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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre- Effective Amendment No. [ ]
Post-Effective Amendment No. 87 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
Amendment No. 70 [X]
(Check appropriate box or boxes.)
JANUS INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
100 Fillmore Street, Denver, Colorado 80206-4928
Address of Principal Executive Offices (Zip Code)
Registrant's Telephone No., including Area Code: 303-333-3863
Thomas A. Early - 100 Fillmore Street, Denver, Colorado 80206-4928
(Name and Address of Agent for Service)
Approximate Date of Proposed Offering: February 17, 1999
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on February 17, 1999 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
JANUS INVESTMENT FUND
Cross Reference Sheet
Between the Prospectuses and Statements of
Additional Information and Form N-1A Item
FORM N-1A ITEM CAPTION IN PROSPECTUSES
PART A
1. Front and Back Cover Pages Cover Pages
2. Risk/Return Summary: Risk/Return Summary
Investments, Risks, and
Performance
3. Risk/Return Summary: Fee Risk/Return Summary
Table
4. Investment Objectives, Investment Objectives, Principal
Principal Investment Investment Strategies, and Risks;
Strategies, and Related Risks Rating Categories (Combined Income
Prospectus only)
5. Management's Discussion of Not Applicable
Fund Performance
6. Management, Organization, and Management of the Funds
Capital Structure
7. Shareholder Information Shareholder's Manual; Other
Information Distributions and Taxes
8. Distribution Arrangements Not Applicable
9. Financial Highlights Financial Highlights
Information
<PAGE>
FORM N-1A ITEM CAPTION IN STATEMENTS OF
ADDITIONAL INFORMATION
PART B
10. Cover Page and Table of Cover Page; Table of Contents
Contents
11. Fund History Miscellaneous Information
12. Description of the Fund and Classification, Portfolio Turnover,
Its Investments and Risks Investment Policies and Restrictions,
Investment Strategies and Risks;
Appendix A; Appendix B (Money Market
Fund Statements of Additional
Information only)
13. Management of the Fund Investment Adviser (Combined Growth
and Income Funds, Venture and
Overseas Statements of Additional
Information only); Investment Adviser
and Administrator (Money Market Fund
Statements of Additional Information
only); Trustees and Officers
14. Control Persons and Principal Principal Shareholders
Holders of Securities
15. Investment Advisory and Other Investment Adviser (Combined Growth
Services and Income Funds, Venture and
Overseas Statements of Additional
Information only); Investment Adviser
and Administrator (Money Market Fund
Statements of Additional Information
only); Custodian, Transfer Agent, and
Certain Affiliations; Portfolio
Transactions and Brokerage; Trustees
and Officers; Miscellaneous
Information
<PAGE>
16. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices
17. Capital Stock and Other Purchase of Shares; Redemption of
Securities Shares; Miscellaneous Information
18. Purchase, Redemption, and Purchase of Shares; Redemption of
Pricing of Shares Shares; Miscellaneous Information
19. Taxation of the Fund Tax-Deferred Accounts; Income
Dividends, Capital Gains
Distributions, and Tax Status
(Combined Growth and Income Funds,
Venture and Overseas Statements of
Additional Information only);
Dividends and Tax Status (Money
Market Fund Statements of Additional
Information only)
20. Underwriters Custodian, Transfer Agent, and
Certain Affiliations
21. Calculation of Performance Performance Information (Combined
Data Growth and Income Funds, Venture and
Overseas Statements of Additional
Information); Performance Data (Money
Market Fund Statements of Additional
Information only)
22. Financial Statements Financial Statements
<PAGE>
[JANUS LOGO]
Janus Equity Funds
PROSPECTUS
FEBRUARY 17, 1999
Janus Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Special Situations Fund
Janus Twenty Fund
Janus Global Life Sciences Fund
Janus Global Technology Fund
Janus Worldwide Fund
Janus Balanced Fund
Janus Equity Income Fund
Janus Growth and Income Fund
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Growth funds................................. 2
Combination funds............................ 11
Fees and expenses............................ 16
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Growth funds................................. 18
Combination funds............................ 24
General portfolio policies................... 27
Risks........................................ 30
SHAREHOLDER'S MANUAL
Minimum investments.......................... 39
Types of account ownership................... 39
How to open your Janus account............... 41
How to purchase shares....................... 42
How to exchange shares....................... 44
How to redeem shares......................... 46
Shareholder services and account policies.... 51
MANAGEMENT OF THE FUNDS
Investment adviser........................... 55
Investment personnel......................... 56
OTHER INFORMATION............... ............... 60
DISTRIBUTIONS AND TAXES
Distributions................................ 61
Taxes........................................ 63
FINANCIAL HIGHLIGHTS.............. ............. 65
GLOSSARY
Glossary of investment terms................. 76
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
GROWTH FUNDS
The Growth Funds are designed for long-term investors who seek
growth of capital and who can tolerate the greater risks
associated with common stock investments.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE GROWTH FUNDS?
- --------------------------------------------------------------------------------
DOMESTIC GROWTH FUNDS
- JANUS FUND seeks long-term growth of capital in a manner
consistent with the preservation of capital.
- JANUS ENTERPRISE FUND, JANUS MERCURY FUND, JANUS OLYMPUS
FUND AND JANUS TWENTY FUND seek long-term growth of capital.
- JANUS SPECIAL SITUATIONS FUND seeks capital appreciation.
GLOBAL GROWTH FUNDS
- JANUS GLOBAL LIFE SCIENCES FUND AND JANUS GLOBAL TECHNOLOGY
FUND seek long-term growth of capital.
- JANUS WORLDWIDE FUND seeks long-term growth of capital in a
manner consistent with the preservation of capital.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change to a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that a Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE GROWTH FUNDS?
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, they look for companies with
earnings growth potential one at a time. If a portfolio manager
is unable to find investments with earnings growth potential, a
2 Janus Equity Funds
<PAGE>
significant portion of a Fund's assets may be in cash or similar
investments.
JANUS FUND invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in
companies of any size, it generally invests in larger, more
established companies.
JANUS ENTERPRISE FUND invests primarily in common stocks
selected for their growth potential, and normally invests at
least 50% of its equity assets in medium-sized companies.
JANUS MERCURY FUND invests primarily in common stocks selected
for their growth potential. The Fund may invest in companies
of any size, from larger, well-established companies to
smaller, emerging growth companies.
JANUS OLYMPUS FUND invests primarily in common stocks selected
for their growth potential. The Fund may invest in companies
of any size, from larger, well-established companies to
smaller, emerging growth companies.
JANUS SPECIAL SITUATIONS FUND invests primarily in common
stocks selected for their capital appreciation potential. The
Fund emphasizes stocks of "special situation" companies that
the portfolio manager believes have been overlooked or
undervalued by other investors. A "special situation" arises
when, in the portfolio manager's opinion, securities of a
particular company will appreciate in value due to a specific
development. The portfolio manager pays particular attention
to companies that he thinks have high free cash flows.
JANUS TWENTY FUND invests primarily in common stocks selected
for their growth potential. The Fund normally concentrates its
investments in a core group of 20-30 common stocks.
JANUS GLOBAL LIFE SCIENCES FUND invests primarily in equity
securities of U.S. and foreign companies selected for their
growth potential. Normally, it invests at least 65% of its
total assets in securities of companies that the portfolio
manager believes have a life science orientation. As a
fundamental
Risk return summary 3
<PAGE>
policy, the Fund normally invests at least 25% of its total
assets, in the aggregate, in the following industry groups:
health care; pharmaceuticals; agriculture; cosmetics/personal
care; and biotechnology.
JANUS GLOBAL TECHNOLOGY FUND invests primarily in equity
securities of U.S. and foreign companies selected for their
growth potential. Normally, it invests at least 65% of its
total assets in securities of companies that the portfolio
manager believes will benefit significantly from advances or
improvements in technology.
JANUS WORLDWIDE FUND invests primarily in common stocks of
companies of any size throughout the world. The Fund normally
invests in issuers from at least five different countries,
including the United States. The Fund may at times invest in
fewer than five countries or even a single country.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE GROWTH FUNDS?
The biggest risk is that the Funds' returns may vary, and you
could lose money. If you are considering investing in any of
the Growth Funds, remember that they are each designed for
long-term investors who can accept the risks of investing in a
portfolio with significant common stock holdings. Common
stocks tend to be more volatile than other investment choices.
The value of a Fund's portfolio may decrease if the value of
an individual company in the portfolio decreases. The value of
a Fund's portfolio could also decrease if the stock market
goes down. If the value of a Fund's portfolio decreases, a
Fund's net asset value (NAV) will also decrease, which means
if you sell your shares in a Fund you would get back less
money.
JANUS SPECIAL SITUATIONS FUND emphasizes investments in
special situation companies which may not appreciate if an
anticipated development does not occur or attract the
anticipated attention. See "What is a 'special situation'?" on
page 21 for an explanation of what the portfolio manager may
consider a special situation.
4 Janus Equity Funds
<PAGE>
JANUS GLOBAL LIFE SCIENCES FUND concentrates its investments
in related industry groups. Because of this, companies in its
portfolio may share common characteristics and react similarly
to market developments. For example, many companies with a
life science orientation are highly regulated and may be
dependent upon certain types of technology. As a result,
changes in government funding or subsidies, new or anticipated
legislative changes, or technological advances could affect
the value of such companies and, therefore, the Fund's NAV.
The Fund's returns may be more volatile than those of a less
concentrated portfolio.
Although JANUS GLOBAL TECHNOLOGY FUND does not concentrate its
investments in specific industries, it may invest in companies
related in such a way that they react similarly to certain
market pressures. For example, competition among technology
companies may result in increasingly aggressive pricing of
their products and services, which may affect the
profitability of companies in the Fund's portfolio. In
addition, because of the rapid pace of technological
development, products or services developed by companies in
the Fund's portfolio may become rapidly obsolete or have
relatively short product cycles. As a result, the Fund's
returns may be considerably more volatile than the returns of
a fund that does not invest in similarly related companies.
JANUS GLOBAL LIFE SCIENCES FUND, JANUS GLOBAL TECHNOLOGY FUND
AND JANUS WORLDWIDE FUND may have significant exposure to
foreign markets. As a result, their returns and NAV may be
affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a
particular country.
Risk return summary 5
<PAGE>
JANUS ENTERPRISE FUND, JANUS OLYMPUS FUND, JANUS SPECIAL
SITUATIONS FUND, JANUS TWENTY FUND, JANUS GLOBAL LIFE SCIENCES
FUND AND JANUS GLOBAL TECHNOLOGY FUND are nondiversified. In
other words, they may hold larger positions in a smaller
number of securities than a diversified fund. As a result, a
single security's increase or decrease in value may have a
greater impact on a Fund's NAV and total return. Since JANUS
TWENTY FUND normally concentrates in a core portfolio of 20-30
stocks, this risk may be increased.
An investment in these Funds is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The following information illustrates how each of the Growth
Fund's performance has varied over time. The bar charts depict
the change in performance from year-to-year during the period
indicated. The tables compare each Fund's average annual returns
for the periods indicated to a broad-based securities market
index.
6 Janus Equity Funds
<PAGE>
JANUS FUND
A BAR CHART showing Annual Total Returns for Janus Fund from 1989 through 1998:
Annual returns for periods ended 12/31
46.32% (0.74%) 42.80% 6.87% 10.92% (1.10%) 29.43% 19.61% 22.72% 38.89%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 28.44%; Worst Quarter: 3rd-1990 (13.91%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (2/5/70)
<S> <C> <C> <C> <C>
Janus Fund 38.89% 21.15% 20.43% 17.59%
S&P 500 Index* 28.74% 24.08% 19.20% 13.83%
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
JANUS ENTERPRISE FUND
A BAR CHART showing Annual Total Returns for Janus Enterprise Fund from 1993
through 1998:
Annual returns for periods ended 12/31
15.64% 8.92% 27.25% 11.65% 10.82% 33.75%
1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 34.15%; Worst Quarter: 3rd-1998 (14.63%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C> <C> <C>
Janus Enterprise Fund 33.75% 18.06% 21.54%
S&P MidCap 400 Index+ 18.25% 18.67% 19.19%
----------------------------------
</TABLE>
+ The S&P MidCap 400 Index is an unmanaged group of 400
domestic stocks chosen for their market size, liquidity and
industry group representation.
Risk return summary 7
<PAGE>
JANUS MERCURY FUND
A BAR CHART showing Annual Total Returns for Janus Mercury Fund from 1994
through 1998:
Annual returns for periods ended 12/31
15.86% 33.01% 17.67% 11.88% 58.41%
1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 30.04%; Worst Quarter: 3rd-1998 (6.94%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/3/93)
<S> <C> <C> <C>
Janus Mercury Fund 58.41% 26.30% 26.86%
S&P 500 Index* 28.74% 24.08% 22.64%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
JANUS OLYMPUS FUND
A BAR CHART showing Annual Total Returns for Janus Olympus Fund from 1996
through 1998:
Annual returns for periods ended 12/31
21.73% 26.73% 56.97%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 32.66%; Worst Quarter: 3rd-1998 (7.93%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/29/95)
<S> <C> <C>
Janus Olympus Fund 56.97% 34.28%
S&P 500 Index+ 28.74% 28.27%
--------------------
</TABLE>
+ The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
8 Janus Equity Funds
<PAGE>
JANUS SPECIAL SITUATIONS FUND
A BAR CHART showing Annual Total Returns for Janus Special Situations Fund from
1997 through 1998:
Annual returns for periods ended 12/31
46.04% 25.31%
1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 28.53%; Worst Quarter: 3rd-1998 (19.55%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/31/96)
<S> <C> <C>
Janus Special Situations Fund 25.31% 35.28%
S&P 500 Index* 28.74% 31.03%
--------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
JANUS TWENTY FUND
A BAR CHART showing Annual Total Returns for Janus Twenty Fund from 1991 through
1998:
Annual returns for periods ended 12/31
50.85% 0.59% 69.21% 1.97% 3.43% (6.73%) 36.22 27.85% 29.70% 73.39%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 29.67%; Worst Quarter: 3rd-1990 (17.71%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (4/30/85)
<S> <C> <C> <C> <C>
Janus Twenty Fund 73.39% 29.58% 25.76% 20.90%
S&P 500 Index+ 28.74% 24.08% 19.20% 18.51%
---------------------------------------
</TABLE>
+ The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
Risk return summary 9
<PAGE>
JANUS WORLDWIDE FUND
A BAR CHART showing Annual Total Returns for Janus Worldwide Fund from 1992
through 1998:
Annual returns for periods ended 12/31
9.01% 28.41% 3.61% 21.90% 26.40% 20.48% 25.87%
1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 20.24%; Worst Quarter: 3rd-1998 (16.10%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/15/91)
<S> <C> <C> <C>
Janus Worldwide Fund 25.87% 19.34% 20.72%
Morgan Stanley International Worldwide
Index* 24.34% 15.68% 13.22%
-----------------------------
</TABLE>
* The Morgan Stanley International Worldwide Index is a market
capitalization weighted index composed of countries
representative of the market structure of 47 developed and
emerging markets.
Since Janus Global Life Sciences Fund and Janus Global Technology
Fund did not commence operations until December 31, 1998, there
is no performance shown.
The Growth Funds' past performance does not necessarily indicate
how they will perform in the future.
10 Janus Equity Funds
<PAGE>
COMBINATION FUNDS
The Combination Funds are designed for investors who primarily
seek growth of capital with varying degrees of emphasis on
income. These Funds are not designed for investors who desire a
consistent level of income.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE COMBINATION FUNDS?
- --------------------------------------------------------------------------------
- JANUS BALANCED FUND seeks long-term capital growth, consistent
with preservation of capital and balanced by current income.
- JANUS EQUITY INCOME FUND seeks current income and long-term
growth of capital.
- JANUS GROWTH AND INCOME FUND seeks long-term capital growth and
current income.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change to a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that a Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE COMBINATION FUNDS?
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, they look mostly for equity and
income-producing securities that meet their investment criteria
one at a time. If a portfolio manager is unable to find such
investments, much of a Fund's assets may be in cash or similar
investments.
JANUS BALANCED FUND normally invests 40-60% of its assets in
securities selected primarily for their growth potential and
40-60% of its assets in securities selected primarily for their
income potential. The Fund will normally invest at least 25% of
its assets in fixed-income securities.
Risk return summary 11
<PAGE>
JANUS EQUITY INCOME FUND normally emphasizes investments in
common stocks, and growth potential is a significant investment
consideration. Normally, it invests at least 65% of its assets in
income-producing equity securities.
JANUS GROWTH AND INCOME FUND normally emphasizes investments in
common stocks. It will normally invest up to 75% of its assets in
equity securities selected primarily for their growth potential,
and at least 25% of its assets in securities the portfolio
manager believes have income potential. Equity securities may
make up part of this income component if they currently pay
dividends or the portfolio manager believes they have potential
for increasing or commencing dividend payments.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE COMBINATION FUNDS?
The biggest risk is that the Funds' returns may vary, and you
could lose money. If you are considering investing in any of the
Combination Funds, remember that they are each designed for
long-term investors who can accept the risks of investing in a
portfolio with significant common stock holdings. Common stocks
tend to be more volatile than other investment choices.
The value of a Fund's portfolio may decrease if the value of an
individual company in the portfolio decreases. The value of a
Fund's portfolio could also decrease if the stock market goes
down. If the value of a Fund's portfolio decreases, a Fund's NAV
will also decrease, which means if you sell your shares in a Fund
you would get back less money.
The income component of the Funds' portfolios includes fixed-
income securities. A fundamental risk to the income component is
that the value of these securities will fall if interest rates
rise. Generally, the value of a fixed-income portfolio will
decrease when interest rates rise, which means the Fund's NAV may
likewise decrease. Another fundamental risk associated with
fixed-income securities is credit risk, which is the risk that an
issuer will be unable to make principal and interest payments
when due.
12 Janus Equity Funds
<PAGE>
An investment in these Funds is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The following information illustrates how each Combination Fund's
performance has varied over time. The bar chart depicts the
change in performance from year-to-year during the period
indicated. The tables compare each Fund's average annual returns
for the period indicated to a broad-based securities market
index.
Risk return summary 13
<PAGE>
JANUS BALANCED FUND
A BAR CHART showing Annual Total Returns for Janus Balanced Fund from 1993
through 1998:
Annual returns for periods ended 12/31
10.56% 0.02% 27.31% 15.30% 21.81% 31.20%
1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 18.75%; Worst Quarter: 3rd-1998 (4.49%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C>
Janus Balanced Fund 31.20% 18.60% 18.43%
S&P 500 Index* 28.74% 24.08% 21.54%
Lehman Brothers Gov't/Corp Bond Index+ 9.47% 7.30% 7.73%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
+ Lehman Brothers Gov't/Corp Bond Index is composed of all bonds
that are of investment grade with at least one year until
maturity.
JANUS EQUITY INCOME FUND
A BAR CHART showing Annual Total Returns for Janus Equity Income Fund from 1997
through 1998:
Annual returns for periods ended 12/31
31.08% 40.50%
1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 26.34%; Worst Quarter: 3rd-1998 (8.06%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (6/28/96)
<S> <C> <C>
Janus Equity Income Fund 40.05% 35.11%
S&P 500 Index++ 28.74% 29.74%
--------------------
</TABLE>
++ The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
14 Janus Equity Funds
<PAGE>
JANUS GROWTH AND INCOME FUND
A BAR CHART showing Annual Total Returns for Janus Growth and Income Fund from
1992 through 1998:
Annual returns for periods ended 12/31
5.35% 6.70% (4.87%) 36.35 26.03% 34.66% 34.87%
1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 21.49%; Worst Quarter: 3rd-1998 (8.97%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/15/91)
<S> <C> <C> <C>
Janus Growth and Income Fund 34.87% 24.31% 22.08%
S&P 500 Index* 28.74% 24.08% 20.00%
-----------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
The Combination Funds' past performance does not necessarily
indicate how they will perform in the future.
Risk return summary 15
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Funds.
ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
on the next page shows, these costs are borne indirectly by all
shareholders.
16 Janus Equity Funds
<PAGE>
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds. It is based upon gross expenses (without the effect of
expense offset arrangements) for the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Management Total Annual Fund
Fee Other Operating Expenses
Expenses
<S> <C> <C> <C>
Janus Fund 0.65% 0.22% 0.87%
Janus Enterprise Fund 0.72% 0.36% 1.08%
Janus Mercury Fund 0.67% 0.30% 0.97%
Janus Olympus Fund 0.70% 0.31% 1.01%
Janus Special Situations Fund 0.70% 0.38% 1.08%
Janus Twenty Fund 0.65% 0.26% 0.91%
Janus Global Life Sciences Fund 0.75% 0.50%(1) 1.25%
Janus Global Technology Fund 0.75% 0.50%(1) 1.25%
Janus Worldwide Fund 0.65% 0.27% 0.92%
Janus Balanced Fund 0.72% 0.31% 1.03%
Janus Equity Income Fund 0.75% 0.46% 1.21%
Janus Growth and Income Fund 0.67% 0.29% 0.96%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Other Expenses" are based on the estimated expenses that the Fund
expects to incur in its initial fiscal year.
- --------------------------------------------------------------------------------
EXAMPLE:
This example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in each of the Funds for the time
periods indicated then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return
each year and that the Funds' operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
--------------------------------------
Janus Fund $ 89 $278 $482 $1,073
Janus Enterprise Fund $110 $343 $595 $1,317
Janus Mercury Fund $ 99 $309 $536 $1,190
Janus Olympus Fund $103 $322 $558 $1,236
Janus Special Situations Fund $110 $343 $595 $1,317
Janus Twenty Fund $ 93 $290 $504 $1,120
Janus Global Life Sciences Fund $127 $397 N/A N/A
Janus Global Technology Fund $127 $397 N/A N/A
Janus Worldwide Fund $ 94 $293 $509 $1,131
Janus Balanced Fund $105 $328 $569 $1,259
Janus Equity Income Fund $123 $384 $665 $1,466
Janus Growth and Income Fund $ 98 $306 $531 $1,178
</TABLE>
Risk return summary 17
<PAGE>
Investment objectives, principal
investment strategies
and risks
GROWTH FUNDS
This section takes a closer look at the investment objectives of
each of the Growth Funds, their principal investment strategies
and certain risks of investing in the Growth Funds. Strategies
and policies that are noted as "fundamental" cannot be changed
without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 30-34 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
DOMESTIC GROWTH FUNDS
JANUS FUND
Janus Fund seeks long-term growth of capital in a manner
consistent with the preservation of capital. It pursues its
objective by investing primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies
of any size, it generally invests in larger, more established
companies.
JANUS ENTERPRISE FUND
Janus Enterprise Fund seeks long-term growth of capital. It
pursues its objective by investing primarily in common stocks
selected for their growth potential, and normally invests at
least 50% of its equity assets in medium-sized companies. Medium-
sized companies are those whose market capitalizations fall
within the range of companies in the S&P MidCap 400 Index. Market
capitalization is a commonly used measure of the size and value
of a company. The market capitalizations within the Index will
vary, but as of December 31, 1998, they ranged from approximately
$142 million to $73 billion.
JANUS MERCURY FUND
Janus Mercury Fund seeks long-term growth of capital. It pursues
its objective by investing primarily in common stocks selected
for
18 Janus Equity Funds
<PAGE>
their growth potential. The Fund may invest in companies of any
size, from larger, well-established companies to smaller,
emerging growth companies.
JANUS OLYMPUS FUND
Janus Olympus Fund seeks long-term growth of capital. It pursues
its objective by investing primarily in common stocks selected
for their growth potential. The Fund may invest in companies of
any size, from larger, well-established companies to smaller,
emerging growth companies.
JANUS SPECIAL SITUATIONS FUND
Janus Special Situations Fund seeks capital appreciation. It
pursues its objective by investing primarily in common stocks
selected for their capital appreciation potential. The Fund
emphasizes stocks of "special situation" companies that the
portfolio manager believes have been overlooked or undervalued by
other investors. A "special situation" arises when, in the
portfolio manager's opinion, securities of a particular company
will appreciate in value due to a specific development. The
portfolio manager pays particular attention to companies that he
thinks may have high free cash flows.
JANUS TWENTY FUND
Janus Twenty Fund seeks long-term growth of capital. It pursues
its objective by investing primarily in common stocks selected
for their growth potential. The Fund normally concentrates its
investments in a core group of 20-30 common stocks.
GLOBAL GROWTH FUNDS
JANUS GLOBAL LIFE SCIENCES FUND
Janus Global Life Sciences Fund seeks long-term growth of
capital. It pursues its objective by investing primarily in
equity securities of U.S. and foreign companies selected for
their growth potential. Normally, it invests at least 65% of its
total assets in securities of companies that the portfolio
manager believes have a life science orientation. As a
fundamental policy, the Fund normally invests at
Investment objectives, principal investment strategies and risks 19
<PAGE>
least 25% of its total assets, in the aggregate, in the following
industry groups: health care; pharmaceuticals; agriculture;
cosmetics/personal care; and biotechnology.
JANUS GLOBAL TECHNOLOGY FUND
Janus Global Technology Fund seeks long-term growth of capital.
It pursues its objective by investing primarily in equity
securities of U.S. and foreign companies selected for their
growth potential. Normally, it invests at least 65% of its total
assets in securities of companies that the portfolio manager
believes will benefit significantly from advances or improvements
in technology. These companies generally fall into two
categories:
a. Companies that the portfolio manager believes have or will
develop products, processes or services that will provide
significant technological advancements or improvements; and
b. Companies that the portfolio manager believes rely extensively
on technology in connection with their operations or services.
JANUS WORLDWIDE FUND
Janus Worldwide Fund seeks long-term growth of capital in a
manner consistent with the preservation of capital. It pursues
its objective by investing primarily in common stocks of
companies of any size throughout the world. The Fund normally
invests in issuers from at least five different countries,
including the United States. The Fund may at times invest in
fewer than five countries or even a single country.
20 Janus Equity Funds
<PAGE>
The following questions and answers are designed to help you better understand
the Growth Funds' principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
Each of the Funds may invest substantially all of its assets in
common stocks if its portfolio manager believes that common
stocks will appreciate in value. The portfolio managers generally
take a "bottom up" approach to selecting companies. In other
words, they seek to identify individual companies with earnings
growth potential that may not be recognized by the market at
large. They make this assessment by looking at companies one at a
time, regardless of size, country of organization, place of
principal business activity, or other similar selection criteria.
Realization of income is not a significant consideration when
choosing investments for the Funds. Income realized on the Funds'
investments will be incidental to their objectives.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio managers seek companies that meet
their selection criteria, regardless of where a company is
located. Foreign securities are generally selected on a
stock-by-stock basis without regard to any defined allocation
among countries or geographic regions. However, certain factors
such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency
relationships, and prospects for economic growth among countries,
regions or geographic areas may warrant greater consideration in
selecting foreign securities. There are no limitations on the
countries in which the Funds may invest and the Funds may at
times have significant foreign exposure.
3. WHAT IS A "SPECIAL SITUATION"?
Each Fund may invest in special situations. A special situation
arises when a portfolio manager believes that the securities of
an issuer will be recognized and appreciate in value due to a
specific development with respect to that issuer. Special
situations may include significant changes in a company's
allocation of its existing
Investment objectives, principal investment strategies and risks 21
<PAGE>
capital, a restructuring of assets, or a redirection of free cash
flows. For example, issuers undergoing significant capital
changes may include companies involved in spin-offs, sales of
divisions, mergers or acquisitions, companies emerging from
bankruptcy, or companies initiating large changes in their debt
to equity ratio. Companies that are redirecting cash flows may be
reducing debt, repurchasing shares or paying dividends. Special
situations may also result from (i) significant changes in
industry structure through regulatory developments or shifts in
competition; (ii) a new or improved product, service, operation
or technological advance; (iii) changes in senior management; or
(iv) significant changes in cost structure. As noted previously,
Janus Special Situations Fund emphasizes this type of strategy.
4. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the
size and value of a company. It is computed by multiplying the
current market price of a share of the company's stock by the
total number of its shares outstanding. As noted previously,
market capitalization is an important investment criteria for
Janus Enterprise Fund. Although the other Growth Funds offered by
this Prospectus do not emphasize companies of any particular
size, Funds with a larger asset base (e.g., Janus Fund) are more
likely to invest in larger, more established issuers.
5. WHAT DOES "LIFE SCIENCE ORIENTATION" MEAN IN RELATION TO JANUS GLOBAL LIFE
SCIENCES FUND?
Generally speaking, the "life sciences" relate to maintaining or
improving quality of life. So, for example, companies with a
"life science orientation" include companies engaged in research,
development, production or distribution of products or services
related to health and personal care, medicine or pharmaceuticals.
Life science oriented companies also include companies that the
portfolio manager believes have growth potential primarily as a
result of particular products, technology, patents or other
market advantages in the life sciences. Life sciences encompass a
variety of industries, including health care, nutrition,
agriculture, medical
22 Janus Equity Funds
<PAGE>
diagnostics, nuclear and biochemical research and development and
health care facilities ownership and operation.
6. HOW DOES JANUS GLOBAL TECHNOLOGY FUND'S INDUSTRY POLICY DIFFER FROM THAT OF
JANUS GLOBAL LIFE SCIENCES FUND?
Unlike Janus Global Life Sciences Fund, Janus Global Technology
Fund will not concentrate its investments in any particular
industry or group of related industries. As a result, its
portfolio manager may have more flexibility to find companies
that he believes will benefit from advances or improvements in
technology in a number of industries. Nevertheless, the Fund may
hold a significant portion of its assets in industries such as:
aerospace/ defense; biotechnology; computers; office/business
equipment; semiconductors; software; telecommunications; and
telecommunications equipment.
Investment objectives, principal investment strategies and risks 23
<PAGE>
COMBINATION FUNDS
This section takes a closer look at the investment objectives of
each of the Combination Funds, their principal investment
strategies and certain risks of investing in the Combination
Funds. Strategies and policies that are noted as "fundamental"
cannot be changed without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 30-34 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
JANUS BALANCED FUND
Janus Balanced Fund seeks long-term capital growth, consistent
with preservation of capital and balanced by current income. It
pursues its objective by normally investing 40-60% of its assets
in securities selected primarily for their growth potential and
40-60% of its assets in securities selected primarily for their
income potential. This Fund normally invests at least 25% of its
assets in fixed-income securities.
JANUS EQUITY INCOME FUND
Janus Equity Income Fund seeks current income and long-term
growth of capital. It pursues its objective by normally
emphasizing investments in common stocks, and growth potential is
a significant investment consideration. The Fund tries to provide
a lower level of volatility than the S&P 500 Index. Normally, it
invests at least 65% of its assets in income-producing equity
securities including common and preferred stocks, warrants and
securities that are convertible to common or preferred stocks.
JANUS GROWTH AND INCOME FUND
Janus Growth and Income Fund seeks long-term capital growth and
current income. It normally emphasizes investments in common
stocks. It will normally invest up to 75% of its assets in equity
securities selected primarily for their growth potential, and
24 Janus Equity Funds
<PAGE>
at least 25% of its assets in securities the portfolio manager
believes have income potential. Because of this investment
strategy, the Fund is not designed for investors who need
consistent income.
The following questions and answers are designed to help you better understand
the Combination Funds' principal investment strategies.
1. HOW DO THE COMBINATION FUNDS DIFFER FROM EACH OTHER?
Janus Growth and Income Fund places a greater emphasis on
aggressive growth stocks and may derive a greater portion of its
income from dividend-paying common stocks. Because of these
factors, its NAV can be expected to fluctuate more than the other
Combination Funds. Although Janus Equity Income Fund invests
substantially all of its assets in common stocks, it emphasizes
investments in dividend-paying common stocks and other equity
securities characterized by relatively greater price stability,
and thus may be expected to be less volatile than Janus Growth
and Income Fund, as discussed in more detail below. Janus
Balanced Fund places a greater emphasis on the income component
of its portfolio and invests to a greater degree in securities
selected primarily for their income potential. As a result it is
expected to be the least volatile of the Combination Funds.
2. HOW DOES JANUS EQUITY INCOME FUND TRY TO LIMIT PORTFOLIO VOLATILITY?
Janus Equity Income Fund seeks to provide a lower level of
volatility than the stock market at large, as measured by the S&P
500 Index. The lower volatility sought by this Fund is expected
to result primarily from investments in dividend-paying common
stocks and other equity securities characterized by relatively
greater price stability. The greater price stability sought by
Janus Equity Income Fund may be characteristic of companies that
generate above average free cash flows. A company may use free
cash flows for a number of purposes including commencing or
increasing dividend payments, repurchasing its own stock or
retiring outstanding debt. The portfolio manager also considers
growth potential in selecting this Fund's securities and may hold
securities selected solely for their growth potential.
Investment objectives, principal investment strategies and risks 25
<PAGE>
3. HOW ARE COMMON STOCKS SELECTED FOR THE COMBINATION FUNDS IN COMPARISON TO THE
GROWTH FUNDS?
Because income is a part of the investment objective of the
Combination Funds, a portfolio manager may consider dividend-
paying characteristics to a greater degree in selecting common
stocks for these Funds.
4. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF JANUS
BALANCED FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS?
Janus Balanced Fund and Janus Growth and Income Fund shift assets
between the growth and income components of their portfolios
based on the portfolio managers' analysis of relevant market,
financial and economic conditions. If a portfolio manager
believes that growth securities will provide better returns than
the yields then available or expected on income-producing
securities, that Fund will place a greater emphasis on the growth
component.
5. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF THE COMBINATION
FUNDS' PORTFOLIOS?
The growth component of the Combination Funds' portfolios is
expected to consist primarily of common stocks, but may also
include warrants, preferred stocks or convertible securities
selected primarily for their growth potential.
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF JANUS BALANCED
FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS?
The income component of Janus Balanced Fund and Janus Growth and
Income Fund will consist of securities that a portfolio manager
believes have income potential. Such securities may include
equity securities, convertible securities and all types of debt
securities. Equity securities may be included in the income
component of a Fund if they currently pay dividends or a
portfolio manager believes they have the potential for either
increasing their dividends or commencing dividends, if none are
currently paid.
26 Janus Equity Funds
<PAGE>
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies
to all of the Funds. The percentage limitations included in these
policies and elsewhere in this Prospectus apply at the time of
purchase of the security. So, for example, if a Fund exceeds a
limit as a result of market fluctuations or the sale of other
securities, it will not be required to dispose of any securities.
CASH POSITION
When a Fund's portfolio manager believes that market conditions
are unfavorable for profitable investing, or when he or she is
otherwise unable to locate attractive investment opportunities,
the Funds' cash or similar investments may increase. In other
words, the Funds do not always stay fully invested in stocks and
bonds. Cash or similar investments generally are a
residual - they represent the assets that remain after a
portfolio manager has committed available assets to desirable
investment opportunities. However, a portfolio manager may also
temporarily increase a Fund's cash position to protect its assets
or maintain liquidity. Partly because the portfolio managers act
independently of each other, the cash positions of the Funds may
vary significantly.
When a Fund's investments in cash or similar investments
increase, it may not participate in market advances or declines
to the same extent that it would if the Fund remained more fully
invested in stocks or bonds.
Investment objectives, principal investment strategies and risks 27
<PAGE>
OTHER TYPES OF INVESTMENTS
The Growth Funds invest primarily in domestic and foreign equity
securities, which may include preferred stocks, common stocks,
warrants and securities convertible into common or preferred
stocks. The Combination Funds also invest in domestic and foreign
equity securities with varying degrees of emphasis on income. The
Funds may also invest to a lesser degree in other types of
securities. These securities (which are described in the
Glossary) may include:
- debt securities
- indexed/structured securities
- high-yield/high-risk securities (less than 35% of each Fund's
assets)
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or
forward commitment basis
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other
position that cannot be disposed of quickly in the normal course
of business. For example, some securities are not registered
under U.S. securities laws and cannot be sold to the U.S. public
because of SEC regulations (these are known as "restricted
securities"). Under procedures adopted by the Funds' Trustees,
certain restricted securities may be deemed liquid, and will not
be counted toward this 15% limit.
FOREIGN SECURITIES
The Funds may invest without limit in foreign equity and debt
securities. The Funds may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the
United States. Other ways of investing in foreign securities
28 Janus Equity Funds
<PAGE>
include depositary receipts or shares, and passive foreign
investment companies.
SPECIAL SITUATIONS
Each Fund may invest in special situations. A special situation
arises when, in the opinion of a Fund's portfolio manager, the
securities of a particular issuer will be recognized and
appreciate in value due to a specific development with respect to
that issuer. Developments creating a special situation might
include, among others, a new product or process, a technological
breakthrough, a management change or other extraordinary
corporate event, or differences in market supply of and demand
for the security. A Fund's performance could suffer if the
anticipated development in a "special situation" investment does
not occur or does not attract the expected attention.
PORTFOLIO TURNOVER
The Funds generally intend to purchase securities for long-term
investment although, to a limited extent, a Fund may purchase
securities in anticipation of relatively short-term price gains.
Short-term transactions may also result from liquidity needs,
securities having reached a price or yield objective, changes in
interest rates or the credit standing of an issuer, or by reason
of economic or other developments not foreseen at the time of the
investment decision. A Fund may also sell one security and
simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or
securities prices. Changes are made in a Fund's portfolio
whenever its portfolio manager believes such changes are
desirable. Portfolio turnover rates are generally not a factor in
making buy and sell decisions.
Janus Global Technology Fund may invest in companies with
relatively short product cycles, for example, 6 to 9 months.
Consequently, its portfolio turnover may be more frequent than
other growth funds. Increased portfolio turnover may result in
higher costs for brokerage commissions, dealer mark-ups and other
transaction costs and may also result in taxable capital gains.
Investment objectives, principal investment strategies and risks 29
<PAGE>
Higher costs associated with increased portfolio turnover may
offset gains in a Fund's performance.
RISKS
Because the Funds may invest substantially all of their assets in
common stocks, the main risk is the risk that the value of the
stocks they hold might decrease in response to the activities of
an individual company or in response to general market and/or
economic conditions. If this occurs, a Fund's share price may
also decrease. A Fund's performance may also be affected by risks
specific to certain types of investments, such as foreign
securities, derivative investments, non-investment grade debt
securities or companies with relatively small market
capitalizations. Janus Global Life Sciences Fund's and Janus
Global Technology Fund's performance may also be affected by
industry risk.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Funds.
