------------------------------------------------------------------------------
Illinois - 9.0%
2,500,000 Illinois Health Facilities Authority Revenue,
(Lutheran), (FSA Insured), Series C, 7.00%,
4/1/08 2,909,375
1,000,000 Metropolitan Pier and Exposition Authority
Hospitality Facilities Revenue, (McCormick
Place Convention Center Project), 7.00%,
7/1/26 1,202,500
2,000,000 Regional Transportation Authority,
(FGIC Insured), 6.00%, 6/1/23 2,257,500
- --------------------------------------------------------------------------------
6,369,375
- --------------------------------------------------------------------------------
Minnesota - 0.6%
440,000 Maplewood Multifamily Revenue,
(Hazel Ridge Project), Series B,
7.50%, 12/15/32 443,300
- --------------------------------------------------------------------------------
Mississippi - 1.1%
740,000 Harrison County School District State
Aid Capital Improvement, (FSA Insured),
6.25%, 8/1/02 792,725
- --------------------------------------------------------------------------------
Missouri - 6.2%
1,000,000 Cape Girardeau County Industrial Development
Authority Health Care Facilities
Revenue, (Southeast Missouri Hospital
Association), (MBIA Insured), 5.25%, 6/1/16 1,005,000
1,425,000 Carthage Waterworks and Wastewater
Treatment System Revenue, Series B,
6.50%, 7/1/16 1,514,063
2,000,000 Kansas City Municipal Assistance Leasehold
Refunding Revenue, (H. Roe Bartle
Convention Center Project), (MBIA Insured),
Series A, 5.00%, 4/15/20 1,922,500
- --------------------------------------------------------------------------------
4,441,563
- --------------------------------------------------------------------------------
Montana - 2.6%
1,000,000 Montana State Board of Investment Workers
Compensation Program, (MBIA Insured),
6.875%, 6/1/20 1,087,499
750,000 Montana State Health Facilities Authority
Facilities Revenue, (St. Peters Community
Hospital Project), 5.50%, 6/1/11 765,937
- --------------------------------------------------------------------------------
1,853,436
- --------------------------------------------------------------------------------
Nebraska - 3.9%
$2,800,000 Douglas County Nebraska Zoo Facilities
Revenue, (Henry Doorly Zoo Aquarium
Project), 6.00%, 6/1/03 $ 2,802,156
- --------------------------------------------------------------------------------
New Jersey - 1.7%
1,000,000 New Jersey State Turnpike Authority
Turnpike Revenue, (FSA Insured), Series C,
6.50%, 1/1/16 1,171,250
- --------------------------------------------------------------------------------
New Mexico - 4.6%
1,110,000 Santa Fe Educational Facilities Revenue,
(St. John's College Project), 5.40%, 3/1/20 1,061,438
2,000,000 University of New Mexico University Revenue,
Series A, 6.00%, 6/1/21 2,207,500
- --------------------------------------------------------------------------------
3,268,938
- --------------------------------------------------------------------------------
New York - 4.3%
1,000,000 New York State Dormitory Authority Revenue,
(State University Educational Facilities),
Series A, 5.50%, 5/15/19 1,028,750
2,000,000 New York, Series G, 5.00%, 8/1/01 2,027,500
- --------------------------------------------------------------------------------
3,056,250
- --------------------------------------------------------------------------------
North Dakota - 2.1%
1,500,000 Grand Forks Senior Housing Revenue Special
Term, (4000 VY Square Project), 6.375%,
12/1/34 1,518,750
- --------------------------------------------------------------------------------
Oklahoma - 3.0%
500,000 McGee Creek Authority Water Revenue,
(MBIA Insured), 6.00%, 1/1/23 564,375
500,000 Oklahoma County Finance Authority Multifamily
Housing Revenue First Mortgage,
(Multiple Apartments Project), Series A,
7.00%, 4/1/18 490,625
1,000,000 Tulsa Industrial Authority Revenue, (University
of Tulsa), (MBIA Insured), Series A,
6.00%, 10/1/16 1,110,000
- --------------------------------------------------------------------------------
2,165,000
- --------------------------------------------------------------------------------
Texas - 4.8%
Grapevine Industrial Development Corp.,
(American Airlines):
400,000 Series A-3, Variable Rate, 4.25%, 12/1/24 400,000
800,000 Series B-3, Variable Rate, 4.25%, 12/1/24 800,000
100,000 Series B-4, Variable Rate, 4.25%, 12/1/24 100,000
1,000,000 Orange County Naval and Port District
Industrial Development Corp. Revenue,
(North Star Steel Texas Project), 6.375%,
2/1/17 1,095,000
1,000,000 Texas State Public Financial Authority,
Series C, 4.70%, 10/1/03 1,015,000
- --------------------------------------------------------------------------------
3,410,000
- --------------------------------------------------------------------------------
Virginia - 3.9%
2,800,000 Fairfax County Water Authority Water Revenue,
5.00%, 4/1/21 2,754,500
- --------------------------------------------------------------------------------
Wyoming - 1.5%
1,000,000 Sweetwater County Pollution Control Revenue,
(Idaho Power Co.), Series A, 6.05%,
7/15/26** 1,062,500
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 13
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Total Municipal Securities (cost $69,110,410) - 98.8% $ 70,329,591
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.2% 839,635
- --------------------------------------------------------------------------------
Net Assets - 100% $ 71,169,226
- --------------------------------------------------------------------------------
Financial Futures - Short
25 Contracts U.S. Treasury - 20 year bond, expires June 1998,
principal amount $2,989,063
value $3,005,469, cumulative depreciation ($16,406)
- --------------------------------------------------------------------------------
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 APRIL 30, 1998 SEMIANNUAL REPORT 14
<PAGE>
JANUS SHORT-TERM BOND FUND Portfolio Manager, Sandy R. Rufenacht
For the six-month period ended April 30, 1998, Janus Short-Term Bond Fund
earned a total return of 3.07%, compared with a 4.05% total return for the
Lehman Brothers Government/Corporate 1-3 Year Bond Index. The Fund ranked 32nd
out of 103 funds for the 12-month period ended April 30, 1998, in the short-term
investment-grade debt category as tracked by Lipper Analytical Services, Inc., a
leading mutual fund rating company.(1)
I believe the Fund underperformed the Index as a result of the Fund's
shorter duration on its investment-grade portion when the market rallied in
December and early January. This same positioning benefited us during the
decline that followed in February as the market became concerned about
inflation. Since then, the short end of the market has seen less volatility,
trading in the 5.5% to 5.7% range. Throughout this entire period, the Fund has
been able to beat the majority of its category because of an emphasis on
high-yield/ high-risk positions.
Continued Focus on Fundamentals
In looking back over the last six months, it is important to keep in mind
that there were two very distinct market forces at work. In late 1997, our
market was affected by the Asian monetary crisis. As investors worldwide flocked
to high-quality investments, the market rallied strongly. By early January, the
yields on Treasury securities fell to levels not seen since the early 1960s.
After this initial inflow of money, the market began to take a closer look
at the domestic situation. The economy was strong, and the short end of the
curve began to worry about potential inflationary pressure if this growth were
to continue. If signs of inflation were to appear, the Fed could raise rates.
Although there had been no signs of inflation to date, the short end of the
market drove rates from their low of 5.2% up as high as 5.7% (almost a 10%
decline in the market). It was during this time that the combination of our
shorter maturity and our high-yield position allowed us to outperform many of
our competitors.
Throughout this volatile period, I continued to invest on the basis of
credit fundamentals. There were some small changes to the overall category
allocations, but this was the result of individual investment choices, not a
change in asset allocation.
- --------------------------------------------------------------------------------
Fund Profile April 30, 1998 October 31, 1997
Weighted Average Maturity 2.4 Yrs. 2.4 Yrs.
Average Modified Duration* 2.0 Yrs. 2.0 Yrs.
30-Day Average Yield** 5.89% 6.04%
30-Day Average Yield
Without Reimbursement** 5.59% 5.57%
Average Rating A A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Asset Mix April 30, 1998 October 31, 1997
Investment-Grade
Corporate Bonds 51.1% 56.2%
High-Yield/High-Risk
Corporate Bonds 20.3% 16.5%
U.S. Treasury Bonds 19.6% 21.7%
Cash & Cash Equivalents 9.0% 5.6%
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility
**Yields will fluctuate.
High-yield bonds were introduced to the Fund last year. Although they
generally involve greater credit risk, yet less interest rate risk, than
investment-grade bonds, their higher coupons provide more attractive yields.
The Fund focuses on high-yield issues that are currently, or I believe soon
will be, called. These are generally trading close to their call price, and the
market believes they will either be refinanced or redeemed by the company. The
result is that the Fund is able to reduce the overall price volatility, because
it is unlikely that the bond will trade far from that call price unless market
perception changes. These bonds no longer react to changes in interest rates to
the same extreme. Oftentimes these securities have only a short period (anywhere
from a month to a few years) until this call becomes effective. During the
holding period, the Fund is able to earn a higher income until the security is
called away.
With interest rates at such low levels, many companies took the opportunity
to refinance their debt. Calling in these original bonds generally helped them
appreciate in value. The Fund profited from several of these calls during the
past six months; among them were Allbritton Communications and Ralphs Grocery.
Although this strategy has been successful thus far, it needs to be
monitored closely. Because high-yield bonds often move in sync with the equity
markets, they are not immune to the volatility surrounding stocks.
Making the Most of Our Resources
The key to identifying opportunities like Ralphs Grocery is the interaction
with the Janus equity analysts and portfolio managers. Although high-yield
securities react to changes in interest rates, they are also strongly influenced
by the fundamental strengths and operating results of the company (as a stock
would be). Drawing upon the wealth of data gathered by the equity team helps us
to better assess credit quality and the risk of the underlying business. By
looking at a security from another viewpoint, we are able to better understand
the company going forward.
The use of short-term high-yield issues can work to the Fund's advantage no
matter which direction interest rates move. If rates decline, the high coupons
on these holdings would become even more valuable. If rates rise, the Fund
should maintain a fairly stable net asset value because of the extra income and
relatively stable pricing of these yield-to-call bonds.
Overall, I have a positive outlook for both investment-grade and high-yield
securities. The recent volatility in Asia may take some time to rectify itself
and is likely to restrict economic growth and inflation in the U.S. to some
degree. That, in turn, should keep the short-term fixed-income market fairly
stable for the foreseeable future.
In closing, I would like to thank you for your investment in Janus
Short-Term Bond Fund.
- --------------------------------------------------------------------------------
(1) Lipper Analytical Services, Inc. defines short-term investment grade debt
funds as investing "at least 65% of assets in investment-grade debt issues
(rated in top four grades) with dollar-weighted average maturities of 5
years or less." As of April 30, 1998, Janus Short-Term Bond Fund ranked
13/78 of short-term investment grade debt funds for the 3-year period and
15/46 for the 5-year period. The Lipper 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 APRIL 30, 1998 SEMIANNUAL REPORT 15
<PAGE>
JANUS SHORT-TERM BOND FUND Portfolio Manager, Sandy R. Rufenacht
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Short-Term Bond Fund and the Lehman Brothers 1-3 Year
Government/Corporate Bond Index. Janus Short-Term Bond Fund is represented by a
solid green line. The Lehman Brothers 1-3 Year Government/Corporate Bond Index
is represented by a single dashed black line. The "y" axis reflects the value of
the investment. The "x" axis reflects the computation periods from inception,
September 1, 1992, through April 30, 1998. The upper right quadrant reflects the
ending value of the hypothetical investment in Janus Short-Term Bond Fund
($13,391) as compared to the Lehman Brothers 1-3 Year Government/Corporate Bond
Index ($13,619). There is a legend in the upper left quadrant of the graph which
indicates Janus Short-Term Bond Fund's one-year, five-year and since inception
(September 1, 1992) average annual total returns as 6.98%, 5.36% and 5.29%,
respectively.