1. THE FUNDS MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Particularly in the area of technology, many attractive
investment opportunities may be smaller, start-up companies
offering emerging products or services. Smaller or newer
companies may suffer more significant losses as well as realize
more substantial growth than larger or more established issuers
because they may lack depth of management, be unable to generate
funds necessary for growth or potential development, or be
developing or marketing new products or services for which
markets are not yet established and may never become established.
In addition, such companies may be insignificant factors in their
industries and may become subject to intense competition from
larger or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, and
may be subject to wide price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
30 Janus Equity Funds
<PAGE>
2. HOW DOES THE NONDIVERSIFIED STATUS OF JANUS ENTERPRISE FUND, JANUS OLYMPUS
FUND, JANUS SPECIAL SITUATIONS FUND, JANUS TWENTY FUND, JANUS GLOBAL LIFE
SCIENCES FUND AND JANUS GLOBAL TECHNOLOGY FUND AFFECT THEIR RISK?
Diversification is a way to reduce risk by investing in a broad
range of stocks or other securities. A "nondiversified" fund has
the ability to take larger positions in a smaller number of
issuers. Because the appreciation or depreciation of a single
stock may have a greater impact on the NAV of a nondiversified
fund, its share price can be expected to fluctuate more than a
comparable diversified fund. This fluctuation, if significant,
may affect the performance of a Fund.
3. WHAT IS "INDUSTRY RISK"?
Industry risk is the possibility that a group of related stocks
will decline in price due to industry-specific developments.
Companies in the same or similar industries may share common
characteristics and are more likely to react similarly to
industry-specific market or economic developments. In the life
sciences, for example, many companies are subject to government
regulation and approval of their products and services, which may
affect their price or availability. In addition, the products and
services offered by these companies may quickly become obsolete
in the face of scientific or technological developments. The
economic outlook of such companies may fluctuate dramatically due
to changes in regulatory or competitive environments. In
technology-related industries, competitive pressures may have a
significant effect on the performance of companies in which Janus
Global Technology Fund may invest. In addition, technology and
technology-related companies often progress at an accelerated
rate, and these companies may be subject to short product cycles
and aggressive pricing which may increase their volatility.
Janus Global Life Sciences Fund invests in a concentrated
portfolio, which may result in greater exposure to related
industries. As a result, the Fund may be more volatile than a
less concentrated portfolio. Although Janus Global Technology
Fund does not "concentrate" in a specific group of industries, it
may at
Investment objectives, principal investment strategies and risks 31
<PAGE>
times have significant exposure to companies in a variety of
technology-related industries.
4. I'VE HEARD A LOT ABOUT HOW THE CHANGE TO THE YEAR 2000 COULD AFFECT COMPUTER
SYSTEMS. DOES THIS CREATE ANY SPECIAL RISKS?
The portfolio managers carefully research each potential
investment before making an investment decision and, among other
things, consider Year 2000 readiness when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
readiness is completely accurate. If a company has not
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
5. HOW COULD THE FUNDS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR
PERFORMANCE?
The Funds may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic securities because the Funds' performance may depend on
issues other than the performance of a particular company. These
issues include:
- CURRENCY RISK. As long as a Fund holds a foreign security, its
value will be affected by the value of the local currency
relative to the U.S. dollar. When a Fund sells a foreign
denominated security, its value may be worth less in U.S.
dollars even if the security increases in value in its home
country. U.S. dollar denominated securities of foreign issuers
may also be affected by currency risk.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject
to heightened political and economic risks, particularly in
emerging markets which may have relatively unstable
governments, immature economic structures, national policies
restricting investments by foreigners, different legal systems,
and economies based on only a few industries. In some
countries,
32 Janus Equity Funds
<PAGE>
there is the risk that the government may take over the assets
or operations of a company or that the government may impose
taxes or limits on the removal of a Fund's assets from that
country.
- REGULATORY RISK. There may be less government supervision of
foreign markets. As a result, foreign issuers may not be
subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to domestic
issuers and there may be less publicly available information
about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of
emerging market countries, may be less liquid and more volatile
than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in
settling securities transactions. In some foreign markets,
there may not be protection against failure by other parties to
complete transactions.
- TRANSACTION COSTS. Costs of buying, selling and holding foreign
securities, including brokerage, tax and custody costs, may be
higher than those involved in domestic transactions.
6. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
SECURITIES?
High-yield/high-risk securities (or "junk" bonds) are securities
rated below investment grade by the primary rating agencies such
as Standard & Poor's and Moody's. The value of lower quality
securities generally is more dependent on credit risk, or the
ability of the issuer to meet interest and principal payments,
than investment grade debt securities. Issuers of high-yield
securities may not be as strong financially as those issuing
bonds with higher credit ratings and are more vulnerable to real
or perceived economic changes, political changes or adverse
developments specific to the issuer.
Please refer to the SAI for a description of bond rating
categories.
Investment objectives, principal investment strategies and risks 33
<PAGE>
7. HOW DO THE FUNDS TRY TO REDUCE RISK?
The Funds may use futures, options and other derivative
instruments to "hedge" or protect their portfolios from adverse
movements in securities prices and interest rates. The Funds may
also use a variety of currency hedging techniques, including
forward currency contracts, to manage exchange rate risk. The
Funds believe the use of these instruments will benefit the
Funds. However, a Fund's performance could be worse than if the
Fund had not used such instruments if a portfolio manager's
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
34 Janus Equity Funds
<PAGE>
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35
<PAGE>
Janus Equity Funds
<PAGE>
Shareholder's
Manual
This section will help you become
familiar with the different types
of accounts you can establish with
Janus. It also explains in detail
the wide array of services and
features you can establish on your
account, as well as account
policies and fees that may apply
to your account. Account policies
(including fees), services and
features may be modified or
discontinued without shareholder
approval or prior notice.
[JANUS LOGO]
<PAGE>
HOW TO GET IN TOUCH WITH JANUS
Janus offers two Investor Service Centers for those individuals
who would like to conduct their investing in person. Our
representatives will be happy to assist you at either of the
following locations Monday-Friday 7:00 a.m. to 6:00 p.m. Mountain
time and Saturday 9:00 a.m. to 1:00 p.m. Mountain time.
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
QUICK ADDRESS AND TELEPHONE REFERENCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
MAILING ADDRESS JANUS XPRESSLINE(TM)
Janus 1-888-979-7737
P.O. Box 173375 For 24-hour access to account
Denver, CO 80217-3375 and fund information,
exchanges, purchases and
FOR OVERNIGHT CARRIER redemptions, automated daily
Janus quotes on fund share prices,
Suite 101 yields and total returns.
3773 Cherry Creek North Drive
Denver, CO 80209-3811 TDD
1-800-525-0056
INVESTOR SERVICE REPRESENTATIVES A telecommunications device
If you have any questions while reading for our hearing- and
this Prospectus, please call one of our speech-impaired shareholders.
Investor Service Representatives at
1-800-525-3713 Monday-Friday: 8:00 JANUS LITERATURE LINE
a.m.-8:00 p.m., and Saturday: 10:00 1-800-525-8983
a.m.-4:00 p.m., New York time. To request a prospectus,
shareholder reports or
JANUS INTERNET ADDRESS marketing materials 24 hours a
janus.com day.
</TABLE>
38 Janus Equity Funds
<PAGE>
MINIMUM INVESTMENTS*
- ---------------------------------------------
<TABLE>
<S> <C>
To open a new regular account $2,500
To open a new retirement,
education or UGMA/UTMA account $ 500
To open a new regular account with
an Automatic Investment Program $ 500**
To add to any type of an account $ 100+
</TABLE>
* The Funds reserve the right to
change the amount of these
minimums from time to time or
to waive them in whole or in
part for certain types of
accounts.
** An Automatic Investment Program
requires a $100 minimum
automatic investment per month
until the account balance
reaches $2,500.
+ The minimum subsequent
investment for IRA UGMA/UTMA
accounts is $50.
TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds for the first time, you will
need to establish an account. You can establish the following
types of accounts by completing a New Account Application. To
request an application, call 1-800-525-3713 or visit our Web site
at janus.com to download an application.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have
two or more owners.
A GIFT OR TRANSFER TO MINOR (UGMA OR UTMA)
An UGMA/UTMA account is a custodial account managed for the
benefit of a minor. To open an UGMA or UTMA account, you must
include the minor's Social Security number on the application.
TRUST
An established trust can open an account. The names of each
trustee, the name of the trust and the date of the trust
agreement must be included on the application.
Shareholder's manual 39
<PAGE>
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The
application must be signed by an authorized officer of the
corporation or a general partner of the partnership.
TAX-DEFERRED ACCOUNTS
If you are eligible, you may set up one or more tax-deferred
accounts. A tax-deferred account allows you to shelter your
investment income and capital gains from current income taxes. A
contribution to certain of these plans may also be tax
deductible. Tax-deferred accounts include retirement plans
described below and the Education IRA. Distributions from these
plans are generally subject to income tax and may be subject to
an additional tax if withdrawn prior to age 59 1/2 or used for a
nonqualifying purpose. Investors should consult their tax adviser
or legal counsel before selecting a tax-deferred account.
Investors Fiduciary Trust Company serves as custodian for the
tax-deferred accounts offered by the Funds. You will be charged
an annual account maintenance fee of $12 for each taxpayer
identification number no matter how many tax-deferred accounts
you have with Janus. You may pay the fee by check or have it
automatically deducted from your account (usually in December).
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.
TRADITIONAL AND ROTH INDIVIDUAL RETIREMENT ACCOUNTS
Both types of IRAs allow most individuals with earned income to
contribute up to the lesser of $2,000 ($4,000 for most married
couples) or 100% of compensation annually. Please refer to the
Janus IRA booklet for more complete information regarding the
different types of IRAs.
40 Janus Equity Funds
<PAGE>
EDUCATION IRA
This plan allows individuals, subject to certain income
limitations, to contribute up to $500 annually on behalf of any
child under the age of 18. Please refer to the Janus IRA booklet
for more complete information regarding the Education IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN
This plan allows small business owners (including sole
proprietors) to make tax-deductible contributions for themselves
and any eligible employee(s). A SEP requires an IRA (a SEP-IRA)
to be set up for each SEP participant.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships and sole
proprietors to benefit their employees and themselves.
SECTION 403(B)(7) PLAN
Employees of educational organizations or other qualifying, tax-
exempt organizations may be eligible to participate in a Section
403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to
provide your Social Security or taxpayer identification number on
the application and make your check payable to Janus. The Funds
are available only to U.S. citizens or residents, and your
application will be returned if you do not meet these criteria.
Send all items to one of the addresses listed in the "Quick
Address and Telephone Reference" on page 38.
Shareholder's manual 41
<PAGE>
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the
next NAV calculated after your order is received and accepted.
Please note the following:
- Cash, credit cards, third party checks and credit card checks
will not be accepted.
- All purchases must be made in U.S. dollars.
- Checks must be drawn on U.S. banks and made payable to Janus.
- If a check does not clear your bank, the Funds reserve the
right to cancel the purchase.
- If the Funds are unable to debit your predesignated bank
account on the day of purchase, they may make additional
attempts or cancel the purchase.
- The Funds reserve the right to reject any specific purchase
request.
If your purchase is cancelled, you will be responsible for any
losses or fees imposed by your bank and losses that may be
incurred as a result of any decline in the value of the cancelled
purchase. The Funds (or their agents) have the authority to
redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will
accrue to the Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR
AN ADDITIONAL INVESTMENT IS $100 ($50 FOR IRAS OR UGMA/UTMA
ACCOUNTS). You may add to your account at any time through any of
the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your
confirmation statement. If you are making a purchase into a
42 Janus Equity Funds
<PAGE>
retirement account, please indicate whether the purchase is a
rollover or a current or prior year contribution. Send your check
made payable to Janus and remittance slip or written instructions
to one of the addresses listed previously. You may also request a
booklet of remittance slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. To purchase
shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
day. When you make an additional purchase by telephone, Janus
will automatically debit your predesignated bank account for the
desired amount. To establish the telephone purchase option on
your new account, complete the "Telephone Purchase of Shares
Option" section on the application and attach a "voided" check or
deposit slip from your bank account. If your account is already
established, call 1-800-525-3713 to request the appropriate form.
This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.
BY INTERNET
You must pre-establish the "Telephone Purchase of Shares Option"
to make a purchase on our Web site at janus.com. If you have
questions, please call 1-800-975-9932 to speak to a Janus
representative.
Shareholder's manual 43
<PAGE>
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment programs to help you
achieve your financial goals as simply and conveniently as
possible. You may open a new account with a $500 initial purchase
and $100 automatic subsequent investments.
AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will
be electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic
Monthly Investment Program" section on the application and attach
a "voided" check from your bank account. If your Fund account is
already established, call 1-800-525-3713 to request the
appropriate form.
PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you
may have all or a portion of your paycheck ($100 minimum)
invested directly into your Fund account. To obtain information
on establishing this option, call 1-800-525-3713.
SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from one
Janus account to another on any day of the month. For more
information on how to establish this option, call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions
for written requests on page 48.
44 Janus Equity Funds
<PAGE>
BY TELEPHONE
All accounts are automatically eligible for the telephone
exchange option. To exchange shares by telephone, call an
Investor Service Representative at 1-800-525-3713 during normal
business hours or call the Janus XpressLine, 1-888-979-7737, for
access to this option 24 hours a day.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as
little as $100 per month on established accounts. You may
establish a new account with a $500 initial purchase and
subsequent $100 systematic exchanges. If the balance in the
account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the
program will be discontinued.
BY INTERNET
Exchanges may also be made on our Web site at janus.com.
EXCHANGE POLICIES
- Except for Systematic Exchanges, new accounts established by
exchange must be opened with $2,500 or the total account value
if the value of the account you are exchanging from is less
than $2,500.
- Exchanges between existing accounts must meet the $100
subsequent investment requirement.
- You may make four exchanges out of each Fund during a calendar
year (exclusive of Systematic Exchanges). Exchanges in excess
of this limit may be subject to an exchange fee or may result
in termination of the exchange privilege.
- The Funds reserve the right to reject any exchange request and
to modify or terminate the exchange privilege at any time. For
example, the Funds may reject exchanges from accounts engaged
Shareholder's manual 45
<PAGE>
in or known to engage in trading in excess of the limit above
(including market timing transactions).
- Exchanges between accounts will be accepted only if the
registrations are identical.
- If the shares you are exchanging are held in certificate form,
you must return the certificate to your Fund prior to making
any exchanges.
- Be sure that you read the prospectus for the fund into which
you are exchanging.
- An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable
gain or loss in a non-tax deferred account.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your
shares. If the shares are held in certificate form, the
certificate must be returned with or before your redemption
request. Your transaction will be processed at the next NAV
calculated after your order is received and accepted. The
redemption may be suspended for 10 days following an address
change unless a signature guarantee is provided.
IN WRITING
To request a redemption in writing, please follow the
instructions for written requests on page 48.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this
option was specifically declined on the application or in
writing. This option enables you to request redemptions daily
from your account by calling 1-800-525-3713 by the close of the
regular trading session of the New York Stock Exchange ("NYSE")
normally 4:00 p.m. New York time. You may also use Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
46 Janus Equity Funds
<PAGE>
day. (There is a daily limit of $100,000 per account for
redemptions payable by check).
BY INTERNET
Redemptions may also be made on our Web site at janus.com.
SYSTEMATIC REDEMPTION OPTION
The Systematic Redemption Option allows you to redeem a specific
dollar amount from your account on a regular basis. For more
information or to request the appropriate form, please call
1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
BY CHECK
Redemption proceeds will be sent to the shareholder(s) of record
at the address of record within seven days after receipt of a
valid redemption request.
BY ELECTRONIC TRANSFER
If you have established the electronic redemption option, your
redemption proceeds can be electronically transferred to your
predesignated bank account on the next bank business day after
receipt of your redemption request (wire transfer) or the second
bank business day after receipt of your redemption request (ACH
transfer). Wire transfers will be charged an $8 fee per wire and
your bank may charge an additional fee to receive the wire. ACH
transfers are made free of charge. Wire redemptions are not
available for retirement accounts.
If you would like to establish the electronic redemption option
on an existing account, please call 1-800-525-3713 to request the
appropriate form.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE,
ON OUR WEB SITE, OR THROUGH THE AUTOMATIC MONTHLY INVESTMENT
PROGRAM, THE FUNDS MAY DELAY THE PAYMENT OF YOUR REDEMPTION
PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF
Shareholder's manual 47
<PAGE>
PURCHASE TO ALLOW THE PURCHASE TO CLEAR. Unless you provide
alternate instructions, your proceeds will be invested in Janus
Money Market Fund - Investor Shares during the 15 day hold
period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on page 38
and must include the following information:
- the name of the Fund(s)
- the account number(s)
- the amount of money or number of shares being redeemed or
exchanged
- the name(s) on the account
- the signature(s) of all registered account owners
- your daytime telephone number
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON
Written instructions must be signed by each shareholder, exactly
as the names appear in the account registration.
UGMA OR UTMA
Written instructions must be signed by the custodian in his/her
capacity as it appears in the account registration.
SOLE PROPRIETOR, GENERAL PARTNER
Written instructions must be signed by an authorized individual
in his/her capacity as it appears on the account registration.
CORPORATION, ASSOCIATION
Written instructions must be signed by the person(s) authorized
to act on the account. In addition, a certified copy of the
corporate
48 Janus Equity Funds
<PAGE>
resolution authorizing the signer to act must accompany the
request.
TRUST
Written instructions must be signed by the trustee(s). If the
name of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days
must also be submitted.
IRA
Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you
must state that you elect not to have such withholding apply. In
addition, your instructions must state whether the distribution
is normal (after age 59 1/2) or premature (before age 59 1/2)
and, if premature, whether any exceptions such as death or
disability apply with regard to the 10% additional tax on early
distributions.
SIGNATURE GUARANTEE
In addition to the signature requirements, A SIGNATURE GUARANTEE
IS ALSO REQUIRED if any of the following is applicable:
- You request a redemption by check that exceeds $100,000.
- You would like the check made payable to anyone other than the
shareholder(s) of record.
- You would like the check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like the check mailed to an address other than the
address of record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE
UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON
CERTAIN LEGAL GROUNDS. FOR MORE INFORMATION PERTAINING TO
SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
Shareholder's manual 49
<PAGE>
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized
account transfers. The following financial institutions may
guarantee signatures: banks, savings and loan associations, trust
companies, credit unions, broker-dealers, and member firms of a
national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A
signature guarantee cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly
authorized to do business in your country of residence or a U.S.
consulate may be able to authenticate your signature.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the
NAV next calculated after your request is received and accepted
by a Fund (or a Fund's agent or authorized designee). A Fund's
NAV is calculated at the close of the regular trading session of
the NYSE (normally 4:00 p.m. New York time) each day that the
NYSE is open. The NAV of Fund shares is not determined on days
the NYSE is closed (generally New Year's Day, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas). In order to receive
a day's price, your order must be received by the close of the
regular trading session of the NYSE. Securities are valued at
market value or, if a market quotation is not readily available,
at their fair value determined in good faith under procedures
established by and under the supervision of the Trustees. Short-
term instruments maturing within 60 days are valued at amortized
cost, which approximates market value. See the SAI for more
detailed information.
50 Janus Equity Funds
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS XPRESSLINE(TM)
Janus XpressLine, our electronic telephone service, offers you
24-hour access by TouchTone(TM) telephone to obtain information
on account balances, Fund performance or dividends. You can also
make exchanges, purchases and redemptions in existing accounts,
request literature about any Janus fund, or order duplicate
statements. Janus XpressLine is accessed by calling
1-888-979-7737. Calls are limited to five minutes.
JANUS WEB SITE
Janus maintains a Web site located at JANUS.COM. You can
purchase, exchange and redeem shares and access information such
as your account balance and the Funds' NAVs through the Web site.
In order to engage in transactions on our Web site, you must
authorize us to transmit account information online and accept
online instructions (see janus.com and follow the procedures
accordingly). You may also need to have bank account information,
wire instructions or other options established on your account.
The Funds and their agents will not be responsible for any losses
resulting from unauthorized transactions on our Web site when
procedures designed for engaging in such transactions are
followed. If you have questions, please call 1-800-975-9932 to
speak to a Janus representative.
ACCOUNT MINIMUMS
Due to the proportionately higher costs of maintaining small
accounts, Janus reserves the right to deduct a $10 minimum
balance fee (or the value of the account if less than $10) from
accounts with values below the minimums described on page 39 or
to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if
your account balance does not reach the required minimum initial
investment or falls below such minimum and you have discontinued
monthly investments. This policy does not apply to
Shareholder's manual 51
<PAGE>
accounts that fall below the minimums solely as a result of
market value fluctuations. It is expected that, for purposes of
this policy, accounts will be valued in September, and the $10
fee will be assessed on the second Friday of September of each
year. You will receive notice before we charge the $10 fee or
close your account so that you may increase your account balance
to the required minimum.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer,
bank or other financial institution, or an organization that
provides recordkeeping and consulting services to 401(k) plans or
other employee benefit plans (a "Processing Organization").
Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent
investments than the Funds. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Funds directly. A
Processing Organization, rather than its customers, may be the
shareholder of record of your shares. The Funds are not
responsible for the failure of any Processing Organization to
carry out its obligations to its customers. Certain Processing
Organizations may receive compensation from Janus Capital or its
affiliates and certain Processing Organizations may receive
compensation from the Funds for shareholder recordkeeping and
similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification number, the IRS requires the Funds to
withhold 31% of any dividends paid and redemption or exchange
proceeds. In addition to the 31% backup withholding, you may
52 Janus Equity Funds
<PAGE>
be subject to a $50 fee to reimburse the Funds for any penalty
that the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Funds. The Funds will issue share certificates
upon written request only and reserve the right to charge a fee
for this service. Share certificates will not be issued until the
shares have been held for at least 15 days and will not be issued
for accounts that do not meet the minimum investment
requirements. Share certificates cannot be issued for retirement
accounts. In addition, if the certificate is lost, there may be a
replacement charge.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the
shareholder is deemed to engage in activities which are illegal
or otherwise believed to be detrimental to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and
their agents will not be responsible for any losses resulting
from unauthorized transactions when procedures designed to verify
the identity of the caller are followed.
It may be difficult to reach an Investor Service Representative
by telephone during periods of unusual market activity. If you
are unable to reach a representative by telephone, please
consider sending written instructions, stopping by a Service
Center, calling the Janus XpressLine or visiting our Web site.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may, in case of emergency, temporarily
suspend telephone transactions and other shareholder services.
Shareholder's manual 53
<PAGE>
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by all account owners. Include the
name of your Fund(s), the account number(s), the name(s) on the
account and both the old and new addresses. Certain options may
be suspended for 10 days following an address change unless a
signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally
transferred to a new account. In some cases, legal documentation
may be required. For more information, call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will
receive quarterly confirmations of all transactions. In addition,
the Funds will send you an immediate transaction confirmation
statement after every non-systematic transaction. The Growth
Funds distribute dividend information annually. The Combination
Funds distribute dividend information quarterly.
The Funds produce financial reports, which include a list of each
of the Fund's portfolio holdings, semiannually and update their
prospectus annually. To reduce expenses, the Funds may choose to
mail only one report or prospectus to your household, even if
more than one person in the household has a Fund account. Please
call 1-800-525-3713 if you would like to receive additional
reports or prospectuses. The Funds reserve the right to charge a
fee for additional statement and report requests.
54 Janus Equity Funds
<PAGE>
Management of the funds
INVESTMENT ADVISER
Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado
80206-4928, is the investment adviser to each of the Funds and is
responsible for the day-to-day management of their investment
portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to Janus Fund
in 1970 and currently serves as investment adviser to all of the
Janus funds, acts as sub-adviser for a number of private-label
mutual funds and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes continuous advice and recommendations
concerning the Funds' investments. Janus Capital also furnishes
certain administrative, compliance and accounting services for
the Funds, and may be reimbursed by the Funds for its costs in
providing those services. In addition, Janus Capital employees
serve as officers of the Trust and Janus Capital provides office
space for the Funds and pays the salaries, fees and expenses of
all Fund officers and those Trustees who are affiliated with
Janus Capital.
MANAGEMENT EXPENSES
The Funds pay Janus Capital a management fee which is calculated
daily and paid monthly. The advisory agreement with the Funds
spells out the management fee and other expenses that the Funds
must pay. Each of the Funds is subject to the following
management fee schedule (expressed as an annual rate):
<TABLE>
<CAPTION>
Average Daily Net Assets of Funds Annual Rate Percentage (%)
- ----------------------------------------------------------------------------------
<S> <C>
First $300 Million 0.75
Next $200 Million 0.70
Over $500 Million 0.65
- ----------------------------------------------------------------------------------
</TABLE>
Each Fund incurs expenses not assumed by Janus Capital including
transfer agent and custodian fees and expenses, legal and
auditing fees, printing and mailing costs of sending reports and
other information to existing shareholders, and independent
Trustees' fees and expenses. The Annual Fund Operating Expenses
table on page 17 lists the actual management fees and total
operating expenses of each Fund for the most recent fiscal year.
Management of the funds 55
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
DAVID J. CORKINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Growth and Income Fund which he has managed since August
1997. He previously served as an assistant portfolio
manager of Janus Mercury Fund. He joined Janus Capital in
1995 as a research analyst specializing in domestic
financial services companies and a variety of foreign
industries. Prior to joining Janus he was the Chief
Financial Officer of Chase U.S. Consumer Services, Inc., a
Chase Manhattan mortgage business. He holds a Bachelor of
Arts in English and Russian from Dartmouth and received
his Master of Business Administration from Columbia
University in 1993.
JAMES P. CRAIG, III
- --------------------------------------------------------------------------------
is Chief Investment Officer of Janus Capital. He is
Executive Vice President and portfolio manager of Janus
Fund, which he has managed since 1986. He is also
Executive Vice President and a co-manager of Janus Venture
Fund, which he has managed since February 1, 1997. Mr.
Craig previously managed Janus Balanced Fund from December
1993 to December 1995. He holds a Bachelor of Arts in
Business from the University of Alabama and a Master of
Arts in Finance from the Wharton School of the University
of Pennsylvania.
DAVID C. DECKER
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Special Situations Fund, which he has managed since
inception, and an assistant portfolio manager of Janus
Fund. He joined Janus Capital in 1992 as a research
analyst and focused on companies in the automotive and
defense industries prior to managing Janus Special
Situations Fund.
56 Janus Equity Funds
<PAGE>
He obtained his Master of Business Administration in
Finance from the Fuqua School of Business at Duke
University and a Bachelor of Arts in Economics and
Political Science from Tufts University. Mr. Decker
received the Chartered Financial Analyst designation.
JAMES P. GOFF
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Enterprise Fund. Mr. Goff joined Janus Capital in 1988 and
has managed Janus Enterprise Fund since its inception. Mr.
Goff managed or co-managed Janus Venture Fund from
December 1993 to February 1, 1997. He holds a Bachelor of
Arts in Economics from Yale University and received the
Chartered Financial Analyst designation.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Worldwide Fund. She is also Executive Vice President and
co-manager of Janus Overseas Fund. Ms. Hayes joined Janus
Capital in 1987 and has managed or co-managed Janus
Worldwide Fund and Janus Overseas Fund since their
inceptions. She holds a Bachelor of Arts in Economics from
Yale University and received the Chartered Financial
Analyst designation.
WARREN B. LAMMERT
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Mercury Fund. Mr. Lammert joined Janus Capital in 1987 and
has managed Janus Mercury Fund since its inception. He
previously co-managed Janus Venture Fund from December
1993 to December 1996. He holds a Bachelor of Arts in
Economics from Yale University and a Master of Science in
Economic History from the London School of Economics. Mr.
Lammert received the Chartered Financial Analyst
designation.
Management of the funds 57
<PAGE>
C. MIKE LU
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Global Technology Fund, which he has managed since
inception. He joined Janus Capital in 1991 as a research
analyst and has consistently focused on companies in the
technology industry. Mr. Lu has a Bachelor of Arts in
History and a Bachelor of Arts in Economics from Yale
University. Mr. Lu received the Chartered Financial
Analyst designation.
THOMAS R. MALLEY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Global Life Sciences Fund, which he has managed since
inception. He joined Janus Capital in 1991 as a research
analyst and has focused on companies in the health care,
pharmaceutical and biotechnology industries. Mr. Malley
has a Bachelor of Science in Biology from Stanford
University and received the Chartered Financial Analyst
designation.
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Balanced Fund, which he has managed since January 1996,
and Janus Equity Income Fund, which he has managed since
inception. He is an assistant portfolio manager of Janus
Fund. Mr. Rollins joined Janus Capital in 1990 and gained
experience as a fixed-income trader and equity research
analyst prior to managing Janus Balanced Fund. He holds a
Bachelor of Science in Finance from the University of
Colorado and received the Chartered Financial Analyst
designation.
SCOTT W. SCHOELZEL
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Twenty Fund, which he has managed since August 1997. He
previously managed Janus Olympus Fund from its inception
to August 1997. Mr. Schoelzel joined Janus Capital in
58 Janus Equity Funds
<PAGE>
January 1994. He holds a Bachelor of Arts in Business from
Colorado College.
CLAIRE YOUNG
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Olympus Fund which she has managed since August 1997. She
previously served as an assistant portfolio manager of
Janus Growth and Income Fund and Janus Twenty Fund. Ms.
Young joined Janus Capital in January 1992. She holds a
Bachelor of Science in Electrical Engineering from Yale
University and received the Chartered Financial Analyst
designation.
ASSISTANT PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is assistant portfolio manager of Janus Worldwide Fund. He
is also Executive Vice President and co-manager of Janus
Overseas Fund. Mr. Chang joined Janus Capital in 1993 as a
research analyst. He received an undergraduate degree with
honors in Religion and Philosophy from Dartmouth College
and a Master's Degree in Political Science from Stanford
University. Mr. Chang received the Chartered Financial
Analyst designation.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Janus Fund. Prior to
joining Janus Capital in 1995, she worked for Price
Waterhouse in the Mergers and Acquisitions area,
performing corporate due diligence, and as an audit
senior, analyzing financials for corporate clients. She
received an undergraduate degree in Accounting from the
University of Colorado. She is seeking the Chartered
Financial Analyst designation.
Management of the funds 59
<PAGE>
Other information
SIZE OF FUNDS
Although there is no present intention to do so, the Funds may
discontinue sales of their shares if management and the Trustees
believe that continued sales may adversely affect a Fund's
ability to achieve its investment objective. If sales of a Fund
are discontinued, it is expected that existing shareholders of
that Fund would be permitted to continue to purchase shares and
to reinvest any dividends or capital gains distributions, absent
highly unusual circumstances.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Funds invest or worldwide
markets and economies.
60 Janus Equity Funds
<PAGE>
Distributions and taxes
DISTRIBUTIONS
To avoid taxation of the Funds, the Internal Revenue Code
requires each Fund to distribute net income and any net capital
gains realized on its investments annually. A Fund's income from
dividends and interest and any net realized short-term gains are
paid to shareholders as ordinary income dividends. Net realized
long-term gains are paid to shareholders as capital gains
distributions.
DISTRIBUTION SCHEDULE
<TABLE>
<CAPTION>
Dividends Capital Gains
<S> <C> <C>
Growth Funds Normally declared and paid in Normally declared and paid in
December December
---------------------------------------------------------------------------------------
Combination Normally declared and paid in Normally declared and paid in
Funds March, June, September and December
December
</TABLE>
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of a
distribution of a Fund, regardless of how long the shares have
been held. Dividends and capital gains awaiting distribution are
included in each Fund's daily NAV. The share price of a Fund
drops by the amount of the distribution, net of any subsequent
market fluctuations. As an example, assume that on December 31,
Janus Fund declared a dividend in the amount of $0.25 per share.
If Janus Fund's share price was $10.00 on December 30, the Fund's
share price on December 31 would be $9.75, barring market
fluctuations. Shareholders should be aware that distributions
from a taxable mutual fund are not value-enhancing and may create
income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of a Fund just before the distribution,
you will pay the full price for the shares and receive a portion
of the purchase price back as a taxable distribution. This is
referred to as "buying a dividend." In the above example, if you
bought shares on December 30, you would have paid $10.00 per
share. On
Distributions and taxes 61
<PAGE>
December 31, the Fund would pay you $0.25 per share as a dividend
and your shares would now be worth $9.75 per share. Unless your
account is set up as a tax-deferred account, dividends paid to
you would be included in your gross income for tax purposes, even
though you may not have participated in the increase in NAV of
the Fund, whether or not you reinvested the dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application
how you want to receive your distributions. You may change your
distribution option at any time by writing the Funds at one of
the addresses on page 38 or calling 1-800-525-3713. The Funds
offer the following options:
1. REINVESTMENT OPTION. You may reinvest your income dividends
and capital gains distributions in additional shares. This
option is assigned automatically if no other choice is made.
2. CASH OPTION. You may receive your income dividends and capital
gains distributions in cash.
3. REINVEST AND CASH OPTION. You may receive either your income
dividends or capital gains distributions in cash and reinvest
the other in additional shares.
4. REDIRECT OPTION. You may direct your dividends or capital
gains to purchase shares of another Janus fund.
The Funds reserve the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that
remain outstanding for six months in shares of the applicable
Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
62 Janus Equity Funds
<PAGE>
TAXES
As with any investment, you should consider the tax consequences
of investing in the Funds. Any time you sell or exchange shares
of a fund in a taxable account, it is considered a taxable event.
Depending on the purchase price and the sale price, you may have
a gain or loss on the transaction. Any tax liabilities generated
by your transactions are your responsibility.
The following discussion does not apply to tax-deferred accounts,
nor is it a complete analysis of the federal tax implications of
investing in the Funds. You may wish to consult your own tax
adviser. Additionally, state or local taxes may apply to your
investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions of the Funds are subject to federal
income tax, regardless of whether the distribution is made in
cash or reinvested in additional shares of a Fund. Distributions
may be taxable at different rates depending on the length of time
a Fund holds a security. In certain states, a portion of the
dividends and distributions (depending on the sources of a Fund's
income) may be exempt from state and local taxes. Information
regarding the tax status of income dividends and capital gains
distributions will be mailed to shareholders on or before January
31st of each year. Account tax information will also be sent to
the IRS.
TAXATION OF THE FUNDS
Dividends, interest, and some capital gains received by the Funds
on foreign securities may be subject to tax withholding or other
foreign taxes. The Funds may from year to year make the election
permitted under section 853 of the Internal Revenue Code to pass
through such taxes to shareholders as a foreign tax credit. If
such an election is not made, any foreign taxes paid or accrued
will represent an expense to the Funds.
Distributions and taxes 63
<PAGE>
The Funds do not expect to pay federal income or excise taxes
because they intend to meet certain requirements of the Internal
Revenue Code. It is important that the Funds meet these
requirements so that any earnings on your investment will not be
taxed twice.
64 Janus Equity Funds
<PAGE>
Financial highlights
The financial highlights tables are intended to help you
understand the Funds' financial performance for the past 5 years
through October 31st of each fiscal year shown (or for Funds with
a performance history shorter than 5 years, through October 31st
of each fiscal period shown). Items 1 through 9 reflect financial
results for a single Fund share. The total returns in the tables
represent the rate that an investor would have earned (or lost)
on an investment in each of the Funds (assuming reinvestment of
all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with
the Funds' financial statements, are included in the Annual
Reports, which are available upon request and incorporated by
reference into the SAI.
FINANCIAL HIGHLIGHTS ARE NOT PRESENTED FOR JANUS GLOBAL LIFE
SCIENCES FUND AND JANUS GLOBAL TECHNOLOGY FUND BECAUSE THESE
FUNDS DID NOT COMMENCE OPERATIONS UNTIL DECEMBER 31, 1998.
Financial highlights 65
<PAGE>
<TABLE>
<CAPTION>
JANUS FUND
- ----------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $29.36 $26.65 $23.37 $19.62 $20.81
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income (.02) 0.15 0.31 0.16 0.17
3. Net gains or (losses) on securities (both
realized and unrealized) 3.70 5.69 4.23 3.99 (0.03)
4. Total from investment operations 3.68 5.84 4.54 4.15 0.14
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.23) (0.21) (0.13) (0.01) (0.39)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) (4.84) (2.92) (1.13) (0.39) (0.94)
8. Total distributions (5.07) (3.13) (1.26) (0.40) (1.33)
9. NET ASSET VALUE, END OF PERIOD $27.97 $29.36 $26.65 $23.37 $19.62
10. Total return 15.12% 24.18% 20.31% 21.62% 0.75%
11. Net assets, end of period (in millions) $20,721 $19,029 $15,313 $11,963 $9,647
12. Average net assets for the period (in
millions) $20,777 $17,515 $13,753 $10,560 $9,339
13. Ratio of gross expenses to average net
assets 0.87% 0.87% 0.86% 0.87% N/A
14. Ratio of net expenses to average net
assets 0.86% 0.86% 0.85% 0.86% 0.91%
15. Ratio of net investment income/(loss) to
average net assets -- 0.85% 0.91% 1.25% 1.12%
16. Portfolio turnover rate 70% 132% 104% 118% 139%
- ------------------------------------------------------------------------------------
</TABLE>
66 Janus Equity Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS ENTERPRISE FUND
- ------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $30.86 $31.19 $27.14 $24.43 $21.87
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- -- 0.52 (0.06)
3. Net gains or (losses) on securities
(both realized and unrealized) 3.43 0.95 5.85 3.09 3.18
4. Total from investment operations 3.43 0.95 5.85 3.61 3.12
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) -- -- -- (0.52) (0.02)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.96) (1.28) (1.80) (0.38) (0.54)
8. Total distributions (1.96) (1.28) (1.80) (0.90) (0.56)
9. NET ASSET VALUE, END OF PERIOD $32.33 $30.86 $31.19 $27.14 $24.43
10. Total return 11.79% 3.31% 22.43% 15.46% 14.56%
11. Net assets, end of period (in
millions) $559 $552 $732 $459 $370
12. Average net assets for the period (in
millions) $551 $614 $596 $408 $270
13. Ratio of gross expenses to average
net assets 1.08% 1.07% 1.14% 1.26% N/A
14. Ratio of net expenses to average net
assets 1.06% 1.04% 1.12% 1.23% 1.25%
15. Ratio of net investment income/(loss)
to average net assets (0.67%) (0.61%) (0.78%) 0.02% (0.32%)
16. Portfolio turnover rate 134% 111% 93% 194% 193%
- ------------------------------------------------------------------------------------------------
</TABLE>
Financial highlights 67
<PAGE>
<TABLE>
<CAPTION>
JANUS MERCURY FUND
- ------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $18.65 $18.20 $17.38 $14.12 $11.70
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income (0.01) (0.01) 0.14 0.16 0.02
3. Net gains or (losses) on securities
(both realized and unrealized) 4.07 2.82 2.74 3.37 2.40
4. Total from investment operations 4.06 2.81 2.88 3.53 2.42
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) -- (0.08) -- (0.16) --
6. Dividends (in excess of net
investment income) (0.04) -- -- -- --
7. Distributions (from capital gains) (1.90) (2.28) (2.06) (0.11) --
8. Total distributions (1.94) (2.36) (2.06) (0.27) --
9. NET ASSET VALUE, END OF PERIOD $20.77 $18.65 $18.20 $17.38 $14.12
10. Total return 24.75% 17.07% 18.18% 25.53% 20.68%
11. Net assets, end of period (in
millions) $2,368 $1,971 $2,002 $1,521 $596
12. Average net assets for the period (in
millions) $2,103 $2,046 $1,839 $1,116 $258
13. Ratio of gross expenses to average
net assets 0.97% 0.98% 1.02% 1.14% N/A
14. Ratio of net expenses to average net
assets 0.94% 0.96% 1.00% 1.12% 1.33%
15. Ratio of net investment income/(loss)
to average net assets (0.33%) 0.21% 0.45% 0.50% 0.25%
16. Portfolio turnover rate 105% 157% 177% 201% 283%
- ------------------------------------------------------------------------------------------------
</TABLE>
68 Janus Equity Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS OLYMPUS FUND
- -------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $18.41 $14.86 $12.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- 0.04 0.13
3. Net gains or (losses) on securities (both realized
and unrealized) 4.05 3.64 2.73
4. Total from investment operations 4.05 3.68 2.86
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- (0.13) --
6. Dividends (in excess of net investment income) (0.04) -- --
7. Distributions (from capital gains) (0.72) -- --
8. Total distributions (0.76) (0.13) --
9. NET ASSET VALUE, END OF PERIOD $21.70 $18.41 $14.86
10. Total return* 23.10% 24.98% 23.83%
11. Net assets, end of period (in millions) $947 $616 $432
12. Average net assets for the period (in millions) $774 $517 $276
13. Ratio of gross expenses to average net assets** 1.01% 1.06% 1.17%
14. Ratio of net expenses to average net assets** 0.98% 1.03% 1.15%
15. Ratio of net investment income/(loss) to average
net assets** (0.21%) 0.26% 1.64%
16. Portfolio turnover rate** 123% 244% 303%
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 69
<PAGE>
<TABLE>
<CAPTION>
JANUS SPECIAL SITUATIONS FUND
- ------------------------------------------------------------------------------------
Periods ending
October 31st
1998 1997(1)
<S> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $14.08 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- --
3. Net gains or (losses) on securities (both realized and
unrealized) 1.15 4.08
4. Total from investment operations 1.15 4.08
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- --
6. Dividends (in excess of net investment income) -- --
7. Distributions (from capital gains) (0.66) --
8. Total distributions (0.66) --
9. NET ASSET VALUE, END OF PERIOD $14.57 $14.08
10. Total return* 8.49% 40.80%
11. Net assets, end of period (in millions) $786 $334
12. Average net assets for the period (in millions) $716 $168
13. Ratio of gross expenses to average net assets** 1.08% 1.20%
14. Ratio of net expenses to average net assets** 1.05% 1.18%
15. Ratio of net investment income/(loss) to average net
assets** (0.49%) (0.08%)
16. Portfolio turnover rate** 117% 146%
- ------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 31, 1996 (inception) to October 31, 1997.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
70 Janus Equity Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS TWENTY FUND
- ------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $35.16 $31.90 $30.12 $24.24 $25.85
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.12 (0.09) 0.37 0.01 0.16
3. Net gains or (losses) on securities
(both realized and unrealized) 12.26 8.85 6.68 5.94 (1.07)
4. Total from investment operations 12.38 8.76 7.05 5.95 (0.91)
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.10) (0.18) -- (0.07) (0.25)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (4.46) (5.32) (5.27) -- (0.45)
8. Total distributions (4.56) (5.50) (5.27) (0.07) (0.70)
9. NET ASSET VALUE, END OF PERIOD $42.98 $35.16 $31.90 $30.12 $24.24
10. Total return 40.58% 31.65% 27.59% 24.67% (3.52%)
11. Net assets, end of period (in
millions) $11,255 $5,871 $3,937 $2,996 $2,743
12. Average net assets for the period (in
millions) $8,025 $4,990 $3,386 $2,716 $3,051
13. Ratio of gross expenses to average
net assets 0.91% 0.93% 0.93% 1.00% N/A
14. Ratio of net expenses to average net
assets 0.90% 0.91% 0.92% 0.99% 1.02%
15. Ratio of net investment income/(loss)
to average net assets 0.39% 0.33% 0.67% 0.62% 0.57%
16. Portfolio turnover rate 54% 123% 137% 147% 102%
- ------------------------------------------------------------------------------------------------
</TABLE>
Financial highlights 71
<PAGE>
<TABLE>
<CAPTION>
JANUS WORLDWIDE FUND
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $40.05 $34.60 $27.65 $27.00 $24.16
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 1.26 (0.08) 0.49 0.81 0.15
3. Net gains or (losses) on securities
(both realized and unrealized) 3.01 7.73 7.79 1.39 3.34
4. Total from investment operations 4.27 7.65 8.28 2.20 3.49
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (1.35) (0.15) (0.26) (0.54) (0.27)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.45) (2.05) (1.07) (1.01) (0.38)
8. Total distributions (2.80) (2.20) (1.33) (1.55) (0.65)
9. NET ASSET VALUE, END OF PERIOD $41.52 $40.05 $34.60 $27.65 $27.00
10. Total return 11.40% 23.34% 31.00% 8.89% 14.76%
11. Net assets, end of period (in
millions) $13,932 $10,358 $4,467 $1,804 $1,587
12. Average net assets for the period (in
millions) $13,078 $7,784 $2,953 $1,622 $1,244
13. Ratio of gross expenses to average
net assets 0.92% 0.97% 1.02% 1.24% N/A
14. Ratio of net expenses to average net
assets 0.90% 0.95% 1.01% 1.23% 1.12%
15. Ratio of net investment income/(loss)
to average net assets 0.47% 0.65% 0.73% 0.99% 0.42%
16. Portfolio turnover rate 86% 79% 80% 142% 158%
- ----------------------------------------------------------------------------------------
</TABLE>
72 Janus Equity Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS BALANCED FUND
- ------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $16.73 $15.20 $13.72 $12.17 $12.23
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.33 0.36 0.33 0.61 0.27
3. Net gains or (losses) on securities
(both realized and unrealized) 2.00 2.88 2.22 1.52 (0.09)
4. Total from investment operations 2.33 3.24 2.55 2.13 0.18
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.35) (0.36) (0.26) (0.58) (0.24)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) (1.49) (1.35) (0.81) -- --
8. Total distributions (1.84) (1.71) (1.07) (0.58) (0.24)
9. NET ASSET VALUE, END OF PERIOD $17.22 $16.73 $15.20 $13.72 $12.17
10. Total return 15.48% 23.38% 19.39% 18.26% 1.51%
11. Net assets, end of period (in
millions) $830 $360 $207 $125 $94
12. Average net assets for the period (in
millions) $537 $283 $159 $107 $86
13. Ratio of gross expenses to average net
assets 1.03% 1.12% 1.23% 1.35% N/A
14. Ratio of net expenses to average net
assets 1.01% 1.10% 1.21% 1.32% 1.42%
15. Ratio of net investment income/(loss)
to average net assets 2.34% 2.63% 2.35% 2.52% 2.28%
16. Portfolio turnover rate 73% 139% 151% 185% 167%
- ---------------------------------------------------------------------------------------
</TABLE>
Financial highlights 73
<PAGE>
<TABLE>
<CAPTION>
JANUS EQUITY INCOME FUND
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $13.98 $11.29 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.09 0.07
3. Net gains or (losses) on securities (both realized
and unrealized) 2.47 3.11 1.25
4. Total from investment operations 2.52 3.20 1.32
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.03) (0.12) (0.03)
6. Dividends (in excess of net investment income) -- -- --
7. Distributions (from capital gains) (0.88) (0.39) --
8. Total distributions (0.91) (0.51) (0.03)
9. NET ASSET VALUE, END OF PERIOD $15.59 $13.98 $11.29
10. Total return* 19.21% 29.46% 13.20%
11. Net assets, end of period (in millions) $201 $74 $30
12. Average net assets for the period (in millions) $134 $46 $21
13. Ratio of gross expenses to average net assets** 1.21% 1.48% 1.79%
14. Ratio of net expenses to average net assets** 1.18% 1.45% 1.71%
15. Ratio of net investment income/(loss) to average net
assets** 0.41% 0.62% 3.09%
16. Portfolio turnover rate** 101% 180% 325%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from June 28, 1996 (inception) to October 31, 1996.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
74 Janus Equity Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS GROWTH AND INCOME FUND
- ---------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $25.07 $20.05 $18.13 $14.69 $15.24
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.08 0.01 0.16 0.11 0.19
3. Net gains or (losses) on securities
(both realized and unrealized) 3.72 6.98 4.01 3.43 (0.31)
4. Total from investment operations 3.80 6.99 4.17 3.54 (0.12)
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.04) (0.11) (0.08) (0.10) (0.10)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) (2.38) (1.86) (2.17) -- (0.33)
8. Total distributions (2.42) (1.97) (2.25) (0.10) (0.43)
9. NET ASSET VALUE, END OF PERIOD $26.45 $25.07 $20.05 $18.13 $14.69
10. Total return 16.73% 37.78% 25.56% 24.20% (0.76%)
11. Net assets, end of period (in
millions) $2,819 $1,889 $1,033 $583 $490
12. Average net assets for the period (in
millions) $2,479 $1,416 $773 $498 $500
13. Ratio of gross expenses to average net
assets 0.96% 0.98% 1.05% 1.19% N/A
14. Ratio of net expenses to average net
assets 0.94% 0.96% 1.03% 1.17% 1.22%
15. Ratio of net investment income/(loss)
to average net assets 0.33% 0.30% 0.70% 1.11% 1.26%
16. Portfolio turnover rate 95% 127% 153% 195% 123%
- ---------------------------------------------------------------------------------------
</TABLE>
Financial highlights 75
<PAGE>
Glossary of investment terms
This glossary provides a more detailed description of some of the
types of securities and other instruments in which the Funds may
invest. The Funds may invest in these instruments to the extent
permitted by their investment objectives and policies. The Funds
are not limited by this discussion and may invest in any other
types of instruments not precluded by the policies discussed
elsewhere in this Prospectus. Please refer to the SAI for a more
detailed discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality,
government or government agency. The issuer of a bond is required
to pay the holder the amount of the loan (or par value of the
bond) at a specified maturity and to make scheduled interest
payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and
other borrowers to investors seeking to invest idle cash. The
Funds may purchase commercial paper issued in private placements
under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of
ownership in a company and usually carry voting rights and earns
dividends. Unlike preferred stock, dividends on common stock are
not fixed but are declared at the discretion of the issuer's
board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a
fixed dividend or interest payment and are convertible into
common stock at a specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that
must be repaid at a later date, such securities have specific
maturities and usually a specific rate of interest or on original
purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital
gains on the underlying security. Receipts include those issued
by domestic banks (American Depositary Receipts), foreign banks
76 Janus Equity Funds
<PAGE>
(Global or European Depositary Receipts) and broker-dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate
of return. The term generally includes short- and long-term
government, corporate and municipal obligations that pay a
specified rate of interest or coupons for a specified period of
time, and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the
case of adjustable and floating rate securities, for a shorter
period.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated
below investment grade by the primary rating agencies (e.g., BB
or lower by Standard & Poor's and Ba or lower by Moody's). Other
terms commonly used to describe such securities include "lower
rated bonds," "noninvestment grade bonds" and "junk bonds."
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of
mortgages or other debt. These securities are generally pass-
through securities, which means that principal and interest
payments on the underlying securities (less servicing fees) are
passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the
underlying mortgages or other debt may be refinanced or paid off
prior to their maturities during periods of declining interest
rates. In that case, a portfolio manager may have to reinvest the
proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that
is not subject to prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign
corporations which generate certain amounts of passive income or
hold certain amounts of assets for the production of passive
income. Passive income includes dividends, interest, royalties,
rents and annuities. To avoid taxes and interest that the Funds
must pay if these investments are profitable, the Funds may make
various elections permitted by the tax laws. These elections
could require that the Funds recognize taxable income, which in
turn
Glossary of investment terms 77
<PAGE>
must be distributed, before the securities are sold and before
cash is received to pay the distributions.
PREFERRED STOCKS are equity securities that generally pay
dividends at a specified rate and have preference over common
stock in the payment of dividends and liquidation. Preferred
stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by a
Fund and a simultaneous agreement by the seller (generally a bank
or dealer) to repurchase the security from the Fund at a
specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk
that the seller will fail to repurchase the security, as agreed.
In that case, a Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter
delays and incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a
Fund to another party (generally a bank or dealer) in return for
cash and an agreement by the Fund to buy the security back at a
specified price and time. This technique will be used primarily
to provide cash to satisfy unusually high redemption requests, or
for other temporary or emergency purposes.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
government that are supported by its full faith and credit.
Treasury bills have initial maturities of less than one year,
Treasury notes have initial maturities of one to ten years and
Treasury bonds may be issued with any maturity but generally have
maturities of at least ten years. U.S. government securities also
include indirect obligations of the U.S. government that are
issued by federal agencies and government sponsored entities.
Unlike Treasury securities, agency securities generally are not
backed by the full faith and credit of the U.S. government. Some
agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the
discretionary authority of the U.S. government to purchase the
agency's obligations and others are supported only by the credit
of the sponsoring agency.
78 Janus Equity Funds
<PAGE>
WARRANTS are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate
amount of common stock at a specified price, usually at a price
that is higher than the market price at the time of issuance of
the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally
involve the purchase of a security with payment and delivery at
some time in the future - i.e., beyond normal settlement. The
Funds do not earn interest on such securities until settlement
and bear the risk of market value fluctuations in between the
purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in
this manner.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified
amount of a financial instrument for an agreed upon price at a
specified time. Forward contracts are not currently exchange
traded and are typically negotiated on an individual basis. The
Funds may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose
value is tied to, a currency other than the U.S. dollar or to
reduce the impact of currency appreciation on purchases of such
securities. They may also enter into forward contracts to
purchase or sell securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a
specified price on a specified date. The Funds may buy and sell
futures contracts on foreign currencies, securities and financial
indices including interest rates or an index of U.S. government,
foreign government, equity or fixed-income securities. The Funds
may also buy options on futures contracts. An option on a futures
contract gives the buyer the right, but not the obligation, to
buy or sell a futures contract at a specified price on or before
a specified date. Futures contracts and options on futures are
standardized and traded on designated exchanges.
Glossary of investment terms 79
<PAGE>
INDEXED/STRUCTURED SECURITIES are typically short- to
intermediate-term debt securities whose value at maturity or
interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e. their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. A Fund bears the market
risk of an investment in the underlying instruments, as well as
the credit risk of the issuer.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a
fixed date at a predetermined price. The Funds may purchase and
write put and call options on securities, securities indices and
foreign currencies.
80 Janus Equity Funds
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-525-3713 or visiting our Web
site at janus.com. In the Funds' Annual Reports, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during their last
fiscal year. Other information is also available from financial
intermediaries that sell shares of the Funds.
The Statement of Additional Information provides detailed
information about the Funds and is incorporated into this Prospectus
by reference. You may review the Funds' Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3164
<PAGE>
[JANUS LOGO]
Janus Income Funds
PROSPECTUS
FEBRUARY 17, 1999
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
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Fixed-income funds........................... 2
Money market funds........................... 7
Fees and expenses............................ 10
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Fixed income funds........................... 12
Money market funds........................... 22
SHAREHOLDER'S MANUAL
Minimum investments.......................... 33
Types of account ownership................... 33
How to open your Janus account............... 35
How to purchase shares....................... 36
How to exchange shares....................... 38
How to redeem shares......................... 40
Shareholder services and account policies.... 46
MANAGEMENT OF THE FUNDS
Investment adviser........................... 51
Investment personnel......................... 52
OTHER INFORMATION............... ............... 55
DISTRIBUTIONS AND TAXES
Distributions................................ 56
Taxes........................................ 59
FINANCIAL HIGHLIGHTS.............. ............. 61
GLOSSARY
Glossary of investment terms................. 68
RATING CATEGORIES
Explanation of rating categories............. 76
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
FIXED-INCOME FUNDS
The Fixed-Income Funds are designed for long-term investors who
primarily seek current income.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE FIXED-INCOME FUNDS?
- --------------------------------------------------------------------------------
- JANUS FLEXIBLE INCOME FUND seeks to obtain maximum total
return, consistent with preservation of capital.
- JANUS HIGH-YIELD FUND seeks to obtain high current income.
Capital appreciation is a secondary objective when
consistent with its primary objective.
- JANUS FEDERAL TAX-EXEMPT FUND seeks as high a level of
current income exempt from federal income tax as is
consistent with preservation of capital.
- JANUS SHORT-TERM BOND FUND seeks as high a level of current
income as is consistent with preservation of capital.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change to a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that a Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE FIXED-INCOME FUNDS?
In addition to considering economic factors such as the effect of
interest rates on the Fund's investments, the portfolio managers
apply a "bottom up" approach in choosing investments. In other
words, they look mostly for income-producing securities that meet
their investment criteria one at a time. If a portfolio manager
is unable to find such investments, a Fund's assets may be in
cash or similar investments.
JANUS FLEXIBLE INCOME FUND invests primarily in a wide variety of
income-producing securities such as corporate bonds and notes,
government securities and preferred stock. As a fundamental
2 Janus Income Funds
<PAGE>
policy, the Fund will invest at least 80% of its assets in
income-producing securities. The Fund may own an unlimited amount
of high-yield/high-risk securities, and these securities may be a
big part of the portfolio.
JANUS HIGH-YIELD FUND normally invests at least 65% of its assets
in high-yield/high-risk fixed-income securities, and may at times
invest all of its assets in these securities.
JANUS FEDERAL TAX-EXEMPT FUND invests primarily in municipal
obligations of any maturity whose interest is exempt from federal
income tax. As a fundamental policy, the Fund will normally
invest at least 80% of its assets in securities whose interest is
exempt from federal income tax, including the federal alternative
minimum tax.
JANUS SHORT-TERM BOND FUND invests primarily in short- and
intermediate-term fixed-income securities. The Fund will normally
invest at least 65% of its assets in debt securities such as
corporate bonds or notes, or U.S. Treasury bonds, and may invest
up to 35% of its assets in high-yield/high-risk securities.
Normally, the Fund expects to maintain an average weighted
effective maturity of three years or less.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE FIXED-INCOME FUNDS?
Although the Fixed-Income Funds may be less volatile than funds
that invest most of their assets in common stocks, the Funds'
returns and yields will vary, and you could lose money.
The Funds invest in a variety of fixed-income securities. A
fundamental risk is that the value of these securities will fall
if interest rates rise. Generally, the value of a fixed-income
portfolio will decrease when interest rates rise, which means the
Fund's net asset value (NAV) will likewise decrease. Another
fundamental risk associated with fixed-income funds is credit
risk, which is the risk that an issuer will be unable to make
principal and interest payments when due.
At times, JANUS FEDERAL TAX-EXEMPT FUND may invest more than 25%
of its assets in tax-exempt securities related in such a way
Risk return summary 3
<PAGE>
that a negative economic, business or political development or
change affecting the invested security could also negatively
affect other securities in the same category.
JANUS FLEXIBLE INCOME FUND AND JANUS HIGH-YIELD FUND may invest
an unlimited amount of their assets in high-yield/high-risk
securities, also known as "junk" bonds. JANUS FEDERAL TAX-EXEMPT
FUND AND JANUS SHORT-TERM BOND FUND may invest up to 35% of their
assets in high-yield/high-risk securities. Junk bonds may be
sensitive to economic changes, political changes, or adverse
developments specific to the company that issued the bond. These
securities generally have a greater credit risk than other types
of fixed-income securities. Because of these factors, the
performance and NAV of the Fixed-Income Funds may vary
significantly, depending upon their holdings of junk bonds.
An investment in these Funds is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The following information illustrates how each Fixed-Income
Fund's performance has varied over time. The bar charts depict
the change in performance from year-to-year during the period
indicated. The tables compare each Fund's average annual returns
for the periods indicated to a broad-based securities market
index.
4 Janus Income Funds
<PAGE>
JANUS FLEXIBLE INCOME FUND
A BAR CHART showing Annual Total Returns for Janus Flexible Income Fund from
1989 through 1998:
Annual returns for periods ended 12/31
4.12% (4.62%) 25.98% 11.85% 15.70% (2.92%) 21.15% 6.88% 11.43% 8.84%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 1st-1991 8.17%; Worst Quarter: 1st-1990 (8.37%)
Average annual total return for periods ended 12/31/98
---------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (7/7/87)
<S> <C> <C> <C> <C> <C> <C>
Janus Flexible Income Fund 8.84% 8.80% 9.46% 9.45%
Lehman Brothers Gov't/Corp
Bond Index* 9.47% 7.30% 9.33% 9.01%
-----------------------------------------
</TABLE>
* Lehman Brothers Gov't/Corp Bond Index is composed of all bonds
that are of investment grade with at least one year until
maturity.
JANUS HIGH-YIELD FUND
A BAR CHART showing Annual Total Returns for Janus High-Yield Fund from 1996
through 1998.
Annual returns for periods ended 12/31
23.99% 15.47% 0.97%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 1st-1996 7.34%; Worst Quarter: 3rd-1998 (5.76%)
Average annual total return for periods ended 12/31/98
---------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/29/95)
<S> <C> <C> <C> <C>
Janus High-Yield Fund 0.97% 13.07%
Lehman Brothers High-Yield Bond Index+ 1.60% 8.46%
------------------------
</TABLE>
+ Lehman Brothers High-Yield Bond Index is composed of
fixed-rate, publicly issued, noninvestment grade debt.
Risk return summary 5
<PAGE>
JANUS FEDERAL TAX-EXEMPT FUND
A BAR CHART showing Annual Total Returns for Janus Federal Tax-Exempt Fund from
1994 through 1998:
Annual returns for periods ended 12/31
(7.77%) 15.84% 4.71% 8.98% 5.31%
1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar
Best Quarter: 1st-1995 6.66%; Worst Quarter: 1st-1994 (6.76%)
Average annual total return for periods ended 12/31/98
---------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/3/93)
<S> <C> <C> <C> <C> <C>
Janus Federal Tax-Exempt Fund 5.31% 5.13% 5.88%
Lehman Brothers Municipal Bond
Index* 5.84% 6.10% 6.66%
----------------------------------
</TABLE>
* Lehman Brothers Municipal Bond Index is composed of
approximately 1,100 bonds; 60% of which are revenue bonds and
40% of which are state government obligations.
JANUS SHORT-TERM BOND FUND
A BAR CHART showing Annual Total Returns for Janus Short-Term Bond Fund from
1993 through 1998:
Annual returns for periods ended 12/31
6.18% 0.35% 7.95% 6.19% 6.61% 6.77%
1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1996 3.25%; Worst Quarter: 1st-1994 (0.63%)
Average annual total return for periods ending 12/31/98
----------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C> <C> <C>
Janus Short-Term Bond Fund 6.77% 5.54% 5.41%
Lehman Brothers Gov't/Corp 1-3 Year
Bond Index+ 6.96% 6.00% 5.80%
--------------------------------
</TABLE>
+ Lehman Brothers Gov't/Corp 1-3 Year Bond Index is composed of
all bonds of investment grade with a maturity between one and
three years.
Call the Janus XpressLine(TM) at 1-888-979-7737 to obtain the
Funds' yields.
The Fixed-Income Funds' past performance does not necessarily
indicate how they will perform in the future.
6 Janus Income Funds
<PAGE>
MONEY MARKET FUNDS
The Money Market Funds are designed for investors who seek
current income.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE MONEY MARKET FUNDS?
- --------------------------------------------------------------------------------
- JANUS MONEY MARKET FUND AND JANUS GOVERNMENT MONEY MARKET FUND
seek maximum current income to the extent consistent with
stability of capital.
- JANUS TAX-EXEMPT MONEY MARKET FUND seeks maximum current income
that is exempt from federal income taxes to the extent
consistent with stability of capital.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change in a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that any Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE MONEY MARKET FUNDS?
The Money Market Funds will invest only in high-quality, short-
term money market instruments that present minimal credit risks,
as determined by Janus Capital.
JANUS MONEY MARKET FUND invests primarily in high quality debt
obligations and obligations of financial institutions. Debt
obligations may include commercial paper, notes and bonds, and
variable amount master demand notes. Obligations of financial
institutions include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND invests exclusively in
obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and
instrumentalities and repurchase agreements secured by such
obligations.
Risk return summary 7
<PAGE>
JANUS TAX-EXEMPT MONEY MARKET FUND invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. The Fund may
invest up to 20% of its net assets in taxable securities and may
invest without limit in cash and cash equivalents that may be
federally taxable to the extent the portfolio manager cannot
locate investment opportunities with desirable risk/reward
characteristics.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE MONEY MARKET FUNDS?
The Funds' yields will vary as the short-term securities in their
portfolios mature and the proceeds are reinvested in securities
with different interest rates. Over time, the real value of a
Fund's yield may be eroded by inflation. Although the Money
Market Funds invest only in high-quality, short-term money market
instruments, there is a risk that the value of the securities
they hold will fall as a result of changes in interest rates, an
issuer's actual or perceived credit-worthiness or an issuer's
ability to meet its obligations.
Economic, business, or political development or change affecting
tax-exempt securities may affect Janus Tax-Exempt Money Market
Fund's holdings similarly. This could result in increased
variability of performance. Income from the Fund's investments
may be taxable by your state or local government.
An investment in the Money Market Funds is not a deposit of a
bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although
the Funds seek to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in these
Funds.
The following information illustrates how Investor Shares of each
Money Market Fund's performance has varied over time. The bar
charts depict the change in performance from year to year.
8 Janus Income Funds
<PAGE>
JANUS MONEY MARKET FUND - INVESTOR SHARES
A BAR CHART showing Annual Total Returns for Janus Money Market Fund - Investor
Shares from 1996 through 1998:
Annual returns for periods ended 12/31
5.06% 5.25% 5.20%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.33%; Worst Quarter: 2nd-1996 1.22%
JANUS GOVERNMENT MONEY MARKET FUND - INVESTOR SHARES
A BAR CHART showing Annual Total Returns for Janus Government Money Market Fund
- - Investor Shares from 1996 through 1998.
Annual returns for periods ended 12/31
4.97% 5.11% 5.06%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.30%; Worst Quarter: 1st-1997 1.18%
JANUS TAX-EXEMPT MONEY MARKET FUND - INVESTOR SHARES
A BAR CHART showing Annual Total Returns for Janus Tax-Exempt Money Market Fund
- - Investor Shares from 1996 through 1998:
Annual returns for periods ended 12/31
3.18% 3.22% 3.20%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 2nd-1997 0.86%; Worst Quarter: 1st-1997 0.70%
The 7-day yield on December 31, 1998 was 4.96% for Janus Money
Market Fund - Investor Shares; 4.69% for Janus Government Money
Market Fund - Investor Shares; and 3.45% for Janus Tax-Exempt
Money Market Fund - Investor Shares, respectively. For the Funds'
current yields, call the Janus XpressLine(TM) at 1-888-979-7737.
The Money Market Funds' past performance does not necessarily
indicate how they will perform in the future.
Risk return summary 9
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Funds.
ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
on the next page shows, these costs are borne indirectly by all
shareholders.
10 Janus Income Funds
<PAGE>
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds. It is based upon gross expenses (without the effect of
expense offset arrangements) for the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Janus Janus
Flexible Income Fund High-Yield Fund
<S> <C> <C>
Management Fee 0.58% 0.73%
Other Expenses 0.26% 0.26%
Total Annual Fund Operating Expenses 0.84% 0.99%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Janus Federal Janus Short-Term
Tax-Exempt Fund Bond Fund
<S> <C> <C>
Management Fee 0.60 % 0.65 %
Other Expenses 0.39 % 0.41 %
Total Annual Fund Operating Expenses Without
Waivers* 0.99 % 1.06 %
Total Waivers (0.32)% (0.39)%
Total Annual Fund Operating Expenses With
Waivers* 0.67 % 0.67 %
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Janus Money Janus Government Janus Tax-Exempt
Investor Shares Market Fund Money Market Fund Money Market Fund
<S> <C> <C> <C>
Management Fee 0.20 % 0.20 % 0.20 %
Other Expenses 0.50 % 0.50 % 0.50 %
Total Annual Fund Operating
Expenses Without Waivers* 0.70 % 0.70 % 0.70 %
Total Waivers (.10)% (.10)% (.10)%
Total Annual Fund Operating
Expenses With Waivers* 0.60 % 0.60 % 0.60 %
</TABLE>
- --------------------------------------------------------------------------------
* All expenses are stated both with and without contractual waivers by
Janus Capital. Waivers for the Fixed-Income Funds are first applied
against the Management Fee and then against Other Expenses. Janus
Capital has agreed to continue such waivers until at least the next
annual renewal of the advisory agreements.
- --------------------------------------------------------------------------------
EXAMPLE:
THE FOLLOWING EXAMPLE IS BASED ON FUND EXPENSES WITHOUT WAIVERS.
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in each of the Funds for the time periods
indicated then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year, and
that the Funds' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income Fund $ 86 $268 $466 $1,037
Janus High-Yield Fund $101 $315 $547 $1,213
Janus Federal Tax-Exempt Fund $101 $315 $547 $1,213
Janus Short-Term Bond Fund $108 $337 $585 $1,294
Janus Money Market Fund - Investor
Shares $ 72 $224 $390 $ 871
Janus Government Money Market Fund -
Investor Shares $ 72 $224 $390 $ 871
Janus Tax-Exempt Money Market Fund -
Investor Shares $ 72 $224 $390 $ 871
</TABLE>
Risk return summary 11
<PAGE>
Investment objectives, principal
investment strategies
and risks
FIXED-INCOME FUNDS
This section takes a closer look at the investment objectives of
each of the Fixed-Income Funds, their principal investment
strategies and certain risks of investing in the Fixed-Income
Funds. Strategies and policies that are noted as "fundamental"
cannot be changed without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 19-21 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
In addition to considering economic factors such as the effect of
interest rates on a Fund's investments, the portfolio managers
apply a "bottom up" approach in choosing investments. In other
words, they look mostly for income-producing securities that meet
their investment criteria one at a time. If a portfolio manager
is unable to find such investments, much of a Fund's assets may
be in cash or similar investments.
JANUS FLEXIBLE INCOME FUND
Janus Flexible Income Fund seeks to obtain maximum total return,
consistent with preservation of capital. It pursues its objective
by primarily investing in a wide variety of income-producing
securities such as corporate bonds and notes, government
securities and preferred stock. As a fundamental policy, the Fund
will invest at least 80% of its assets in income-producing
securities. The Fund may own an unlimited amount of high-
yield/high-risk securities, and these may be a big part of the
portfolio. This Fund generates total return from a combination of
current income and capital appreciation, but income is usually
the dominant portion.
JANUS HIGH-YIELD FUND
Janus High-Yield Fund seeks to obtain high current income.
Capital appreciation is a secondary objective when consistent
with
12 Janus Income Funds
<PAGE>
its primary objective. It pursues its objectives by normally
investing 65% of its assets in high-yield/high-risk fixed-income
securities, and may at times invest all of its assets in these
securities.
JANUS FEDERAL TAX-EXEMPT FUND
Janus Federal Tax-Exempt Fund seeks as high a level of current
income exempt from federal income tax as is consistent with
preservation of capital. It pursues its objective by investing
primarily in municipal obligations of any maturity whose interest
is exempt from federal income tax. As a fundamental policy, the
Fund will normally invest at least 80% of its assets in
securities whose interest is exempt from federal income tax,
including the federal alternative minimum tax.
JANUS SHORT-TERM BOND FUND
Janus Short-Term Bond Fund seeks as high a level of current
income as is consistent with preservation of capital. It pursues
its objective by investing primarily in short- and
intermediate-term fixed-income securities. The Fund will normally
invest at least 65% of its assets in debt securities such as
corporate bonds or notes, or U.S. Treasury bonds, and may invest
up to 35% of its assets in high-yield/high-risk securities.
Normally, the Fund expects to maintain an average weighted
effective maturity of three years or less.
"Effective" maturity differs from actual maturity, which may be
longer. In calculating the "effective" maturity the portfolio
manager will estimate the effect of expected principal payments
and call provisions on securities held in the portfolio. This
gives the portfolio manager some additional flexibility in the
securities he purchases, but all else being equal, could result
in more volatility than if the Fund calculated an actual maturity
target.
Investment objectives, principal investment strategies and risks 13
<PAGE>
The following questions and answers are designed to help you better understand
the Fixed-Income Funds' principal investment strategies.
1. HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
Generally, a fixed-income security will increase in value when
interest rates fall and decrease in value when interest rates
rise. Longer-term securities are generally more sensitive to
interest rate changes than shorter-term securities, but they
generally offer higher yields to compensate investors for the
associated risks. High-yield bond prices are generally less
directly responsive to interest rate changes than investment
grade issues and may not always follow this pattern. A bond
fund's average-weighted effective maturity and its duration are
measures of how the fund may react to interest rate changes.
2. HOW DO THE FIXED-INCOME FUNDS MANAGE INTEREST RATE RISK?
Each Fixed-Income Fund may vary the average-weighted effective
maturity of its portfolio to reflect its portfolio manager's
analysis of interest rate trends and other factors. A Fund's
average-weighted effective maturity will tend to be shorter when
the portfolio manager expects interest rates to rise and longer
when its portfolio manager expects interest rates to fall. The
Funds may also use futures, options and other derivatives to
manage interest rate risks.
3. WHAT IS MEANT BY A FUND'S "AVERAGE-WEIGHTED EFFECTIVE MATURITY"?
The stated maturity of a bond is the date when the issuer must
repay the bond's entire principal value to an investor. Some
types of bonds may also have an "effective maturity" that is
shorter than the stated date due to prepayment or call
provisions. Securities without prepayment or call provisions
generally have an effective maturity equal to their stated
maturity. Dollar-weighted effective maturity is calculated by
averaging the effective maturity of bonds held by a Fund with
each effective maturity "weighted" according to the percentage of
net assets that it represents.
14 Janus Income Funds
<PAGE>
4. WHAT IS MEANT BY A FUND'S "DURATION"?
A bond's duration indicates the time it will take an investor to
recoup his investment. Unlike average maturity, duration reflects
both principal and interest payments. Generally, the higher the
coupon rate on a bond, the lower its duration will be. The
duration of a bond fund is calculated by averaging the duration
of bonds held by a fund with each duration "weighted" according
to the percentage of net assets that it represents. Because
duration accounts for interest payments, a Fund's duration is
usually shorter than its average maturity.
5. WHAT IS A HIGH-YIELD/HIGH-RISK SECURITY?
A high-yield/high-risk security (also called a "junk" bond) is a
debt security rated below investment grade by major rating
agencies (i.e., BB or lower by Standard & Poor's or Ba or lower
by Moody's) or an unrated bond of similar quality. It presents
greater risk of default (the failure to make timely interest and
principal payments) than higher quality bonds.
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following policies applies
to all of the Fixed-Income Funds. The percentage limitations
included in these policies and elsewhere in this Prospectus apply
at the time of purchase of the security. So, for example, if a
Fund exceeds a limit as a result of market fluctuations or the
sale of other securities, it will not be required to dispose of
any securities.
CASH POSITION
When a Fixed-Income Fund's portfolio manager believes that market
conditions are unfavorable for profitable investing, or when he
is otherwise unable to locate attractive investment
opportunities, the Fund's cash or similar investments may
increase. In other words, the Fixed-Income Funds do not always
stay fully invested in bonds. Cash or similar investments
generally are a residual - they represent the assets that remain
after a portfolio manager has committed available assets to
desirable
Investment objectives, principal investment strategies and risks 15
<PAGE>
investment opportunities. However, a portfolio manager may also
temporarily increase a Fund's cash position to protect its assets
or maintain liquidity. Partly because the portfolio managers act
independently of each other, the cash positions of the Fixed-
Income Funds may vary significantly.
When a Fixed-Income Fund's investments in cash or similar
investments increase, it may not participate in market advances
or declines to the same extent that it would if the Fund remained
more fully invested in bonds.
OTHER TYPES OF INVESTMENTS
The Fixed-Income Funds invest primarily in fixed-income
securities, which may include corporate bonds and notes,
government securities, preferred stock, high-yield/high-risk
fixed-income securities and municipal obligations. The Funds may
also invest to a lesser degree in other types of securities.
These securities (which are described in the Glossary) may
include:
- common stocks
- mortgage- and asset-backed securities (without limit for Janus
Flexible Income Fund and Janus High-Yield Fund; and up to 25%
of Janus Federal Tax-Exempt Fund's and Janus Short-Term Bond
Fund's assets)
- zero coupon, pay-in-kind and step coupon securities (without
limit for Janus Flexible Income Fund and Janus High-Yield Fund;
and up to 10% for Janus Federal Tax-Exempt Fund and Janus
Short-Term Bond Fund)
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or
forward commitment basis
16 Janus Income Funds
<PAGE>
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other
position that cannot be disposed of quickly in the normal course
of business. For example, some securities are not registered
under U.S. securities laws and cannot be sold to the U.S. public
because of SEC regulations (these are known as "restricted
securities"). Under procedures adopted by the Funds' Trustees,
certain restricted securities may be deemed liquid, and will not
be counted toward this 15% limit.
FOREIGN SECURITIES
The Funds may invest without limit in foreign equity and debt
securities. The Funds may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the
United States. Other ways of investing in foreign securities
include depositary receipts or shares, and passive foreign
investment companies.
SPECIAL SITUATIONS
Each Fund may invest in special situations. A special situation
arises when, in the opinion of a Fund's portfolio manager, the
securities of a particular issuer will be recognized and
appreciate in value due to a specific development with respect to
that issuer. Developments creating a special situation might
include, among others, a new product or process, a technological
breakthrough, a management change or other extraordinary
corporate event, or differences in market supply of and demand
for the security. A Fund's performance could suffer if the
anticipated development in a "special situation" investment does
not occur or does not attract the expected attention.