*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.
JANUS SHORT-TERM BOND FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Corporate Bonds - 71.4%
- --------------------------------------------------------------------------------
Building - Residential and Commercial - 0.5%
$ 400,000 Toll Corp., 9.50%
senior subordinated notes, due 3/15/03 $ 415,500
- --------------------------------------------------------------------------------
Cable Television - 2.4%
2,000,000 TCI Communications, Inc., 6.375%
senior notes, due 9/15/99 2,002,500
- --------------------------------------------------------------------------------
Computers - Mainframe - 4.2%
3,500,000 IBM Corp., 6.375%
global notes, due 6/15/00 3,530,625
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 1.3%
1,000,000 Plastic Containers, Inc., 10.00%
senior notes, due 12/15/06 1,085,000
- --------------------------------------------------------------------------------
Diversified Financial Services - 4.4%
3,750,000 Associates Corp. N.A., 5.85%
senior notes, due 1/15/01 3,731,250
- --------------------------------------------------------------------------------
Educational Software - 0.5%
350,000 Herff Jones, Inc., 11.00%
senior subordinated notes, due 8/15/05 385,875
- --------------------------------------------------------------------------------
Finance - Auto Loans - 6.2%
2,750,000 Ford Motor Credit Corp., 6.25%
notes, due 11/8/00 2,760,312
2,500,000 General Motors Acceptance Corp., 6.375%
notes, due 12/1/01 2,515,625
- --------------------------------------------------------------------------------
5,275,937
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 3.3%
2,800,000 Merrill Lynch & Co., Inc., 6.00%
notes, due 3/1/01 2,800,000
- --------------------------------------------------------------------------------
Finance Leasing Companies - 2.1%
1,750,000 International Lease Finance Corp., 6.625%
notes, due 4/1/99 1,761,200
- --------------------------------------------------------------------------------
Food - Retail - 4.1%
$2,000,000 Racers-Kellogg, 5.75%
bonds, due 2/2/01+ $ 1,987,500
1,310,000 Star Markets Co., Inc., 13.00%
senior subordinated notes, due 11/1/04 1,486,850
- --------------------------------------------------------------------------------
3,474,350
- --------------------------------------------------------------------------------
Home Furnishings - 1.4%
1,100,000 Cort Furniture Rental, 12.00%
senior notes, due 9/1/00 1,199,000
- --------------------------------------------------------------------------------
Hotels and Motels - 1.5%
1,250,000 Hyatt Equities, L.L.C., 6.80%
notes, due 5/15/00+ 1,264,063
- --------------------------------------------------------------------------------
Life and Health Insurance - 0.3%
235,000 Penncorp Financial Group, Inc., 9.25%
senior subordinated notes, due 12/15/03 246,162
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.8%
625,000 Fairfield Manufacturing Company, Inc., 11.375%
senior subordinated notes, due 7/1/01 654,688
- --------------------------------------------------------------------------------
Medical - Drugs - 3.1%
2,550,000 SmithKline Beecham PLC, 6.75%
company guaranteed notes, due 10/30/01 2,607,375
- --------------------------------------------------------------------------------
Metal - Aluminum - 1.3%
1,000,000 Kaiser Aluminum and Chemical Corp., 12.75%
senior subordinated notes, due 2/1/03 1,065,000
- --------------------------------------------------------------------------------
Money Center Banks - 3.5%
3,000,000 Chase Manhattan Corp., 5.50%
notes, due 2/15/01 2,951,250
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 16
<PAGE>
JANUS SHORT-TERM BOND FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Multimedia - 5.0%
$1,750,000 Time Warner, Inc., 4.90%
bonds, due 7/29/99+ $ 1,723,750
2,500,000 Walt Disney Co. (The), 6.375%
senior notes, due 3/30/01 2,531,250
- --------------------------------------------------------------------------------
4,255,000
- --------------------------------------------------------------------------------
Paint and Related Products - 2.4%
2,000,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 2,010,000
- --------------------------------------------------------------------------------
Physical Therapy and Rehabilitation Centers - 2.5%
2,000,000 HEALTHSOUTH Corp., 9.50%
senior subordinated notes, due 4/1/01 2,107,500
- --------------------------------------------------------------------------------
Pipelines - 3.0%
2,500,000 Enron Corp., 6.45%
notes, due 11/15/01 2,515,625
- --------------------------------------------------------------------------------
Retail - Discount - 2.1%
1,800,000 TJX Companies, Inc., 6.625%
notes, due 6/15/00 1,815,750
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 2.1%
1,800,000 Fred Meyer, Inc., 7.15%
senior notes, due 3/1/03 1,797,750
- --------------------------------------------------------------------------------
Steel - Producers - 1.2%
1,000,000 Bayou Steel Corp., 10.25%
first mortgage notes, due 3/1/01 1,030,000
- --------------------------------------------------------------------------------
Super-Regional Banks - 5.3%
2,750,000 NationsBank Corp., 5.75%
senior notes, due 3/15/01 2,729,375
1,750,000 Norwest Corp., 6.25%
senior notes, due 4/15/99 1,754,375
- --------------------------------------------------------------------------------
4,483,750
- --------------------------------------------------------------------------------
Telecommunication Equipment - 3.0%
2,500,000 Lucent Technologies, Inc., 6.90%
notes, due 7/15/01 2,565,625
- --------------------------------------------------------------------------------
Textile - Products - 1.2%
1,000,000 Westpoint Stevens, Inc., 8.75%
senior notes, due 12/15/01 1,038,592
- --------------------------------------------------------------------------------
Wire and Cable Products - 2.7%
1,500,000 Essex Group, Inc., 10.00%
senior notes, due 5/1/03 1,554,375
650,000 International Wire Group, Inc., 11.75%
senior subordinated notes, due 6/1/05 721,500
- --------------------------------------------------------------------------------
2,275,875
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $60,279,057) 60,345,242
- --------------------------------------------------------------------------------
U.S. Government Obligation - 19.6%
16,500,000 U.S. Treasury Note, 6.00%
due 6/30/99 (cost $16,574,517) 16,586,295
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 8.6%
Household Finance Corp.
3,500,000 5.51%, 5/1/98 3,500,000
Prudential Funding Corp.
3,800,000 5.45%, 5/1/98 3,800,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $7,300,000) 7,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $84,153,574) - 99.6% 84,231,537
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.4% 372,829
- --------------------------------------------------------------------------------
Net Assets - 100% $ 84,604,366
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 17
<PAGE>
JANUS MONEY MARKET FUNDS Portfolio Manager, Sharon S. Pichler
Before discussing my strategy for each of the Janus money market funds
during the past six months, I'd like to share my overall perspective with you.
Expectations and Volatility
The six-month period ended April 30, 1998, might best be described as a
time when expectations rather than facts controlled the market. We saw wide
short-term swings in the market, both up and down, as investors anticipated that
the Federal Reserve would change its policies. In reality, the underlying
fundamentals of the economy and interest rates did not justify such speculation,
and the Fed held steady.
My policy, however, is not to let the "tail wag the dog." I leave the
speculation to others and endeavor to keep all options open while pursuing the
funds' goal: to give the best returns possible while maintaining liquidity and
preserving principal.
Janus Money Market Fund
Essentially, the Fund was invested with one thought in mind: Be prepared
for interest rate movements in either direction.
I continued my strategy of investing about one-third of assets in the
shortest-term securities, namely repurchase agreements, which were providing
yields nearly as high as those I could obtain in three-month securities. Keeping
this much invested in repurchase agreements ensured that we could quickly move a
large percentage of the Fund to the best alternative, no matter where rates were
headed.
The balance of the Fund was split among high-quality securities that might
fare well if rates rose and others that would benefit if short-term rates fell.
The latter included some investments with maturities as high as 397 days, so the
weighted average maturity of the Fund at April 30, 1998, was 36 days.
For the 12-month period ended April 30, 1998, the Fund ranked 52nd out of
303 funds in the U.S. Money Market category as tracked by Lipper Analytical
Services, Inc., a leading mutual fund rating company.(1)
Janus Government Money Market Fund
Typically, at least one-half of this fund's assets are placed in overnight
investments issued by the U.S. government or its agencies. Because all
government debt in the Fund is rated AAA, the highest credit quality available,
this emphasis on very short-term issues means that we maintain maximum liquidity
and safety of principal.
During the most recent six months, we also held 25% of assets in government
floating rate notes and another 25% in longer-term fixed-rate government or
government-guaranteed notes to pick up a slightly better yield. As a result, the
Fund had a weighted average maturity of 32 days at the fiscal mid-year.
For the 12-month period ended April 30, 1998, the Fund ranked 21st out of
111 funds in the U.S. Government Money Market category as tracked by Lipper
Analytical Services, Inc., a leading mutual fund rating company.(1)
Janus Tax-Exempt Money Market Fund
Over most of the period, long-term and short-term rates for municipal
securities were very close to one another, which gave me little incentive to
take on the additional risk associated with longer-term issues. However, I was
able to buy long-term "bargains" when tax-free rates were close to 70% of the
yield on comparable Treasury securities. As of April 30, 1998, the weighted
average maturity of the Fund was 54 days.
For the 12-month period ended April 30, 1998, the Fund ranked 28th out of
135 funds in the U.S. Tax-Exempt Money Market category as tracked by Lipper
Analytical Services, Inc., a leading mutual fund rating company.(1)
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-weighted average maturities of less than 90 days" and that
intends "to keep constant net asset value." As of April 30, 1998, Janus
Money Market Fund ranked 47/254 U.S. money market funds for the 3-year
period. 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 April 30, 1998, Janus Government Money
Market Fund ranked 21/100 U.S. government money market funds for the 3-year
period. 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 April 30, 1998, Janus Tax-Exempt Money Market Fund
ranked 25/125 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.
Money market funds are neither insured nor guaranteed by the U.S. government,
and there can be no assurance that money market funds will be able to maintain a
$1.00 per share price. Past performance does not guarantee future results.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 18
<PAGE>
JANUS MONEY MARKET FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 15.4%
Countrywide Home Loans, Inc.:
$ 100,000,000 5.62%, 5/6/98 $ 100,000,000
47,300,000 5.63%, 5/8/98 47,300,000
50,000,000 General Motors Acceptance Corp.
5.60%, 7/2/98 49,517,778
Heller Financial, Inc.:
45,000,000 5.78%, 5/1/98 45,000,000
50,000,000 5.78%, 5/4/98 49,975,917
15,000,000 5.78%, 5/5/98 14,990,367
50,000,000 5.78%, 5/6/98 49,959,861
45,000,000 Marsh & McLennan Companies, Inc.