PORTFOLIO TURNOVER
The Funds generally intend to purchase securities for long-term
investment although, to a limited extent, a Fund may purchase
securities in anticipation of relatively short-term price gains.
Short-term transactions may also result from liquidity needs,
securities
Investment objectives, principal investment strategies and risks 17
<PAGE>
having reached a price or yield objective, changes in interest
rates or the credit standing of an issuer, or by reason of
economic or other developments not foreseen at the time of the
investment decision. A Fund may also sell one security and
simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or
securities prices. Changes are made in a Fund's portfolio
whenever its portfolio manager believes such changes are
desirable. Portfolio turnover rates are generally not a factor in
making buy and sell decisions.
Increased portfolio turnover may result in higher costs for
brokerage commissions, dealer mark-ups and other transaction
costs and may also result in taxable capital gains. Higher costs
associated with increased portfolio turnover may offset gains in
a Fund's performance.
18 Janus Income Funds
<PAGE>
RISKS
Because the Funds invest substantially all of their assets in
fixed-income securities, they are subject to risks such as credit
or default risks, and decreased value due to interest rate
increases. A Fund's performance may also be affected by risks to
certain types of investments, such as foreign securities and
derivative instruments.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Fixed-Income Funds.
1. HOW DO THE FIXED-INCOME FUNDS DIFFER FROM EACH OTHER IN TERMS OF PRIMARY
INVESTMENT TYPE, CREDIT RISK AND INTEREST RATE RISK?
The chart below shows that the Fixed-Income Funds differ
substantially in terms of the type, credit quality and interest
rate risk of the securities in which they invest. You should
consider these factors before you determine whether a fund is a
suitable investment.
<TABLE>
<CAPTION>
Primary Credit Interest
Investment Type Risk Rate Risk
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Flexible Income Fund Corporate Bonds High High
Janus High-Yield Fund Corporate Bonds Highest Moderate
Janus Federal Tax-Exempt Fund Municipal Securities Low High
Janus Short-Term Bond Fund Corporate Bonds Moderate Low
</TABLE>
2. WHAT IS MEANT BY "CREDIT QUALITY" AND WHAT ARE THE RISKS ASSOCIATED WITH IT?
Credit quality measures the likelihood that the issuer will meet
its obligations on a bond. One of the fundamental risks
associated with all fixed-income funds is credit risk, which is
the risk that an issuer will be unable to make principal and
interest payments when due. U.S. government securities are
generally considered to be the safest type of investment in terms
of credit risk. Municipal obligations generally rank between U.S.
government securities and corporate debt securities in terms of
credit safety. Corporate debt securities, particularly those
rated below investment grade, present the highest credit risk.
Investment objectives, principal investment strategies and risks 19
<PAGE>
3. HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized statistical rating
agencies such as Standard & Poor's and Moody's are widely
accepted measures of credit risk. The lower a bond issue is rated
by an agency, the more credit risk it is considered to represent.
Lower rated bonds generally pay higher yields to compensate
investors for the associated risk. Please refer to "Explanation
of Rating Categories" on page 76 for a description of rating
categories.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
SECURITIES?
High-yield/high-risk securities (or "junk" bonds) are securities
rated below investment grade by the primary rating agencies such
as Standard & Poor's and Moody's. The value of lower quality
securities generally is more dependent on credit risk, or the
ability of the issuer to meet interest and principal payments,
than investment grade debt securities. Issuers of high-yield
securities may not be as strong financially as those issuing
bonds with higher credit ratings and are more vulnerable to real
or perceived economic changes, political changes or adverse
developments specific to the issuer.
The junk bond market can experience sudden and sharp price
swings. Because Janus Flexible Income Fund and Janus High-Yield
Fund may invest a significant portion of their portfolios in
high-yield/high-risk securities, investors should be willing to
tolerate a corresponding increase in the risk of significant and
sudden changes in NAV. Please refer to "Explanation of Rating
Categories" on page 76 for a description of rating categories.
5. HOW DO THE FUNDS TRY TO REDUCE RISK?
The Funds may use futures, options and other derivative
instruments to "hedge" or protect their portfolios from adverse
movements in securities prices and interest rates. The Funds may
also use a variety of currency hedging techniques, including
forward currency contracts, to manage exchange rate risk. The
20 Janus Income Funds
<PAGE>
Funds believe the use of these instruments will benefit the
Funds. However, a Fund's performance could be worse than if the
Fund had not used such instruments if a portfolio manager's
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
6. I'VE HEARD A LOT ABOUT HOW THE CHANGE TO THE YEAR 2000 COULD AFFECT COMPUTER
SYSTEMS. DOES THIS CREATE ANY SPECIAL RISKS?
The portfolio managers carefully research each potential
investment before making an investment decision and, among other
things, consider Year 2000 readiness when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
readiness is completely accurate. If a company has not
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
7. HOW COULD THE FUNDS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR
PERFORMANCE?
The Funds may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic securities, because the Funds' performance may depend on
issues other than the performance of a particular company. These
issues include:
- currency risk
- political and economic risk
- regulatory risk
- market risk
- transaction costs
These risks are described in the SAI.
Investment objectives, principal investment strategies and risks 21
<PAGE>
MONEY MARKET FUNDS
This section takes a closer look at the investment objective of
each of the Money Market Funds, their principal investment
strategies and certain risks of investing in the Funds.
Strategies and policies that are noted as "fundamental" cannot be
changed without a shareholder vote.
Money market funds are subject to certain specific SEC rule
requirements. Among other things, the Funds are limited to
investing in U.S. dollar-denominated instruments with a remaining
maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the 1940 Act).
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
JANUS MONEY MARKET FUND
Janus Money Market Fund seeks maximum current income to the
extent consistent with stability of capital. It pursues its
objective by investing primarily in high quality debt obligations
and obligations of financial institutions. Debt obligations may
include commercial paper, notes and bonds, and variable amount
master demand notes. Obligations of financial institutions
include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund seeks maximum current income
to the extent consistent with stability of capital. It pursues
its objective by investing exclusively in obligations issued
and/or guaranteed as to principal and interest by the United
States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund seeks maximum current income
that is exempt from federal income taxes to the extent consistent
with stability of capital. It pursues it objective by investing
primarily in municipal securities whose interest is exempt from
federal income taxes, including the federal alternative
22 Janus Income Funds
<PAGE>
minimum tax. The Fund may invest up to 20% of its net assets in
taxable securities and may invest without limit in cash and cash
equivalents to the extent the portfolio manager cannot locate
investment opportunities with desirable risk/reward
characteristics.
COMMON INVESTMENT POLICIES
Each of the Money Market Funds will:
- invest in high quality, short-term money market instruments
that present minimal credit risks, as determined by Janus
Capital
- invest only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated pursuant
to Rule 2a-7 under the 1940 Act)
- maintain a dollar-weighted average portfolio maturity of 90
days or less
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund invests primarily in:
- high quality debt obligations
- obligations of financial institutions
This Fund may also invest (to a lesser degree) in:
- U.S. Government Securities (securities issued or guaranteed by
the U.S. government, its agencies and instrumentalities)
- municipal securities
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers. Debt
obligations include:
- commercial paper
- notes and bonds
Investment objectives, principal investment strategies and risks 23
<PAGE>
- variable amount master demand notes (the payment obligations on
these instruments may be backed by securities, swap agreements
or other assets, by a guarantee of a third party or solely by
the unsecured promise of the issuer to make payments when due)
- privately issued commercial paper or other securities that are
restricted as to disposition under the federal securities laws
OBLIGATIONS OF FINANCIAL INSTITUTIONS
Examples of obligations of financial institutions include:
- negotiable certificates of deposit, bankers' acceptances, time
deposits and other obligations of U.S. banks (including savings
and loan associations) having total assets in excess of one
billion dollars and U.S. branches of foreign banks having total
assets in excess of ten billion dollars
- Eurodollar and Yankee bank obligations (Eurodollar bank
obligations are dollar-denominated certificates of deposit or
time deposits issued outside the U.S. capital markets by
foreign branches of U.S. banks and by foreign banks. Yankee
bank obligations are dollar-denominated obligations issued in
the U.S. capital markets by foreign banks)
- other U.S. dollar-denominated obligations of foreign banks
having total assets in excess of ten billion dollars that Janus
Capital believes are of an investment quality comparable to
obligations of U.S. banks in which the Fund may invest
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-denominated funds from flowing across its borders. Other
risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation
of financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of
foreign issuers.
24 Janus Income Funds
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. However, this Fund
reserves the right to invest:
- up to 20% of its net assets in securities whose interest is
federally taxable
- without limit in cash and cash equivalents, including
obligations that may be federally taxable (when its portfolio
manager is unable to locate investment opportunities with
desirable risk/reward characteristics)
MUNICIPAL SECURITIES
Municipal securities include:
- municipal notes
- short-term municipal bonds
- participation interests in municipal securities
At times, the Fund may invest more than 25% of its total assets
in tax-exempt securities that are related in such a way that an
economic, business, or political development or change affecting
one such security could similarly affect the other securities.
Examples include securities whose issuers are located in the same
state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of
its assets in industrial development bonds or participation
interests therein.
Investment objectives, principal investment strategies and risks 25
<PAGE>
Yields on municipal securities are dependent on a variety of
factors, including general market conditions, the size of a
particular offering, the maturity of the obligation and the
rating of the issue. Municipal securities investments may lose
money if the municipal securities issuer does not pay principal
and interest when due. Bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors may affect the
issuer's ability to pay.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation
interests therein. The issuing municipality's credit will not
necessarily back a lease obligation. Interest on lease
obligations may become taxable if the lease is assigned. The Fund
may incur losses if the issuer does not appropriate funds for the
lease payment on an annual basis.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest
substantially all of its assets in municipal securities whose
interest is exempt from federal income tax, the Fund may under
certain circumstances invest in certain securities whose interest
is subject to such taxation, as described under Janus Money
Market Fund's investments.
COMMON INVESTMENT TECHNIQUES
The following is a description of other investment techniques
that the Money Market Funds may use:
PARTICIPATION INTERESTS
A participation interest gives a Money Market Fund a
proportionate, undivided interest in underlying debt securities
and usually carries a demand feature.
DEMAND FEATURES
Demand features give the Money Market Funds the right to resell
securities at specified periods prior to their maturity dates.
26 Janus Income Funds
<PAGE>
Demand features may shorten the life of a variable or floating
rate security, enhance the instrument's credit quality and
provide a source of liquidity.
Demand features are often issued by third party financial
institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Money Market Funds'
investments may be dependent in part on the credit quality of the
banks supporting the Money Market Funds' investments. This will
result in exposure to risks pertaining to the banking industry,
including the foreign banking industry. Brokerage firms and
insurance companies also provide certain liquidity and credit
support. A substantial portion of the Janus Tax-Exempt Money
Market Fund's portfolio in particular may consist of securities
backed by banks and other financial institutions, and thus
adverse changes in the credit quality of these institutions could
cause losses to the Fund and affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The Money Market Funds may invest in securities which have
variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a
specified formula, usually with reference to an interest rate
index or market interest rate. Variable and floating rate
securities are subject to changes in value based on changes in
market interest rates or changes in the issuer's or guarantor's
creditworthiness.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Money Market Funds may purchase fixed or variable rate
mortgage-backed securities issued by the Government National
Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entity. Janus Money Market Fund and Janus
Tax-Exempt Money Market Fund may purchase other mortgage- and
asset-backed securities including securities backed by automobile
loans, equipment leases or credit card receivables.
Investment objectives, principal investment strategies and risks 27
<PAGE>
Unlike traditional debt instruments, payments on these securities
include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities and may result in a Fund
having to reinvest proceeds at a lower interest rate.
REPURCHASE AGREEMENTS
Each Money Market Fund may enter into a collateralized repurchase
agreements. Repurchase agreements are transactions in which a
Fund purchases securities and simultaneously commits to resell
those securities to the seller at an agreed-upon price on an
agreed-upon future date. The repurchase price reflects a market
rate of interest and is collateralized by cash or securities.
If the seller of the securities underlying a repurchase agreement
fails to pay the agreed resale price on the agreed delivery date,
a Money Market Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its
ability to do so.
28 Janus Income Funds
<PAGE>
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29
<PAGE>
Janus Income Funds
<PAGE>
Shareholder's
Manual
This section will help you become
familiar with the different types
of accounts you can establish with
Janus. It also explains in detail
the wide array of services and
features you can establish on your
account, as well as account
policies and fees that may apply
to your account. Account policies
(including fees), services and
features may be modified or
discontinued without shareholder
approval or prior notice.
[JANUS LOGO]
<PAGE>
HOW TO GET IN TOUCH WITH JANUS
Janus offers two Investor Service Centers for those individuals
who would like to conduct their investing in person. Our
representatives will be happy to assist you at either of the
following locations Monday-Friday 7:00 a.m. to 6:00 p.m. Mountain
time and Saturday 9:00 a.m. to 1:00 p.m. Mountain time.
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
QUICK ADDRESS AND TELEPHONE REFERENCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
MAILING ADDRESS JANUS XPRESSLINE(TM)
Janus 1-888-979-7737
P.O. Box 173375 For 24-hour access to account
Denver, CO 80217-3375 and fund information,
exchanges, purchases and
FOR OVERNIGHT CARRIER redemptions, automated daily
Janus quotes on fund share prices,
Suite 101 yields and total returns.
3773 Cherry Creek North Drive
Denver, CO 80209-3811 TDD
1-800-525-0056
INVESTOR SERVICE REPRESENTATIVES A telecommunications device
If you have any questions while reading for our hearing- and
this Prospectus, please call one of our speech-impaired shareholders.
Investor Service Representatives at
1-800-525-3713 Monday-Friday: 8:00 JANUS LITERATURE LINE
a.m.-8:00 p.m., and Saturday: 10:00 1-800-525-8983
a.m.-4:00 p.m., New York time. To request a prospectus,
shareholder reports or
JANUS INTERNET ADDRESS marketing materials 24 hours a
janus.com day.
</TABLE>
32 Janus Income Funds
<PAGE>
MINIMUM INVESTMENTS*
- ---------------------------------------------
<TABLE>
<S> <C>
To open a new regular account $2,500
To open a new retirement,
education or UGMA/UTMA account $ 500
To open a new regular account with
an Automatic Investment Program $ 500**
To add to any type of an account $ 100+
</TABLE>
* The Funds reserve the right to
change the amount of these
minimums from time to time or
to waive them in whole or in
part for certain types of
accounts.
** An Automatic Investment Program
requires a $100 minimum
automatic investment per month
until the account balance
reaches $2,500.
+ The minimum subsequent
investment for IRA UGMA/UTMA
accounts is $50.
TYPES OF ACCOUNT OWNERSHIP
If you are investing in the Funds for the first time, you will
need to establish an account. You can establish the following
types of accounts by completing a New Account Application. To
request an application, call 1-800-525-3713 or visit our Web site
at janus.com to download an application.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have
two or more owners.
A GIFT OR TRANSFER TO MINOR (UGMA OR UTMA)
An UGMA/UTMA account is a custodial account managed for the
benefit of a minor. To open an UGMA or UTMA account, you must
include the minor's Social Security number on the application.
TRUST
An established trust can open an account. The names of each
trustee, the name of the trust and the date of the trust
agreement must be included on the application.
Shareholder's manual 33
<PAGE>
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The
application must be signed by an authorized officer of the
corporation or a general partner of the partnership.
TAX-DEFERRED ACCOUNTS
If you are eligible, you may set up one or more tax-deferred
accounts. A tax-deferred account allows you to shelter your
investment income and capital gains from current income taxes. A
contribution to certain of these plans may also be tax
deductible. Tax-deferred accounts include retirement plans
described below and the Education IRA. Distributions from these
plans are generally subject to income tax and may be subject to
an additional tax if withdrawn prior to age 59 1/2 or used for a
nonqualifying purpose. Investors should consult their tax adviser
or legal counsel before selecting a tax-deferred account.
Investors Fiduciary Trust Company serves as custodian for the
tax-deferred accounts offered by the Funds. You will be charged
an annual account maintenance fee of $12 for each taxpayer
identification number no matter how many tax-deferred accounts
you have with Janus. You may pay the fee by check or have it
automatically deducted from your account (usually in December).
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.
TRADITIONAL AND ROTH INDIVIDUAL RETIREMENT ACCOUNTS
Both types of IRAs allow most individuals with earned income to
contribute up to the lesser of $2,000 ($4,000 for most married
couples) or 100% of compensation annually. Please refer to the
Janus IRA booklet for more complete information regarding the
different types of IRAs.
34 Janus Income Funds
<PAGE>
EDUCATION IRA
This plan allows individuals, subject to certain income
limitations, to contribute up to $500 annually on behalf of any
child under the age of 18. Please refer to the Janus IRA booklet
for more complete information regarding the Education IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN
This plan allows small business owners (including sole
proprietors) to make tax-deductible contributions for themselves
and any eligible employee(s). A SEP requires an IRA (a SEP-IRA)
to be set up for each SEP.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships and sole
proprietors to benefit their employees and themselves.
SECTION 403(B)(7) PLAN
Employees of educational organizations or other qualifying, tax-
exempt organizations may be eligible to participate in a Section
403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
Complete and sign the appropriate application. Please be sure to
provide your Social Security or taxpayer identification number on
the application and make your check payable to Janus. The Funds
are available only to U.S. citizens or residents, and your
application will be returned if you do not meet these criteria.
Send all items to one of the addresses listed in the "Quick
Address and Telephone Reference" on page 32.
Shareholder's manual 35
<PAGE>
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the
next NAV calculated after your order is received and accepted.
Please note the following:
- Cash, credit cards, third party checks and credit card checks
will not be accepted.
- All purchases must be made in U.S. dollars.
- Checks must be drawn on U.S. banks and made payable to Janus.
- If a check does not clear your bank, the Funds reserve the
right to cancel the purchase.
- If the Funds are unable to debit your predesignated bank
account on the day of purchase, they may make additional
attempts or cancel the purchase.
- The Funds reserve the right to reject any specific purchase
request.
If your purchase is cancelled, you will be responsible for any
losses or fees imposed by your bank and losses that may be
incurred as a result of any decline in the value of the cancelled
purchase. The Funds (or their agents) have the authority to
redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will
accrue to the Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR
AN ADDITIONAL INVESTMENT IS $100 ($50 FOR IRAS OR UGMA/UTMA
ACCOUNTS). You may add to your account at any time through any of
the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your
confirmation statement. If you are making a purchase into a
36 Janus Income Funds
<PAGE>
retirement account, please indicate whether the purchase is a
rollover or a current or prior year contribution. Send your check
made payable to Janus and remittance slip or written instructions
to one of the addresses listed previously. You may also request a
booklet of remittance slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. To purchase
shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
day. When you make an additional purchase by telephone, Janus
will automatically debit your predesignated bank account for the
desired amount. To establish the telephone purchase option on
your new account, complete the "Telephone Purchase of Shares
Option" section on the application and attach a "voided" check or
deposit slip from your bank account. If your account is already
established, call 1-800-525-3713 to request the appropriate form.
This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.
BY INTERNET
You must pre-establish the "Telephone Purchase of Shares Option"
to make a purchase on our Web site at janus.com. If you have
questions, please call 1-800-975-9932 to speak to a Janus
representative.
Shareholder's manual 37
<PAGE>
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment programs to help you
achieve your financial goals as simply and conveniently as
possible. You may open a new account with a $500 initial purchase
and $100 automatic subsequent investments.
AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will
be electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic
Monthly Investment Program" section on the application and attach
a "voided" check from your bank account. If your Fund account is
already established, call 1-800-525-3713 to request the
appropriate form.
PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you
may have all or a portion of your paycheck ($100 minimum)
invested directly into your Fund account. To obtain information
on establishing this option, call 1-800-525-3713.
SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from one
Janus account to another on any day of the month. For more
information on how to establish this option, call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.
38 Janus Income Funds
<PAGE>
IN WRITING
To request an exchange in writing, please follow the instructions
for written requests on page 42.
BY TELEPHONE
All accounts are automatically eligible for the telephone
exchange option. To exchange shares by telephone, call an
Investor Service Representative at 1-800-525-3713 during normal
business hours or call the Janus XpressLine, 1-888-979-7737, for
access to this option 24 hours a day.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as
little as $100 per month on established accounts. You may
establish a new account with a $500 initial purchase and
subsequent $100 systematic exchanges. If the balance in the
account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the
program will be discontinued.
BY INTERNET
Exchanges may also be made on our Web site at janus.com.
EXCHANGE POLICIES
- Except for Systematic Exchanges, new accounts established by
exchange must be opened with $2,500 or the total account value
if the value of the account you are exchanging from is less
than $2,500.
- Exchanges between existing accounts must meet the $100
subsequent investment requirement.
- You may make four exchanges out of each non-Money Market Fund
during a calendar year (exclusive of Systematic Exchanges).
Exchanges in excess of this limit may be subject to an exchange
fee or may result in termination of the exchange
Shareholder's manual 39
<PAGE>
privilege. There is currently no limit on exchanges out of the
Money Market Funds.
- The Funds reserve the right to reject any exchange request and
to modify or terminate the exchange privilege at any time. For
example, the Funds may reject exchanges from accounts engaged
in or known to engage in trading in excess of the limit above
(including market timing transactions).
- Exchanges between accounts will be accepted only if the
registrations are identical.
- If the shares you are exchanging are held in certificate form,
you must return the certificate to your Fund prior to making
any exchanges.
- Be sure that you read the prospectus for the fund into which
you are exchanging.
- An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable
gain or loss in a non-tax deferred account. Because the Money
Market Funds seek to maintain a stable net asset value per
share, it is not anticipated that a sale of Shares of the Money
Market Funds will produce a taxable gain or loss.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your
shares. If the shares are held in certificate form, the
certificate must be returned with or before your redemption
request. Your transaction will be processed at the next NAV
calculated after your order is received and accepted. The
redemption may be suspended for 10 days following an address
change unless a signature guarantee is provided.
IN WRITING
To request a redemption in writing, please follow the
instructions for written requests on page 42.
40 Janus Income Funds
<PAGE>
BY TELEPHONE
Most accounts have the telephone redemption option, unless this
option was specifically declined on the application or in
writing. This option enables you to request redemptions daily
from your account by calling 1-800-525-3713 by the close of the
regular trading session of the NYSE, normally 4:00 p.m. New York
time (or until 5:00 p.m. for Janus Government Money Market Fund).
You may also use Janus XpressLine, 1-888-979-7737, for access to
this option 24 hours a day. (There is a daily limit of $100,000
per account for redemptions payable by check.)
BY INTERNET
Redemptions may also be made on our Web site at janus.com.
SYSTEMATIC REDEMPTION OPTION
The Systematic Redemption Option allows you to redeem a specific
dollar amount from your account on a regular basis. For more
information or to request the appropriate form, please call
1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
BY CHECK
Redemption proceeds will be sent to the shareholder(s) of record
at the address of record within seven days after receipt of a
valid redemption request.
BY ELECTRONIC TRANSFER
If you have established the electronic redemption option, your
redemption proceeds can be electronically transferred to your
predesignated bank account on the next bank business day after
receipt of your redemption request (wire transfer) or the second
bank business day after receipt of your redemption request (ACH
transfer). Wire transfers will be charged an $8 fee per wire and
your bank may charge an additional fee to receive the wire. ACH
Shareholder's manual 41
<PAGE>
transfers are made free of charge. Wire redemptions are not
available for retirement accounts.
If you would like to establish the electronic redemption option
on an existing account, please call 1-800-525-3713 to request the
appropriate form.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE
ON OUR WEB SITE, OR THROUGH THE AUTOMATIC MONTHLY INVESTMENT
PROGRAM, THE FIXED-INCOME FUNDS MAY DELAY THE PAYMENT OF YOUR
REDEMPTION PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO
ALLOW THE PURCHASE TO CLEAR. Unless you provide alternate
instructions, your proceeds will be invested in Janus Money
Market Fund - Investor Shares during the 15 day hold period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on page 32
and must include the following information:
- the name of the Fund(s)
- the account number(s)
- the amount of money or number of shares being redeemed or
exchanged
- the name(s) on the account
- the signature(s) of all registered account owners
- your daytime telephone number
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON
Written instructions must be signed by each shareholder, exactly
as the names appear in the account registration.
42 Janus Income Funds
<PAGE>
UGMA OR UTMA
Written instructions must be signed by the custodian in his/her
capacity as it appears in the account registration.
SOLE PROPRIETOR, GENERAL PARTNER
Written instructions must be signed by an authorized individual
in his/her capacity as it appears in the account registration.
CORPORATION, ASSOCIATION
Written instructions must be signed by the person(s) authorized
to act on the account. In addition, a certified copy of the
corporate resolution authorizing the signer to act must accompany
the request.
TRUST
Written instructions must be signed by the trustee(s). If the
name of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days
must also be submitted.
IRA
Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you
must state that you elect not to have such withholding apply. In
addition, your instructions must state whether the distribution
is normal (after age 59 1/2) or premature (before age 59 1/2)
and, if premature, whether any exceptions such as death or
disability apply with regard to the 10% additional tax on early
distributions.
SIGNATURE GUARANTEE
In addition to the signature requirements, A SIGNATURE GUARANTEE
IS ALSO REQUIRED if any of the following is applicable:
- You request a redemption by check that exceeds $100,000.
- You would like the check made payable to anyone other than the
shareholder(s) of record.
Shareholder's manual 43
<PAGE>
- You would like the check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like the check mailed to an address other than the
address of record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE
UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON
CERTAIN LEGAL GROUNDS. FOR MORE INFORMATION PERTAINING TO
SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized
account transfers. The following financial institutions may
guarantee signatures: banks, savings and loan associations, trust
companies, credit unions, broker-dealers, and member firms of a
national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A
signature guarantee cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly
authorized to do business in your country of residence or a U.S.
consulate may be able to authenticate your signature.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the
NAV next calculated after your request is received and accepted
by a Fund (or a Fund's agent or authorized designee). A Fund's
NAV is calculated at the close of the regular trading session of
the NYSE (normally 4:00 p.m. New York time) each day that the
NYSE is open ("business day") (and, in the case of the Money
Market Funds, the Federal Reserve Banks are also open ("bank
business day")) except that Janus Government Money Market Fund's
NAV is normally calculated at 5:00 p.m. (New York time) on such
days. The NAV of Fixed-Income Fund shares is not determined on
days the NYSE is closed (generally, New Year's Day, Martin Luther
King Day, Presidents' Day, Good Friday,
44 Janus Income Funds
<PAGE>
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas) and, in the case of the Money Market Funds, when the
Federal Reserve Banks are closed (generally, the same days the
NYSE is closed and also Columbus Day and Veterans' Day). In order
to receive a day's price, your order must be received by the
close of the regular trading session of the NYSE. In order to
receive same day dividends for the Money Market Funds, your
purchase request must be received by 3:00 p.m. New York time for
the Janus Money Market Fund, 5:00 p.m. New York time for the
Janus Government Money Market Fund and 12:00 p.m. New York time
for the Janus Tax-Exempt Money Market Fund (the daily yield for
the Money Market Funds is calculated after these times). The
Money Market Funds reserve the right to require purchase,
redemption and exchange requests and payments prior to this time
on days when the bond market or the NYSE close early.
The Fixed-Income Funds' portfolio securities are valued at market
value or, if a market quotation is not readily available, at
their fair value determined in good faith under procedures
established by and under the supervision of the Trustees.
Short-term instruments maturing within 60 days are valued at
amortized cost, which approximates market value.
The Money Market Funds' portfolio securities are valued at their
amortized cost. Amortized cost valuation involves valuing an
instrument at its cost and thereafter assuming a constant
amortization to maturity (or such other date as permitted by Rule
2a-7) of any discount or premium. If fluctuating interest rates
cause the market value of a Fund's portfolio to deviate more than
1/2 of 1% from the value determined on the basis of amortized
cost, the Trustees will consider whether any action, such as
adjusting the Share's NAV to reflect current market conditions,
should be initiated to prevent any material dilutive effect on
shareholders.
See your Fund's SAI for more detailed information.
Shareholder's manual 45
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS XPRESSLINE(TM)
Janus XpressLine, our electronic telephone service, offers you
24-hour access by TouchTone(TM) telephone to obtain information
on account balances, Fund performance or dividends. You can also
make exchanges, purchases and redemptions in existing accounts,
request literature about any Janus fund, or order duplicate
statements. Janus XpressLine is accessed by calling
1-888-979-7737. Calls are limited to five minutes.
JANUS WEB SITE
Janus maintains a Web site located at JANUS.COM. You can
purchase, exchange and redeem shares and access information such
as your account balance and the Funds' NAVs through the Web site.
In order to engage in transactions on our Web site, you must
authorize us to transmit account information online and accept
online instructions (see janus.com and follow the procedures
accordingly). You may also need to have bank account information,
wire instructions or other options established on your account.
The Funds and their agents will not be responsible for any losses
resulting from unauthorized transactions on our Web site when
procedures designed for engaging in such transactions are
followed. If you have questions, please call 1-800-975-9932 to
speak to a Janus representative.
CHECK WRITING PRIVILEGE
Check writing privileges are available for all three Money Market
Funds. Checkbooks will be issued to shareholders who have
completed a Signature Draft Card, which is sent in the new
account welcome package or by calling 1-800-525-3713. (There is
no check writing privilege for retirement accounts.) Your
checkbook will be mailed approximately 10 days after the check
writing privilege is requested. Checks may be written for $250 or
more per check. Purchases made by check or the Automatic Monthly
Investment Program may not be redeemed by a redemption check
46 Janus Income Funds
<PAGE>
until the 15-day hold period has passed. All checks written on
the account must be signed by all account holders unless
otherwise specified on the original application or the subsequent
Signature Draft Card. The Funds reserve the right to terminate or
modify the check writing privilege at any time.
ACCOUNT MINIMUMS
Due to the proportionately higher costs of maintaining small
accounts, Janus reserves the right to deduct a $10 minimum
balance fee (or the value of the account if less than $10) from
accounts with values below the minimums described on page 33 or
to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if
your account balance does not reach the required minimum initial
investment or falls below such minimum and you have discontinued
monthly investments. This policy does not apply to accounts that
fall below the minimums solely as a result of market value
fluctuations. It is expected that, for purposes of this policy,
accounts will be valued in September, and the $10 fee will be
assessed on the second Friday of September of each year. You will
receive notice before we charge the $10 fee or close your account
so that you may increase your account balance to the required
minimum.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer,
bank or other financial institution, or an organization that
provides recordkeeping and consulting services to 401(k) plans or
other employee benefit plans (a "Processing Organization").
Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent
investments than the Funds. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Funds directly. A
Processing Organization, rather than its customers, may be the
shareholder of record of your shares. The Funds are not
responsible for the failure of any
Shareholder's manual 47
<PAGE>
Processing Organization to carry out its obligations to its
customers. Certain Processing Organizations may receive
compensation from Janus Capital or its affiliates and certain
Processing Organizations may receive compensation from the Funds
for shareholder recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification number, the IRS requires the Funds to
withhold 31% of any dividends paid and redemption or exchange
proceeds. In addition to the 31% backup withholding, you may be
subject to a $50 fee to reimburse the Funds for any penalty that
the IRS may impose.
SHARE CERTIFICATES
(FIXED-INCOME FUNDS ONLY)
Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Funds. The Fixed-Income Funds will issue share
certificates upon written request only and reserve the right to
charge a fee for this service. Share certificates will not be
issued until the shares have been held for at least 15 days and
will not be issued for accounts that do not meet the minimum
investment requirements. Share certificates cannot be issued for
retirement accounts. In addition, if the certificate is lost,
there may be a replacement charge.
Share certificates are not available for the Money Market Funds
in order to maintain the general liquidity that is representative
of a money market fund and to help facilitate transactions in
shareholder accounts.
48 Janus Income Funds
<PAGE>
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the
shareholder is deemed to engage in activities which are illegal
or otherwise believed to be detrimental to the Funds.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Funds and
their agents will not be responsible for any losses resulting
from unauthorized transactions when procedures designed to verify
the identity of the caller are followed.
It may be difficult to reach an Investor Service Representative
by telephone during periods of unusual market activity. If you
are unable to reach a representative by telephone, please
consider sending written instructions, stopping by a Service
Center, calling the Janus XpressLine or visiting our Web site.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may, in case of emergency, temporarily
suspend telephone transactions and other shareholder services.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by all account owners. Include the
name of your Fund(s), the account number(s), the name(s) on the
account and both the old and new addresses. Certain options may
be suspended for 10 days following an address change unless a
signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally
transferred to a new account. In some cases, legal documentation
may be required. For more information, call 1-800-525-3713.
Shareholder's manual 49
<PAGE>
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will
receive quarterly confirmations of all transactions. Dividend
information will be confirmed quarterly. In addition, the Funds
will send you an immediate transaction confirmation statement
after every non-systematic transaction.
The Funds produce financial reports, which include a list of each
of the Fund's portfolio holdings, semiannually and update their
prospectus annually. To reduce expenses, the Funds may choose to
mail only one report or prospectus to your household, even if
more than one person in the household has a Fund account. Please
call 1-800-525-3713 if you would like to receive additional
reports or prospectuses. The Funds reserve the right to charge a
fee for additional statement and report requests.
50 Janus Income Funds
<PAGE>
Management of the funds
INVESTMENT ADVISER
Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado
80206-4928, is the investment adviser to each of the Funds and is
responsible for the day-to-day management of their investment
portfolios and other business affairs of the Funds.
Janus Capital began serving as investment adviser to Janus Fund
in 1970 and currently serves as investment adviser to all of the
Janus funds, acts as sub-adviser for a number of private-label
mutual funds and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes continuous advice and recommendations
concerning the Funds' investments. Janus Capital also furnishes
certain administrative, compliance and accounting services for
the Funds, and may be reimbursed by the Fixed-Income Funds for
its costs in providing those services. In addition, Janus Capital
employees serve as officers of the Trust and Janus Capital
provides office space for the Funds and pays the salaries, fees
and expenses of all Fund officers and those Trustees who are
affiliated with Janus Capital. The Funds pay all of their
expenses not assumed by Janus Capital, including auditing fees
and independent Trustees' fees and expenses. (Janus Capital
provides these services to the Money Market Funds pursuant to an
Administration Agreement as described in the SAI.)
FIXED-INCOME FUNDS
The Funds pay Janus Capital a management fee which is calculated
daily and paid monthly. The advisory agreement with the Funds
spells out the management fee and other expenses that the Funds
must pay.
Each Fixed-Income Fund incurs expenses not assumed by Janus
Capital, including transfer agent and custodian fees and
expenses, legal and auditing fees, printing and mailing costs of
sending reports and other information to existing shareholders,
and independent Trustees' fees and expenses. The Annual Fund
Operating Expenses table on page 11 lists the actual management
fees and total operating expenses with and without waivers of
each Fund for the most recent fiscal year.
Management of the funds 51
<PAGE>
MONEY MARKET FUNDS
Each of the Money Market Funds has agreed to compensate Janus
Capital for its advisory services by the monthly payment of a fee
at the annual rate of 0.20% of the value of the average daily net
assets of each Money Market Fund. However, Janus Capital has
agreed to waive a portion of its fee and accordingly, the
advisory fee of each Money Market Fund will be calculated at the
annual rate of 0.10% of the value of each Money Market Fund's
average daily net assets. Janus Capital has agreed to continue
such waivers until at least the next annual renewal of the
advisory agreements. You will be notified of any change in this
limit.
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
SHARON S. PICHLER
- --------------------------------------------------------------------------------
is Executive Vice President of Janus Money Market Fund,
Janus Government Money Market Fund and Janus Tax-Exempt
Money Market Fund. She is portfolio manager of Janus Money
Market Fund and Janus Tax-Exempt Money Market Fund, which
she has managed since inception. She previously served as
portfolio manager of Janus Government Money Market Fund
from inception to February 1999. She holds a Bachelor of
Arts in Economics from Michigan State University and a
Master of Business Administration from the University of
Texas at San Antonio. Ms. Pichler received the Chartered
Financial Analyst designation.
52 Janus Income Funds
<PAGE>
SANDY R. RUFENACHT
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Short-Term Bond Fund and Janus High-Yield Fund. He has
managed Janus Short-Term Bond Fund since January 1996 and
has served as manager or co-manager of Janus High-Yield
Fund since June 1996. He previously served as Executive
Vice President and co-manager of Janus Flexible Income
Fund from June 1996 to February 1998. He holds a Bachelor
of Arts in Business from the University of Northern
Colorado.
RONALD V. SPEAKER
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Flexible Income Fund, which he has managed or co-managed
since December 1991. He previously served as co-manager of
Janus High-Yield Fund from its inception to February 1998
and manager of Janus Short-Term Bond Fund and Janus
Federal Tax-Exempt Fund from their inceptions through
December 1995. He holds a Bachelor of Arts in Finance from
the University of Colorado and received the Chartered
Financial Analyst designation.
In January 1997, Mr. Speaker settled an SEC administrative
action involving two personal trades made by him in
January of 1993. Without admitting or denying the
allegations, Mr. Speaker agreed to civil money penalty,
disgorgement, and interest payments totaling $37,199 and
to a 90-day suspension which ended on April 25, 1997.
Management of the funds 53
<PAGE>
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is portfolio manager of Janus Government Money Market Fund
which he has managed since February 1999. Prior to
assuming management of the Fund, he served as assistant
portfolio manager of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money
Market Fund. He joined Janus Capital in May 1996 as a
senior fixed income analyst. Prior to joining Janus
Capital, he was a portfolio manager for USAA Investment
Management Company from 1991 to 1996. He holds a Bachelor
of Arts in Business Administration from Wayne State
University and a Master's Degree in Business
Administration from the University of Illinois. Mr.
Thorderson received the Chartered Financial Analyst
designation.
DARRELL W. WATTERS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Federal Tax-Exempt Fund, which he has managed since
January 1996. He holds a Bachelor of Arts in Economics
from Colorado State University.
ASSISTANT PORTFOLIO MANAGER
JEANINE M. MORRONI
- --------------------------------------------------------------------------------
is assistant portfolio manager of Janus Government Money
Market Fund. Ms. Morroni joined Janus Capital in January
1994 as a Fund Accountant and began trading short-term
securities in July 1994. She has been a credit analyst for
the Money Market Funds since 1996. Prior to joining Janus
Capital, she worked as a Fund Accountant at Oppenheimer
Management Corporation. She holds a Bachelor of Science in
Accounting from Colorado State University. She is a
candidate for the Chartered Financial Analyst designation.
54 Janus Income Funds
<PAGE>
Other information
CLASSES OF SHARES
Each of the Money Market Funds currently offers three classes of
shares. This Prospectus only describes the Investor Shares of the
Money Market Funds which are available to the general public.
Institutional Shares of the Money Market Funds are available only
to institutional clients, including corporations, foundations and
trusts, and individuals meeting certain initial investment
requirements. A third class of shares, Service Shares of the
Money Market Funds are available only to banks and other
financial institutions that meet minimum investment requirements
in connection with trust accounts, cash management programs and
similar programs. If you would like additional information,
please call 1-800-525-3713.
SIZE OF FUNDS
Although there is no present intention to do so, the Funds may
discontinue sales of their shares if management and the Trustees
believe that continued sales may adversely affect a Fund's
ability to achieve its investment objective. If sales of a Fund
are discontinued, it is expected that existing shareholders of
that Fund would be permitted to continue to purchase shares and
to reinvest any dividends or capital gains distributions, absent
highly unusual circumstances.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Funds invest or worldwide
markets and economies.
Other information 55
<PAGE>
Distributions and taxes
DISTRIBUTIONS
To avoid taxation of the Funds, the Internal Revenue Code
requires each Fund to distribute net income and any net capital
gains realized on its investments annually. A Fund's income from
dividends and interest and any net realized short-term gains are
paid to shareholders as ordinary income dividends. Net realized
long-term gains are paid to shareholders as capital gains
distributions.
FIXED-INCOME FUNDS
Income dividends for the Fixed-Income Funds are declared daily,
Saturdays, Sundays and holidays included, and are generally paid
as of the last business day of each month. If a month begins on a
Saturday, Sunday or holiday, dividends for those days are paid at
the end of the preceding month. You will begin accruing income
dividends the day after a purchase is effective. If shares are
redeemed, you will receive all dividends accrued through the day
of the redemption. Capital gains, if any, are declared and paid
in December.
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions, other than daily income dividends, are paid to
shareholders as of the record date of a distribution of a Fund,
regardless of how long the shares have been held. Undistributed
income and realized gains are included in each Fund's daily NAV.
The share price of a Fund drops by the amount of the
distribution, net of any subsequent market fluctuations. As an
example, assume that on December 31, Janus Flexible Income Fund
declared a dividend in the amount of $0.25 per share. If Janus
Flexible Income Fund's share price was $10.00 on December 30, the
Fund's share price on December 31 would be $9.75, barring market
fluctuations. Shareholders should be aware that distributions
from a taxable mutual fund are not value-enhancing and may create
income tax obligations. Capital gains distributions, if any, from
Janus Federal Tax-Exempt Fund will also be taxable.
56 Janus Income Funds
<PAGE>
"BUYING A DIVIDEND"
If you purchase shares of a Fund just before the distribution,
you will pay the full price for the shares and receive a portion
of the purchase price back as a taxable distribution. This is
referred to as "buying a dividend." In the above example, if you
bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as
a dividend and your shares would now be worth $9.75 per share.
Unless your account is set up as a tax-deferred account,
dividends paid to you would be included in your gross income for
tax purposes, even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the
dividends.
MONEY MARKET FUNDS
For the Money Market Funds, dividends representing substantially
all of the net investment income and any net realized gains on
sales of securities are declared daily, Saturdays, Sundays and
holidays included, and distributed on the last business day of
each month. If a month begins on a Saturday, Sunday or holiday,
dividends for those days are declared at the end of the preceding
month and distributed on the first business day of the month.
Shares of the Money Market Funds purchased by wire on a day on
which the Funds calculate their net asset value and the Federal
Reserve Banks are open ("bank business day") will receive that
day's dividend if the purchase is effected prior to 3:00 p.m.
(New York time) for Janus Money Market Fund, 5:00 p.m. for Janus
Government Money Market Fund and 12:00 p.m. for Janus Tax-Exempt
Money Market Fund. Otherwise, such Shares begin to accrue
dividends on the following bank business day. Purchase orders
accompanied by a check or other negotiable bank draft will be
accepted and effected as of 4:00 p.m. (New York time) (5:00 p.m.
for Janus Government Money Market Fund), on the business day of
receipt and such Shares will begin to accrue dividends on the
first bank business day following receipt of the order.
Distributions and taxes 57
<PAGE>
Redemption orders effected on any particular day will generally
receive dividends declared through the day of redemption.
However, redemptions made by wire which are received prior to
3:00 p.m. (New York time) for the Janus Money Market Fund, 5:00
p.m. for Janus Government Money Market Fund and 12:00 p.m. for
Janus Tax-Exempt Money Market Fund on a bank business day will
result in Shares being redeemed that day. Proceeds of such a
redemption will normally be sent to the predesignated account on
that day, and that day's dividend will not be received. Requests
for redemptions made by wire which are received after these times
will be processed on that day and receive that day's dividend,
but will not be wired until the following bank business day.
The Funds reserve the right to require purchase and redemption
requests and payments prior to these times on days when the bond
market or NYSE close early.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application
how you want to receive your distributions. You may change your
distribution option at any time by writing the Funds at one of
the addresses on page 32 or calling 1-800-525-3713. The Funds
offer the following options:
1. REINVESTMENT OPTION. You may reinvest your income dividends
and capital gains distributions in additional shares. This
option is assigned automatically if no other choice is made.
2. CASH OPTION. You may receive your income dividends and capital
gains distributions in cash.
3. REINVEST AND CASH OPTION (THE FIXED-INCOME FUNDS ONLY). You
may receive either your income dividends or capital gains
distributions in cash and reinvest the other in additional
shares.
4. REDIRECT OPTION. You may direct your dividends or capital
gains distributions (dividends in the case of the Money Market
Funds) to purchase shares of another Janus fund.
58 Janus Income Funds
<PAGE>
The Funds reserve the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that
remain outstanding for six months in shares of the applicable
Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
TAXES
As with any investment, you should consider the tax consequences
of investing in the Funds. Any time you sell or exchange shares
of a Fund in a taxable account, it is considered a taxable event.
Depending on the purchase price and the sale price, you may have
a gain or loss on the transaction. Any tax liabilities generated
by your transactions are your responsibility.
The following discussion does not apply to tax-deferred accounts,
nor is it a complete analysis of the federal tax implications of
investing in the Funds. You may wish to consult your own tax
adviser. Additionally, state or local taxes may apply to your
investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Janus Federal Tax-Exempt Fund and Janus Tax-Exempt Money Market
Fund anticipate that substantially all their income dividends
will be exempt from federal income tax, although either Fund may
occasionally earn income on taxable investments and dividends
attributable to that income would be taxable. These Funds may be
subject to state and local income tax. In addition, interest from
certain private activity bonds is a preference item for purposes
of the alternative minimum tax, and to the extent a Fund earns
such income, shareholders subject to the alternative minimum tax
must include that income as a preference item. Distributions from
capital gains, if any, are subject to federal tax. The Funds will
advise shareholders of the percentage of dividends, if any,
subject to any federal tax.
Dividends and distributions for all of the other Funds are
subject to federal income tax, regardless of whether the
distribution is made in cash or reinvested in additional shares
of a Fund.
Distributions and taxes 59
<PAGE>
Distributions may be taxable at different rates depending on the
length of time a Fund holds a security. In certain states, a
portion of the dividends and distributions (depending on the
sources of a Fund's income) may be exempt from state and local
taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on
or before January 31st of each year. Account tax information will
also be sent to the IRS.
TAXATION OF THE FUNDS
Dividends, interest, and some capital gains received by the Funds
on foreign securities may be subject to tax withholding or other
foreign taxes. The Funds may from year to year make the election
permitted under section 853 of the Internal Revenue Code to pass
through such taxes to shareholders as a foreign tax credit. If
such an election is not made, any foreign taxes paid or accrued
will represent an expense to the Funds.
The Funds do not expect to pay federal income or excise taxes
because they intend to meet certain requirements of the Internal
Revenue Code. It is important that the Funds meet these
requirements so that any earnings on your investment will not be
taxed twice.
60 Janus Income Funds
<PAGE>
Financial highlights
The financial highlights tables are intended to help you
understand the Funds' financial performance for the past 5 years
through October 31st of each fiscal year shown (or for Funds with
a performance history shorter than 5 years, through October 31st
of each fiscal period shown). Items 1 through 8 reflect financial
results for a single Fund share. The total returns in the tables
represent the rate that an investor would have earned (or lost)
on an investment in each of the Funds (assuming reinvestment of
all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with
the Funds' financial statements, are included in the Annual
Report, which is available upon request and incorporated by
reference into the SAI.
<TABLE>
<CAPTION>
JANUS FLEXIBLE INCOME FUND
- --------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $ 9.65 $ 9.55 $ 8.96 $10.03
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.67 0.69 0.73 0.72 0.74
3. Net gains or (losses) on securities
(both realized and unrealized) 0.12 0.37 0.10 0.59 (0.86)
4. Total from investment operations 0.79 1.06 0.83 1.31 (0.12)
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.67) (0.69) (0.73) (0.72) (0.72)
6. Distributions (from capital gains) (0.21) (0.02) -- -- (0.23)
7. Total distributions (0.88) (0.71) (0.73) (0.72) (0.95)
8. NET ASSET VALUE, END OF PERIOD $ 9.91 $10.00 $ 9.65 $ 9.55 $ 8.96
9. Total return 8.14% 11.48% 9.01% 15.35% (1.26%)
10. Net assets, end of period (in
millions) $1,104 $ 727 $ 604 $ 580 $ 377
11. Average net assets for the period
(in millions) $ 893 $ 656 $ 604 $ 450 $ 429
12. Ratio of gross expenses to average
net assets 0.84% 0.87% 0.88% 0.96% N/A
13. Ratio of net expenses to average net
assets 0.82% 0.86% 0.87% 0.96% 0.93%
14. Ratio of net investment income to
average net assets 6.68% 7.10% 7.60% 7.91% 7.75%
15. Portfolio turnover rate 148% 207% 214% 250% 137%
- --------------------------------------------------------------------------------------
</TABLE>
Financial highlights 61
<PAGE>
<TABLE>
<CAPTION>
JANUS HIGH-YIELD FUND
- -------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $11.83 $11.12 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.90 0.97 0.80
3. Net gains or (losses) on securities (both
realized and unrealized) (1.02) 0.82 1.12
4. Total from investment operations (0.12) 1.79 1.92
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.90) (0.97) (0.80)
6. Distributions (from capital gains) (0.56) (0.11) --
7. Total distributions (1.46) (1.08) (0.80)
8. NET ASSET VALUE, END OF PERIOD $10.25 $11.83 $11.12
9. Total return* (1.45%) 16.94% 19.71%
10. Net assets, end of period (in millions) $ 268 $ 301 $ 211
11. Average net assets for the period (in millions) $ 381 $ 266 $ 88
12. Ratio of gross expenses to average net assets** 0.99% 1.03%(2) 1.01%(2)
13. Ratio of net expenses to average net assets** 0.96% 1.00% 1.00%
14. Ratio of net investment income to average net
assets** 7.85% 8.45% 9.00%
15. Portfolio turnover rate** 336% 404% 324%
- -------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) The ratio was 1.04% in 1997 and 1.18% in 1996 before waiver of certain Fund
expenses.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
62 Janus Income Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS FEDERAL TAX-EXEMPT FUND
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $ 7.09 $ 6.92 $ 6.88 $ 6.45 $ 7.30
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.34 0.35 0.36 0.36 0.36
3. Net gains or (losses) on securities
(both realized and unrealized) 0.18 0.17 0.04 0.43 (0.83)
4. Total from investment operations 0.52 0.52 0.40 0.79 (0.47)
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.34) (0.35) (0.36) (0.36) (0.36)
6. Distributions (from capital gains) -- -- -- -- (0.02)
7. Total distributions (0.34) (0.35) (0.36) (0.36) (0.38)
8. NET ASSET VALUE, END OF PERIOD $ 7.27 $ 7.09 $ 6.92 $ 6.88 $ 6.45
9. Total return 7.65% 7.72% 5.94% 12.60% (6.62%)
10. Net assets, end of period (in
millions) $ 92 $ 62 $ 45 $ 33 $ 26
11. Average net assets for the period (in
millions) $ 74 $ 54 $ 36 $ 29 $ 28
12. Ratio of gross expenses to average net
assets 0.67%(2) 0.66%(2) 0.68%(2) 0.70%(2) N/A
13. Ratio of net expenses to average net
assets 0.65% 0.65% 0.65% 0.65% 0.65%(2)
14. Ratio of net investment income to
average net assets 4.76% 5.00% 5.18% 5.43% 5.20%
15. Portfolio turnover rate 227% 304% 225% 164% 160%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(2) The ratio was 0.99% in 1998; 1.11% in 1997; 1.14% in 1996; 1.31% in 1995;
and 1.41% in 1994 before waiver of certain Fund expenses.
Financial highlights 63
<PAGE>
<TABLE>
<CAPTION>
JANUS SHORT-TERM BOND FUND
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $ 2.90 $ 2.86 $ 2.84 $ 2.87 $ 3.02
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.17 0.17 0.16 0.18 0.18
3. Net gains or (losses) on securities
(both realized and unrealized) 0.01 0.04 0.02 (0.03) (0.15)
4. Total from investment operations 0.18 0.21 0.18 0.15 0.03
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.17) (0.17) (0.16) (0.18) (0.17)
6. Distributions (from capital gains) -- -- -- -- (0.01)
7. Total distributions (0.17) (0.17) (0.16) (0.18) (0.18)
8. NET ASSET VALUE, END OF PERIOD $ 2.91 $ 2.90 $ 2.86 $ 2.84 $ 2.87
9. Total return 6.49% 7.70% 6.49% 5.55% 1.26%
10. Net assets, end of period (in millions) $ 141 $ 58 $ 41 $ 48 $ 54
11. Average net assets for the period (in
millions) $ 90 $ 48 $ 42 $ 47 $ 60
12. Ratio of gross expenses to average net
assets 0.67%(2) 0.67%(2) 0.67%(2) 0.66%(2) N/A
13. Ratio of net expenses to average net
assets 0.65% 0.65% 0.65% 0.65% 0.65%(2)
14. Ratio of net investment income to
average net assets 5.91% 6.03% 5.57% 6.67% 6.08%
15. Portfolio turnover rate 101% 133% 486% 337% 346%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(2) The ratio was 1.06% in 1998; 1.20% in 1997; 1.23% in 1996; 1.23% in 1995;
and 1.15% in 1994 before waiver of certain Fund expenses.
64 Janus Income Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS MONEY MARKET FUND - INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05 0.04
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.05 0.05 0.05 0.04
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.05) (0.05) (0.04)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.05) (0.05) (0.05) (0.04)
8. NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
9. Total return* 5.25% 5.23% 5.13% 3.95%
10. Net assets, end of period (in millions) $1,492 $1,033 $ 774 $ 643
11. Average net assets for the period (in millions) $1,124 $ 883 $ 676 $ 461
12. Ratio of expenses to average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
13. Ratio of net investment income to average net
assets** 5.13% 5.09% 5.01% 5.56%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from February 15, 1995 (inception) to October 31, 1995.
(2) The ratio of expenses to average net assets was 0.70% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 65
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND - INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05 0.04
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.05 0.05 0.05 0.04
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.05) (0.05) (0.04)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.05) (0.05) (0.05) (0.04)
8. NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
9. Total return* 5.12% 5.11% 5.03% 3.90%
10. Net assets, end of period (in millions) $ 213 $ 132 $ 117 $ 199
11. Average net assets for the period (in millions) $ 151 $ 123 $ 112 $ 88
12. Ratio of expenses to average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
13. Ratio of net investment income to average net
assets** 5.01% 5.42% 4.91% 5.40%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from February 15, 1995 (inception) to October 31, 1995.
(2) The ratio of expenses to average net assets was 0.70% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
66 Janus Income Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.03 0.03 0.03 0.02
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.03 0.03 0.03 0.02
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.03) (0.03) (0.03) (0.02)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.03) (0.03) (0.03) (0.02)
8. NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
9. Total return* 3.23% 3.20% 3.27% 2.40%
10. Net assets, end of period (in millions) $ 105 $ 81 $ 75 $ 67
11. Average net assets for the period (in millions) $ 91 $ 76 $ 69 $ 57
12. Ratio of expenses to average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
13. Ratio of net investment income to average net
assets** 3.16% 3.14% 3.22% 3.38%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from February 15, 1995 (inception) to October 31, 1995.
(2) The ratio of expenses to average net assets was 0.70% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 67
<PAGE>
Glossary of investment terms
This glossary provides a more detailed description of some of the
types of securities and other instruments in which the Fixed-
Income Funds may invest. The Fixed-Income Funds may invest in
these instruments to the extent permitted by their investment
objectives and policies. The Fixed-Income Funds are not limited
by this discussion and may invest in any other types of
instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed
discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality,
government or government agency. The issuer of a bond is required
to pay the holder the amount of the loan (or par value of the
bond) at a specified maturity and to make scheduled interest
payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates
representing an interest in a pool of securities. Holders are
entitled to a proportionate interest in the underlying
securities. Municipal lease obligations are often sold in the
form of COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and
other borrowers to investors seeking to invest idle cash. The
Funds may purchase commercial paper issued in private placements
under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of
ownership in a company and usually carry voting rights and earns
dividends. Unlike preferred stock, dividends on common stock are
not fixed but are declared at the discretion of the issuer's
board of directors.
68 Janus Income Funds
<PAGE>
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a
fixed dividend or interest payment and are convertible into
common stock at a specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that
must be repaid at a later date. Such securities have specific
maturities and usually a specific rate of interest or an original
purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital
gains on the underlying security. Receipts include those issued
by domestic banks (American Depositary Receipts), foreign banks
(Global or European Depositary Receipts) and broker-dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate
of return. The term generally includes short- and long-term
government, corporate and municipal obligations that pay a
specified rate of interest or coupons for a specified period of
time, and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the
case of adjustable and floating rate securities, for a shorter
period.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated
below investment grade by the primary rating agencies (e.g., BB
or lower by Standard & Poor's and Ba or lower by Moody's). Other
terms commonly used to describe such securities include "lower
rated bonds," "noninvestment grade bonds" and "junk bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by
a public authority but which may be backed only by the credit and
security of a private issuer and may involve greater credit risk.
See "Municipal securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of
mortgages or other debt. These securities are generally pass-
Glossary of investment terms 69
<PAGE>
through securities, which means that principal and interest
payments on the underlying securities (less servicing fees) are
passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the
underlying mortgages or other debt may be refinanced or paid off
prior to their maturities during periods of declining interest
rates. In that case, a portfolio manager may have to reinvest the
proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that
is not subject to prepayment risk.
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or
installment purchase contracts for property or equipment. Lease
obligations may not be backed by the issuing municipality's
credit and may involve risks not normally associated with general
obligation bonds and other revenue bonds. For example, their
interest may become taxable if the lease is assigned and the
holders may incur losses if the issuer does not appropriate funds
for the lease payments on an annual basis, which may result in
termination of the lease and possible default.
MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or
political subdivision. A municipal security may be a general
obligation backed by the full faith and credit (i.e., the
borrowing and taxing power) of a municipality or a revenue
obligation paid out of the revenues of a designated project,
facility or revenue source.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign
corporations which generate certain amounts of passive income or
hold certain amounts of assets for the production of passive
income. Passive income includes dividends, interest, royalties,
rents and annuities. To avoid taxes and interest that the Funds
must pay if these investments are profitable, the Funds may make
various elections permitted by the tax laws. These elections
could require that the Funds recognize taxable income, which in
turn
70 Janus Income Funds
<PAGE>
must be distributed, before the securities are sold and before
cash is received to pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the
issuer an option to pay cash at a coupon payment date or give the
holder of the security a similar bond with the same coupon rate
and a face value equal to the amount of the coupon payment that
would have been made.
PREFERRED STOCKS are equity securities that generally pay
dividends at a specified rate and have preference over common
stock in the payment of dividends and liquidation. Preferred
stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by a
Fund and a simultaneous agreement by the seller (generally a bank
or dealer) to repurchase the security from the Fund at a
specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk
that the seller will fail to repurchase the security, as agreed.
In that case, a Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter
delays and incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a
Fund to another party (generally a bank or dealer) in return for
cash and an agreement by the Fund to buy the security back at a
specified price and time. This technique will be used primarily
to provide cash to satisfy unusually high redemption requests, or
for other temporary or emergency purposes.
RULE 144A SECURITIES are securities that are not registered for
sale to the general public under the Securities Act of 1933, but
that may be resold to certain institutional investors.
Glossary of investment terms 71
<PAGE>
STANDBY COMMITMENTS are obligations purchased by a Fund from a
dealer that give the Fund the option to sell a security to the
dealer at a specified price.
STEP COUPON BONDS are debt securities that trade at a discount
from their face value and pay coupon interest. The discount from
the face value depends on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer.
STRIP BONDS are debt securities that are stripped of their
interest (usually by a financial intermediary) after the
securities are issued. The market value of these securities
generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS are generally long-term securities that are
coupled with an option to tender the securities to a bank,
broker-dealer or other financial institution at periodic
intervals and receive the face value of the bond. This type of
security is commonly used as a means of enhancing the security's
liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
government that are supported by its full faith and credit.
Treasury bills have initial maturities of less than one year,
Treasury notes have initial maturities of one to ten years and
Treasury bonds may be issued with any maturity but generally have
maturities of at least ten years. U.S. government securities also
include indirect obligations of the U.S. government that are
issued by federal agencies and government sponsored entities.
Unlike Treasury securities, agency securities generally are not
backed by the full faith and credit of the U.S. government. Some
agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the
discretionary authority of the U.S. government to purchase the
agency's obligations and others are supported only by the credit
of the sponsoring agency.
72 Janus Income Funds
<PAGE>
VARIABLE AND FLOATING RATE SECURITIES have variable or floating
rates of interest and, under certain limited circumstances, may
have varying principal amounts. These securities pay interest at
rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or
market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stock or
bonds, that give the holder the right to buy a proportionate
amount of common stock at a specified price, usually at a price
that is higher than the market price at the time of issuance of
the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally
involve the purchase of a security with payment and delivery at
some time in the future - i.e., beyond normal settlement. The
Funds do not earn interest on such securities until settlement
and bear the risk of market value fluctuations in between the
purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in
this manner.
ZERO COUPON BONDS are debt securities that do not pay regular
interest at regular intervals, but are issued at a discount from
face value. The discount approximates the total amount of
interest the security will accrue from the date of issuance to
maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than
interest-paying securities.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified
amount of a financial instrument for an agreed upon price at a
specified time. Forward contracts are not currently exchange
traded and are typically negotiated on an individual basis. The
Glossary of investment terms 73
<PAGE>
Funds may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose
value is tied to, a currency other than the U.S. dollar or to
reduce the impact of currency appreciation on purchases of such
securities. They may also enter into forward contracts to
purchase or sell securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a
specified price on a specified date. The Funds may buy and sell
futures contracts on foreign currencies, securities and financial
indices including interest rates or an index of U.S. government,
foreign government, equity or fixed-income securities. The Funds
may also buy options on futures contracts. An option on a futures
contract gives the buyer the right, but not the obligation, to
buy or sell a futures contract at a specified price on or before
a specified date. Futures contracts and options on futures are
standardized and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to
intermediate-term debt securities whose value at maturity or
interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e. their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. A Fund bears the market
risk of an investment in the underlying instruments, as well as
the credit risk of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an
exchange of floating rate payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears
an inverse relationship to the interest rate on another
instrument or
74 Janus Income Funds
<PAGE>
index. For example, upon reset the interest rate payable on a
security may go down when the underlying index has risen. Certain
inverse floaters may have an interest rate reset mechanism that
multiplies the effects of change in the underlying index. Such
mechanism may increase the volatility of the security's market
value.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a
fixed date at a predetermined price. The Funds may purchase and
write put and call options on securities, securities indices and
foreign currencies.
Glossary of investment terms 75
<PAGE>
Explanation of rating categories
The following is a description of credit ratings issued by two of
the major credit ratings agencies. Credit ratings evaluate only
the safety of principal and interest payments, not the market
value risk of lower quality securities. Credit rating agencies
may fail to change credit ratings to reflect subsequent events on
a timely basis. Although Janus Capital considers security ratings
when making investment decisions, it also performs its own
investment analysis and does not rely solely on the ratings
assigned by credit agencies.
STANDARD & POOR'S
RATINGS SERVICES
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
AAA......................... Highest rating; extremely strong
capacity to pay principal and
interest.
AA.......................... High quality; very strong capacity
to pay principal and interest.
A........................... Strong capacity to pay principal
and interest; somewhat more
susceptible to the adverse effects
of changing circumstances and
economic conditions.
BBB......................... Adequate capacity to pay principal
and interest; normally exhibit
adequate protection parameters, but
adverse economic conditions or
changing circumstances more likely
to lead to a weakened capacity to
pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, CCC, CC, C........... Predominantly speculative with
respect to the issuer's capacity to
meet required interest and
principal payments. BB - lowest
degree of speculation; C - the
highest degree of speculation.
Quality and protective
characteristics outweighed by large
uncertainties or major risk
exposure to adverse conditions.
D........................... In default.
</TABLE>
76 Janus Income Funds
<PAGE>
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
Aaa......................... Highest quality, smallest degree of
investment risk.
Aa.......................... High quality; together with Aaa
bonds, they compose the high-grade
bond group.
A........................... Upper-medium grade obligations;
many favorable investment
attributes.
Baa......................... Medium-grade obligations; neither
highly protected nor poorly
secured. Interest and principal
appear adequate for the present but
certain protective elements may be
lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba.......................... More uncertain, with speculative
elements. Protection of interest
and principal payments not well
safeguarded during good and bad
times.
............................ Lack characteristics of desirable
investment; potentially low
assurance of timely interest and
principal payments or maintenance
of other contract terms over time.
Caa......................... Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
Ca.......................... Speculative in a high degree; could
be in default or have other marked
shortcomings.
C........................... Lowest-rated; extremely poor
prospects of ever attaining
investment standing.
</TABLE>
Explanation of rating categories 77
<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless a portfolio manager determines that such
securities are the equivalent of investment grade securities.
Securities that have received ratings from more than one agency
are considered investment grade if at least one agency has rated
the security investment grade.
SECURITIES HOLDINGS BY RATING CATEGORY
During the fiscal period ended October 31, 1998, the percentage
of securities holdings for the following Funds by rating category
based upon a weighted monthly average was:
<TABLE>
<CAPTION>
JANUS FLEXIBLE INCOME FUND
--------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA 24%
AA 2%
A 13%
BBB 18%
BB 15%
B 17%
CCC 0%
CC 0%
C 0%
Preferred Stock 2%
Cash and Options 9%
TOTAL 100%
--------------------------------------------------------------------------
</TABLE>
78 Janus Income Funds
<PAGE>
<TABLE>
<CAPTION>
JANUS HIGH-YIELD FUND
--------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA 0%
AA 0%
A 0%
BBB 0%
BB 6%
B 76%
CCC 6%
CC 0%
C 0%
Preferred Stock 0%
Cash and Options 12%
TOTAL 100%
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
JANUS SHORT-TERM BOND FUND
--------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA 24%
AA 20%
A 31%
BBB 10%
BB 3%
B 7%
CCC 2%
CC 0%
C 0%
Preferred Stock 0%
Cash and Options 3%
TOTAL 100%
--------------------------------------------------------------------------
</TABLE>
No other Fund described in this Prospectus held 5% or more of its
assets in bonds rated below investment grade for the fiscal year
ended October 31, 1998.
Explanation of rating categories 79
<PAGE>
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<PAGE>
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81
<PAGE>
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82
<PAGE>
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83
<PAGE>
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84
<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-525-3713 or visiting our Web
site at janus.com. In the Funds' Annual Report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during their last
fiscal year. Other information is also available from financial
intermediaries that sell shares of the Funds.
The Statement of Additional Information provides detailed
information about the Funds and is incorporated into this Prospectus
by reference. You may review the Funds' Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3165
<PAGE>
[JANUS LOGO]
Janus Venture Fund
PROSPECTUS
FEBRUARY 17, 1999
THE FUND HAS DISCONTINUED PUBLIC SALES OF ITS SHARES
TO NEW INVESTORS, BUT SHAREHOLDERS WHO HAVE OPEN
FUND ACCOUNTS MAY MAKE ADDITIONAL INVESTMENTS AND
REINVEST DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
CURRENT SHAREHOLDERS MAY ALSO OPEN ADDITIONAL FUND
ACCOUNTS UNDER CERTAIN CONDITIONS. IF A FUND ACCOUNT
IS CLOSED, HOWEVER, ADDITIONAL INVESTMENTS IN THE
FUND MAY NOT BE POSSIBLE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Venture Fund........................... 2
Fees and expenses............................ 4
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objective and principal investment
strategies................................... 5
Risks........................................ 9
SHAREHOLDER'S MANUAL
Minimum investments.......................... 16
Types of account ownership................... 16
How to open your Janus account............... 18
How to purchase shares....................... 19
How to exchange shares....................... 21
How to redeem shares......................... 23
Shareholder services and account policies.... 27
MANAGEMENT OF THE FUND
Investment adviser........................... 32
Portfolio managers........................... 33
OTHER INFORMATION............... ............... 34
DISTRIBUTIONS AND TAXES
Distributions................................ 35
Taxes........................................ 36
FINANCIAL HIGHLIGHTS.............. ............. 38
GLOSSARY
Glossary of investment terms................. 39
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
JANUS VENTURE FUND
1. WHAT IS THE INVESTMENT OBJECTIVE OF JANUS VENTURE FUND?
The Fund seeks capital appreciation.
The Fund's Trustees may change this objective without a
shareholder vote and the Fund will notify you of any changes that
are material. If there is a material change in the Fund's
objective or policies, you should consider whether the Fund
remains an appropriate investment for you. There is no guarantee
that the Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF JANUS VENTURE FUND?
The Fund invests in equity securities of U.S. and foreign
companies selected for their potential for capital appreciation.
The Fund normally invests at least 50% of its equity assets in
small-sized companies.
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, they look for companies with
earnings growth potential one at a time. If the portfolio
managers are unable to find investments with earnings growth
potential, a significant portion of the Fund's assets may be in
cash or similar investments.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN JANUS VENTURE FUND?
The biggest risk of investing in this Fund is that its returns
may vary and you could lose money. If you are considering
investing in the Fund, remember that it is designed for long-term
investors who can accept the risks of investing in a portfolio
with significant common stock holdings. Common stocks tend to be
more volatile than other investment choices.
The value of the Fund's portfolio may decrease if the value of an
individual company in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes
down. If the value of the Fund's portfolio decreases, the Fund's
net asset value (NAV) will also decrease which means if you sell
your shares in the Fund you would get back less money. Normally,
the Fund invests at least 50% of its equity assets in
2 Janus Venture Fund
<PAGE>
securities issued by small-sized companies, which tend to be more
volatile than securities issued by larger or more established
companies. As a result, the Fund's returns may be more volatile
than one holding securities of large, established companies.
An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The following information illustrates how the Fund's performance
has varied over time. The bar chart depicts the change in the
Fund's performance from year-to-year during the periods
indicated. The table compares the Fund's average annual returns
for the periods indicated to a broad-based securities market
index.
JANUS VENTURE FUND
A BAR CHART showing Annual Total Returns for Janus Venture Fund from 1989
through 1998:
Annual returns for periods ended 12/31
38.74% (0.40%) 47.82% 7.44% 9.08% 5.46% 26.46% 8.02% 12.62% 23.22%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 24.98%; Worst Quarter: 3rd-1998 (14.81%)
Average annual total return for periods ended 12/31/98
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (4/30/85)
<S> <C> <C> <C> <C>
Janus Venture Fund 23.22% 14.86% 16.95% 16.89%
Russell 2000(R) Index* (2.55%) 11.87% 12.92% 12.05%
------------------------------------------
</TABLE>
* The Russell 2000(R) Index is an index that measures the
performance of the 2,000 smallest companies in the Russell
3,000 Index with an average market capitalization of
approximately $421 million.
The Fund's past performance does not necessarily indicate how it
will perform in the future.
Risk return summary 3
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Fund.
ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
below shows, these costs are borne indirectly by all
shareholders.
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund. It is based upon gross
expenses (without the effect of expense offset arrangements) for
the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Janus Venture Fund
<S> <C>
Management Fee 0.68%
Other Expenses 0.26%
Total Annual Fund Operating Expenses 0.94%
</TABLE>
EXAMPLE:
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods
indicated then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and
that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------------------------------
<S> <C> <C> <C> <C>
Janus Venture Fund $96 $300 $520 $1,155
</TABLE>
4 Janus Venture Fund
<PAGE>
Investment objective, principal
investment strategies
and risks
This section takes a closer look at the investment objective of
the Fund, its principal investment strategies and certain risks
of investing in the Fund. Strategies and policies that are noted
as "fundamental" cannot be changed without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 9-11 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
Janus Venture Fund seeks capital appreciation. Normally, the Fund
pursues its objective by investing at least 50% of its equity
assets in small-sized companies. Small-sized companies are those
who have market capitalizations of less than $1 billion or annual
gross revenues of less than $500 million. Companies whose
capitalization or revenues fall outside these ranges after the
Fund's initial purchase continue to be considered small-sized.
The Fund may also invest in larger companies with strong growth
potential or relatively well-known and large companies with
potential for capital appreciation.
The following questions and answers are designed to help you better understand
the Fund's principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
The Fund may invest substantially all of its assets in common
stocks if its portfolio managers believe that common stocks will
appreciate in value. The portfolio managers generally take a
"bottom up" approach to selecting companies. In other words, they
seek to identify individual companies with earnings growth
potential that may not be recognized by the market at large. They
make this assessment by looking at companies one at a time,
regardless of size, country of organization, place of principal
business activity, or other similar selection criteria.
Realization of income is not a significant consideration when
choosing investments for the Fund. Income realized on the Fund's
investments will be incidental to its objective.
Investment objective, principal investment strategies and risks 5
<PAGE>
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio managers seek companies that meet
their selection criteria regardless of where a company is
located. Foreign securities are generally selected on a
stock-by-stock basis without regard to any defined allocation
among countries or geographic regions. However, certain factors
such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency
relationships, and prospects for economic growth among countries,
regions or geographic areas may warrant greater consideration in
selecting foreign securities. There are no limitations on the
countries in which the Fund may invest and the Fund may at times
have significant foreign exposure.
3. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the
size and value of a company. It is computed by multiplying the
current market price of a share of the company's stock by the
total number of its shares outstanding. As noted previously,
market capitalization and annual gross revenues are important
investment criteria for the Fund.
GENERAL PORTFOLIO POLICIES
In investing its portfolio assets, the Fund will follow the
general policies listed below. The percentage limitations
included in these policies and elsewhere in this Prospectus apply
only at the time of purchase of the security. So, for example, if
the Fund exceeds a limit as a result of market fluctuations or
the sale of securities, it will not be required to dispose of any
securities.
CASH POSITION
When the Fund's portfolio managers believe that market conditions
are unfavorable for profitable investing, or when they are
otherwise unable to locate attractive investment opportunities,
the Fund's cash or similar investments may increase. In other
words, the Fund does not always stay fully invested in stocks.
Cash or similar investments generally are a residual - they
represent the
6 Janus Venture Fund
<PAGE>
assets that remain after the portfolio managers have committed
available assets to desirable investment opportunities. However,
the portfolio managers may also temporarily increase the Fund's
cash position to protect its assets or maintain liquidity. When
the Fund's investments in cash or similar investments increase,
it may not participate in market advances or declines to the same
extent that it would if the Fund remained more fully invested in
stocks.
OTHER TYPES OF INVESTMENTS
The Fund invests primarily in a portfolio of equity securities,
which may include preferred stocks, common stocks, warrants and
securities convertible into common or preferred stocks, but it
may also invest to a lesser degree in other types of securities.
These securities (which are described in the Glossary) may
include:
- debt securities
- indexed/structured securities
- high-yield/high-risk securities (less than 35% of the Fund's
assets)
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or
forward commitment basis
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other
position that cannot be disposed of quickly in the normal course
of business. For example, some securities are not registered
under the U.S. securities laws and cannot be sold to the U.S.
public because of SEC regulations (these are known as "restricted
securities"). Under procedures adopted by the Fund's Trustees,
certain restricted securities may be deemed liquid, and will not
be counted toward this 15% limit.
Investment objective, principal investment strategies and risks 7
<PAGE>
FOREIGN SECURITIES
The Fund may invest without limit in foreign equity and debt
securities. The Fund may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the
United States. Other ways of investing in foreign securities
include depositary receipts or shares, and passive foreign
investment companies.
SPECIAL SITUATIONS
The Fund may invest in special situations. A special situation
arises when, in the opinion of the Fund's portfolio managers, the
securities of a particular issuer will be recognized and
appreciate in value due to a specific development with respect to
that issuer. Developments creating a special situation might
include, among others, a new product or process, a technological
breakthrough, a management change or other extraordinary
corporate event, or differences in market supply of and demand
for the security. The Fund's performance could suffer if the
anticipated development in a "special situation" investment does
not occur or does not attract the expected attention.
PORTFOLIO TURNOVER
The Fund generally intends to purchase securities for long-term
investment although, to a limited extent, the Fund may purchase
securities in anticipation of relatively short-term price gains.
Short-term transactions may also result from liquidity needs,
securities having reached a price or yield objective, changes in
interest rates or the credit standing of an issuer, or by reason
of economic or other developments not foreseen at the time of the
investment decision. The Fund may also sell one security and
simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or
securities prices. Changes are made in the Fund's portfolio
whenever its portfolio managers believe such changes are
desirable. Portfolio turnover rates are generally not a factor in
making buy and sell decisions.
Increased portfolio turnover may result in higher costs for
brokerage commissions, dealer mark-ups and other transaction
8 Janus Venture Fund
<PAGE>
costs and may also result in taxable capital gains. Higher costs
associated with increased portfolio turnover may offset gains in
the Fund's performance.
RISKS
Because the Fund may invest substantially all of its assets in
common stocks, the main risk is the risk that the value of the
stocks it holds might decrease in response to the activities of
an individual company or in response to general market and/or
economic conditions. If this occurs, the Fund's share price may
also decrease. The Fund's performance may also be affected by
risks specific to certain types of investments, such as foreign
securities, derivative investments, non-investment grade debt
securities or companies with relatively small market
capitalizations.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Fund.