5.65%, 7/24/98 45,000,000
Sanwa Business Credit Corp.:
50,000,000 5.58%, 5/28/98 49,790,750
50,000,000 5.57%, 5/29/98 49,783,389
75 State Street Capital Corp.:
20,126,000 5.55%, 5/4/98 20,116,692
55,957,000 5.54%, 6/2/98 55,681,443
55,000,000 5.54%, 6/3/98 54,720,692
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $631,836,889) 631,836,889
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - 39.7%
American Honda Finance Corp.:
50,000,000 5.6875%, 6/23/98 50,000,000
10,000,000 5.6718%, 7/8/98 10,000,000
25,000,000 5.6875%, 7/27/98 25,000,000
22,000,000 5.625%, 8/3/98 22,000,000
50,000,000 5.625%, 8/14/98 50,000,000
30,000,000 5.6875%, 1/19/99 30,000,000
35,000,000 5.6875%, 1/21/99 35,000,000
12,000,000 Amsouth Bank of Alabama,
5.5262%, 10/9/98 11,993,204
9,675,000 APTC Plastics Acquiring Co., L.L.C.,
5.70%, 4/1/17 9,675,000
Bankers Trust Company of New York:
45,000,000 5.65%, 7/15/98 44,995,513
177,500,000 5.605%, 2/19/99 177,480,184
20,000,000 5.61625%, 2/26/99 19,993,555
10,385,000 Bannockburn Associates, L.L.C.,
5.75%, 4/1/27 10,385,000
14,360,000 Community Health System, Inc., Series A,
5.80%, 10/1/03 14,360,000
75,000,000 CP Trust Certificates, Series 1996-2,
5.505%, 12/28/98 75,000,000
15,510,000 Crouse Health Hospital, Inc.,
5.75%, 7/1/17 15,510,000
25,000,000 Crozer-Keystone Health Systems,
5.70%, 12/15/21 25,000,000
9,100,000 Eagle County, Colorado Housing Facility
Authority, (BC Housing L.L.C. Project),
Series A, 5.6562%, 6/1/27 9,100,000
20,000,000 Episcopal Health Services, Inc., New York,
5.70%, 3/1/28 20,000,000
50,000,000 Ford Motor Credit Co.,
5.70%, 12/23/98 49,989,695
General American Life Insurance Co.:
30,000,000 5.87%, 8/13/98 30,000,000
80,000,000 5.87%, 12/31/98 80,000,000
50,000,000 5.87%, 2/19/99 50,000,000
47,800,000 General Motors Acceptance Corp.,
5.62%, medium term notes, 5/15/98 47,800,000
12,700,000 Genesys Michigan Health System, Inc.,
Series A, 5.66%, 4/1/20 12,700,000
8,700,000 H/M Partners, L.L.C.,
5.65%, 10/1/20 8,700,000
50,000,000 Household Finance Corp.,
5.72%, medium term notes, 5/7/98 50,000,000
Taxable Variable Rate Demand Notes - (continued)
$ 25,000,000 Integrity Life,
5.87%, 3/30/99 $ 25,000,000
9,600,000 Jackson County, Alabama Industrial
Development, (Beaulieu America Project),
5.81%, 7/1/10 9,600,000
59,000,000 Los Angeles, California Community
Redevelopment Agency, Series A,
5.70%, 12/1/18 59,000,000
Merrill Lynch & Co.:
40,000,000 5.68%, medium term notes, 11/10/98 39,995,770
50,000,000 5.70%, medium term notes, 11/23/98 50,000,000
50,000,000 5.73%, medium term notes, 12/21/98 50,000,000
23,300,000 New Jersey Economic Development
Authority Revenue, Series A,
5.69%, 10/1/21 23,300,000
25,000,000 Rehau, Inc.,
5.64%, 10/1/19 25,000,000
17,260,000 Rockland Financial, Ltd.,
5.75%, 12/1/26 17,260,000
Salomon, Inc.:
73,000,000 5.7957%, medium term notes, due 6/2/98 73,008,049
47,000,000 5.7275%, medium term notes, due 10/26/98 47,005,059
35,000,000 Societe Generale,
5.67%, 7/31/98 34,997,445
17,800,000 St. Joseph Health Systems of California,
Series A, 5.96%, 7/1/11 17,800,000
100,000,000 Standard Chartered Bank of New York,
5.6012%, 2/24/99 99,955,961
50,000,000 Transamerica Occidental Life Insurance Co.,
5.6914%, 2/26/99 50,000,000
5,170,000 Union City, Tennessee Industrial Development
Board, (Cobank Limited, L.L.C., Project),
5.90%, 1/1/25 5,170,000
23,307,091 West Labs, Series 1998 - 1, Class A,
5.6562%, 2/26/99 23,307,091
- --------------------------------------------------------------------------------
Total Taxable Variable Rate Demand Notes
(amortized cost $1,635,081,526) 1,635,081,526
- --------------------------------------------------------------------------------
Certificates of Deposit - 10.3%
Bankers Trust Company of New York:
20,000,000 5.96%, 12/14/98 20,028,282
20,000,000 5.69%, 1/8/99 19,994,707
Canadian Imperial Bank of Commerce:
25,000,000 5.88%, 10/14/98 24,992,933
30,000,000 5.75%, 4/1/99 29,986,817
50,000,000 Deutsche Bank
5.67%, 2/26/99 49,984,190
50,000,000 National Bank of Canada
5.64%, 10/8/98 49,987,305
Skandinaviska Enskilda Banken:
50,000,000 5.67%, 2/26/99 49,984,208
50,000,000 5.68%, 3/2/99 49,979,987
50,000,000 5.72%, 3/5/99 49,983,833
25,000,000 Societe Generale
5.89%, 10/14/98 24,996,737
Standard Chartered Bank of New York:
30,000,000 5.67%, 2/26/99 29,990,525
25,000,000 5.68%, 3/5/99 24,991,913
- --------------------------------------------------------------------------------
Total Certificates of Deposit (cost $424,901,437) 424,901,437
- --------------------------------------------------------------------------------
Promissory Notes - 10.6%
240,000,000 Goldman Sachs Group, L.P., 5.6875%, 7/20/98 240,000,000
200,000,000 Lehman Brothers, Inc., 5.7625%, 4/21/99 200,000,000
- --------------------------------------------------------------------------------
Total Promissory Notes (cost $440,000,000) 440,000,000
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 19
<PAGE>
JANUS MONEY MARKET FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Time Deposit - 4.3%
$176,300,000 Key Bank EDT
5.53125%, 5/1/98 (cost $176,300,000) $ 176,300,000
- --------------------------------------------------------------------------------
Put Bonds - 0.5%
18,900,000 Bedford County, Virginia Industrial
Development Authority, Series 95D,
5.67%, 5/19/98 (cost $18,900,000) 18,900,000
- --------------------------------------------------------------------------------
Repurchase Agreements - 19.1%
250,000,000 BZW Securities, Inc.,
5.66%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $250,039,306,
collateralized by $6,600,000 in Sears
Credit Account Master Trust,
6.25%-8.10%, 1/15/03-06/15/04;
$16,000,000 in Student Loan Marketing
Association, 5.878%, 10/25/11;
$15,000,000 in Residential Funding
Mortgage Sec I, 6.50%, 1/25/28;
$5,007,850 in Prudential Home Mortgage
Securities, 6.22143%, 10/25/08;
$4,650,000 in Paine Webber Mortgage
Acceptance Corp., 7.46096%, 4/25/23;
$10,730,000 in NationsBank Credit Card
Master Trust, 6.45%, 4/15/03;
$19,250,000 in MBNA Master Credit Card
Trust, 5.755%-5.82625%, 8/15/05 -
4/15/09; $28,727,112 in Headlands
Mortgage Securities, Inc., 6.20%-7.25%,
3/25/27- 11/25/27; $34,914,000 in
General Motors Acceptance Corp. Grantor
Trust, 7.15%, 3/15/00; $500,000 in First
Plus Home Loan Trust, 6.80%, 3/10/12;
$5,000,000 in First USA Credit Card
Master Trust, 5.84625%, 4/10/09;
$68,095,000 in First Chicago Master
Trust II, 5.7713%-5.8863%,
2/15/04-11/15/04; $31,956,000 in
Discover Card Master Trust I,
5.80%-6.55%, 2/18/03-9/16/03; $8,000,000
in Dayton Hudson Credit Card Master
Trust, 6.25%, 8/25/05; $3,500,000 in
Copelco Capital Funding Corp., 6.27%,
4/20/05; $5,000,000 in Citibank Credit
Card Master Trust I, 5.8025%, 3/10/11;
$7,196,184 in CIT RV Trust, 6.35%,
4/15/11; $7,618,000 in Chase Manhattan
Grantor Trust, 6.00%, 9/17/01;
$5,000,000 in Chase Manhattan Auto Owner
Trust, 6.50%, 10/15/01; $100,000 in
Capita Equipment Receivable Trust,
5.95%, 7/15/98; $8,700,000 in CTS
Adjustable Rate MortgageTrust, 6.2975%,
5/25/26; $250,000 in American Express
Master Trust, 5.77625%, 8/15/02;
$5,000,000 in Fleet Credit Card Master
Trust, 6.00%, 11/15/05; $10,000,000 in
Advanta Equipment Receivables, 5.82%,
12/15/06; $2,200,000 in AT&T Universal
Card Master Trust, 5.715%, 4/19/04; with
respective values of $5,944,779,
$15,962,400, $14,104,860, $5,002,842,
$431,070, $10,824,263, $19,249,857,
$23,383,412, $3,947,460, $503,800,
$5,007,050, $68,278,047, $31,927,490,
$8,050,664, $3,509,632, $4,973,900,
$7,218,204, $1,473,828, $5,042,390,
$5,550, $2,641,910, $250,000,
$5,066,150, $9,999,400, and $2,201,042 250,000,000
Repurchase Agreements - (continued)
$250,000,000 Deutsche Morgan Grenfell,
5.66%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $250,039,306,
collateralized by $18,768,544 in
Residential Funding Mortgage Securities
I, 7.810714%, 3/25/28; $57,461,000 in
Remsen Funding Corp., 5.58%, 5/19/98;
$45,000,000 in Norwest Asset Securities
Corporation, 7.00%, 6/25/12; $35,000,000
in Nomura Depositor Trust, 5.905%,
1/15/03; $121,898,061 in Countrywide
Home Loans, 2.84375%-6.6125%, 2/25/28;
with respective values of $18,548,952,
$57,173,695, $37,418,366, $35,000,000,
and $106,858,957 $250,000,000
100,000,000 J.P. Morgan and Co., Inc.,
5.56%, dated 4/28/98, maturing 5/5/98,
to be repurchased at $100,108,111,
collateralized by $1,000,000 in
Woodfield Financial 144A, 6.16406%,
10/13/98; $48,696,541 in PHH Corp.,
5.61%, 3/11/99; $45,000,000 in NJ
Economic Development Authority Revenue,
Series A, 7.425%, 2/15/29; $1,802,585 in
GE Capital Corp., 6.90%, 9/15/15; with
respective values of $1,020,500,
$49,067,720, $50,085,900, and $1,939,554 100,000,000
185,000,000 NationsBank Corp.