1. THE FUND NORMALLY INVESTS AT LEAST 50% OF ITS EQUITY ASSETS IN SECURITIES OF
SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up
companies offering emerging products or services. Smaller or
newer companies may suffer more significant losses as well as
realize more substantial growth than larger or more established
issuers because they may lack depth of management, be unable to
generate funds necessary for growth or potential development, or
be developing or marketing new products or services for which
markets are not yet established and may never become established.
In addition, such companies may be insignificant factors in their
industries and may become subject to intense competition from
larger or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, and
may be subject to wide price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
Investment objective, principal investment strategies and risks 9
<PAGE>
2. I'VE HEARD A LOT ABOUT HOW THE CHANGE TO THE YEAR 2000 COULD AFFECT COMPUTER
SYSTEMS. DOES THIS CREATE ANY SPECIAL RISKS?
The portfolio managers carefully research each potential
investment before making an investment decision and, among other
things, consider Year 2000 readiness when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
readiness is completely accurate. If a company has not
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
3. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS
PERFORMANCE?
The Fund may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic securities because the Fund's performance may depend on
issues other than the performance of a particular company. These
issues include:
- currency risk
- political and economic risk
- regulatory risk
- market risk
- transaction costs
These risks are described in the SAI.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
SECURITIES?
High-yield/high-risk securities (or "junk" bonds) are securities
rated below investment grade by the primary rating agencies such
as Standard & Poor's and Moody's. The value of lower quality
securities generally is more dependent on credit risk, or the
ability of the issuer to meet interest and principal payments,
than
10 Janus Venture Fund
<PAGE>
investment grade debt securities. Issuers of high-yield
securities may not be as strong financially as those issuing
bonds with higher credit ratings and are more vulnerable to real
or perceived economic changes, political changes or adverse
developments specific to the issuer.
Please refer to the SAI for a description of bond rating
categories.
5. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options and other derivative
instruments to "hedge" or protect its portfolio from adverse
movements in securities prices and interest rates. The Fund may
also use a variety of currency hedging techniques, including
forward currency contracts, to manage exchange rate risk. The
Fund believes the use of these instruments will benefit the Fund.
However, the Fund's performance could be worse than if the Fund
had not used such instruments if the portfolio managers'
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
Investment objective, principal investment strategies and risks 11
<PAGE>
Janus Venture Fund
<PAGE>
Shareholder's
Manual
This section will help you become
familiar with the different types
of accounts you can establish with
Janus. It also explains in detail
the wide array of services and
features you can establish on your
account, as well as account
policies and fees that may apply
to your account. Account policies
(including fees), services and
features may be modified or
discontinued without shareholder
approval or prior notice.
[JANUS LOGO]
<PAGE>
Although the Fund has discontinued public sales of its shares to
new investors, shareholders who maintain open accounts will be
able to continue to purchase shares and reinvest any dividends
and capital gains distributions in additional shares. In
addition, the Fund will continue to accept new accounts which are
opened under taxpayer identification numbers that are identical
to those for existing Fund accounts.
Once a Fund account is closed, it may not be reopened. An account
may be considered closed and subject to redemption by the Fund in
the circumstances discussed under "Involuntary Redemptions" on
page 30.
HOW TO GET IN TOUCH WITH JANUS
Janus offers two Investor Service Centers for those individuals
who would like to conduct their investing in person. Our
representatives will be happy to assist you at either of the
following locations: Monday-Friday 7:00 a.m. to 6:00 p.m.
Mountain time and Saturday 9:00 a.m. to 1:00 p.m. Mountain time.
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
14 Janus Venture Fund
<PAGE>
QUICK ADDRESS AND TELEPHONE REFERENCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
MAILING ADDRESS JANUS XPRESSLINE(TM)
Janus 1-888-979-7737
P.O. Box 173375 For 24-hour access to account
Denver, CO 80217-3375 and fund information,
exchanges, purchases and
FOR OVERNIGHT CARRIER redemptions, automated daily
Janus quotes on fund share prices,
Suite 101 yields and total returns.
3773 Cherry Creek North Drive
Denver, CO 80209-3811 TDD
1-800-525-0056
INVESTOR SERVICE REPRESENTATIVES A telecommunications device
If you have any questions while reading for our hearing- and
this Prospectus, please call one of our speech-impaired shareholders.
Investor Service Representatives at
1-800-525-3713 Monday-Friday: 8:00 JANUS LITERATURE LINE
a.m.-8:00 p.m., and Saturday: 10:00 1-800-525-8983
a.m.-4:00 p.m., New York time. To request a prospectus,
shareholder reports or
JANUS INTERNET ADDRESS marketing materials 24 hours a
janus.com day.
</TABLE>
Shareholder's manual 15
<PAGE>
MINIMUM INVESTMENTS*
- ---------------------------------------------
<TABLE>
<S> <C>
To open a new regular account $2,500
To open a new retirement,
education or UGMA/UTMA account $ 500
To open a new regular account with
an Automatic Investment Program $ 500**
To add to any type of an account $ 100+
</TABLE>
* The Fund reserves the right to
change the amount of these
minimums from time to time or
to waive them in whole or in
part for certain types of
accounts.
** An Automatic Investment Program
requires a $100 minimum
automatic investment per month
until the account balance
reaches $2,500.
+ The minimum subsequent
investment for IRA UGMA/UTMA
accounts is $50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 14, the Fund will accept new accounts opened
under taxpayer identification numbers identical to those on
current Fund accounts. You can establish the following types of
accounts by completing a New Account Application. To request an
application, call 1-800-525-3713.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have
two or more owners.
A GIFT OR TRANSFER TO MINOR (UGMA OR UTMA)
An UGMA/ UTMA account is a custodial account managed for the
benefit of a minor. To open an UGMA or UTMA account, you must
include the minor's Social Security number on the application.
TRUST
An established trust can open an account. The names of each
trustee, the name of the trust and the date of the trust
agreement must be included on the application.
16 Janus Venture Fund
<PAGE>
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The
application must be signed by an authorized officer of the
corporation or a general partner of the partnership.
TAX-DEFERRED ACCOUNTS
If you are eligible, you may set up one or more tax-deferred
accounts. A tax-deferred account allows you to shelter your
investment income and capital gains from current income taxes. A
contribution to certain of these plans may also be tax
deductible. Tax-deferred accounts include retirement plans
described below and the Education IRA. Distributions from these
plans are generally subject to income tax and may be subject to
an additional tax if withdrawn prior to age 59 1/2 or used for a
nonqualifying purpose. Investors should consult their tax adviser
or legal counsel before selecting a tax-deferred account.
Investors Fiduciary Trust Company serves as custodian for the
tax-deferred accounts offered by the Fund. You will be charged an
annual account maintenance fee of $12 for each taxpayer
identification number no matter how many tax-deferred accounts
you have with Janus. You may pay the fee by check or have it
automatically deducted from your account (usually in December).
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.
TRADITIONAL AND ROTH INDIVIDUAL RETIREMENT ACCOUNTS
Both types of IRAs allow most individuals with earned income to
contribute up to the lesser of $2,000 ($4,000 for most married
couples) or 100% of compensation annually. Please refer to the
Janus IRA booklet for more complete information regarding the
different types of IRAs.
Shareholder's manual 17
<PAGE>
EDUCATION IRA
This plan allows individuals, subject to certain income
limitations, to contribute up to $500 annually on behalf of any
child under the age of 18. Please refer to the Janus IRA booklet
for more complete information regarding the Education IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN
This plan allows small business owners (including sole
proprietors) to make tax-deductible contributions for themselves
and any eligible employee(s). A SEP requires an IRA (a SEP-IRA)
to be set up for each SEP participant.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships and sole
proprietors to benefit their employees and themselves.
SECTION 403(B)(7) PLAN
Employees of educational organizations or other qualifying, tax-
exempt organizations may be eligible to participate in a Section
403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
If you are a current Fund shareholder and want to open another
Fund account, complete and sign the appropriate application.
Please be sure to provide your Social Security or taxpayer
identification number on the application and make your check
payable to Janus. The Fund is available only to U.S. citizens or
residents, and your application will be returned to you if you do
not meet these criteria. Send all items to one of addresses
listed in the "Quick Address and Telephone Reference" on page 15.
18 Janus Venture Fund
<PAGE>
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the
next NAV calculated after your order is received and accepted.
Please note the following:
- Cash, credit cards, third party checks and credit card checks
will not be accepted.
- All purchases must be made in U.S. dollars.
- Checks must be drawn on a U.S. bank and made payable to Janus.
- If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.
- If the Fund is unable to debit your predesignated bank account
on the day of purchase, it may make additional attempts or
cancel the purchase.
- The Fund reserves the right to reject any specific purchase
request.
If your purchase is cancelled you will be responsible for any
losses or fees imposed by your bank and losses that may be
incurred as a result of any decline in the value of the cancelled
purchase. The Fund (or its agents) has the authority to redeem
shares in your account(s) to cover any such losses due to
fluctuations in share price. Any profit on such cancellation will
accrue to the Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR
AN ADDITIONAL INVESTMENT IS $100 ($50 FOR IRAS OR UGMA/UTMA
ACCOUNTS). You may add to your account at any time through any of
the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your
confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a
Shareholder's manual 19
<PAGE>
rollover or a current or prior year contribution. Send your check
made payable to Janus and remittance slip or written instructions
to one of the addresses listed previously. You may also request a
booklet of remittance slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. To purchase
shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
day. When you make an additional purchase by telephone, Janus
will automatically debit your predesignated bank account for the
desired amount. To establish the telephone purchase option on
your new account, complete the "Telephone Purchase of Shares
Option" section on the application and attach a "voided" check or
deposit slip from your bank account. If your account is already
established, call 1-800-525-3713 to request the appropriate form.
This option will become effective ten business days after the
form is received.
BY WIRE
Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.
BY INTERNET
You must pre-establish the "Telephone Purchase of Shares Option"
to make a purchase on our Web site at janus.com. If you have
questions, please call 1-800-975-9932 to speak to a Janus
representative.
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment programs to help you
achieve your financial goals as simply and conveniently as
20 Janus Venture Fund
<PAGE>
possible. You may open a new account with a $500 initial purchase
and $100 automatic subsequent investments.
AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will
be electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic
Monthly Investment Program" section on the application and attach
a "voided" check from your bank account. If your Fund account is
already established, call 1-800-525-3713 to request the
appropriate form.
PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you
may have all or a portion of your paycheck ($100 minimum)
invested directly into your Fund account. To obtain information
on establishing this option, call 1-800-525-3713.
SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from one
Janus account to another on any day of the month. For more
information on how to establish this option, call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions
for written requests on page 25.
BY TELEPHONE
All accounts are automatically eligible for the telephone
exchange option. To exchange shares by telephone, call an
Investor Service Representative at 1-800-525-3713 during normal
business hours
Shareholder's manual 21
<PAGE>
or call the Janus XpressLine, 1-888-979-7737, for access to this
option 24 hours a day.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as
little as $100 per month on established accounts. You may
establish a new account with a $500 initial purchase and
subsequent $100 systematic exchanges. If the balance in the
account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the
program will be discontinued.
BY INTERNET
Exchanges may also be made on our Web site at janus.com.
EXCHANGE POLICIES
- Except for Systematic Exchanges, new accounts established by
exchange must be opened with $2,500 or the total account value
if the value of the account you are exchanging from is less
than $2,500.
- Exchanges between existing accounts must meet the $100
subsequent investment requirement.
- You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges). Exchanges in excess
of this limit may be subject to an exchange fee or may result
in termination of the exchange privilege.
- The Fund reserves the right to reject any exchange request and
to modify or terminate the exchange privilege at any time. For
example, the Fund may reject exchanges from accounts engaged in
or known to engage in trading in excess of the limit above
(including market timing transactions).
- Exchanges between accounts will be accepted only if the
registrations are identical.
22 Janus Venture Fund
<PAGE>
- If the shares you are exchanging are held in certificate form,
you must return the certificate to the Fund prior to making any
exchanges.
- Be sure to read the prospectus for the fund into which you are
exchanging.
- An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable
gain or loss in a non-tax deferred account.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your
shares. REMEMBER THAT THE FUND IS CLOSED TO NEW INVESTORS AND IF
A TOTAL REDEMPTION IS MADE ADDITIONAL INVESTMENTS IN YOUR FUND
ACCOUNT MIGHT NOT BE POSSIBLE.
If the shares are held in certificate form, the certificate must
be returned with or before your redemption request. Your
transaction will be processed at the next NAV calculated after
your order is received and accepted. The redemption may be
suspended for 10 days following an address change unless a
signature guarantee is provided.
IN WRITING
To request a redemption in writing, please follow the
instructions for written requests noted on page 25.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this
option was specifically declined on the application or in
writing. This option enables you to request redemptions daily
from your account by calling 1-800-525-3713 by the close of the
regular trading session of the New York Stock Exchange ("NYSE")
normally 4:00 p.m. New York time. You may also use Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
day. (There is a daily limit of $100,000 per account for
redemptions payable by check.)
Shareholder's manual 23
<PAGE>
BY INTERNET
Redemptions may also be made on our Web site at janus.com.
SYSTEMATIC REDEMPTION OPTION
The Systematic Redemption Option allows you to redeem a specific
dollar amount from your Fund account on a regular basis. For more
information or to request the appropriate form, please call
1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
BY CHECK
Redemption proceeds will be sent to the shareholder(s) of record
at the address of record within seven days after receipt of a
valid redemption request.
BY ELECTRONIC TRANSFER
If you have established the electronic redemption option, your
redemption proceeds can be electronically transferred to your
predesignated bank account on the next bank business day after
receipt of your redemption request (wire transfer) or the second
bank business day after receipt of your redemption request (ACH
transfer). Wire transfers will be charged an $8 fee per wire and
your bank may charge an additional fee to receive the wire. ACH
transfers are made free of charge. Wire redemptions are not
available for retirement accounts.
If you would like to establish the electronic redemption option
on an existing account, please call 1-800-525-3713 to request the
appropriate form.
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE,
ON OUR WEB SITE, OR THROUGH THE AUTOMATIC MONTHLY INVESTMENT
PROGRAM, THE FUND MAY DELAY THE PAYMENT OF YOUR REDEMPTION
PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR. Unless you provide alternate instructions,
your proceeds will be invested in
24 Janus Venture Fund
<PAGE>
Janus Money Market Fund - Investor Shares during the 15 day hold
period.
WRITTEN INSTRUCTIONS
To redeem all or part of your shares in writing, your request
should be sent to one of the addresses listed on page 14 and must
include the following information:
- the name of the Fund
- the account number
- the amount of money or number of shares being redeemed or
exchanged
- the name(s) on the account registration
- the signature(s) of all registered account owners
- your daytime telephone number
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON
Written instructions must be signed by each shareholder, exactly
as the names appear in the account registration.
UGMA OR UTMA
Written instructions must be signed by the custodian in his/her
capacity as it appears in the account registration.
SOLE PROPRIETOR, GENERAL PARTNER
Written instructions must be signed by an authorized individual
in his/her capacity as it appears on the account registration.
CORPORATION, ASSOCIATION
Written instructions must be signed by the person(s) authorized
to act on the account. In addition, a certified copy of the
corporate resolution authorizing the signer to act must accompany
the request.
Shareholder's manual 25
<PAGE>
TRUST
Written instructions must be signed by the trustee(s). If the
name(s) of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days
must also be submitted.
IRA
Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you
must state that you elect not to have such withholding apply. In
addition, your instructions must state whether the distribution
is normal (after age 59 1/2) or premature (before age 59 1/2)
and, if premature, whether any exceptions such as death or
disability apply with regard to the 10% additional tax on early
distributions.
SIGNATURE GUARANTEE
In addition to the signature requirements, A SIGNATURE GUARANTEE
IS ALSO REQUIRED if any of the following is applicable:
- You request a redemption by check that exceeds $100,000.
- You would like the check made payable to anyone other than the
shareholder(s) of record.
- You would like the check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like the check mailed to an address other than the
address of record.
THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE
UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON
CERTAIN LEGAL GROUNDS. FOR MORE INFORMATION PERTAINING TO
SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized
account transfers. The following financial institutions may
guaran-
26 Janus Venture Fund
<PAGE>
tee signatures: banks, savings and loan associations, trust
companies, credit unions, broker-dealers, and member firms of a
national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A
signature guarantee cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly
authorized to do business in your country of residence or a U.S.
consulate may be able to authenticate your signature.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the
NAV next calculated after your request is received and accepted
by the Fund (or the Fund's agent or authorized designee). The
Fund's NAV is calculated at the close of the regular trading
session of the NYSE (normally 4:00 p.m. New York time) each day
that the NYSE is open. The NAV of Fund shares is not determined
on days the NYSE is closed (generally, New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas). In
order to receive a day's price, your order must be received by
the close of the regular trading session of the NYSE. Securities
are valued at market value or, if a market quotation is not
readily available, at their fair value determined in good faith
under procedures established by and under the supervision of the
Trustees. Short-term instruments maturing within 60 days are
valued at amortized cost, which approximates market value. See
the SAI for more detailed information.
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS XPRESSLINE(TM)
Janus XpressLine, our electronic telephone service, offers you
24-hour access by TouchTone(TM) telephone to obtain information
on account balances, Fund performance or dividends. You can also
make exchanges, purchases and redemptions in existing accounts,
request literature about any Janus fund, or order duplicate
Shareholder's manual 27
<PAGE>
statements. Janus XpressLine is accessed by calling
1-888-979-7737. Calls are limited to five minutes.
JANUS WEB SITE
Janus maintains a Web site located at JANUS.COM. You can
purchase, exchange and redeem shares and access information such
as your account balance and the Fund's NAV through the Web site.
In order to engage in transactions on our Web site, you must
authorize us to transmit account information online and accept
online instructions (see janus.com and follow the procedures
accordingly). You may also need to have bank account information,
wire instructions or other options established on your account.
The Fund and its agents will not be responsible for any losses
resulting from unauthorized transactions on our Web site when
procedures designed for engaging in such transactions are
followed. If you have questions, please call 1-800-975-9932 to
speak to a Janus representative.
ACCOUNT MINIMUMS
Due to the proportionately higher costs of maintaining small
accounts, Janus reserves the right to deduct a $10 minimum
balance fee (or the value of the account if less than $10) from
accounts with values below the minimums described on page 16 or
to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if
your account balance does not reach the required minimum initial
investment or falls below such minimum and you have discontinued
monthly investments. This policy does not apply to accounts that
fall below the minimums solely as a result of market value
fluctuations. It is expected that, for purposes of this policy,
accounts will be valued in September, and the $10 fee will be
assessed on the second Friday of September of each year. You will
receive notice before we charge the $10 fee or close your account
so that you may increase your account balance to the required
minimum.
28 Janus Venture Fund
<PAGE>
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer,
bank or other financial institution, or an organization that
provides recordkeeping and consulting services to 401(k) plans or
other employee benefit plans (a "Processing Organization").
Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent
investments than the Fund. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. A
Processing Organization, rather than its customer, may be the
shareholder of record of your shares. The Fund is not responsible
for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations
may receive compensation from Janus Capital or its affiliates and
certain Processing Organizations may receive compensation from
the Fund for shareholder recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On your application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification number, the IRS requires the Fund to
withhold 31% of any dividends paid and redemption or exchange
proceeds. In addition to the 31% backup withholding, you may be
subject to a $50 fee to reimburse the Fund for any penalty that
the IRS may impose.
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Fund. The Fund will issue share certificates upon
written request only and reserves the right to charge a fee for
this service.
Shareholder's manual 29
<PAGE>
Share certificates will not be issued until the shares have been
held for at least 15 days and will not be issued for accounts
that do not meet the minimum investment requirements. Share
certificates cannot be issued for retirement accounts. In
addition, if the certificate is lost, there may be a replacement
charge.
INVOLUNTARY REDEMPTIONS
The Fund reserves the right to close an account if the
shareholder is deemed to engage in activities which are illegal
or otherwise believed to be detrimental to the Fund.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Fund and its
agents will not be responsible for any losses resulting from
unauthorized transactions when procedures designed to verify the
identity of the caller are followed.
It may be difficult to reach an Investor Service Representative
by telephone during periods of unusual market activity. If you
are unable to reach a representative by telephone, please
consider sending written instructions, stopping by a Service
Center, calling the Janus XpressLine or visiting our Web site.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily
suspend telephone transactions or other shareholder services.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by all account owners. Include the
name of the Fund, the account number(s), the name(s) on the
account and both the old and new addresses. Certain options may
be suspended for 10 days following an address change unless a
signature guarantee is provided.
30 Janus Venture Fund
<PAGE>
REGISTRATION CHANGES
To change the name on an account, the shares are generally
transferred to a new account. In some cases, legal documentation
may be required. For more information call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will
receive quarterly confirmations of all transactions. Dividend
information will be distributed annually. In addition, the Fund
will send you an immediate transaction confirmation statement
after every non-systematic transaction.
The Fund produces financial reports, which include a list of the
Fund's portfolio holdings, semiannually and updates its
prospectus annually. To reduce expenses, the Fund may choose to
mail only one report or prospectus to your household, even if
more than one person in the household has a Fund account. Please
call 1-800-525-3713 if you would like to receive additional
reports or prospectuses. The Fund reserves the right to charge a
fee for additional statement and report requests.
Shareholder's manual 31
<PAGE>
Management of the fund
INVESTMENT ADVISER
Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado
80206-4928, is the investment adviser to the Fund and is
responsible for the day-to-day management of its investment
portfolio and other business affairs.
Janus Capital began serving as investment adviser to Janus Fund
in 1970 and currently serves as investment adviser to all of the
Janus funds, acts as sub-adviser for a number of private-label
mutual funds and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes continuous advice and recommendations
concerning the Fund's investments. Janus Capital also furnishes
certain administrative, compliance and accounting services for
the Fund, and may be reimbursed by the Fund for its costs in
providing those services. In addition, Janus Capital employees
serve as officers of the Trust and Janus Capital provides office
space for the Fund and pays the salaries, fees and expenses of
all Fund officers and those Trustees who are affiliated with
Janus Capital.
The Fund pays Janus Capital a management fee which is calculated
daily and paid monthly. The advisory agreement with the Fund
spells out the management fee and other expenses that the Fund
must pay.
The Fund incurs expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and
auditing fees, printing and mailing costs of sending reports and
other information to existing shareholders, and independent
Trustees' fees and expenses. The Annual Fund Operating Expenses
table on page 4 lists the actual management fee and total
operating expenses of the Fund for the most recent fiscal year.
32 Janus Venture Fund
<PAGE>
PORTFOLIO MANAGERS
The Fund is managed by a management team consisting of James P.
Craig, William H. Bales and Jonathan D. Coleman, each of whom
also serves as Executive Vice President of the Fund. The
management team began managing the Fund on February 1, 1997. The
portfolio managers' other primary responsibilities and education
are set forth below.
JAMES P. CRAIG, III
- --------------------------------------------------------------------------------
is Chief Investment Officer of Janus Capital. He is
Executive Vice President and portfolio manager of Janus
Fund, which he has managed since 1986. Mr. Craig
previously managed Janus Balanced Fund from December 1993
to December 1995. He holds a Bachelor of Arts in Business
from the University of Alabama and a Master of Arts in
Finance from the Wharton School of the University of
Pennsylvania.
WILLIAM H. BALES
- --------------------------------------------------------------------------------
has been a research analyst with Janus Capital since 1993,
focusing primarily on the transportation, consumer
products and restaurant industries. He joined Janus
Capital in September 1991. Mr. Bales holds a Bachelor of
Science in Marketing and a Master of Science in Marketing
and Finance from the University of Colorado. He is seeking
the Chartered Financial Analyst designation.
JONATHAN D. COLEMAN
- --------------------------------------------------------------------------------
has been a research analyst with Janus Capital since July
1994, focusing primarily on the railroad, computer,
healthcare and financial services industries. Prior to
joining Janus Capital, Mr. Coleman was a Fulbright Fellow
from August 1993 until June 1994. He holds a Bachelor of
Arts in Political Economy and Spanish from Williams
College and received the Chartered Financial Analyst
designation.
Management of the fund 33
<PAGE>
Other information
SIZE OF THE FUND
The Fund has discontinued sales of its shares because its
management and the Trustees believe that a substantial increase
in size may adversely affect the Fund's ability to achieve its
investment objective by reducing its flexibility in making
investments and in effecting portfolio changes. Although sales to
new investors have been discontinued, existing shareholders are
permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions. See the Shareholder's
Manual beginning on page 14.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Fund with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Fund invests or worldwide
markets and economies.
34 Janus Venture Fund
<PAGE>
Distributions and taxes
DISTRIBUTIONS
To avoid taxation of the Fund, the Internal Revenue Code requires
the Fund to distribute net income and any net capital gains
realized on its investments annually. The Fund's income from
dividends and interest and any net realized short-term gains are
paid to shareholders as ordinary income dividends. Net realized
long-term gains are paid to shareholders as capital gains
distributions. Dividends and capital gains distributions are
normally declared and paid in December.
HOW DISTRIBUTIONS AFFECT THE FUND'S NAV
Distributions are paid to shareholders as of the record date of
the distribution of the Fund, regardless of how long the shares
have been held. Dividends and capital gains awaiting distribution
are included in the Fund's daily NAV. The share price of the Fund
drops by the amount of the distribution, net of any subsequent
market fluctuations. As an example, assume that on December 31,
the Fund declared a dividend in the amount of $0.25 per share. If
the Fund's share price was $10.00 on December 30, the Fund's
share price on December 31 would be $9.75, barring market
fluctuations. Shareholders should be aware that distributions
from a taxable mutual fund are not value-enhancing and may create
income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before the distribution,
you will pay the full price for the shares and receive a portion
of the purchase price back as a taxable distribution. This is
referred to as "buying a dividend." In the above example, if you
bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as
a dividend and your shares would now be worth $9.75 per share.
Unless your account is set up as a tax-deferred account,
dividends paid to you would be included in your gross income for
tax purposes, even though you may not have participated in the
Distributions and taxes 35
<PAGE>
increase in NAV of the Fund, whether or not you reinvested the
dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application
how you want to receive your distributions. You may change your
distribution option at any time by writing the Fund at one of the
addresses on page 14 or calling 1-800-525-3713. The Fund offers
the following options:
1. REINVESTMENT OPTION. You may reinvest your income dividends
and capital gains distributions in additional shares. This
option is assigned automatically if no other choice is made.
2. CASH OPTION. You may receive your income dividends and capital
gains distributions in cash.
3. REINVEST AND CASH OPTION. You may receive either your income
dividends or capital gains distributions in cash and reinvest
the other in additional shares.
4. REDIRECT OPTION. You may direct your dividends or capital
gains to purchase shares of another Janus fund.
The Fund reserves the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that
remain outstanding for six months in shares of the Fund at the
NAV next computed after the check is cancelled. Subsequent
distributions may also be reinvested.
TAXES
As with any investment, you should consider the tax consequences
of investing in the Fund. Any time you sell or exchange shares of
a Fund in a taxable account, it is considered a taxable event.
Depending on the purchase price and the sale price, you may have
a gain or loss on the transaction. Any tax liabilities generated
by your transactions are your responsibility.
The following discussion does not apply to tax-deferred accounts,
nor is it a complete analysis of the federal tax implications of
investing in the Fund. You may wish to consult your own tax
36 Janus Venture Fund
<PAGE>
adviser. Additionally, state or local taxes may apply to your
investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions by the Fund are subject to federal
income tax, regardless of whether the distribution is made in
cash or reinvested in additional shares of the Fund.
Distributions may be taxable at different rates depending on the
length of time the Fund holds a security. In certain states, a
portion of the dividends and distributions (depending on the
source of the Fund's income) may be exempt from state and local
taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on
or before January 31st of each year. Account tax information will
also be sent to the IRS.
TAXATION OF THE FUND
Dividends, interest, and some capital gains received by the Fund
on foreign securities may be subject to tax withholding or other
foreign taxes. The Fund may from year to year make the election
permitted under section 853 of the Internal Revenue Code to pass
through such taxes to shareholders as a foreign tax credit. If
such an election is not made, any foreign taxes paid or accrued
will represent an expense to the Fund.
The Fund does not expect to pay federal income or excise taxes
because it intends to meet certain requirements of the Internal
Revenue Code. It is important that the Fund meet these
requirements so that any earnings on your investment will not be
taxed twice.
Distributions and taxes 37
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand
the Fund's financial performance for the past 5 years through
October 31st of each fiscal year shown. Items 1 through 9 reflect
financial results for a single Fund share. The total returns in
the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment of
all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with
the Fund's financial statements, are included in the Annual
Report, which is available upon request and incorporated by
reference into the SAI.
JANUS VENTURE FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $58.84 $57.16 $59.53 $52.86 $53.25
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income (0.09) 0.16 -- 0.05 0.11
3. Net gains or (losses) on securities
(both realized and unrealized) 0.43 6.80 5.09 9.49 4.40
4. Total from investment operations 0.34 6.96 5.09 9.54 4.51
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- (0.01) (0.03) (0.53)
6. Distributions (in excess of net
investment income) (0.07) -- -- -- --
7. Distributions (from capital gains) (9.30) (5.28) (7.45) (2.84) (4.37)
8. Total distributions (9.37) (5.28) (7.46) (2.87) (4.90)
9. NET ASSET VALUE, END OF PERIOD $49.81 $58.84 $57.16 $59.53 $52.86
10. Total return 1.07% 13.38% 9.28% 19.24% 9.23%
11. Net assets, end of period (in
millions) $1,036 $1,252 $1,741 $1,753 $1,550
12. Average net assets for the period (in
millions) $1,174 $1,379 $1,823 $1,613 $1,563
13. Ratio of gross expenses to average net
assets 0.94% 0.94% 0.89% 0.92% N/A
14. Ratio of net expenses to average net
assets 0.93% 0.92% 0.88% 0.91% 0.96%
15. Ratio of net investment income/(loss)
to average net assets (0.29%) 0.11% (0.33%) 0.29% 0.27%
16. Portfolio turnover rate 90% 146% 136% 113% 114%
- --------------------------------------------------------------------------------------
</TABLE>
38 Janus Venture Fund
<PAGE>
Glossary of investment terms
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fund may invest. The Fund may
invest in these instruments to the extent permitted by its investment objective
and policies. The Fund is not limited by this discussion and may invest in any
other types of instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed discussion of
certain instruments.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality,
government or government agency. The issuer of a bond is required
to pay the holder the amount of the loan (or par value of the
bond) at a specified maturity and to make scheduled interest
payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and
other borrowers to investors seeking to invest idle cash. The
Fund may purchase commercial paper issued in private placements
under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of
ownership in a company, and usually carry voting rights and earns
dividends. Unlike preferred stock, dividends on common stocks are
not fixed but are declared at the discretion of the issuer's
board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a
fixed dividend or interest payment and are convertible into
common stock at a specified price or conversion ratio.
DEBT SECURITIES are equity securities representing money borrowed
that must be repaid at a later date. Such securities have
specific maturities and usually a specific rate of interest or an
original purchase discount.
Glossary of investment terms 39
<PAGE>
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital
gains on the underlying security. Receipts include those issued
by domestic banks (American Depositary Receipts), foreign banks
(Global or European Depositary Receipts) and broker-dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate
of return. The term generally includes short- and long-term
government, corporate and municipal obligations that pay a
specified rate of interest or coupons for a specified period of
time, and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the
case of adjustable and floating rate securities, for a shorter
period.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated
below investment grade by the primary rating agencies (e.g., BB
or lower by Standard & Poor's and Ba or lower by Moody's). Other
terms commonly used to describe such securities include "lower
rated bonds," "noninvestment grade bonds" and "junk bonds."
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of
mortgages or other debt. These securities are generally pass-
through securities, which means that principal and interest
payments on the underlying securities (less servicing fees) are
passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the
underlying mortgages or other debt may be refinanced or paid off
prior to their maturities during periods of declining interest
rates. In that case, the portfolio managers may have to reinvest
the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that
is not subject to prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign
corporations which generate certain amounts of passive income or
40 Janus Venture Fund
<PAGE>
hold certain amounts of assets for the production of passive
income. Passive income includes dividends, interest, royalties,
rents and annuities. To avoid taxes and interest that the Fund
must pay if these investments are profitable, the Fund may make
various elections permitted by the tax laws. These elections
could require that the Fund recognize taxable income, which in
turn must be distributed, before the securities are sold and
before cash is received to pay the distributions.
PREFERRED STOCKS are equity securities that generally pay
dividends at a specified rate and have preference over common
stock in the payment of dividends and liquidation. Preferred
stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by the
Fund and a simultaneous agreement by the seller (generally a bank
or dealer) to repurchase the security from the Fund at a
specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk
that the seller will fail to repurchase the security, as agreed.
In that case, the Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter
delays and incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by
the Fund to another party (generally a bank or dealer) in return
for cash and an agreement by the Fund to buy the security back at
a specified price and time. This technique will be used primarily
to provide cash to satisfy unusually heavy redemption requests,
or for other temporary or emergency purposes.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
government that are supported by its full faith and credit.
Treasury bills have initial maturities of less than one year,
Treasury notes have initial maturities of one to ten years and
Treasury bonds may be issued with any maturity but generally have
maturities of at least ten years. U.S. government securities also
Glossary of investment terms 41
<PAGE>
include indirect obligations of the U.S. government that are
issued by federal agencies and government sponsored entities.
Unlike Treasury securities, agency securities generally are not
backed by the full faith and credit of the U.S. government. Some
agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the
discretionary authority of the U.S. government to purchase the
agency's obligations and others are supported only by the credit
of the sponsoring agency.
WARRANTS are securities, typically issued with preferred stocks
or bonds, that give the holder the right to buy a proportionate
amount of common stock at a specified price, usually at a price
that is higher than the market price at the time of issuance of
the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally
involve the purchase of a security with payment and delivery at
some time in the future - i.e., beyond normal settlement. The
Fund does not earn interest on such securities until settlement
and bears the risk of market value fluctuations in between the
purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in
this manner.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified
amount of a financial instrument for an agreed upon price at a
specified time. Forward contracts are not currently exchange
traded and are typically negotiated on an individual basis. The
Fund may enter into forward currency contracts to hedge against
declines in the value of securities denominated in, or whose
value is tied to, a currency other than the U.S. dollar or to
reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase
or sell securities or other financial indices.
42 Janus Venture Fund
<PAGE>
FUTURES CONTRACTS are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a
specified price on a specified date. The Fund may buy and sell
futures contracts on foreign currencies, securities and financial
indices including interest rates or an index of U.S. government,
foreign government, equity or fixed-income securities. The Fund
may also buy options on futures contracts. An option on a futures
contract gives the buyer the right, but not the obligation, to
buy or sell a futures contract at a specified price on or before
a specified date. Futures contracts and options on futures are
standardized and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to
intermediate-term debt securities whose value at maturity or
interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instrument and may be more volatile
than the underlying instrument. The Fund bears the market risk of
an investment in the underlying instrument, as well as the credit
risk of the issuer.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a
fixed date at a predetermined price. The Fund may purchase and
write put and call options on securities, securities indices and
foreign currencies.
Glossary of investment terms 43
<PAGE>
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44
<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-525-3713 or visiting our Web
site at janus.com. In the Fund's Annual Report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year. Other information is also available from financial
intermediaries that sell shares of the Fund.
The Statement of Additional Information provides detailed
information about the Fund and is incorporated into this Prospectus
by reference. You may review the Fund's Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3167
<PAGE>
[JANUS LOGO]
Janus Overseas Fund
PROSPECTUS
FEBRUARY 17, 1999
THE FUND HAS DISCONTINUED PUBLIC SALE OF ITS SHARES TO
NEW INVESTORS, BUT SHAREHOLDERS WHO HAVE OPEN FUND
ACCOUNTS MAY MAKE ADDITIONAL INVESTMENTS AND REINVEST
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. CURRENT
SHAREHOLDERS MAY ALSO OPEN ADDITIONAL FUND ACCOUNTS
UNDER CERTAIN CONDITIONS. IF A FUND ACCOUNT IS CLOSED,
HOWEVER, ADDITIONAL INVESTMENTS IN THE FUND MAY NOT BE
POSSIBLE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Overseas Fund.......................... 2
Fees and expenses............................ 4
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objectives and principal
investment strategies........................ 5
Risks........................................ 8
SHAREHOLDER'S MANUAL
Minimum investments.......................... 16
Types of account ownership................... 16
How to open your Janus account............... 18
How to purchase shares....................... 19
How to exchange shares....................... 21
How to redeem shares......................... 23
Shareholder services and account policies.... 28
MANAGEMENT OF THE FUND
Investment adviser........................... 32
Portfolio managers........................... 33
OTHER INFORMATION............... ............... 34
DISTRIBUTIONS AND TAXES
Distributions................................ 35
Taxes........................................ 36
FINANCIAL HIGHLIGHTS.............. ............. 38
GLOSSARY
Glossary of investment terms................. 39
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
JANUS OVERSEAS FUND
1. WHAT IS THE INVESTMENT OBJECTIVE OF JANUS OVERSEAS FUND?
The Fund seeks long-term growth of capital.
The Fund's Trustees may change this objective without a
shareholder vote and the Fund will notify you of any changes that
are material. If there is a material change in the Fund's
objective or policies, you should consider whether the Fund
remains an appropriate investment for you. There is no guarantee
that the Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF JANUS OVERSEAS FUND?
The Fund normally invests at least 65% of its total assets in
securities of issuers from at least five different countries,
excluding the United States. Although the Fund intends to invest
substantially all of its assets in issuers located outside the
United States, it may at times invest in U.S. issuers and it may
at times invest all of its assets in fewer than five countries or
even a single country.
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, they look for companies with
earnings growth potential one at a time. If the portfolio
managers are unable to find investments with earnings growth
potential, a significant portion of the Fund's assets may be in
cash or similar investments.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN JANUS OVERSEAS FUND?
The biggest risk of investing in this Fund is that its returns
may vary and you could lose money. If you are considering
investing in the Fund, remember that it is designed for long-term
investors who can accept the risks of investing in a portfolio
with significant foreign common stock holdings. Common stocks
tend to be more volatile than other investment choices.