5.60%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $185,028,778,
collateralized by $2,702,981 in
Residential Funding Mortgage Securities
I, 6.75%, 3/25/28; $401,758,987 in
Mortgage Capital Funding, Inc.,
1.369%-7.288%, 3/20/07 -11/20/12;
$42,500,000 in Metropolitan Asset
Funding, Inc., 6.51%-6.596%, 9/20/03
-12/20/10; $8,000,000 in GMAC Commercial
Mortgage Securities Inc., 6.566%,
11/15/07; $38,474,000 in GE Capital
Mortgage Services, Inc., 6.21%-7.00%,
10/25/27-12/25/23; $11,000,000 in EQCC
Home Equity Loan Trust, 6.136%, 4/15/09;
$12,892,000 in Aames Mortgage Trust,
5.8775%, 3/15/28; with respective values
of $2,671,356, $75,195,113, $41,878,920,
$8,030,480, $37,676,731, $11,000,000,
and $12,247,400 185,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $785,000,000) $ 785,000,000
- --------------------------------------------------------------------------------
Total Investments (total cost $4,112,019,852) - 99.9% $ 4,112,019,852
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.1% $ 3,791,407
- --------------------------------------------------------------------------------
Net Assets - 100% $ 4,115,811,259
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 20
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
U. S. Government Agency Discount Notes - 10.9%
Fannie Mae:
$ 2,335,000 5.37%, 9/14/98 $ 2,287,631
4,303,000 5.37%, 9/17/98 4,213,781
3,422,000 5.35%, 9/23/98 3,348,261
Federal Farm Credit Bank:
2,000,000 5.69%, 5/20/98 1,993,994
1,165,000 5.43%, 8/7/98 1,147,779
Federal Home Loan Bank System:
2,000,000 5.28%, 11/2/98 1,945,733
3,527,000 5.26%, 2/26/99 3,371,884
5,000,000 5.26, 3/1/99 4,777,911
2,770,000 5.24%, 3/12/99 2,642,995
Freddie Mac:
1,000,000 5.425%, 10/30/98 972,574
2,860,000 5.21%, 1/28/99 2,747,418
- --------------------------------------------------------------------------------
Total U. S. Government Agency Discount Notes
(amortized cost $29,449,961) 29,449,961
- --------------------------------------------------------------------------------
U. S. Government Agency Variable Notes - 24.2%
Fannie Mae:
3,000,000 5.573%, 11/9/98 2,999,542
5,000,000 5.54%, 1/6/99 4,997,993
10,000,000 5.395%, 2/19/99 9,990,519
10,000,000 5.473%, 3/16/99 9,995,630
Federal Home Loan Bank System:
750,000 6.00%, 6/29/98 750,415
5,000,000 5.46%, 10/6/98 4,997,868
3,000,000 5.523%, 12/24/98 2,999,026
5,000,000 5.433%, 3/11/99 4,993,638
4,000,000 5.508%, 3/26/99 3,998,377
5,000,000 5.543%, 4/9/99 4,997,651
15,000,000 5.00%, 5/4/99 14,983,800
- --------------------------------------------------------------------------------
Total U. S. Government Agency Variable Notes
(amortized cost $65,704,459) 65,704,459
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 15.4%
5,000,000 Downey Savings and Loan, (FHLB)
5.64%, 5/18/98 4,986,683
6,890,000 Kirksville College of Osteopathic, (SLMA)
5.50%, 5/7/98 6,883,684
10,000,000 Nebraska Help, Inc., (SLMA)
5.52%, 5/14/98 9,980,067
10,000,000 New Hampshire Higher Education Loan, (SLMA)
5.46%, 7/17/98 9,883,217
10,000,000 USA Group Secondary Market Services, (SLMA)
5.47%, 5/20/98 9,971,131
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $41,704,782) 41,704,782
- --------------------------------------------------------------------------------
Repurchase Agreements - 55.1%
$60,000,000 CS First Boston, Inc.,
5.6125%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $60,009,354,
collateralized by $53,175,000 in Fannie
Mae 6.50% - 7.00%, 9/18/11 - 3/18/26;
$8,825,000 in Freddie Mac 6.00%,
8/15/17; with respective values of
$52,519,175 and $8,764,784 $ 60,000,000
28,500,000 Goldman Sachs and Co.,
5.49%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $28,504,346,
collateralized by $28,215,000 in U.S.
Treasury Notes 6.125%, 8/15/07; with a
value of $29,070,866 28,500,000
16,100,000 HSBC Securities, Inc.,
5.57%, dated 4/30/98, maturing 5/1/98,
to be repurchased at $16,102,491,
collateralized by $16,460,000 in Freddie
Mac 6.08%, 5/13/98; with a value of
$16,425,434 16,100,000
45,000,000 Morgan Stanley, Dean Witter, Discover &
Co., 5.57%, dated 4/30/98, maturing
5/1/98, to be repurchased at
$45,006,963, collateralized by
$35,000,000 in Federal Home Loan
Mortgage Corp. - Government National
Mortgage Association 6.79%, 10/25/23;
$25,619,200 in Freddie Mac 6.95% -
7.00%, 1/15/24 - 1/15/27; with
respective values of $20,231,780 and
$25,989,346 45,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $149,600,000) 149,600,000
- --------------------------------------------------------------------------------
Total Investments (total cost $286,459,202) - 105.6% 286,459,202
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (5.6%) (15,096,545)
- --------------------------------------------------------------------------------
Net Assets - 100% $ 271,362,657
- --------------------------------------------------------------------------------
FHLB - Federal Home Loan Bank of San Francisco
SLMA - Student Loan Marketing Association
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 21
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Variable Rate Demand Notes - 76.4%
- --------------------------------------------------------------------------------
Alabama - 1.1%
$1,100,000 Athens Industrial Development Board Revenue,
(Coilplus Income Project), 4.75%, 9/1/99 $ 1,100,000
- --------------------------------------------------------------------------------
Arizona - 2.6%
1,000,000 Pinal County Industrial Development Authority
Hospital Revenue, (Casa Grande
Regional Medical Center), 4.35%, 12/1/22 1,000,000
1,600,000 Tucson Industrial Development Authority
Multifamily Revenue, (Freedom Park
Apartments Project), 4.50%, 12/1/07 1,600,000
- --------------------------------------------------------------------------------
2,600,000
- --------------------------------------------------------------------------------
California - 8.8%
1,000,000 California Higher Education Loan Authority, Inc.
Student Loan Revenue, Series A,
3.80%, 5/1/99 1,000,000
2,900,000 Hayward Housing Authority Multifamily
Revenue, (Huntwood Terrace Apartments),
4.95%, 3/1/27 2,900,000
5,000,000 Orange County Special Financing Authority
Teeter Plan Revenue, Series B,
4.50%, 11/1/14 5,000,000
- --------------------------------------------------------------------------------
8,900,000
- --------------------------------------------------------------------------------
Colorado - 10.7%
1,100,000 Arapahoe County Multifamily Revenue,
(Stratford Station Project), 4.80%, 11/1/17 1,100,000
3,000,000 Boulder County Revenue, (National Atmospheric
Research Project), 8.25%, 12/1/98 3,101,654
4,900,000 Denver City and County Multi-Family Housing
Revenue, (Ogden Residences
Project), 4.30%, 12/1/09 4,900,000
1,200,000 Englewood Industrial Development Revenue,
(Swedish Mobility Limited Project), 4.40%
12/1/10 1,200,000
490,000 University of Northern Colorado Revenue
Auxiliary Facilities Systems, 4.10%, 6/1/98 490,000
- --------------------------------------------------------------------------------
10,791,654
- --------------------------------------------------------------------------------
Hawaii - 1.7%
1,700,000 Hawaii State Housing Finance and Development
Corp. Revenue, (Rental Housing
System), Series A, 4.70%, 7/1/25 1,700,000
- --------------------------------------------------------------------------------
Illinois - 8.5%
649,070 Franklin Park Industrial Development Revenue,
(A.M. Castle and Co. Project), 4.55%, 6/1/17 649,070
1,000,000 Hoffman Estates Park District, 3.90%, 12/1/98 1,000,000
2,000,000 Lombard Multifamily Housing, (Clover Creek
Apartments Project), 4.00%, 12/15/98 2,000,000
187,500 Rosemont Industrial Development Revenue,
(A.M. Castle and Co. Project), 4.55%, 6/1/17 187,500
900,000 Sauget Pollution Control Revenue, (Monsanto
Co. Project), 4.20%, 5/1/28 900,000
3,900,000 Wood Dale Industrial Development Revenue,
(Nippon Express USA, Inc. Project),
4.70%, 6/1/00 3,900,000
- --------------------------------------------------------------------------------
8,636,570
- --------------------------------------------------------------------------------
Iowa - 3.3%
3,300,000 Muscatine County Pollution Control Revenue,
(Monsanto Co. Project), 4.20%, 10/1/07 3,300,000
- --------------------------------------------------------------------------------
Kansas - 2.3%
1,045,000 Shawnee Industrial Revenue, (Shawnee Village
Association), 4.45%, 12/1/09 1,045,000
1,300,000 Wichita Revenue, (CSJ Health Systems Wichita),
4.70%, 10/1/02 1,300,000
- --------------------------------------------------------------------------------
2,345,000
- --------------------------------------------------------------------------------
Michigan - 5.1%
5,200,000 Holland Economic Development Corp.,
(Thrifty Holland, Inc.), 4.35%, 3/1/13 5,200,000
- --------------------------------------------------------------------------------
Minnesota - 4.4%
$2,800,000 Golden Valley Industrial Development
Revenue, (Unicare Homes, Inc. Project),
4.25%,9/1/14 $ 2,800,000
500,000 New Brighton Industrial Development
Revenue, (Unicare Homes, Inc. Project),
4.25%, 12/1/14 500,000
1,200,000 Robbinsdale Industrial Development
Revenue, (Unicare Homes, Inc. Project),
4.25%, 10/1/14 1,200,000
- --------------------------------------------------------------------------------
4,500,000
- --------------------------------------------------------------------------------
Missouri - 1.6%
973,000 Kansas City Industrial Development Authority
Revenue, (A.M. Castle and Co. Project),
4.55%, 6/1/10 973,000
600,000 West Plains Industrial Development Authority
Revenue, (West Plains Manor Project),
4.30%, 11/1/10 600,000
- --------------------------------------------------------------------------------
1,573,000
- --------------------------------------------------------------------------------
Nebraska - 1.8%
1,825,000 Hamilton County Industrial Development
Revenue, (The Iams Co. Project), 4.15%,
7/1/05 1,825,000
- --------------------------------------------------------------------------------
New York - 2.7%
2,700,000 New York State Dormitory Authority Revenue,
(St. Francis Center at the Knolls), 4.30%,
7/1/23 2,700,000
- --------------------------------------------------------------------------------
North Carolina - 2.5%
500,000 Cumberland County Industrial Facilities and
Pollution Control Financing Authority
Revenue, (Monsanto Co. Project),
4.10%, 10/1/14 500,000
2,000,000 Wake County Industrial Facilities and Pollution
Control Financing Authority Revenue,
(Carolina Power and Light Co.), Series B,
4.90%, 9/1/15 2,000,000
- --------------------------------------------------------------------------------
2,500,000
- --------------------------------------------------------------------------------
Ohio - 7.5%
5,300,000 Cuyahoga County Hospital Revenue, (University
Hospitals - Cleveland), 4.60%, 1/1/16 5,300,000
1,700,000 Hamilton County Health Systems Revenue,
(Franciscan Sisters of the Poor), Series
A, 4.60%, 3/1/17 1,700,000
590,000 Ohio State Industrial Development Revenue,
(A.M. Castle and Co. Project), 4.55%, 12/1/06 590,000
- --------------------------------------------------------------------------------
7,590,000
- --------------------------------------------------------------------------------
Oklahoma - 3.6%
800,000 Oklahoma City Industrial and Cultural Facilities
Trust Revenue, (Oklahoma Christian
College), 4.724%, 7/1/15 800,000
2,840,000 Tulsa County Home Financing Authority
Multifamily Housing Revenue, (Greenbriar
Project), Series B, 4.25%, 3/15/05 2,840,000
- --------------------------------------------------------------------------------
3,640,000
- --------------------------------------------------------------------------------
Pennsylvania - 6.5%
1,000,000 Allegheny County Hospital Development
Authority Revenue, (South Hills Health
System), 4.25%, 4/1/99 1,004,420
1,000,000 Dauphin County General Authority, (Allied
Health Pooled Financing Program), Series B,
4.30%, 10/1/27 1,000,000
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 22
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND April 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Principal Amount Market Value
- --------------------------------------------------------------------------------
Pennsylvania - (continued)
$1,260,000 Lancaster County Hospital Authority Revenue,
(Lancaster General Hospital Project),
3.70%, 7/1/98 $ 1,260,000
1,000,000 Pennsylvania State Higher Educational
Facilities Authority Revenue, (CICU Financing
Program), Series B1, 4.50%, 11/1/98 1,003,047
1,000,000 Somerset County Hospital Authority Revenue,
(Somerset County Hospital Project),
Series A, 3.625%, 3/1/22 1,000,000
1,300,000 Venango Industrial Development Authority,
(Pennzoil Co. Project), 4.30%, 12/1/12 1,300,000
- --------------------------------------------------------------------------------
6,567,467
- --------------------------------------------------------------------------------
Tennessee - 0.2%
200,000 Hamilton County Industrial Development
Revenue, (Komatsu America Manufacturing
Project), 4.70%, 11/1/05 200,000
- --------------------------------------------------------------------------------
Texas - 1.5%
200,000 Metropolitan Higher Education Authority,
(University of Dallas Project),
4.80%, 12/1/04 200,000
1,300,000 Texas State Department of Housing and
Community Affairs Multifamily Revenue,
(Remington Hill), Series B, 4.20%, 2/1/23 1,300,000
- --------------------------------------------------------------------------------
1,500,000
- --------------------------------------------------------------------------------
Total Variable Rate Demand Notes (amortized cost $77,168,691) 77,168,691
- --------------------------------------------------------------------------------
Bond Anticipation Notes - 1.0%
1,000,000 Fall River, Massachusetts
4.25%, 8/14/98 (amortized cost $1,000,966) 1,000,966
- --------------------------------------------------------------------------------
General Obligation Notes - 21.7%
2,430,000 Colorado Housing Finance Authority (Single
Family Residential), Series A, 3.75%, 9/1/98 2,430,000
840,000 Harris County Health Facilities and
Development Corp. Revenue, (School Health
Care Systems), Series B, 4.00%, 7/1/98 840,059
795,000 Longview, Texas, 3.70%, 6/1/98 795,000
Mississippi State Board of Trustees of
Institutions of Higher Learning, Series A:
955,000 3.95%, 11/15/98 955,000
925,000 3.90%, 4/1/99 925,000
200,000 Missouri State Health and Educational
Facilities Authority Revenue, (St. Louis
University Project), 4.35%, 12/1/05 200,000
Missouri State Health and Educational
Facilities Authority School District Advance
Funding Program:
705,000 (Camdenton School District), Series C,
4.50%, 9/14/98 706,510
1,240,000 (Windsor C-1 School District), Series O,
4.50%, 9/14/98 1,242,655
400,000 Navajo County University School District
No. 10, (Show Low), Series A, 4.25%, 7/1/98 400,224
745,000 New Castle Area Hospital Authority Revenue,
(Jameson Memorial Hospital), 3.95%, 7/1/98 744,936
General Obligation Notes - (continued)
$2,235,000 North Central Texas Health Facility
Development Corp. Revenue, (Presbyterian
Healthcare), Series A, 6.125%, 6/1/98 $ 2,239,092
1,650,000 North Slope, Series G, 8.35%, 6/30/98 1,661,778
6,400,000 Texas State, Series A, 4.75%, 8/31/98 6,422,416
1,385,000 University of Southern Alabama Hospital
and Auxiliary Revenue Certificates, 3.85%, 1,385,000
8/1/98
1,000,000 Weslaco Health Facilities, (Knapp Medical
Center Project), Series B, 10.375%, 6/1/98 1,005,997
- --------------------------------------------------------------------------------
Total General Obligation Notes (amortized cost $21,953,667) 21,953,667
- --------------------------------------------------------------------------------
Put Bonds - 2.0%
1,000,000 Dove Valley Metropolitan District Arapahoe
County, Series B, 4.05%, 11/1/98 1,000,000
1,000,000 Interstate South Metropolitan District,
Series B, 4.05%, 11/1/98 1,000,000
- --------------------------------------------------------------------------------
Total Put Bonds (amortized cost $2,000,000) 2,000,000
- --------------------------------------------------------------------------------
Tax and Revenue Anticipation Notes - 1.0%
1,000,000 Campbell County, Wyoming School
District No. 1 Gillette, Tax Anticipation
Warrants, 4.15%, 6/29/98
(amortized cost $1,000,389) 1,000,389
- --------------------------------------------------------------------------------
Total Investments (total cost $103,123,713) - 102.1% 103,123,713
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.1%) (2,163,653)
- --------------------------------------------------------------------------------
Net Assets - 100% $ 100,960,060
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 23
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS - BOND FUNDS
Janus Janus
Janus Janus Federal Short-Term
For the six months ended April 30, 1998, Flexible Income High-Yield Tax-Exempt Bond
(unaudited) (all numbers in thousands) Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C>
Interest $ 30,247 $ 17,083 $ 1,849 $ 2,497
Dividends 569 219 -- --
- -----------------------------------------------------------------------------------------------------------
30,816 17,302 1,849 2,497
- -----------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 2,352 1,395 205 231
Transfer agent fees and expenses 804 367 74 88
Registration fees 85 103 29 17
Postage and mailing expenses 39 14 3 7
Custodian fees 49 35 15 14
Printing expenses 22 19 2 6
Audit fees 8 13 12 6
Trustees' fees and expenses 7 1 3 1
Other expenses 15 9 5 6
- -----------------------------------------------------------------------------------------------------------
Total Expenses 3,381 1,956 348 376
- -----------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (170) (86) (13) (8)
- -----------------------------------------------------------------------------------------------------------
Net Expenses 3,211 1,870 335 368
- -----------------------------------------------------------------------------------------------------------
Less: Excess Expense Reimbursement -- -- (113) (137)
- -----------------------------------------------------------------------------------------------------------
Net Expenses after Expense Reimbursement 3,211 1,870 222 231
- -----------------------------------------------------------------------------------------------------------
Net Investment Income 27,605 15,432 1,627 2,266
- -----------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gain/(Loss) on Investments:
Net realized gain/(loss) from
securities transactions 14,120 11,390 577 152
Net realized gain/(loss) from
foreign currency 149 (294) -- --
Net realized gain/(loss) from
futures or options contracts (165) -- (106) --
Change in net unrealized appreciation
or depreciation of investments 2,458 1,290 (263) (330)
- -----------------------------------------------------------------------------------------------------------
Net Gain/(Loss) on Investments 16,562 12,386 208 (178)
- -----------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $ 44,167 $ 27,818 $ 1,835 $ 2,088
===========================================================================================================
</TABLE>
An Explanation of the Statement of Operations
This financial statement details the funds' income, expenses, gains and
losses on securities and currency transactions and from appreciation or
depreciation of portfolio holdings. The first section in this statement, called
"Investment Income," reports the dividends earned from stocks and interest
earned from interest-bearing securities in the portfolio.
The next section reports the expenses and expense offsets incurred by the
funds, including the advisory fee paid to the investment adviser, the transfer
agent fees, shareholder servicing expenses, and printing and postage for mailing
statements, financial reports and prospectuses to investors.
The last section lists the increase or decrease in the value of securities
held in the funds' portfolios. Funds realize a gain (or loss) when they sell
their position in a particular security. Unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the funds' portfolios during the
period. This figure is affected both by changes in the market value of portfolio
holdings and by gains (or losses) realized during the reporting period.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 24
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES - BOND FUNDS
Janus Janus
As of April 30, 1998, (unaudited) 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 $823,488 $377,561 $ 69,110 $ 84,154
======================================================================================================
Investments at value $849,775 $385,056 $ 70,330 $ 84,232
Cash 2,430 -- 144 98
Receivables:
Investments sold 30,840 65,045 -- --
Fund shares sold 1,286 4,423 405 296
Dividends -- 99 -- --
Interest 16,508 7,200 1,277 1,534
Due from advisor -- -- 27 20
Other assets 1 1 -- --
- ------------------------------------------------------------------------------------------------------
Total Assets 900,840 461,824 72,183 86,180
- ------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to custodian -- 1,868 -- --
Investments purchased 26,347 36,999 800 1,093
Fund shares repurchased 1,260 1,119 71 345
Dividends 605 258 46 47
Advisory fee 419 255 36 44
Transfer agent fee 137 70 12 18
Accrued expenses 138 95 33 29
Variation margin - futures contracts -- -- 16 --
Forward currency contracts 168 -- -- --
- ------------------------------------------------------------------------------------------------------
Total Liabilities 29,074 40,664 1,014 1,576
- ------------------------------------------------------------------------------------------------------
Net Assets $871,766 $421,160 $ 71,169 $ 84,604
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 87,090 36,058 9,980 29,228
======================================================================================================
Net Asset Value Per Share $ 10.01 $ 11.68 $ 7.13 $ 2.89
======================================================================================================
</TABLE>
An Explanation of the Statement of Assets and Liabilities
This financial statement is often referred to as the "balance sheet." It
lists the assets and liabilities of a fund on the last day of the fiscal period.
The funds' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared on stocks owned but not yet received, and the receivable
for fund shares sold to investors but not yet settled. The funds' liabilities
include payables for securities purchased but not yet settled, fund shares
redeemed but not yet paid, and expenses owed but not yet paid.