The value of the Fund's portfolio may decrease if the value of an
individual company in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes
down. If the value of the Fund's portfolio decreases, the Fund's
net asset value (NAV) will also decrease which means if you sell
2 Janus Overseas Fund
<PAGE>
your shares in the Fund you would get back less money. Because
the Fund has significant exposure to foreign markets and may
invest without limit in foreign securities, its returns and NAV
may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in a
particular country.
An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
The following information illustrates how the Fund's performance
has varied over time. The bar chart depicts the change in the
Fund's performance from year-to-year during the periods
indicated. The table compares the Fund's average annual returns
for the periods indicated to a broad-based securities market
index.
JANUS OVERSEAS FUND
A BAR CHART showing Annual Total Returns for Janus Overseas Fund from 1995
through 1998:
Annual returns for periods ended 12/31
22.05% 28.83% 18.25% 16.03%
1995 1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1998 17.77%; Worst Quarter: 3rd-1998 (19.58%)
Average annual total return for periods ended 12/31/98
---------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (5/2/94)
<S> <C> <C> <C> <C>
Janus Overseas Fund 16.03% 18.03%
Morgan Stanley Capital International EAFE
Index* 20.00% 8.11%
-------------------------
</TABLE>
* The Morgan Stanley Capital International EAFE Index is a market
capitalization weighted index composed of companies
representative of the market structure of 20 developed market
countries in Europe, Australasia and the Far East.
The Fund's past performance does not necessarily indicate how it
will perform in the future.
Risk return summary 3
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Fund.
ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
below shows, these costs are borne indirectly by all
shareholders.
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund. It is based upon gross
expenses (without the effect of expense offset arrangements) for
the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Janus Overseas Fund
<S> <C>
Management Fee 0.66%
Other Expenses 0.30%
Total Annual Fund Operating Expenses 0.96%
</TABLE>
- --------------------------------------------------------------------------------
EXAMPLE:
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods
indicated then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and
that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------------------------------------
<S> <C> <C> <C> <C>
Janus Overseas Fund $98 $306 $531 $1,178
</TABLE>
4 Janus Overseas Fund
<PAGE>
Investment objective, principal
investment strategies
and risks
This section takes a closer look at the investment objective of
the Fund, its principal investment strategies and certain risks
of investing in the Fund. Strategies and policies that are noted
as "fundamental" cannot be changed without a shareholder vote.
Please carefully review the "Risks" section of this Prospectus on
pages 8-11 for a discussion of risks associated with certain
investment techniques. We've also included a Glossary with
descriptions of investment terms used throughout this Prospectus.
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
Janus Overseas Fund seeks long-term growth of capital. Normally,
the Fund pursues its objective by investing at least 65% of its
total assets in securities of issuers from at least five
different countries, excluding the United States. Although the
Fund intends to invest substantially all of its assets in issuers
located outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in fewer
than five countries or even a single country.
The Fund may invest substantially all of its assets in common
stocks of foreign issuers if its portfolio managers believe that
common stocks will appreciate in value. The portfolio managers
generally take a "bottom up" approach to selecting companies. In
other words, they seek to identify individual companies with
earnings growth potential that may not be recognized by the
market at large. They make this assessment by looking at
companies one at a time, regardless of size, country of
organization, place of principal business activity, or other
similar selection criteria. Realization of income is not a
significant consideration when choosing investments for the Fund.
Income realized on the Fund's investments will be incidental to
its objective.
Foreign securities are generally selected on a stock-by-stock
basis without regard to any defined allocation among countries or
geographic regions. However, certain factors such as expected
levels of inflation, government policies influencing business
conditions, the outlook for currency relationships, and prospects
Investment objective, principal investment strategies and risks 5
<PAGE>
for economic growth among countries, regions or geographic areas
may warrant greater consideration in selecting foreign
securities.
GENERAL PORTFOLIO POLICIES
In investing its portfolio assets, the Fund will follow the
general policies listed below. The percentage limitations
included in these policies and elsewhere in this Prospectus apply
at the time of purchase of the security. So, for example, if the
Fund exceeds a limit as a result of market fluctuations or the
sale of securities, it will not be required to dispose of any
securities.
CASH POSITION
When the Fund's portfolio managers believe that market conditions
are unfavorable for profitable investing, or when they are
otherwise unable to locate attractive investment opportunities,
the Fund's cash or similar investments may increase. In other
words, the Fund does not always stay fully invested in stocks.
Cash or similar investments generally are a residual - they
represent the assets that remain after the portfolio managers
have committed available assets to desirable investment
opportunities. However, the portfolio managers may also
temporarily increase the Fund's cash position to protect its
assets or maintain liquidity. When the Fund's investments in cash
or similar investments increase, it may not participate in market
advances or declines to the same extent that it would if the Fund
remained more fully invested in stocks.
OTHER TYPES OF INVESTMENTS
The Fund invests primarily in a portfolio of equity securities,
which may include preferred stocks, common stocks, warrants and
securities convertible into common or preferred stocks, but it
may also invest to a lesser degree in other types of securities.
These securities (which are described in the Glossary) may
include:
- debt securities
- indexed/structured securities
- high-yield/high-risk securities (less than 35% of the Fund's
assets)
6 Janus Overseas Fund
<PAGE>
- options, futures, forwards and other types of derivatives for
hedging purposes or for non-hedging purposes such as seeking to
enhance return
- securities purchased on a when-issued, delayed delivery or
forward commitment basis
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other
position that cannot be disposed of quickly in the normal course
of business. For example, some securities are not registered
under the U.S. securities laws and cannot be sold to the U.S.
public because of SEC regulations (these are known as "restricted
securities"). Under procedures adopted by the Fund's Trustees,
certain restricted securities may be deemed liquid, and will not
be counted toward this 15% limit.
FOREIGN SECURITIES
The Fund may invest without limit in foreign equity and debt
securities. The Fund may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the
United States. Other ways of investing in foreign securities
include depositary receipts or shares, and passive foreign
investment companies.
SPECIAL SITUATIONS
The Fund may invest in special situations. A special situation
arises when, in the opinion of the Fund's portfolio managers, the
securities of a particular issuer will be recognized and
appreciate in value due to a specific development with respect to
that issuer. Developments creating a special situation might
include, among others, a new product or process, a technological
breakthrough, a management change or other extraordinary
corporate event, or differences in market supply of and demand
for the security. The Fund's performance could suffer if the
anticipated development in a "special situation" investment does
not occur or does not attract the expected attention.
Investment objective, principal investment strategies and risks 7
<PAGE>
PORTFOLIO TURNOVER
The Fund generally intends to purchase securities for long-term
investment although, to a limited extent, the Fund may purchase
securities in anticipation of relatively short-term price gains.
Short-term transactions may also result from liquidity needs,
securities having reached a price or yield objective, changes in
interest rates or the credit standing of an issuer, or by reason
of economic or other developments not foreseen at the time of the
investment decision. The Fund may also sell one security and
simultaneously purchase the same or a comparable security to take
advantage of short-term differentials in bond yields or
securities prices. Changes are made in the Fund's portfolio
whenever its portfolio managers believe such changes are
desirable. Portfolio turnover rates are generally not a factor in
making buy and sell decisions.
Increased portfolio turnover may result in higher costs for
brokerage commissions, dealer mark-ups and other transaction
costs and may also result in taxable capital gains. Higher costs
associated with increased portfolio turnover may offset gains in
the Fund's performance.
RISKS
Because the Fund may invest substantially all of its assets in
common stocks, the main risk is the risk that the value of the
stocks it holds might decrease in response to the activities of
an individual company or in response to general market and/or
economic conditions. If this occurs, the Fund's share price may
also decrease. The Fund's performance may also be affected by
risks specific to certain types of investments, such as foreign
securities, derivative investments, non-investment grade debt
securities or companies with relatively small market
capitalizations.
8 Janus Overseas Fund
<PAGE>
The following questions and answers are designed to help you better understand
some of the risks of investing in the Fund.
1. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS
PERFORMANCE?
The Fund may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic securities because the Fund's performance may depend on
issues other than the performance of a particular company. These
issues include:
- CURRENCY RISK. As long as the Fund holds a foreign security,
its value will be affected by the value of the local currency
relative to the U.S. dollar. When the Fund sells a foreign
denominated security, its value may be worth less in U.S.
dollars even if the security increases in value in its home
country. U.S. dollar denominated securities of foreign issuers
may also be affected by currency risk.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject
to heightened political and economic risks, particularly in
emerging markets which may have relatively unstable
governments, immature economic structures, national policies
restricting investments by foreigners, different legal systems,
and economies based on only a few industries. In some
countries, there is the risk that the government may take over
the assets or operations of a company or that the government
may impose taxes or limits on the removal of the Fund's assets
from that country.
- REGULATORY RISK. There may be less government supervision of
foreign markets. As a result, foreign issuers may not be
subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to domestic
issuers and there may be less publicly available information
about foreign issuers.
Investment objective, principal investment strategies and risks 9
<PAGE>
- MARKET RISK. Foreign securities markets, particularly those of
emerging market countries, may be less liquid and more volatile
than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in
settling securities transactions. In some foreign markets,
there may not be protection against failure by other parties to
complete transactions.
- TRANSACTION COSTS. Costs of buying, selling and holding foreign
securities, including brokerage, tax and custody costs, may be
higher than those involved in domestic transactions.
2. THE FUND MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up
companies offering emerging products or services. Smaller or
newer companies may suffer more significant losses as well as
realize more substantial growth than larger or more established
issuers because they may lack depth of management, be unable to
generate funds necessary for growth or potential development, or
be developing or marketing new products or services for which
markets are not yet established and may never become established.
In addition, such companies may be insignificant factors in their
industries and may become subject to intense competition from
larger or more established companies. Securities of smaller or
newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, and
may be subject to wide price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
3. I'VE HEARD A LOT ABOUT HOW THE CHANGE TO THE YEAR 2000 COULD AFFECT COMPUTER
SYSTEMS. DOES THIS CREATE ANY SPECIAL RISKS?
The portfolio managers carefully research each potential
investment before making an investment decision and, among other
things, consider Year 2000 readiness when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
10 Janus Overseas Fund
<PAGE>
readiness is completely accurate. If a company has not
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
SECURITIES?
High-yield/high-risk securities (or "junk" bonds) are securities
rated below investment grade by the primary rating agencies such
as Standard & Poor's and Moody's. The value of lower quality
securities generally is more dependent on credit risk, or the
ability of the issuer to meet interest and principal payments,
than investment grade debt securities. Issuers of high-yield
securities may not be as strong financially as those issuing
bonds with higher credit ratings and are more vulnerable to real
or perceived economic changes, political changes or adverse
developments specific to the issuer.
Please refer to the SAI for a description of bond rating
categories.
5. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options and other derivative
instruments to "hedge" or protect its portfolio from adverse
movements in securities prices and interest rates. The Fund may
also use a variety of currency hedging techniques, including
forward currency contracts, to manage exchange rate risk. The
Fund believes the use of these instruments will benefit the Fund.
However, the Fund's performance could be worse than if the Fund
had not used such instruments if the portfolio managers'
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
Investment objective, principal investment strategies and risks 11
<PAGE>
Janus Overseas Fund
<PAGE>
Shareholder's
Manual
This section will help you become
familiar with the different types
of accounts you can establish with
Janus. It also explains in detail
the wide array of services and
features you can establish on your
account, as well as account
policies and fees that may apply
to your account. Account policies
(including fees), services and
features may be modified or
discontinued without shareholder
approval or prior notice.
[JANUS LOGO]
<PAGE>
Although the Fund has discontinued public sales of its shares to
new investors, shareholders who maintain open accounts will be
able to continue to purchase shares and reinvest any dividends
and capital gains distributions in additional shares. In
addition, the Fund will continue to accept new accounts which are
opened under taxpayer identification numbers that are identical
to those for existing Fund accounts. Once a Fund account is
closed, it may not be reopened. An account may be considered
closed and subject to redemption by the Fund in the circumstances
discussed under "Involuntary Redemptions" on page 30.
HOW TO GET IN TOUCH WITH JANUS
Janus offers two Investor Service Centers for those individuals
who would like to conduct their investing in person. Our
representatives will be happy to assist you at either of the
following locations Monday-Friday 7:00 a.m. to 6:00 p.m. Mountain
time and Saturday 9:00 a.m. to 1:00 p.m. Mountain time.
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
14 Janus Overseas Fund
<PAGE>
QUICK ADDRESS AND TELEPHONE REFERENCE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
MAILING ADDRESS JANUS XPRESSLINE(TM)
Janus 1-888-979-7737
P.O. Box 173375 For 24-hour access to account
Denver, CO 80217-3375 and fund information,
exchanges, purchases and
FOR OVERNIGHT CARRIER redemptions, automated daily
Janus quotes on fund share prices,
Suite 101 yields and total returns.
3773 Cherry Creek North Drive
Denver, CO 80209-3811 TDD
1-800-525-0056
INVESTOR SERVICE REPRESENTATIVES A telecommunications device
If you have any questions while reading for our hearing- and
this Prospectus, please call one of our speech-impaired shareholders.
Investor Service Representatives at
1-800-525-3713 Monday-Friday: 8:00 JANUS LITERATURE LINE
a.m.-8:00 p.m., and Saturday: 10:00 1-800-525-8983
a.m.-4:00 p.m., New York time. To request a prospectus,
shareholder reports or
JANUS INTERNET ADDRESS marketing materials 24 hours a
janus.com day.
</TABLE>
Shareholder's manual 15
<PAGE>
MINIMUM INVESTMENTS*
- ---------------------------------------------
<TABLE>
<S> <C>
To open a new regular account $2,500
To open a new retirement,
education or UGMA/UTMA account $ 500
To open a new regular account with
an Automatic Investment Program $ 500**
To add to any type of an account $ 100+
</TABLE>
* The Fund reserves the right to
change the amount of these
minimums from time to time or
to waive them in whole or in
part for certain types of
accounts.
** An Automatic Investment Program
requires a $100 minimum
automatic investment per month
until the account balance
reaches $2,500.
+ The minimum subsequent
investment for IRA UGMA/UTMA
accounts is $50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 14, the Fund will accept new accounts opened
under taxpayer identification numbers identical to those on
current fund accounts. You can establish the following types of
accounts by completing a New Account Application. To request an
application, call 1-800-525-3713.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have
two or more owners.
A GIFT OR TRANSFER TO MINOR (UGMA OR UTMA)
An UGMA/UTMA account is a custodial account managed for the
benefit of a minor. To open an UGMA or UTMA account, you must
include the minor's Social Security number on the application.
TRUST
An established trust can open an account. The names of each
trustee, the name of the trust and the date of the trust
agreement must be included on the application.
16 Janus Overseas Fund
<PAGE>
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The
application must be signed by an authorized officer of the
corporation or a general partner of the partnership.
TAX-DEFERRED ACCOUNTS
If you are eligible, you may set up one or more tax-deferred
accounts. A tax-deferred account allows you to shelter your
investment income and capital gains from current income taxes. A
contribution to certain of these plans may also be tax
deductible. Tax-deferred accounts include retirement plans
described below and the Education IRA. Distributions from these
plans are generally subject to income tax and may be subject to
an additional tax if withdrawn prior to age 59 1/2 or used for a
nonqualifying purpose. Investors should consult their tax adviser
or legal counsel before selecting a tax-deferred account.
Investors Fiduciary Trust Company serves as custodian for the
tax-deferred accounts offered by the Fund. You will be charged an
annual account maintenance fee of $12 for each taxpayer
identification number no matter how many tax-deferred accounts
you have with Janus. You may pay the fee by check or have it
automatically deducted from your account (usually in December).
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
The following plans require a special application. For an
application and more details about our Retirement Plans, call
1-800-525-3713.
TRADITIONAL AND ROTH INDIVIDUAL RETIREMENT ACCOUNTS
Both types of IRAs allow most individuals with earned income to
contribute up to the lesser of $2,000 ($4,000 for most married
couples) or 100% of compensation annually. Please refer to the
Janus IRA booklet for more complete information regarding IRAs.
Shareholder's manual 17
<PAGE>
EDUCATION IRA
This plan allows individuals, subject to certain income
limitations, to contribute up to $500 annually on behalf of any
child under the age of 18. Please refer to the Janus IRA booklet
for more complete information regarding the Education IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN
This plan allows small business owners (including sole
proprietors) to make tax-deductible contributions for themselves
and any eligible employee(s). A SEP requires an IRA (a SEP-IRA)
to be set up for each SEP participant.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships and sole
proprietors to benefit their employees and themselves.
SECTION 403(B)(7) PLAN
Employees of educational organizations or other qualifying, tax-
exempt organizations may be eligible to participate in a Section
403(b)(7) Plan.
HOW TO OPEN YOUR JANUS ACCOUNT
If you are a current Fund shareholder and want to open another
Fund account, complete and sign the appropriate application.
Please be sure to provide your Social Security or taxpayer
identification number on the application and make your check
payable to Janus. The Fund is available only to U.S. citizens or
residents, and your application will be returned if you do not
meet these criteria. Send all items to one of the addresses
listed in the "Quick Address and Telephone Reference" on page 15.
18 Janus Overseas Fund
<PAGE>
HOW TO PURCHASE SHARES
PAYING FOR SHARES
When you purchase shares, your request will be processed at the
next NAV calculated after your order is received and accepted.
Please note the following:
- Cash, credit cards, third party checks and credit card checks
will not be accepted.
- All purchases must be made in U.S. dollars.
- Checks must be drawn on a U.S. bank and made payable to Janus.
- If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.
- If the Fund is unable to debit your predesignated bank account
on the day of purchase, it may make additional attempts or
cancel the purchase.
- The Fund reserves the right to reject any specific purchase
request.
If your purchase is cancelled, you will be responsible for any
losses or fees imposed by your bank and losses that may be
incurred as a result of any decline in the value of the cancelled
purchase. The Fund (or its agents) has the authority to redeem
shares in your account(s) to cover any such losses due to
fluctuations in share price. Any profit on such cancellation will
accrue to the Fund.
ONCE YOU HAVE OPENED YOUR JANUS ACCOUNT, THE MINIMUM AMOUNT FOR
AN ADDITIONAL INVESTMENT IS $100 ($50 FOR IRAS OR UGMA/UTMA
ACCOUNTS). You may add to your account at any time through any of
the following options:
BY MAIL
Complete the remittance slip attached at the bottom of your
confirmation statement. If you are making a purchase into a
Shareholder's manual 19
<PAGE>
retirement account, please indicate whether the purchase is a
rollover or a current or prior year contribution. Send your check
made payable to Janus and remittance slip or written instructions
to one of the addresses listed previously. You may also request a
booklet of remittance slips for non-retirement accounts.
BY TELEPHONE
This service allows you to purchase additional shares quickly and
conveniently through an electronic transfer of money. To purchase
shares by telephone, call an Investor Service Representative at
1-800-525-3713 during normal business hours or call the Janus
XpressLine, 1-888-979-7737, for access to this option 24 hours a
day. When you make an additional purchase by telephone, Janus
will automatically debit your predesignated bank account for the
desired amount. To establish the telephone purchase option on
your new account, complete the "Telephone Purchase of Shares
Option" section on the application and attach a "voided" check or
deposit slip from your bank account. If your account is already
established, call 1-800-525-3713 to request the appropriate form.
This option will become effective ten days after the form is
received.
BY WIRE
Purchases may also be made by wiring money from your bank account
to your Janus account. Call 1-800-525-3713 to receive wiring
instructions.
BY INTERNET
You must pre-establish the "Telephone Purchase of Shares Option"
to make a purchase on our Web site at janus.com. If you have
questions, please call 1-800-975-9932 to speak to a Janus
representative.
20 Janus Overseas Fund
<PAGE>
AUTOMATIC INVESTMENT PROGRAMS
Janus offers several automatic investment programs to help
investors achieve their financial goals as simply and
conveniently as possible. You may open a new account with a $500
initial purchase and $100 automatic subsequent investments.
AUTOMATIC MONTHLY INVESTMENT PROGRAM
You select the day each month that your money ($100 minimum) will
be electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic
Monthly Investment Program" section on the application and attach
a "voided" check from your bank account. If your Fund account is
already established, call 1-800-525-3713 to request the
appropriate form.
PAYROLL DEDUCTION
If your employer can initiate an automatic payroll deduction, you
may have all or a portion of your paycheck ($100 minimum)
invested directly into your Fund account. To obtain information
on establishing this option, call 1-800-525-3713.
BY SYSTEMATIC EXCHANGE
With a Systematic Exchange you determine the amount of money
($100 minimum) you would like automatically exchanged from one
Janus account to another on any day of the month. For more
information on how to establish this option, call 1-800-525-3713.
HOW TO EXCHANGE SHARES
On any business day, you may exchange all or a portion of your
shares into any other available Janus fund.
IN WRITING
To request an exchange in writing, please follow the instructions
for written requests on page 25.
Shareholder's manual 21
<PAGE>
BY TELEPHONE
All accounts are automatically eligible for the telephone
exchange option. To exchange shares by telephone, call an
Investor Service Representative at 1-800-525-3713 during normal
business hours or call the Janus XpressLine, 1-888-979-7737, for
access to this option 24 hours a day.
BY SYSTEMATIC EXCHANGE
As noted above, you may establish a Systematic Exchange for as
little as a $100 subsequent purchase per month on established
accounts. You may establish a new account with a $500 initial
purchase and subsequent $100 systematic exchanges. If the balance
in the account you are exchanging from falls below the systematic
exchange amount, all remaining shares will be exchanged and the
program will be discontinued.
BY INTERNET
Exchanges may also be made on our Web site at janus.com.
EXCHANGE POLICIES
- Except for Systematic Exchanges, new accounts established by
exchange must be opened with $2,500 or the total account value
if the value of the account you are exchanging from is less
than $2,500.
- Exchanges between existing accounts must meet the $100
subsequent investment requirement.
- You may make four exchanges out of the Fund during a calendar
year (exclusive of Systematic Exchanges). Exchanges in excess
of this limit may be subject to an exchange fee or may result
in termination of the exchange privilege.
- The Fund reserves the right to reject any exchange request and
to modify or terminate the exchange privilege at any time. For
example, the Fund may reject exchanges from accounts engaged
22 Janus Overseas Fund
<PAGE>
in or known to engage in trading in excess of the limit above
(including market timing transactions).
- Exchanges between accounts will be accepted only if the
registrations are identical.
- If the shares you are exchanging are held in certificate form,
you must return the certificate to your Fund prior to making
any exchanges.
- Be sure that you read the prospectus for the fund into which
you are exchanging.
- An exchange represents the sale of shares from one fund and the
purchase of shares of another fund, which may produce a taxable
gain or loss in a non-tax deferred account.
HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your
shares. REMEMBER THAT THE FUND IS CLOSED TO NEW INVESTORS AND IF
A TOTAL REDEMPTION IS MADE ADDITIONAL INVESTMENTS IN YOUR FUND
ACCOUNT MIGHT NOT BE POSSIBLE.
If the shares are held in certificate form, the certificate must
be returned with or before your redemption request. Your
transaction will be processed at the next NAV calculated after
your order is received and accepted. The redemption may be
suspended for 10 days following an address change unless a
signature guarantee is provided.
IN WRITING
To request a redemption in writing, please follow the
instructions for written requests noted on page 25.
BY TELEPHONE
Most accounts have the telephone redemption option, unless this
option was specifically declined on the application or in
writing. This option enables you to request redemptions daily
from your account by calling 1-800-525-3713 by the close of the
regular
Shareholder's manual 23
<PAGE>
trading session of the New York Stock Exchange ("NYSE"), normally
4:00 p.m., New York time. You may also use Janus XpressLine
1-888-979-7737, for access to this option 24 hours a day. (There
is a daily limit of $100,000 per account for redemptions payable
by check).
BY INTERNET
Redemptions may also be made on our Web site at janus.com.
SYSTEMATIC REDEMPTION OPTION
The Systematic Redemption Option allows you to redeem a specific
dollar amount from your account on a regular basis. For more
information or to request the appropriate form, please call
1-800-525-3713.
PAYMENT OF REDEMPTION PROCEEDS
BY CHECK
Redemption proceeds will be sent to the shareholder(s) of record
at the address of record within seven days after receipt of a
valid redemption request.
BY ELECTRONIC TRANSFER
If you have established the electronic redemption option, your
redemption proceeds can be electronically transferred to your
predesignated bank account on the next bank business day after
receipt of your redemption request (wire transfer) or the second
bank business day after receipt of your redemption request (ACH
transfer). Wire transfers will be charged an $8 fee per wire and
your bank may charge an additional fee to receive the wire. ACH
transfers are made free of charge. Wire redemptions are not
available for retirement accounts.
If you would like to establish the electronic redemption option
on an existing account, please call 1-800-525-3713 to request the
appropriate form.
24 Janus Overseas Fund
<PAGE>
IF THE SHARES BEING REDEEMED WERE PURCHASED BY CHECK, TELEPHONE
ON OUR WEB SITE, OR THROUGH THE AUTOMATIC MONTHLY INVESTMENT
PROGRAM, THE FUND MAY DELAY THE PAYMENT OF YOUR REDEMPTION
PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE
PURCHASE TO CLEAR. Unless you provide alternate instructions,
your proceeds will be invested in Janus Money Market
Fund - Investor Shares during the 15 day hold period.
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on page 14
and must include the following information:
- the name of the Fund
- the account number
- the amount of money or number of shares being redeemed or
exchanged
- the name(s) on the account
- the signature(s) of all registered account owners
- your daytime telephone number
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE
INDIVIDUAL, JOINT TENANTS, TENANTS IN COMMON
Written instructions must be signed by each shareholder, exactly
as the names appear in the account registration.
UGMA OR UTMA:
Written instructions must be signed by the custodian in his/her
capacity as it appears in the account registration.
SOLE PROPRIETOR, GENERAL PARTNER
Written instructions must be signed by an authorized individual
in his/her capacity as it appears on the account registration.
Shareholder's manual 25
<PAGE>
CORPORATION, ASSOCIATION
Written instructions must be signed by the person(s) authorized
to act on the account. In addition, a certified copy of the
corporate resolution authorizing the signer to act must accompany
the request.
TRUST
Written instructions must be signed by the trustee(s). If the
name(s) of the current trustee(s) does not appear in the account
registration, a certificate of incumbency dated within 60 days
must also be submitted.
IRA
Written instructions must be signed by the account owner. If you
do not want federal income tax withheld from your redemption, you
must state that you elect not to have such withholding apply. In
addition, your instructions must state whether the distribution
is normal (after age 59 1/2) or premature (before age 59 1/2)
and, if premature, whether any exceptions such as death or
disability apply with regard to the 10% additional tax on early
distributions.
SIGNATURE GUARANTEE
In addition to the signature requirements, a SIGNATURE GUARANTEE
IS ALSO REQUIRED if any of the following is applicable:
- You request a redemption by check that exceeds $100,000.
- You would like the check made payable to anyone other than the
shareholder(s) of record.
- You would like the check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like the check mailed to an address other than the
address of record.
THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE
UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON
CERTAIN LEGAL GROUNDS. FOR MORE INFORMATION PERTAINING TO
SIGNATURE GUARANTEES, PLEASE CALL 1-800-525-3713.
26 Janus Overseas Fund
<PAGE>
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized
account transfers. The following financial institutions may
guarantee signatures: banks, savings and loan associations, trust
companies, credit unions, broker-dealers and member firms of a
national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A
signature guarantee cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly
authorized to do business in your country of residence or a U.S.
consulate may be able to authenticate your signature.
PRICING OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the
NAV next calculated after your request is received and accepted
by the Fund (or the Fund's agent or authorized designee). The
Fund's NAV is calculated at the close of the regular trading
session of the NYSE (normally 4:00 p.m. New York time) each day
that the NYSE is open. The NAV of Fund shares is not determined
on days the NYSE is closed (generally, New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas). In
order to receive a day's price, your order must be received by
the close of the regular trading session of the NYSE. The Fund's
portfolio securities are valued at market value or, if a market
quotation is not readily available, at their fair value
determined in good faith under procedures established by and
under the supervision of the Trustees. Short-term instruments
maturing within 60 days are valued at amortized cost, which
approximates market value. See the SAI for more detailed
information.
Shareholder's manual 27
<PAGE>
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
JANUS XPRESSLINE(TM)
Janus XpressLine, our electronic telephone service, offers you
24-hour access by TouchTone(TM) telephone to obtain information
on account balances, Fund performance or dividends. You can also
make exchanges, purchases and redemptions in existing accounts,
request literature about any Janus fund, or order duplicate
statements. Janus XpressLine is accessed by calling
1-888-979-7737. Calls are limited to five minutes.
JANUS WEB SITE
Janus maintains a Web site located at JANUS.COM. You can
purchase, exchange and redeem shares and access information such
as your account balance and the Fund's NAV through the Web site.
In order to engage in transactions on our Web site, you must
authorize us to transmit account information online and accept
online instructions (see janus.com and follow the procedures
accordingly). You may also need to have bank account information,
wire instructions or other options established on your account.
The Fund and its agents will not be responsible for any losses
resulting from unauthorized transactions on our Web site when
procedures designed for engaging in such transactions are
followed. If you have questions, please call 1-800-975-9932 to
speak to a Janus representative.
ACCOUNT MINIMUMS
Due to the proportionately higher costs of maintaining small
accounts, Janus reserves the right to deduct a $10 minimum
balance fee (or the value of the account if less than $10) from
accounts with values below the minimums described on page 16 or
to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only if
your account balance does not reach the required minimum initial
investment or falls below such minimum and you have discontinued
monthly investments. This policy does not apply to
28 Janus Overseas Fund
<PAGE>
accounts that fall below the minimums solely as a result of
market value fluctuations. It is expected that accounts will be
valued in September and the $10 fee will be assessed on the
second Friday of September of each year. You will receive notice
before we charge the $10 fee or close your account so that you
may increase your account balance to the required minimum.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer,
bank or other financial institution, or an organization that
provides recordkeeping and consulting services to 401(k) plans or
other employee benefit plans (a "Processing Organization").
Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent
investments than the Fund. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. A
Processing Organization, rather than its customer, may be the
shareholder of record of your shares. The Fund is not responsible
for the failure of any Processing Organization to carry out its
obligations to its customers. Certain Processing Organizations
may receive compensation from Janus Capital or its affiliates and
certain Processing Organizations may receive compensation from
the Fund for shareholder recordkeeping and similar services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification number, the IRS requires the Fund to
withhold 31% of any dividends paid and redemption or exchange
proceeds. In addition to the 31% backup withholding, you may be
subject to a $50 fee to reimburse the Fund for any penalty that
the IRS may impose.
Shareholder's manual 29
<PAGE>
SHARE CERTIFICATES
Most shareholders choose not to hold their shares in certificate
form because account transactions such as exchanges and
redemptions cannot be completed until the certificate has been
returned to the Fund. The Fund will issue share certificates upon
written request only and reserves the right to charge a fee for
this service. Share certificates will not be issued until the
shares have been held for at least 15 days and will not be issued
for accounts that do not meet the minimum investment
requirements. Share certificates cannot be issued for retirement
accounts. In addition, if the certificate is lost, there may be a
replacement charge.
INVOLUNTARY REDEMPTIONS
The Fund reserves the right to close an account if the
shareholder is deemed to engage in activities which are illegal
or otherwise believed to be detrimental to the Fund.
TELEPHONE TRANSACTIONS
You may initiate many transactions by telephone. The Fund and its
agents will not be responsible for any losses resulting from
unauthorized transactions when procedures designed to verify the
identity of the caller are followed.
It may be difficult to reach an Investor Service Representative
by telephone during periods of unusual market activity. If you
are unable to reach a representative by telephone, please
consider sending written instructions, stopping by a Service
Center, calling the Janus XpressLine or visiting our Web site.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily
suspend telephone transactions and other shareholder services.
30 Janus Overseas Fund
<PAGE>
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by all account owners. Include the
name of the Fund, the account number(s), the name(s) on the
account and both the old and new addresses. Certain options may
be suspended for 10 days following an address change unless a
signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally
transferred to a new account. In some cases, legal documentation
may be required. For more information call 1-800-525-3713.
STATEMENTS AND REPORTS
Investors participating in an automatic investment program will
receive quarterly confirmations of all transactions. Dividend
information will be distributed annually. In addition, the Fund
will send you an immediate transaction confirmation statement
after every non-systematic transaction.
The Fund produces financial reports, which include a list of the
Fund's portfolio holdings, semiannually and updates its
prospectus annually. To reduce expenses, the Fund may choose to
mail only one report or prospectus to your household, even if
more than one person in the household has a Fund account. Please
call 1-800-525-3713 if you would like to receive additional
reports or prospectuses. The Fund reserves the right to charge a
fee for additional statement and report requests.
Shareholder's manual 31
<PAGE>
Management of the fund
INVESTMENT ADVISER
Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado
80206-4928, is the investment adviser to the Fund and is
responsible for the day-to-day management of its investment
portfolio and other business affairs.
Janus Capital began serving as investment adviser to Janus Fund
in 1970 and currently serves as investment adviser to all of the
Janus funds, acts as sub-adviser for a number of private-label
mutual funds and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes continuous advice and recommendations
concerning the Fund's investments. Janus Capital also furnishes
certain administrative, compliance and accounting services for
the Fund, and may be reimbursed by the Fund for its costs in
providing those services. In addition, Janus Capital employees
serve as officers of the Trust and Janus Capital provides office
space for the Fund and pays the salaries, fees and expenses of
all Fund officers and those Trustees who are affiliated with
Janus Capital.
The Fund pays Janus Capital a management fee which is calculated
daily and paid monthly. The advisory agreement with the Fund
spells out the management fee and other expenses that the Fund
must pay.
The Fund incurs expenses not assumed by Janus Capital, including
transfer agent and custodian fees and expenses, legal and
auditing fees, printing and mailing costs of sending reports and
other information to existing shareholders, and independent
Trustees' fees and expenses. The Annual Fund Operating Expenses
table on page 4 lists the actual management fee and total
operating expenses of the Fund for the most recent fiscal year.
32 Janus Overseas Fund
<PAGE>
PORTFOLIO MANAGERS
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of the Fund,
which she has managed since its inception. Ms. Hayes
joined Janus Capital in 1987 and has also managed or co-
managed Janus Worldwide Fund since its inception. She
holds a Bachelor of Arts in Economics from Yale University
and received the Chartered Financial Analyst designation.
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of the Fund,
which he has co-managed since April 1998, and assistant
portfolio manager of Janus Worldwide Fund. Mr. Chang
joined Janus Capital in 1993 as a research analyst. He
received an undergraduate degree with honors in Religion
and Philosophy from Dartmouth College and a Master's
Degree in Political Science from Stanford University. Mr.
Chang received the Chartered Financial Analyst
designation.
Management of the fund 33
<PAGE>
Other information
SIZE OF THE FUND
The Fund has discontinued sales of its shares because its
management and the Trustees believe that a substantial increase
in size may adversely affect the Fund's ability to achieve its
investment objective by reducing its flexibility in making
investments and in effecting portfolio changes. Although sales to
new investors have been discontinued, existing shareholders are
permitted to continue to purchase shares and to reinvest any
dividends or capital gains distributions. See the Shareholder's
Manual beginning on page 14.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Fund with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Fund invests or worldwide
markets and economies.
34 Janus Overseas Fund
<PAGE>
Distributions and taxes
DISTRIBUTIONS
To avoid taxation of the Fund, the Internal Revenue Code requires
the Fund to distribute net income and any net gains realized on
its investments annually. The Fund's income from dividends and
interest and any net realized short-term gains are paid to
shareholders as ordinary income dividends. Net realized long-term
gains are paid to shareholders as capital gains distributions.
Dividends and capital gains distributions are normally declared
and paid in December.
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of
the distribution of the Fund, regardless of how long the shares
have been held. Dividends and capital gains awaiting distribution
are included in the Fund's daily NAV. The share price of the Fund
drops by the amount of the distribution, net of any subsequent
market fluctuations. As an example, assume that on December 31,
the Fund declared a dividend in the amount of $0.25 per share. If
the Fund's share price was $10.00 on December 30, the Fund's
share price on December 31 would be $9.75, barring market
fluctuations. Shareholders should be aware that distributions
from a taxable mutual fund are not value-enhancing and may create
income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before the distribution,
you will pay the full price for the shares and receive a portion
of the purchase price back as a taxable distribution. This is
referred to as "buying a dividend." In the above example, if you
bought shares on December 30, you would have paid $10.00 per
share. On December 31, the Fund would pay you $0.25 per share as
a dividend and your shares would now be worth $9.75 per share.
Unless your account is set up as a tax-deferred account,
dividends paid to you would be included in your gross income for
tax purposes, even though you may not have participated in the
Distributions and taxes 35
<PAGE>
increase in NAV of the Fund, whether or not you reinvested the
dividends.
DISTRIBUTION OPTIONS
When you open an account, you must specify on your application
how you want to receive your distributions. You may change your
distribution option at any time by writing the Fund at one of the
addresses listed on page 14 or calling 1-800-525-3713. The Fund
offers the following options:
1. REINVESTMENT OPTION. You may reinvest your income dividends
and capital gains distributions in additional shares. This
option is assigned automatically if no other choice is made.
2. CASH OPTION. You may receive your income dividends and capital
gains distributions in cash.
3. REINVEST AND CASH OPTION. You may receive either your income
dividends or capital gains distributions in cash and reinvest
the other in additional shares.
4. REDIRECT OPTION. You may direct your dividends or capital
gains to purchase shares of another Janus fund.
The Fund reserves the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that
remain outstanding for six months in shares of the Fund at the
NAV next computed after the check is cancelled. Subsequent
distributions may also be reinvested.
TAXES
As with any investment, you should consider the tax consequences
of investing in the Fund. Any time you sell or exchange shares of
a Fund in a taxable account, it is considered a taxable event.
Depending on the purchase price and the sale price, you may have
a gain or loss on the transaction. Any tax liabilities generated
by your transactions are your responsibility.
The following discussion does not apply to tax-deferred accounts,
nor is it a complete analysis of the federal tax implications of
investing in the Fund. You may wish to consult your own tax
36 Janus Overseas Fund
<PAGE>
adviser. Additionally, state or local taxes may apply to your
investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions by the Fund are subject to federal
income tax, regardless of whether the distribution is made in
cash or reinvested in additional shares of the Fund.
Distributions may be taxable at different rates depending on the
length of time the Fund holds a security. In certain states, a
portion of the dividends and distributions (depending on the
source of the Fund's income) may be exempt from state and local
taxes. Information regarding the tax status of income dividends
and capital gains distributions will be mailed to shareholders on
or before January 31st of each year.