The last line of this schedule reports the funds' net asset value (NAV) per
share on the last day of the fiscal period. The NAV is calculated by dividing
the funds' net assets (assets minus liabilities) by the number of shares
outstanding.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 25
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS - BOND FUNDS
For the six months ended April 30, 1998,
(unaudited) and the fiscal year Janus Janus Janus Janus
or period ended October 31, 1997, Flexible Income High-Yield Federal Tax-Exempt Short-Term Bond
(all numbers in thousands) Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 27,605 $ 46,577 $ 15,432 $ 22,505 $ 1,627 $ 2,680 $ 2,266 $ 2,920
Net realized gain from
investment transactions 14,104 14,875 11,096 16,424 471 198 152 407
Change in unrealized net appreciation
or depreciation of investments 2,458 11,115 1,290 2,641 (263) 1,009 (330) 128
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 44,167 72,567 27,818 41,570 1,835 3,887 2,088 3,455
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (27,606) (46,546) (15,089) (22,392) (1,627) (2,680) (2,203) (2,920)
Net realized gain from
investment transactions (15,666) (1,192) (16,609) (2,396) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (43,272) (47,738) (31,698) (24,788) (1,627) (2,680) (2,203) (2,920)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 244,770 350,811 298,859 446,508 32,153 45,594 55,287 60,336
Reinvested dividends and distributions 37,455 40,664 27,885 22,048 1,338 2,247 2,002 2,720
Shares repurchased (138,455) (292,858) (203,126) (394,849) (24,585) (31,851) (30,478) (46,467)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from
Capital Share Transactions 143,770 98,617 123,618 73,707 8,906 15,990 26,811 16,589
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 144,665 123,446 119,738 90,489 9,114 17,197 26,696 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 $ 871,766 $ 727,101 $ 421,160 $ 301,422 $ 71,169 $ 62,055 $ 84,604 $ 57,908
===================================================================================================================================
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 831,462 $ 687,691 $ 402,297 $ 278,679 $ 70,947 $ 62,041 $ 87,139 $ 60,328
Undistributed net investment income* 610 610 486 142 -- -- 64 1
Undistributed net realized gain/(loss)
from investments* 13,571 15,135 10,881 16,395 (980) (1,451) (2,677) (2,829)
Unrealized appreciation/(depreciation)
of investments 26,123 23,665 7,496 6,206 1,202 1,465 78 408
- -----------------------------------------------------------------------------------------------------------------------------------
$ 871,766 $ 727,101 $ 421,160 $ 301,422 $ 71,169 $ 62,055 $ 84,604 $ 57,908
===================================================================================================================================
Transactions in Fund Shares:
Shares sold 24,457 36,058 25,566 39,057 4,445 6,489 19,065 20,891
Reinvested distributions 3,766 4,173 2,425 1,928 186 320 691 942
- -----------------------------------------------------------------------------------------------------------------------------------
Total 28,223 40,231 27,991 40,985 4,631 6,809 19,756 21,833
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (13,839) (30,105) (17,404) (34,479) (3,406) (4,535) (10,508) (16,092)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 14,384 10,126 10,587 6,506 1,225 2,274 9,248 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 87,090 72,706 36,058 25,471 9,980 8,755 29,228 19,980
===================================================================================================================================
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 730,657 $1,015,048 $ 831,832 $ 990,668 $ 75,384 $ 160,242 $ 49,922 $ 57,906
Proceeds from sales of securities 566,105 976,235 746,211 931,662 63,454 150,332 33,040 48,107
Purchases of long-term
U.S. government obligations 72,095 302,415 25,524 24,923 25,207 10,028 9,779 17,687
Proceeds from sales of long-term
U.S. government obligations 98,117 260,655 25,662 25,205 28,292 7,045 5,859 10,416
===================================================================================================================================
</TABLE>
*See Note 3 in Notes to Financial Statements.
An Explanation of the Statement of Changes in Net Assets
This financial statement reports the increase or decrease in the funds' net
assets during the reporting period. Changes in the funds' net assets are
attributable to investment operations, dividends, distributions and capital
share transactions. This schedule is of importance to investors because it shows
exactly what caused the funds' asset size to change during the period. Investors
can use this information to determine if the funds' growth was a result of
operations or an increase in the number of shares being purchased.
The first section summarizes the information from the Statement of
Operations regarding changes in net assets because of the funds' investment
performance. The funds' net assets will also change as a result of dividend and
capital gain distributions to investors. If investors receive their dividends in
cash, money is taken out of the fund to pay the distribution. If investors
reinvest their dividends, the funds' net assets will not be affected. If you
compare each fund's "Net decrease from dividends and distributions" to the
"Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each fund's net assets. This is because the
majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share
Transactions." "Capital Shares" refers to the money investors contribute to a
fund through purchases or withdraw via redemptions. The fund's net assets will
increase and decrease in value as investors purchase and redeem shares from a
fund.
The section titled "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.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 26
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - BOND FUNDS
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus Flexible Income Fund
and the fiscal year or period ended October 31 1998 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 9.65 $ 9.55 $ 8.96 $ 10.03 $ 9.26
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income .33 .69 .73 .72 .74 .77
Net gains or (losses) on securities
(both realized and unrealized) .22 .37 .10 .59 (.86) .79
- -------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .55 1.06 .83 1.31 (.12) 1.56
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income) (.34) (.69) (.73) (.72) (.72) (.77)
Distributions (from capital gains) (.20) (.02) -- -- (.23) (.02)
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.54) (.71) (.73) (.72) (.95) (.79)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 10.01 $ 10.00 $ 9.65 $ 9.55 $ 8.96 $ 10.03
===============================================================================================================================
Total Return* 5.69% 11.48% 9.01% 15.35% (1.26%) 17.48%
===============================================================================================================================
Net Assets, End of Period (in thousands) $ 871,766 $ 727,101 $ 603,655 $ 580,359 $ 377,345 $ 473,116
Average Net Assets for the Period
(in thousands) $ 807,851 $ 656,422 $ 603,694 $ 450,001 $ 428,962 $ 337,568
Ratio of Gross Expenses to
Average Net Assets** 0.84% 0.87% 0.88% 0.96% NA NA
Ratio of Net Expenses to
Average Net Assets** 0.80% 0.86% 0.87% 0.96% 0.93% 1.00%(3)
Ratio of Net Investment Income to
Average Net Assets** 6.89% 7.10% 7.60% 7.91% 7.75% 7.96%
Portfolio Turnover Rate** 177% 207% 214% 250% 137% 201%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus Federal Tax-Exempt Fund
and the fiscal year or period ended October 31 1998 1997 1996 1995 1994 1993(1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.09 $ 6.92 $ 6.88 $ 6.45 $ 7.30 $ 7.00
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income .17 .35 .36 .36 .36 .14
Net gains or (losses) on securities
(both realized and unrealized) .04 .17 .04 .43 (.83) .30
- -------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .21 .52 .40 .79 (.47) .44
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income) (.17) (.35) (.36) (.36) (.36) (.14)
Distributions (from capital gains) -- -- -- -- (.02) --
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.17) (.35) (.36) (.36) (.38) (.14)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 7.13 $ 7.09 $ 6.92 $ 6.88 $ 6.45 $ 7.30
===============================================================================================================================
Total Return* 2.94% 7.72% 5.94% 12.60% (6.62%) 6.33%*
===============================================================================================================================
Net Assets, End of Period (in thousands) $ 71,169 $ 62,055 $ 44,858 $ 32,593 $ 26,464 $ 27,331
Average Net Assets for the Period
(in thousands) $ 68,751 $ 53,574 $ 36,312 $ 29,318 $ 28,384 $ 16,038
Ratio of Gross Expenses to
Average Net Assets** 0.69%(4) 0.66%(4) 0.68%(4) 0.70%(4) NA NA
Ratio of Net Expenses to
Average Net Assets** 0.65% 0.65% 0.65% 0.65% 0.65%(4) 0.75%(4)
Ratio of Net Investment Income to
Average Net Assets** 4.77% 5.00% 5.18% 5.43% 5.20% 4.58%
Portfolio Turnover Rate** 282% 304% 225% 164% 160% 124%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus High-Yield Fund
and the fiscal year or period ended October 31 1998 1997 1996(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.83 $ 11.12 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income .46 .97 .80
Net gains or (losses) on securities
(both realized and unrealized) .40 .82 1.12
- -------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .86 1.79 1.92
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income) (.45) (.97) (.80)
Distributions (from capital gains) (.56) (.11) --
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.01) (1.08) (.80)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.68 $ 11.83 $ 11.12
===============================================================================================================================
Total Return* 7.65% 16.94% 19.71%
===============================================================================================================================
Net Assets, End of Period (in thousands) $ 421,160 $ 301,422 $ 210,933
Average Net Assets for the Period
(in thousands) $ 386,596 $ 266,213 $ 88,126
Ratio of Gross Expenses to
Average Net Assets** 1.02% 1.03%(5) 1.01%(5)
Ratio of Net Expenses to
Average Net Assets** 0.98% 1.00% 1.00%
Ratio of Net Investment Income to
Average Net Assets** 8.05% 8.45% 9.00%
Portfolio Turnover Rate** 434% 404% 324%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 3, 1993, (inception) to October 31, 1993
(2) Fiscal period from December 29, 1995, (inception) to October 31, 1996
(3) The ratio was 1.01% in 1993 before voluntary waiver of certain fees incurred
by the Fund.
(4) The ratio was 1.02% in 1998, 1.11% in 1997, 1.14% in 1996, 1.31% in 1995,
1.41% in 1994 and 1.60% in 1993 before voluntary waiver of certain fees
incurred by the Fund.
(5) The ratio was 1.04% in 1997 and 1.18% in 1996 before voluntary waiver of
certain fees incurred by the Fund.
*Total return not annualized for periods of less than one year
**Annualized for periods less than one year
NA - Disclosure not required for prior periods
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 27
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - BOND FUNDS
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus Short-Term Bond Fund
and the fiscal year or period ended October 31 1998 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 2.90 $ 2.86 $ 2.84 $ 2.87 $ 3.02 $ 2.98
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income .09 .17 .16 .18 .18 .14
Net gains or (losses) on securities
(both realized and unrealized) (.01) .04 .02 (.03) (.15) .04
- -------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .08 .21 .18 .15 .03 .18
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income) (.09) (.17) (.16) (.18) (.17) (.14)
Distributions (from capital gains) -- -- -- -- (.01) --
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.09) (.17) (.16) (.18) (.18) (.14)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 2.89 $ 2.90 $ 2.86 $ 2.84 $ 2.87 $ 3.02
===============================================================================================================================
Total Return* 3.07% 7.70% 6.49% 5.55% 1.26% 6.17%
===============================================================================================================================
Net Assets, End of Period (in thousands) $ 84,604 $ 57,908 $ 40,784 $ 48,117 $ 54,285 $ 76,096
Average Net Assets for the Period
(in thousands) $ 71,655 $ 48,421 $ 42,203 $ 47,383 $ 59,584 $ 36,794
Ratio of Gross Expenses to
Average Net Assets** 0.67%(1) 0.67%(1) 0.67%(1) 0.66%(1) NA NA
Ratio of Net Expenses to
average Net Assets** 0.65% 0.65% 0.65% 0.65% 0.65%(1) 0.83%(1)
Ratio of Net Investment income to
Average Net Assets** 6.38% 6.03% 5.57% 6.67% 6.08% 4.86%
Portfolio Turnover Rate** 118% 133% 486% 337% 346% 372%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 1.06% in 1998, 1.20% in 1997, 1.23% in 1996, 1.23% in 1995,
1.15% in 1994, and 1.40% in 1993 before voluntary waiver of certain fees
incurred by the Fund.
*Total return not annualized for periods of less than one year
**Annualized for periods less than one year
NA - Disclosure not required for prior periods
An Explanation of the Financial Highlights
This schedule provides a per-share breakdown of the components that affect
the funds' NAV for the current and past reporting periods. Not only does this
table provide you with total return, it also reports total distributions, asset
size, expense ratios and portfolio turnover rate.
The first line in the table reflects the funds' NAV per share at the
beginning of the fiscal period. The next line reports the funds' net investment
income per share, which comprises dividends and interest income earned on
securities held by a fund. Following is the total of gains, realized and
unrealized. Dividends and distributions are then subtracted to arrive at the NAV
per share at the end of the fiscal period.
Also included in the Financial Highlights is the funds' expense ratio, or
the percentage of net assets that was used to cover operating expenses during
the period. Expense ratios vary across the funds for a number of reasons,
including the differences in management fees, average shareholder account size,
the frequency of dividend payments and the extent of foreign investments, which
entail greater transaction costs.
The funds' expenses may be reduced through expense reduction arrangements.
Those arrangements include the use of broker commissions and cash balances
earning interest or balance credits with the funds' custodian and transfer agent
bank accounts. The Statements of Operations reflect the total expenses before
any offset, the amount of offset and the net expenses. The expense ratios listed
in the Financial Highlights reflect total expenses both prior to any expense
offset and after the offsets, along with any expense reimbursements.
Expense ratios prior to any expense offset are part of disclosure
requirements imposed in 1996. Years prior to 1995 do not reflect this
information.
The next line reports the ratio of net investment income, which is the
income earned divided by the average net assets of the funds during the
reporting period. Don't confuse this ratio with a fund's yield. The net
investment income ratio is not a true measure of a fund's yield because it
doesn't take into account the dividends distributed to a fund's investors.
The next ratio provided in this table is the portfolio turnover rate, which
measures the amount of buying and selling activity in the funds' portfolios.
Portfolio turnover is affected by market conditions, changes in the size of a
fund, the nature of a 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 would
mean that an amount equal to the value of the portfolio is sold in an average of
six months.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 28
<PAGE>
STATEMENTS OF OPERATIONS - MONEY MARKET FUNDS
Janus Janus
Janus Government Tax-Exempt
Money Money Money
For the six months ended April 30, 1998, Marke Market Market
(unaudited) (all numbers in thousands) Fund Fund Fund
- --------------------------------------------------------------------------------
Investment Income:
Interest $128,548 $ 5,730 $ 1,824
- --------------------------------------------------------------------------------
128,548 5,730 1,824
- --------------------------------------------------------------------------------
Expenses:
Advisory fee for investor shares 513 66 43
Advisory fee for institutional shares 1,708 35 5
Advisory fee for service shares 7 -- --
Administrative fee for investor shares 2,566 329 215
Administrative fee for institutional shares 854 18 3
Adminstrative fee for service shares 4 -- --
Service fee for service shares 18 1 --
Audit fees 7 4 4
Trustees' fees and expenses 32 2 --
- --------------------------------------------------------------------------------
Total Expenses 5,709 455 270
- --------------------------------------------------------------------------------
Net Investment Income 122,839 5,275 1,554
- --------------------------------------------------------------------------------
Net Realized Gain/(Loss) on Investments:
Net realized gain/(loss) from
investment transactions 65 2 15
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $122,904 $ 5,277 $ 1,569
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES - MONEY MARKET FUNDS
Janus Janus
Janus Government Tax-Exempt
As of April 30, 1998, (unaudited) Money Money Money
(all numbers in thousands Market Market Market
except net asset value) Fund Fund Fund
- --------------------------------------------------------------------------------
Assets:
Investments at amortized cost $4,112,020 $286,459 $103,124
Cash 13 35 52
Receivables:
Investments sold -- -- 4,201
Fund shares sold 4,569 431 110
Interest 17,109 375 1,035
- --------------------------------------------------------------------------------
Total Assets 4,133,711 287,300 108,522
- --------------------------------------------------------------------------------
Liabilities:
Payables
Investments purchased -- 14,984 7,206
Fund shares repurchased 7,399 738 294
Dividends and distributions 9,583 131 13
Advisory fees 363 21 9
Administrative fees 543 60 37
Service fees 4 -- --
Audit fees 6 3 3
Trustees' fees and expenses 2 -- --
- --------------------------------------------------------------------------------
Total Liabilities 17,900 15,937 7,562
- --------------------------------------------------------------------------------
Net Assets $4,115,811 $271,363 $100,960
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 4,115,779 271,361 100,945
- --------------------------------------------------------------------------------
Net Asset Value Per Share $ 1.00 $ 1.00 $ 1.00
================================================================================
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 29
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS - MONEY MARKET FUNDS
For the six months ended April 30, 1998, (unaudited) Janus Janus Government Janus Tax-Exempt
and the fiscal year or period ended October 31, 1997 Money Market Money Market Money Market
(all numbers in thousands) Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997(1) 1998 1997(1) 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 122,839 $ 185,899 $ 5,275 $ 9,234 1,554 $ 2,511
Net realized gain/(loss)
from investment transactions 65 98 2 8 15 (2)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in
Net Assets Resulting from Operations 122,904 185,997 5,277 9,242 1,569 2,509
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income:
Investor shares (26,522) (44,924) (3,333) (6,112) (1,359) (2,384)
Institutional shares (95,928) (140,928) (1,930) (3,063) (194) (125)
Service shares (389) (47) (12) (60) (1) --
Net realized gain from
investment transactions:
Investor shares (8) (22) -- (5) -- --
Institutional shares (25) (76) -- (2) -- --
Service shares -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (122,872) (185,997) (5,275) (9,242) (1,554) (2,509)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold:
Investor shares 3,068,525 4,205,232 173,470 250,916 196,905 244,419
Institutional shares 39,863,802 57,798,535 387,979 671,494 67,192 37,249
Service shares 113,436 17,775 618 2,557 345 10
Reinvested dividends and distributions:
Investor shares 24,526 42,784 3,122 5,901 1,278 2,281
Institutional shares 28,643 32,270 1,342 2,569 168 113
Service shares 385 47 12 32 1 --
Shares repurchased:
Investor shares (3,186,859) (3,989,256) (175,661) (242,091) (195,304) (240,069)
Institutional shares (39,516,076) (56,765,454) (287,400) (697,778) (54,157) (35,750)
Service shares (94,552) (7,481) (658) (1,961) (321) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from
Capital Share Transactions 301,830 1,334,452 102,824 (8,361) 16,107 8,253
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 301,862 1,334,452 102,826 (8,361) 16,122 8,253
Net Assets:
Beginning of Period 3,813,949 2,479,497 168,537 176,898 84,838 76,585
- ---------------------------------------------------------------------------------------------------------------------------------
End of Period $ 4,115,811 $ 3,813,949 $ 271,363 $ 168,537 $ 100,960 $ 84,838
=================================================================================================================================
Net Assets Consist of:
Capital (par value and paid-in surplus) $ 4,115,779 $ 3,813,949 $ 271,361 $ 168,537 $ 100,945 $ 84,838
Undistributed net realized gain/(loss)
from investments 32 -- 2 -- 15 --
- ---------------------------------------------------------------------------------------------------------------------------------
$ 4,115,811 $ 3,813,949 $ 271,363 $ 168,537 $ 100,960 $ 84,838
=================================================================================================================================
Transactions in Fund Shares - Investor Shares:
Shares sold 3,068,525 4,205,232 173,470 250,916 196,905 244,419
Reinvested dividends and distributions 24,526 42,784 3,122 5,901 1,278 2,281
- ---------------------------------------------------------------------------------------------------------------------------------
Total 3,093,051 4,248,016 176,592 256,817 198,183 246,700
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (3,186,859) (3,989,256) (175,661) (242,091) (195,304) (240,069)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares (93,808) 258,760 931 14,726 2,879 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 938,839 1,032,647 133,065 132,134 84,148 81,269
=================================================================================================================================
Transactions in Fund Shares - Institutional Shares:
Shares sold 39,863,802 57,798,535 387,979 671,494 67,192 37,249
Reinvested dividends and distributions 28,643 32,270 1,342 2,569 168 113
- ---------------------------------------------------------------------------------------------------------------------------------
Total 39,892,445 57,830,805 389,321 674,063 67,360 37,362
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (39,516,076) (56,765,454) (287,400) (697,778) (54,157) (35,750)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 376,369 1,065,351 101,921 (23,715) 13,203 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 3,147,330 2,770,961 137,696 35,775 16,762 3,559
=================================================================================================================================
Transactions in Fund Shares - Service Shares:
Shares sold 113,436 17,775 618 2,557 345 10
Reinvested dividends and distributions 385 47 12 32 1 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total 113,821 17,822 630 2,589 346 10
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (94,552) (7,481) (658) (1,961) (321) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 19,269 10,341 (28) 628 25 10
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding Beginning of Period 10,341 -- 628 -- 10 --
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period 29,610 10,341 600 628 35 10
=================================================================================================================================
</TABLE>
(1) Fiscal period November 22, 1996, (inception) to October 31, 1997, for
Service Shares
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 30
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - MONEY MARKET FUNDS
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus
or through the fiscal year Money Market
or period 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 .03 .05 .05 .04
- -------------------------------------------------------------------------------------------------------------
Total from Investment Operations .03 .05 .05 .04
- -------------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.05) (.05) (.04)
- -------------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.03) (.05) (.05) (.04)
- -------------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================================================================================
Total Return* 2.56% 5.23% 5.13% 3.95%
=============================================================================================================
Net Assets at End of Period (in thousands) $ 938,846 $1,032,647 $773,887 $643,219
Average Net Assets for the Period
(in thousands) $1,034,362 $ 883,052 $676,334 $461,311
Ratio of Expenses to Average Net Assets** 0.60%(4) 0.60%(4) 0.60%(4) 0.60%(4)
Ratio of Net investment Income to
Average Net Assets** 5.17% 5.09% 5.01% 5.56%
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the six months
ended April 30, 1998, (unaudited) Janus Government
or through the fiscal year Money Market
or period 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 .02 .05 .05 .04
- -------------------------------------------------------------------------------------------------------------
Total from Investment Operations .02 .05 .05 .04
- -------------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.02) (.05) (.05) (.04)
- -------------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.02) (.05) (.05) (.04)
- -------------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================================================================================
Total Return* 2.51% 5.11% 5.03% 3.90%
=============================================================================================================
Net Assets at End of Period (in thousands) $133,066 $132,133 $117,408 $199,307
Average Net Assets for the Period
(in thousands) $132,836 $123,193 $112,059 $ 87,906
Ratio of Expenses to Average Net Assets** 0.60%(4) 0.60%(4) 0.60%(4) 0.60%(4)
Ratio of Net investment Income to
Average Net Assets** 5.06% 5.42% 4.91% 5.40%
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the
six months ended April 30, 1998, Janus
(unaudited) or through the fiscal year Money Market
or period ended October 31 Fund
- -----------------------------------------------------------------------------------------------------------
Institutional Shares 1998 1997 1996 1995(2)
- -----------------------------------------------------------------------------------------------------------
<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 .06 .05 .03
- -----------------------------------------------------------------------------------------------------------
Total from Investment Operations .03 .06 .05 .03
- -----------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.06) (.05) (.03)
- -----------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.03) (.06) (.05) (.03)
- -----------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
===========================================================================================================
Total Return* 2.79% 5.71% 5.61% 3.25%
===========================================================================================================
Net Assets at End of Period (in thousands) $ 3,147,355 $ 2,770,961 $ 1,705,610 $ 304,952
Average Net Assets for the Period
(in thousands) $ 3,444,882 $ 2,545,294 $ 874,431 $ 202,427
Ratio of Expenses to
Average Net Assets** 0.15%(5) 0.15%(5) 0.15% 0.15%
Ratio of Net investment Income to
Average Net Assets** 5.62% 5.54% 5.41% 5.86%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the
six months ended April 30, 1998, Janus Government
(unaudited) or through the fiscal year Money Market
or period ended October 31 Fund
- -----------------------------------------------------------------------------------------------------------
Institutional Shares 1998 1997 1996 1995(2)
- -----------------------------------------------------------------------------------------------------------
<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 .05 .05 .03
- -----------------------------------------------------------------------------------------------------------
Total from Investment Operations .03 .05 .05 .03
- -----------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.05) (.05) (.03)
- -----------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.03) (.05) (.05) (.03)
- -----------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
===========================================================================================================
Total Return* 2.73% 5.58% 5.50% 3.20%
===========================================================================================================
Net Assets at End of Period (in thousands) $ 137,697 $ 35,776 $ 59,490 $ 44,164
Average Net Assets for the Period
(in thousands) $ 70,828 $ 56,801 $ 53,398 $ 24,748
Ratio of Expenses to
Average Net Assets** 0.15%(5) 0.15%(5) 0.15% 0.15%(5)
Ratio of Net investment Income to
Average Net Assets** 5.49% 6.04% 5.34% 5.75%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the
six months ended April 30, 1998, Janus Janus Government
(unaudited) or through the fiscal year Money Market Money Market
or period ended October 31 Fund Fund
- ----------------------------------------------------------------------------------------------
Service Shares 1998 1997(3) 1998 1997(3)
- ----------------------------------------------------------------------------------------------
<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 .05 .03 .05
- ----------------------------------------------------------------------------------------------
Total from Investment Operations .03 .05 .03 .05
- ----------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.03) (.05) (.03) (.05)
- ----------------------------------------------------------------------------------------------
Total Dividends and Distributions (.03) (.05) (.03) (.05)
- ----------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================================================================
Total Return* 2.65% 5.14% 2.63% 5.01%
==============================================================================================
Net Assets at End of Period (in thousands) $ 29,610 $ 10,341 $ 600 $ 628
Average Net Assets for the Period
(in thousands) $ 14,622 $ 913 $ 458 $ 1,141
Ratio of Expenses to
Average Net Assets** 0.40%(6) 0.40%(6) 0.40%(6) 0.40%(6)
Ratio of Net investment Income to
Average Net Assets** 5.36% 5.02% 5.25% 5.23%
- ----------------------------------------------------------------------------------------------
</TABLE>
*Total return is not annualized for periods of less than one year
**Annualized
(1) Fiscal period February 15, 1995, (inception) to October 31, 1995
(2) Fiscal period April 17, 1995, (inception) to October 31, 1995
(3) Fiscal period November 22, 1996, (inception) to October 31, 1997
(4) The ratio was .70% before voluntary reduction of fees.
(5) The ratio was .35% before voluntary reduction of fees.
(6) The ratio was .60% before voluntary reduction of fees.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 31
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - MONEY MARKET FUNDS
For a share outstanding during the
six months ended April 30, 1998, (unaudited) Janus Tax-Exempt
or through the fiscal year Money Market
or period 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 .02 .03 .03 .02
- --------------------------------------------------------------------------------------------------------
Total from Investment Operations .02 .03 .03 .02
- --------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.02) (.03) (.03) (.02)
- --------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.02) (.03) (.03) (.02)
- --------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================================================================================
Total Return* 1.56% 3.20% 3.27% 2.40%
========================================================================================================
Net Assets at End of Period (in thousands) $ 84,161 $ 81,268 $ 74,638 $ 67,479
Average Net Assets for the Period
(in thousands) $ 86,614 $ 75,929 $ 68,695 $ 57,366
Ratio of Expenses to
Average Net Assets** 0.60%(4) 0.60%(4) 0.60%(4) 0.60%(4)
Ratio of Net investment Income to
Average Net Assets** 3.16% 3.14% 3.22% 3.38%
- --------------------------------------------------------------------------------------------------------
<CAPTION>
For a share outstanding during the
six months ended April 30, 1998, Janus Tax-Exempt
(unaudited) or through the fiscal Money Market
year or period ended October 31 Fund
- --------------------------------------------------------------------------------------------------------
Institutional Shares 1998 1997 1996 1995(2)
- --------------------------------------------------------------------------------------------------------
<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 .01 .04 .04 .02
- --------------------------------------------------------------------------------------------------------
Total from Investment Operations .01 .04 .04 .02
- --------------------------------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.01) (.04) (.04) (.02)
- --------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (.01) (.04) (.04) (.02)
- --------------------------------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================================================================================================
Total Return* 1.79% 3.67% 3.74% 2.09%
========================================================================================================
Net Assets at End of Period (in thousands) $ 16,764 $ 3,560 $ 1,947 $ 11,192
Average Net Assets for the Period
(in thousands) $ 10,858 $ 3,466 $ 1,754 $ 1,115
Ratio of Expenses to
Average Net Assets** 0.15%(5) 0.15%(5) 0.15%(5) 0.15%(5)
Ratio of Net investment Income to
Average Net Assets** 3.61% 3.94% 3.82% 3.82%
- --------------------------------------------------------------------------------------------------------
</TABLE>
For a share outstanding during the
six months ended April 30, 1998, Janus Tax-Exempt
(unaudited) or through the fiscal Money Market
year or period ended October 31 Fund
- --------------------------------------------------------------------------------
Service Shares 1998 1997(3)
- --------------------------------------------------------------------------------
Net Asset Value at Beginning of Period $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income .02 .03
- --------------------------------------------------------------------------------
Total from Investment Operations .02 .03
- --------------------------------------------------------------------------------
Less Dividends and Distributions:
Dividends (from net investment income) (.02) (.03)
- --------------------------------------------------------------------------------
Total Dividends and Distributions (.02) (.03)
- --------------------------------------------------------------------------------
Net Asset Value at End of Period $ 1.00 $ 1.00
================================================================================
Total Return* 1.67% 3.22%
================================================================================
Net Assets at End of Period (in thousands) $ 35 $ 10
Average Net Assets for the Period
(in thousands) $ 47 $ 10
Ratio of Expenses to
Average Net Assets** 0.40%(6) 0.40%(6)
Ratio of Net investment Income to
Average Net Assets** 3.38% 3.17%
- --------------------------------------------------------------------------------
*Total return is not annualized for periods of less than one year
**Annualized
(1) Fiscal period February 15, 1995, (inception) to October 31, 1995
(2) Fiscal period April 17, 1995, (inception) to October 31, 1995
(3) Fiscal period November 22, 1996, (inception) to October 31, 1997
(4) The ratio was .70% before voluntary reduction of fees.
(5) The ratio was .35% before voluntary reduction of fees.
(6) The ratio was .60% before voluntary reduction of fees.
See Notes to Financial Statements.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 32
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
Adjustable Rate Preferred Stock Dividend Rates are as of April 30, 1998.
*Non-income-producing security
**A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open futures contracts and/or forward
currency contracts.
+Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
1) Variable Rate Notes. The interest rate, which is based on specific, or an
index of, market interest rates, is subject to change. Rates in the security
description are as of April 30, 1998.
2) Money market funds may hold securities with stated maturities of greater than
one year when those securities have features that allow a fund to "put" back
the security to the issuer or to a third party within a year 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.
DEM German Deutschemark
ECU European Currency Unit
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 the $250,000 minimum account
size and allow wire transactions only. "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 Funds enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in foreign currencies. A forward currency
contract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated 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.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Futures contracts are marked to market daily, and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market for federal income tax purposes at fiscal year-end.
Foreign-denominated assets and forward currency contracts may involve more
risks than domestic transactions, including currency risk, political and
economic risk, regulatory risk and market risk. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
The Funds may enter into "futures contracts" and "options" on securities,
financial indexes, foreign currencies, forward contracts and interest rate swaps
and swap-related products. The Funds intend to use such derivative instruments
primarily to hedge or protect from adverse movements in securities prices,
currency rates or interest rates. The use of futures contracts and options may
involve risks such as the possibility of illiquid markets or imperfect
correlation between the value of the contracts and the underlying securities, or
that the counterparty will fail to perform its obligations.
Additional Investment Risk
Janus High-Yield Fund and Janus Flexible Income Fund may be invested in
lower-rated debt securities that have a higher risk of default or loss of value
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, 1997, 100% were exempt
from federal income taxes for Janus Federal Tax-Exempt Fund and Janus Tax-Exempt
Money Market Fund.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
2. Investment Advisory Agreement and Other Transactions with Affiliates
The advisory agreement with the Bond Funds spells out the fee that the
funds must pay. Each of the Funds are subject to the following schedule:
<TABLE>
<CAPTION>
Average Daily Net Annual Rate Expense Limit
Fee Schedule Assets of Fund Percentage (%) Percentage (%)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund First $300 Million .65 1.00*
Over $300 Million .55
- -------------------------------------------------------------------------------------
Janus High-Yield Fund First $300 Million .75 1.00*
Over $300 Million .65
- -------------------------------------------------------------------------------------
Janus Federal First $300 Million .60 .65*
Tax-Exempt Fund Over $300 Million .55
- -------------------------------------------------------------------------------------
Janus Short-Term Bond Fund First $300 Million .65 .65*
Over $300 Million .55
- -------------------------------------------------------------------------------------
</TABLE>
*Janus Capital will waive certain fees and expenses to the extent that net
expenses exceed the stated limits.
Each of the Money Market Funds pays Janus Capital .20% of average daily net
assets as an investment advisory fee. Janus Capital has voluntarily agreed to
reduce its advisory fee for the Janus Money Market Funds to .10%. In addition,
each class of shares of each Money Market Fund pays Janus Capital an
administrative fee. This fee is .50%, .15%, and .40% of average daily net assets
for the Investor Shares, Institutional Shares, and Service Shares, respectively.
Janus Capital has voluntarily agreed to reduce the administrative fee to .05%
and .05% on the Institutional Shares and Service Shares, respectively. The
Service Shares have class-specific expenses called service fees, and this fee is
.25%. All other expenses of the Money Market Funds except Trustees fees and
expenses, audit fees and interest expenses are paid by Janus Capital.
Janus Service Corporation ("Janus Service"), a wholly owned subsidiary of
Janus Capital, receives an annual fee of 0.16% of average net assets per fund
plus $4.00 per shareholder account from each Bond Fund for transfer agent
services plus reimbursement of certain out-of-pocket expenses.
Officers and certain trustees of the Funds are also officers and/ or
directors of Janus Capital; however, they receive no compensation from the
Funds.
DST Systems, Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides fund accounting and shareholder accounting systems to
the Funds through Janus Capital and Janus Service. Fees paid to DST for the
period ended April 30, 1998, are noted below.
DST Fees
- --------------------------------------------------------------------------------
Janus Flexible Income Fund $96,040
- --------------------------------------------------------------------------------
Janus High-Yield Fund 37,766
- --------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund 17,907
- --------------------------------------------------------------------------------
Janus Short-Term Bond Fund 21,612
- --------------------------------------------------------------------------------
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. Federal Income Tax
The Funds have elected to treat gains and losses on forward currency
contracts as capital gains and losses. Other foreign currency gains and losses
on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code.
Net capital loss carryovers noted below as of October 31, 1997, are
available to offset future realized capital gains and thereby reduce future
taxable gains distributions. These carryovers expire between October 31, 2001,
and October 31, 2003. The aggregate cost of investments and the composition of
unrealized appreciation and depreciation of investment securities for federal
income tax purposes as of April 30, 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>
at October 31, 1997 at April 30, 1998
------------------- --------------------------------------------------------------
Net
Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Carryovers Cost Appreciation (Depreciation) (Depreciation)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Flexible Income Fund -- $823,596,910 $27,952,223 ($1,774,328) $26,177,895
- -----------------------------------------------------------------------------------------------------------------
Janus High-Yield Fund -- 377,650,771 9,702,931 (2,297,379) 7,405,552
- -----------------------------------------------------------------------------------------------------------------
Janus Federal Tax-Exempt Fund ($1,420,783) 69,112,038 1,564,240 (346,687) 1,217,553
- -----------------------------------------------------------------------------------------------------------------
Janus Short-Term Bond Fund (2,818,603) 84,158,673 243,309 (170,445) 72,864
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 35
<PAGE>
This page available for your notes and computations.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 36
<PAGE>
This page available for your notes and computations.
JANUS INCOME FUNDS APRIL 30, 1998 SEMIANNUAL REPORT 37
<PAGE>
[LOGO] JANUS
100 Fillmore Street
Denver, Colorado 80206-4923
1-800-525-3713
Funds distributed by Janus Distributors, Inc. Member NASD.
Recycled Paper