TAXATION OF THE FUND
Dividends, interest and some capital gains received by the Fund
on foreign securities may be subject to tax withholding or other
foreign taxes. The Fund may from year to year make the election
permitted under Section 853 of the Internal Revenue Code to pass
through such taxes to shareholders as a foreign tax credit. If
such an election is not made, any foreign taxes paid or accrued
will represent an expense to the Fund.
The Fund does not expect to pay federal income or excise taxes
because it intends to meet certain requirements of the Internal
Revenue Code. It is important that the Fund meets these
requirements so that any earnings on your investment will not be
taxed twice.
Distributions and taxes 37
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand
the Fund's financial performance through October 31st of each
fiscal period shown. Items 1 through 9 reflect financial results
for a single Fund share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, are included in the Annual Report, which is
available upon request and incorporated by reference into the
SAI.
<TABLE>
<CAPTION>
JANUS OVERSEAS FUND
- ------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995 1994>(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $17.94 $14.81 $11.58 $10.36 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.08 0.04 0.10 0.12 (0.02)
3. Net gains or (losses) on
securities (both realized and
unrealized) 0.54 3.39 3.34 1.10 0.38
4. Total from investment operations 0.62 3.43 3.44 1.22 0.36
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.10) (0.04) (0.11) -- --
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.51) (0.26) (0.10) -- --
8. Total distributions (0.61) (0.30) (0.21) -- --
9. NET ASSET VALUE, END OF PERIOD $17.95 $17.94 $14.81 $11.58 $10.36
10. Total return* 3.55% 23.56% 30.19% 11.78% 3.60%
11. Net assets, end of period (in
millions) $3,889 $3,205 $773 $111 $64
12. Average net assets for the period
(in millions) $3,949 $2,093 $335 $78 $37
13. Ratio of gross expenses to average
net assets** 0.96% 1.03% 1.26% 1.76% N/A
14. Ratio of net expenses to average
net assets** 0.94% 1.01% 1.23% 1.73% 2.16%
15. Ratio of net investment
income/(loss) to average net
assets** 0.58% 0.81% 0.73% 0.36% (0.64%)
16. Portfolio turnover rate** 105% 72% 71% 188% 181%
- -------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 2, 1994 (inception) to October 31, 1994.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
38 Janus Overseas Fund
<PAGE>
Glossary of investment terms
This glossary provides a more detailed description of some of the
types of securities and other instruments in which the Fund may
invest. The Fund may invest in these instruments to the extent
permitted by its investment objective and policies. The Fund is
not limited by this discussion and may invest in any other types
of instruments not precluded by the policies discussed elsewhere
in this Prospectus. Please refer to the SAI for a more detailed
discussion of certain instruments.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality,
government or government agency. The issuer of a bond is required
to pay the holder the amount of the loan (or par value of the
bond) at a specified maturity and to make scheduled interest
payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and
other borrowers to investors seeking to invest idle cash. The
Fund may purchase commercial paper issued in private placements
under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of
ownership in a company, and usually carry voting rights and earns
dividends. Unlike preferred stock, dividends on common stock are
not fixed but are declared at the discretion of the issuer's
board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a
fixed dividend or interest payment and are convertible into
common stock at a specified price or conversion ratio.
DEBT SECURITIES are equity securities representing money borrowed
that must be repaid at a later date. Such securities have
specific maturities and usually a specific rate of interest or an
original purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital
gains on the underlying security. Receipts include those issued
by domestic banks (American Depositary Receipts), foreign banks
Glossary of investment terms 39
<PAGE>
(Global or European Depositary Receipts) and broker- dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate
of return. The term generally includes short- and long-term
government, corporate and municipal obligations that pay a
specified rate of interest or coupons for a specified period of
time and preferred stock, which pays fixed dividends. Coupon and
dividend rates may be fixed for the life of the issue or, in the
case of adjustable and floating rate securities, for a shorter
period.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated
below investment grade by the primary rating agencies (e.g., BB
or lower by Standard & Poor's and Ba or lower by Moody's). Other
terms commonly used to describe such securities include "lower
rated bonds," "noninvestment grade bonds" and "junk bonds."
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of
mortgages or other debt. These securities are generally pass-
through securities, which means that principal and interest
payments on the underlying securities (less servicing fees) are
passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the
underlying mortgages or other debt may be refinanced or paid off
prior to their maturities during periods of declining interest
rates. In that case, the portfolio manager may have to reinvest
the proceeds from the securities at a lower rate. Potential
market gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that
is not subject to prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES ("PFICS") are any foreign
corporations which generate amounts of passive income or hold
certain amounts of assets for the production of passive income.
Passive income includes dividends, interest, royalties, rents and
annuities. To avoid taxes and interest that the Fund must pay if
these investments are profitable, the Fund may make various
elections permitted by the tax laws. These elections could
require that the Fund recognize taxable income, which in turn
must be
40 Janus Overseas Fund
<PAGE>
distributed, before the securities are sold and before cash is
received to pay the distributions.
PREFERRED STOCKS are equity securities that generally pay
dividends at a specified rate and have preference over common
stock in the payment of dividends and liquidation. Preferred
stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by the
Fund and a simultaneous agreement by the seller (generally a bank
or dealer) to repurchase the security from the Fund at a
specified date or upon demand. This technique offers a method of
earning income on idle cash. These securities involve the risk
that the seller will fail to repurchase the security, as agreed.
In that case, the Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter
delays and incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by
the Fund to another party (generally a bank or dealer) in return
for cash and an agreement by the Fund to buy the security back at
a specified price and time. This technique will be used primarily
to provide cash to satisfy unusually heavy redemption requests,
or for other temporary or emergency purposes.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
government that are supported by its full faith and credit.
Treasury bills have initial maturities of less than one year,
Treasury notes have initial maturities of one to ten years and
Treasury bonds may be issued with any maturity but generally have
maturities of at least ten years. U.S. government securities also
include indirect obligations of the U.S. government that are
issued by federal agencies and government sponsored entities.
Unlike Treasury securities, agency securities generally are not
backed by the full faith and credit of the U.S. government. Some
agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the
discretionary authority of the U.S. government to purchase the
agency's obligations and others are supported only by the credit
of the sponsoring agency.
Glossary of investment terms 41
<PAGE>
VARIABLE AND FLOATING RATE SECURITIES have variable or floating
rates of interest and, under certain limited circumstances, may
have varying principal amounts. These securities pay interest at
rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or
market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stocks
or bonds, that give the holder the right to buy a proportionate
amount of common stock at a specified price, usually at a price
that is higher than the market price at the time of issuance of
the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally
involve the purchase of a security with payment and delivery at
some time in the future - i.e., beyond normal settlement. The
Fund does not earn interest on such securities until settlement
and bears the risk of market value fluctuations in between the
purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in
this manner.
II. FUTURES, OPTIONS AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified
amount of a financial instrument for an agreed upon price at a
specified time. Forward contracts are not currently exchange
traded and are typically negotiated on an individual basis. The
Fund may enter into forward currency contracts to hedge against
declines on the value of securities denominated in, or whose
value is tied to, a currency other than the U.S. dollar or to
reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase
or sell securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a
specified price on a specified date. The Fund may buy and sell
futures contracts on foreign currencies, securities and financial
indices
42 Janus Overseas Fund
<PAGE>
including interest rates or an index of U.S. government, foreign
government, equity or fixed-income securities. The Fund may also
buy options on futures contracts. An option on a futures contract
gives the buyer the right, but not the obligation, to buy or sell
a futures contract at a specified price on or before a specified
date. Futures contracts and options on futures are standardized
and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to
intermediate-term debt securities whose value at maturity or
interest rate is linked to currencies, interest rates, equity
securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the
reference index or instrument appreciates). Indexed/structured
securities may have return characteristics similar to direct
investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the
market risk of an investment in the underlying instruments, as
well as the credit risk of the issuer.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a
fixed date at a predetermined price. The Fund may purchase and
write put and call options on securities, securities indices and
foreign currencies.
Glossary of investment terms 43
<PAGE>
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44
<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-525-3713 or visiting our Web
site at janus.com. In the Fund's Annual Report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year. Other information is also available from financial
intermediaries that sell shares of the Fund.
The Statement of Additional Information provides detailed
information about the Fund and is incorporated into this Prospectus
by reference. You may review the Fund's Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3166
<PAGE>
[JANUS LOGO]
Janus Money Market Funds
Institutional Shares
PROSPECTUS
FEBRUARY 17, 1999
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Janus Money Market Fund, Janus Government Money Market
Fund, and Janus Tax-Exempt Money Market Fund are
designed for investors who seek maximum current income
consistent with stability of capital. This prospectus
offers a separate class of shares of each Fund
(collectively, the "Shares") exclusively to
institutional and individual clients meeting minimum
investment requirements ($5,000,000 for Janus Money
Market Fund and $250,000 for Janus Government Money
Market Fund and Janus Tax-Exempt Money Market Fund).
Each Fund is a separate series of Janus Investment
Fund, an open-end management investment company.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Money Market Fund...................... 2
Janus Government Money Market Fund........... 2
Janus Tax-Exempt Money Market Fund........... 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objectives and principal
investment strategies........................ 6
Common investment policies................... 7
Types of investments......................... 7
Common investment techniques................. 10
MANAGEMENT OF THE FUNDS
Investment adviser........................... 13
Portfolio managers........................... 13
Assistant portfolio manager.................. 14
DISTRIBUTIONS AND TAXES............ ............ 15
FINANCIAL HIGHLIGHTS.............. ............. 17
OTHER INFORMATION............... ............... 20
SHAREHOLDER'S GUIDE
How to open an account....................... 24
Purchasing shares............................ 25
How to exchange shares....................... 28
How to redeem shares......................... 28
Special shareholder services and other
information.................................. 30
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE MONEY MARKET FUNDS?
- --------------------------------------------------------------------------------
- JANUS MONEY MARKET FUND and JANUS GOVERNMENT MONEY MARKET
FUND seek maximum current income to the extent consistent
with stability of capital.
- JANUS TAX-EXEMPT MONEY MARKET FUND seeks maximum current
income that is exempt from federal income taxes to the
extent consistent with stability of capital.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change in a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that any Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE MONEY MARKET FUNDS?
The Money Market Funds will invest only in high-quality, short-
term money market instruments that present minimal credit risks,
as determined by Janus Capital.
JANUS MONEY MARKET FUND invests primarily in high quality debt
obligations and obligations of financial institutions. Debt
obligations may include commercial paper, notes and bonds, and
variable amount master demand notes. Obligations of financial
institutions include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND invests exclusively in
obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and
instrumentalities and repurchase agreements secured by such
obligations.
JANUS TAX-EXEMPT MONEY MARKET FUND invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. The Fund may
invest up to 20% of its net assets in taxable securities and may
invest without limit in cash and cash equivalents that may be
2 Janus Money Market Funds - Institutional Shares
<PAGE>
federally taxable to the extent the portfolio manager cannot
locate investment opportunities with desirable risk/reward
characteristics.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE MONEY MARKET FUNDS?
The Funds' yields will vary as the short-term securities in their
portfolios mature and the proceeds are reinvested in securities
with different interest rates. Over time, the real value of a
Fund's yield may be eroded by inflation. Although the Money
Market Funds invest only in high-quality, short-term money market
instruments, there is a risk that the value of the securities
they hold will fall as a result of changes in interest rates, an
issuer's actual or perceived credit-worthiness or an issuer's
ability to meet its obligations.
Economic, business, or political development or change affecting
tax-exempt securities may affect Janus Tax-Exempt Money Market
Fund's holdings similarly. This could result in increased
variability of performance. Income from the Fund's investments
may be taxable by your state or local government.
An investment in the Money Market Funds is not a deposit of a
bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although
the Funds seek to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in these
Funds.
The following information illustrates how Institutional Shares of
each Money Market Fund's performance has varied over time. The
bar charts depict the change in performance from year to year.
Risk return summary 3
<PAGE>
JANUS MONEY MARKET FUND - INSTITUTIONAL SHARES
A BAR CHART showing Annual Total Returns for Janus Money Market Fund -
Institutional Shares from 1996 through 1998:
Annual returns for periods ended 12/31
5.53% 5.72% 5.67%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.45%; Worst Quarter: 1st-1997 1.33%
JANUS GOVERNMENT MONEY MARKET FUND - INSTITUTIONAL SHARES
A BAR CHART showing Annual Total Returns for Janus Government Money Market Fund
- - Institutional Shares from 1996 through 1998:
Annual returns for periods ended 12/31
5.44% 5.59% 5.53%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.42%; Worst Quarter: 1st-1997 1.29%
JANUS TAX-EXEMPT MONEY MARKET FUND - INSTITUTIONAL SHARES
A BAR CHART showing Annual Total Returns for Janus Tax-Exempt Money Market Fund
- - Institutional Shares from 1996 through 1998.
Annual returns for periods ended 12/31
3.64% 3.68% 3.65%
1996 1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 2nd-1997 0.98%; Worst Quarter: 1st-1997 0.81%
The 7-day yield on December 31, 1998 was 5.43% for Janus Money
Market Fund - Institutional Shares; 5.17% for Janus Government
Money Market Fund - Institutional Shares; and 3.92% for Janus
Tax-Exempt Money Market Fund - Institutional Shares,
respectively. For the Funds' current yields, call the Janus
XpressLine(TM) at 1-888-979-7737.
The Money Market Funds' past performance does not necessarily
indicate how they will perform in the future.
4 Janus Money Market Funds - Institutional Shares
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Funds.
ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
below shows, these costs are borne indirectly by all
shareholders.
This table describes the fees and expenses that you may pay if
you buy and hold Shares of the Funds. It is based upon gross
expenses (without the effect of expense offset arrangements) for
the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Janus Money Janus Government Janus Tax-Exempt
Institutional Shares Market Fund Money Market Fund Money Market Fund
<S> <C> <C> <C>
Management Fee .20 % .20 % .20 %
Other Expenses .15 % .15 % .15 %
Total Annual Fund
Operating Expenses
Without Waivers* .35 % .35 % .35 %
Total Waivers (.20)% (.20)% (.20)%
Total Annual Fund
Operating Expenses With
Waivers* .15 % .15 % .15 %
</TABLE>
* All expenses are stated both with and without contractual waivers by
Janus Capital. Janus Capital has agreed to continue such waivers until
at least the next annual renewal of the advisory agreements.
EXAMPLE:
THE FOLLOWING EXAMPLE IS BASED ON FUND EXPENSES WITHOUT WAIVERS.
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in each of the Funds for the time periods
indicated then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and
that the Funds' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
----------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund $36 $113 $197 $443
Janus Government Money Market Fund $36 $113 $197 $443
Janus Tax-Exempt Money Market Fund $36 $113 $197 $443
</TABLE>
Risk return summary 5
<PAGE>
Investment objectives, principal
investment strategies
and risks
This section takes a closer look at the investment objective of
each of the Funds, their principal investment strategies and
certain risks of investing in the Funds. Strategies and policies
that are noted as "fundamental" cannot be changed without a
shareholder vote.
Money market funds are subject to certain specific SEC rule
requirements. Among other things, the Funds are limited to
investing in U.S. dollar-denominated instruments with a remaining
maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the 1940 Act).
JANUS MONEY MARKET FUND
Janus Money Market Fund seeks maximum current income to the
extent consistent with stability of capital. It pursues its
objective by investing primarily in high quality debt obligations
and obligations of financial institutions. Debt obligations may
include commercial paper, notes and bonds, and variable amount
master demand notes. Obligations of financial institutions
include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund seeks maximum current income
to the extent consistent with stability of capital. It pursues
its objective by investing exclusively in obligations issued
and/or guaranteed as to principal and interest by the United
States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund seeks maximum current income
that is exempt from federal income taxes to the extent consistent
with stability of capital. It pursues it objective by investing
primarily in municipal securities whose interest is exempt from
federal income taxes, including the federal alternative minimum
tax. The Fund may invest up to 20% of its net assets in
6 Janus Money Market Funds - Institutional Shares
<PAGE>
taxable securities and may invest without limit in cash and cash
equivalents to the extent the portfolio manager cannot locate
investment opportunities with desirable risk/reward
characteristics.
COMMON INVESTMENT POLICIES
Each of the Money Market Funds will:
- invest in high quality, short-term money market instruments
that present minimal credit risks, as determined by Janus
Capital
- invest only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated pursuant
to Rule 2a-7 under the 1940 Act)
- maintain a dollar-weighted average portfolio maturity of 90
days or less
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund invests primarily in:
- high quality debt obligations
- obligations of financial institutions
This Fund may also invest (to a lesser degree) in:
- U.S. Government Securities (securities issued or guaranteed by
the U.S. government, its agencies and instrumentalities)
- municipal securities
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers. Debt
obligations include:
- commercial paper
- notes and bonds
Investment objectives, principal investment strategies and risks 7
<PAGE>
- variable amount master demand notes (the payment obligations on
these instruments may be backed by securities, swap agreements
or other assets, by a guarantee of a third party or solely by
the unsecured promise of the issuer to make payments when due)
- privately issued commercial paper or other securities that are
restricted as to disposition under the federal securities laws
OBLIGATIONS OF FINANCIAL INSTITUTIONS
Examples of obligations of financial institutions include:
- negotiable certificates of deposit, bankers' acceptances, time
deposits and other obligations of U.S. banks (including savings
and loan associations) having total assets in excess of one
billion dollars and U.S. branches of foreign banks having total
assets in excess of ten billion dollars
- Eurodollar and Yankee bank obligations (Eurodollar bank
obligations are dollar-denominated certificates of deposit or
time deposits issued outside the U.S. capital markets by
foreign branches of U.S. banks and by foreign banks. Yankee
bank obligations are dollar-denominated obligations issued in
the U.S. capital markets by foreign banks)
- other U.S. dollar-denominated obligations of foreign banks
having total assets in excess of ten billion dollars that Janus
Capital believes are of an investment quality comparable to
obligations of U.S. banks in which the Fund may invest
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-denominated funds from flowing across its borders. Other
risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation
of financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of
foreign issuers.
8 Janus Money Market Funds - Institutional Shares
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. However, this Fund
reserves the right to invest:
- up to 20% of its net assets in securities whose interest is
federally taxable
- without limit in cash and cash equivalents, including
obligations that may be federally taxable (when its portfolio
manager is unable to locate investment opportunities with
desirable risk/reward characteristics)
MUNICIPAL SECURITIES
Municipal securities include:
- municipal notes
- short-term municipal bonds
- participation interests in municipal securities
At times, the Fund may invest more than 25% of its total assets
in tax-exempt securities that are related in such a way that an
economic, business, or political development or change affecting
one such security could similarly affect the other securities.
Examples include securities whose issuers are located in the same
state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of
its assets in industrial development bonds or participation
interests therein.
Investment objectives, principal investment strategies and risks 9
<PAGE>
Yields on municipal securities are dependent on a variety of
factors, including general market conditions, the size of a
particular offering, the maturity of the obligation and the
rating of the issue. Municipal securities investments may lose
money if the municipal securities issuer does not pay principal
and interest when due. Bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors may affect the
issuer's ability to pay.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation
interests therein. The issuing municipality's credit will not
necessarily back a lease obligation. Interest on lease
obligations may become taxable if the lease is assigned. The Fund
may incur losses if the issuer does not appropriate funds for the
lease payment on an annual basis.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest
substantially all of its assets in municipal securities whose
interest is exempt from federal income tax, the Fund may under
certain circumstances invest in certain securities whose interest
is subject to such taxation, as described under Janus Money
Market Fund's investments.
COMMON INVESTMENT TECHNIQUES
The following is a description of other investment techniques
that the Money Market Funds may use:
PARTICIPATION INTERESTS
A participation interest gives a Money Market Fund a
proportionate, undivided interest in underlying debt securities
and usually carries a demand feature.
DEMAND FEATURES
Demand features give the Money Market Funds the right to resell
securities at specified periods prior to their maturity dates.
10 Janus Money Market Funds - Institutional Shares
<PAGE>
Demand features may shorten the life of a variable or floating
rate security, enhance the instrument's credit quality and
provide a source of liquidity.
Demand features are often issued by third party financial
institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Money Market Funds'
investments may be dependent in part on the credit quality of the
banks supporting the Money Market Funds' investments. This will
result in exposure to risks pertaining to the banking industry,
including the foreign banking industry. Brokerage firms and
insurance companies also provide certain liquidity and credit
support. A substantial portion of the Janus Tax-Exempt Money
Market Fund's portfolio in particular may consist of securities
backed by banks and other financial institutions, and thus
adverse changes in the credit quality of these institutions could
cause losses to the Fund and affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The Money Market Funds may invest in securities which have
variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a
specified formula, usually with reference to an interest rate
index or market interest rate. Variable and floating rate
securities are subject to changes in value based on changes in
market interest rates or changes in the issuer's or guarantor's
creditworthiness.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Money Market Funds may purchase fixed or variable rate
mortgage-backed securities issued by the Government National
Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
government-related entity. Janus Money Market Fund and Janus
Tax-Exempt Money Market Fund may purchase other mortgage- and
asset-backed securities including securities backed by automobile
loans, equipment leases or credit card receivables.
Investment objectives, principal investment strategies and risks 11
<PAGE>
Unlike traditional debt instruments, payments on these securities
include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities and may result in a Fund
having to reinvest proceeds at a lower interest rate.
REPURCHASE AGREEMENTS
Each Money Market Fund may enter into a collateralized repurchase
agreements. Repurchase agreements are transactions in which a
Fund purchases securities and simultaneously commits to resell
those securities to the seller at an agreed-upon price on an
agreed-upon future date. The repurchase price reflects a market
rate of interest and is collateralized by cash or securities.
If the seller of the securities underlying a repurchase agreement
fails to pay the agreed resale price on the agreed delivery date,
a Money Market Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its
ability to do so.
12 Janus Money Market Funds - Institutional Shares
<PAGE>
Management of the Funds
INVESTMENT ADVISER
Each Fund has a separate Investment Advisory Agreement with Janus
Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. Janus
Capital has served as investment adviser to Janus Fund since 1970
and currently serves as investment adviser to all of the Janus
funds, acts as sub-adviser for a number of private-label mutual
funds and provides separate account advisory services for
institutional accounts.
Pursuant to the Investment Advisory Agreements, Janus Capital
furnishes continuous advice and recommendations concerning each
Fund's investments. Each of the Funds has agreed to compensate
Janus Capital for its advisory services by the monthly payment of
a fee at the annual rate of 0.20% of the value of the average
daily net assets of each Fund. However, Janus Capital has agreed
to waive a portion of its fee and accordingly, the advisory fee
of each Fund will be calculated at the annual rate of 0.10% of
the value of each Fund's average daily net assets. Janus Capital
has agreed to continue such waivers until at least the next
annual renewal of the advisory agreements. You will be notified
of any change in this limit.
PORTFOLIO MANAGERS
SHARON S. PICHLER
- --------------------------------------------------------------------------------
is Executive Vice President of Janus Money Market Fund,
Janus Government Money Market Fund and Janus Tax-Exempt
Money Market Fund. She is portfolio manager of Janus Money
Market Fund and Janus Tax-Exempt Money Market Fund, which
she has managed since inception. She previously served as
portfolio manager of Janus Government Money Market Fund
from inception to February 1999. She holds a Bachelor of
Arts in Economics from Michigan State University and a
Master of Business Administration from the University of
Texas at San Antonio. Ms. Pichler received the Chartered
Financial Analyst designation.
Management of the Funds 13
<PAGE>
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is portfolio manager of Janus Government Money Market Fund
which he has managed since February 1999. Prior to
assuming management of the Fund, he served as assistant
portfolio manager of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money
Market Fund. He joined Janus Capital in May 1996 as a
senior fixed income analyst. Prior to joining Janus
Capital, he was a portfolio manager for USAA Investment
Management Company from 1991 to 1996. He holds a Bachelor
of Arts in Business Administration from Wayne State
University and a Master's Degree in Business
Administration from the University of Illinois. Mr.
Thorderson received the Chartered Financial Analyst
designation.
ASSISTANT PORTFOLIO MANAGER
JEANINE M. MORRONI
- --------------------------------------------------------------------------------
is assistant portfolio manager of Janus Government Money
Market Fund. Ms. Morroni joined Janus Capital in January
1994 as a Fund Accountant and began trading short-term
securities in July 1994. She has been a credit analyst for
the Money Market Funds since 1996. Prior to joining Janus
Capital, she worked as a Fund Accountant at Oppenheimer
Management Corporation. She holds a Bachelor of Science in
Accounting from Colorado State University. She is a
candidate for the Chartered Financial Analyst designation.
14 Janus Money Market Funds - Institutional Shares
<PAGE>
Distributions and taxes
Dividends representing substantially all of the net investment
income and any net realized gains on sales of securities are
declared daily, Saturdays, Sundays and holidays included, and
distributed on the last business day of each month. If a month
begins on a Saturday, Sunday or holiday, dividends for those days
are declared at the end of the preceding month and distributed on
the first business day of the month. Distributions will be
reinvested in Shares of a Fund or wired to a predesignated bank
account at the election of the shareholder. If no election is
made, all distributions will be reinvested in additional Shares
of a Fund.
Shares purchased by wire on a day on which the New York Stock
Exchange ("NYSE") and the Federal Reserve Banks are open ("bank
business day") will receive that day's dividend if the purchase
is effected prior to 3:00 p.m. (New York time) for Janus Money
Market Fund, 5:00 p.m. for Janus Government Money Market Fund and
12:00 p.m. for Janus Tax-Exempt Money Market Fund. Otherwise,
such Shares begin to accrue dividends on the first bank business
day following receipt of the order.
Redemption orders effected on any particular day will generally
receive dividends declared through the day of redemption.
However, redemptions made by wire which are received prior to
3:00 p.m. (New York time) for Janus Money Market Fund, 5:00 p.m.
for Janus Government Money Market Fund and 12:00 p.m. for Janus
Tax-Exempt Money Market Fund on a bank business day will result
in Shares being redeemed that day. Proceeds of such a redemption
will normally be sent to the predesignated account on that day
and that day's dividend will not be received. Requests for
redemptions made by wire which are received after 3:00 p.m. for
Janus Money Market Fund, after 5:00 p.m. for Janus Government
Money Market Fund, and after 12:00 p.m. for Janus Tax-Exempt
Money Market Fund will be processed on that day and receive that
day's dividend, but will not be wired until the following bank
business day.
The Funds reserve the right to require purchase and redemption
requests prior to these times on days when the bond market or the
NYSE close early.
Distributions and taxes 15
<PAGE>
Distributions for all of the Funds (except Janus Tax-Exempt Money
Market Fund) are taxable income and are subject to federal income
tax (except for shareholders exempt from income tax), whether
such distributions are received in cash or are reinvested in
additional Shares. Full information regarding the tax status of
income dividends and any capital gains distributions will be
mailed to shareholders for tax purposes on or before January 31st
of each year. Because the Funds are money market funds, they do
not anticipate making any capital gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially
all income dividends it pays will be exempt from federal income
tax. However, dividends attributable to interest on taxable
investments, together with distributions from any net realized
capital gains, are taxable. In addition, interest on certain
private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent
that the Fund earns such income, shareholders who are subject to
the alternative minimum tax must include such income as a
preference item. The Fund will advise shareholders of the
percentage of dividends, if any, subject to the alternative
minimum tax.
Dividends and capital gains distributions may also be subject to
state and local taxes. In certain states some portion of
dividends and distributions (depending on the sources of the
Fund's net income) of Janus Tax-Exempt Money Market Fund may be
exempt from state and local taxes. Shareholders should consult
their own tax adviser regarding exemption from any applicable
state and local tax, as well as the tax treatment of any
dividends or distributions from the Shares.
The Funds intend to comply with provisions of the Internal
Revenue Code applicable to investment companies, and thus it is
not expected that any of the Funds will be required to pay any
federal income or excise taxes. The SAI further explains the
Funds' tax status.
16 Janus Money Market Funds - Institutional Shares
<PAGE>
Financial highlights
The financial highlights tables are intended to help you
understand the financial performance of the Fund's Shares through
October 31st of each fiscal period shown. Items 1 through 8
reflect financial results for a single Fund share. The total
returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in the Shares of each of
the Funds, (assuming the reinvestment of all dividends and
distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds'
financial statements, are included in the Annual Report, which is
available upon request, and incorporated by reference into the
SAI.
<TABLE>
<CAPTION>
JANUS MONEY MARKET FUND - INSTITUTIONAL SHARES
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.06 0.06 0.05 0.03
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.06 0.06 0.05 0.03
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.06) (0.06) (0.05) (0.03)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.06) (0.06) (0.05) (0.03)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
9. Total return* 5.72% 5.71% 5.61% 3.25%
10. Net assets, end of period (in millions) $4,974 $2,771 $1,706 $305
11. Average net assets for the period (in
millions) $3,621 $2,545 $874 $202
12. Ratio of expenses to average net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
13. Ratio of net investment income to average net
assets** 5.58% 5.54% 5.41% 5.86%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Period from April 17, 1995 (inception of Shares) through October 31, 1995.
(2) The ratio was .35% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 17
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND -INSTITUTIONAL SHARES
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05 0.03
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.05 0.05 0.05 0.03
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.05) (0.05) (0.03)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.05) (0.05) (0.05) (0.03)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
9. Total return* 5.59% 5.58% 5.50% 3.20%
10. Net assets, end of period (in millions) $821 $36 $59 $44
11. Average net assets for the period (in
millions) $321 $57 $53 $25
12. Ratio of expenses to average net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
13. Ratio of net investment income to average net
assets** 5.42% 6.04% 5.34% 5.75%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Period from April 17, 1995 (inception of Shares) through October 31, 1995.
(2) The ratio was .35% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
18 Janus Money Market Funds - Institutional Shares
<PAGE>
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - INSTITUTIONAL SHARES
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997 1996 1995(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.04 0.04 0.04 0.02
3. Net gains or (losses) on securities (both
realized and unrealized) -- -- -- --
4. Total from investment operations 0.04 0.04 0.04 0.02
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.04) (0.04) (0.04) (0.02)
6. Distributions (from capital gains) -- -- -- --
7. Total dividends and distributions (0.04) (0.04) (0.04) (0.02)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
9. Total return* 3.67% 3.67% 3.74% 2.09%
10. Net assets, end of period (in millions) $41 $4 $2 $11
11. Average net assets for the period (millions) $19 $3 $2 $1
12. Ratio of expenses to average net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
13. Ratio of net investment income to average net
assets** 3.60% 3.94% 3.82% 3.82%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Period from April 17, 1995 (inception of Shares) through October 31, 1995.
(2) The ratio was .35% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 19
<PAGE>
Other information
CLASSES OF SHARES
Each Fund currently offers three classes of shares by separate
prospectuses. The Shares offered by this Prospectus are available
only to institutional clients, including corporations,
foundations and trusts, and individuals meeting certain minimum
investment requirements. A second class of shares of each Fund,
Service Shares, are available only through banks or other
Financial Institutions that meet minimum investment requirements
in connection with trust accounts, cash management programs and
similar programs. A third class of shares of each Fund, Investor
Shares, are available to the general public. Because the expenses
of each class may differ, the performance of each class is
expected to differ. If you would like additional information,
please call Janus Extended Services at 1-800-29JANUS.
SIGNIFICANT SHAREHOLDERS
As of January 20, 1999, the following shareholder owned more than
25% of the Shares of Janus Government Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
-----------------------------------------------------------
<S> <C> <C>
Janus Twenty Fund 100 Fillmore Street, 61.13%
Denver, CO 80206-4928
-----------------------------------------------------------
</TABLE>
As of January 20, 1999, the following shareholder owned more than
25% of the Shares of Janus Tax-Exempt Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
-----------------------------------------------------------
<S> <C> <C>
Janus Capital 100 Fillmore Street, 84.67%
Corporation Denver, CO 80206-4928
-----------------------------------------------------------
</TABLE>
Thus, these shareholders may have the power to control any vote
of the Shares of these Funds.
20 Janus Money Market Funds - Institutional Shares
<PAGE>
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Funds invest or worldwide
markets and economies.
Other Information 21
<PAGE>
Janus Money Market Funds -
Institutional Shares
<PAGE>
Shareholder's
Guide
This section contains information
about opening your account with
Janus, purchases and redemptions,
and other services and options
available to shareholders.
You may visit our Web site at
janus.com for more information
about the Shares.
[JANUS LOGO]
<PAGE>
HOW TO OPEN AN ACCOUNT
ESTABLISHING YOUR ACCOUNT
The Application enclosed with this Prospectus describes the
options available to you as an institutional shareholder of the
Funds. After reviewing the Application carefully, complete, sign
and forward it to:
<TABLE>
<S> <C>
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Janus
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4928
Attn: Extended Services Attn: Extended Services
</TABLE>
Do not include any purchase money with the Application. All
purchases of Shares should be effected by wire transfer. See
"Purchasing Shares." The Funds reserve the right to suspend the
offering of the Shares for a period of time and to reject any
specific purchase request.
You may set up your account for Investment Retirement Plan
rollovers (in excess of $250,000) under a tax-sheltered
retirement plan. A retirement plan allows you to shelter your
investment income from current income taxes. A contribution to
these plans may also be tax deductible. Distributions from a
retirement plan are generally subject to income tax and may be
subject to an additional tax if withdrawn prior to age 59 1/2.
Please refer to the Janus IRA booklet for complete information
regarding IRAs. You will need a special application to be
enrolled in the plan. For an application and more details, call
1-800-525-3713.
TAXPAYER IDENTIFICATION NUMBERS
On the application or other appropriate form, you will be asked
to certify that your Social Security or taxpayer identification
number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are
24 Janus Money Market Funds - Institutional Shares
<PAGE>
subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold
31% of any dividends paid and redemption or exchange proceeds. In
addition, to the 31% backup withholding, you may be subject to a
$50 fee to reimburse the Funds for any penalty that the IRS may
impose.
DISTRIBUTION OPTIONS
Shareholders have the option of having their dividends and
distributions automatically reinvested in Shares of a Fund or
wired to a predesignated bank account. If no election is made,
all dividends and distributions will be reinvested in additional
Shares.
PURCHASING SHARES
You must establish a Fund account and receive an account number
before making purchases by wire. Contact the Institutional
Services Money Desk at 1-800-29JANUS for complete instructions.
Purchase requests received before 3:00 p.m. for Janus Money
Market Fund, (New York time) 5:00 p.m. for Janus Government Money
Market Fund and 12:00 p.m. for Janus Tax-Exempt Money Market Fund
on a bank business day will receive dividends declared on the
purchase date (the daily yield for the Funds is calculated after
these times). In addition, the Funds' transfer agent must receive
payment in federal funds by 6:00 p.m. (New York time). If your
payment on a purchase order is not received by this time, your
purchase may be canceled. You will be responsible for any losses
or expenses incurred by the Fund, Janus Capital, Janus Service
Corporation or Janus Distributors, Inc., and the Fund can redeem
shares you own in this or another identically registered Janus
fund as reimbursement. The Funds and their agent have the right
to reject or cancel any purchase, exchange, or redemption due to
nonpayment. The Funds also reserve the right to require purchase
requests and payments prior to these times on days when the bond
market or the NYSE close early. Purchase orders received after
these times will receive the dividend declared the following day.
Shareholder's guide 25
<PAGE>
Complete information regarding your account must be included in
all wire instructions in order to facilitate prompt and accurate
handling of investments. Please contact the Institutional
Services Money Desk at 1-800-29JANUS when you intend to make a
wire purchase. The Funds do not charge any fees for transactions
by wire in Shares of the Funds.
Once you have established a Fund account, you may purchase Shares
for such account or open additional accounts with other Funds at
any time. The Funds reserve the right to suspend the offering of
Shares for a period of time and to reject any specific purchase
request. If you have any questions, please call 1-800-29JANUS.
MINIMUM INVESTMENT
JANUS MONEY MARKET FUND
The minimum investment for the Institutional Shares of Janus
Money Market Fund is $5,000,000. Shares may be purchased with an
initial $250,000 investment, however, the $5,000,000 minimum must
be reached within six months of opening the account. Shareholders
who do not reach or maintain the $5,000,000 minimum will be given
the option of (1) exchanging into Investor Shares of Janus Money
Market Fund, Institutional Shares of Janus Government Money
Market Fund or Janus Tax-Exempt Money Market Fund, or shares of
another Janus fund or (2) having their shares redeemed.
Shareholders' balances that fall below the required minimum will
have 30 days to reach an account balance of $5,000,000.
JANUS GOVERNMENT MONEY MARKET FUND AND JANUS TAX-EXEMPT MONEY
MARKET FUND
The minimum initial investment in these shares is $250,000. The
Funds may, in their discretion, waive this minimum under certain
circumstances but, in such event, the minimum must be reached
within 90 days of opening the account. Shareholders who do not
maintain the $250,000 minimum will be given the option of
26 Janus Money Market Funds - Institutional Shares
<PAGE>
exchanging into Investor Shares or shares of another Janus fund
or having their Shares redeemed.
NET ASSET VALUE
The net asset value of the Shares is determined at the close of
the regular trading session of the New York Stock Exchange
(normally 4:00 p.m., New York time) each day that both the
Exchange and the Federal Reserve Banks are open, except that
Janus Government Money Market Fund's NAV is normally calculated
at 5:00 p.m. (New York time) on such days. The NAV of Fund shares
is not determined on the days the NYSE is closed (generally, New
Year's Day, Martin Luther King Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas) and when the Federal Reserve Banks are closed
(generally, the same days as the NYSE is closed and also Columbus
Day and Veterans' Day). NAV per share is determined by dividing
the total value of the securities and other assets, less
liabilities, by the total number of Shares outstanding. Portfolio
securities are valued at their amortized cost. Amortized cost
valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity (or such
other date as permitted by Rule 2a-7) of any discount or premium.
If fluctuating interest rates cause the market value of a
portfolio to deviate more than 1/2 of 1% from the value
determined on the basis of amortized cost, the Trustees will
consider whether any action, such as adjusting the Share's NAV to
reflect current market conditions, should be initiated to prevent
any material dilutive effect on shareholders.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to
maintain the general liquidity that is representative of a money
market fund and to help facilitate transactions in shareholder
accounts.
Shareholder's guide 27
<PAGE>
HOW TO EXCHANGE SHARES
The Janus funds include several funds with a variety of
investment objectives. You may exchange your Shares for shares of
any other Janus fund that is available to the public and
registered in your state of residence. There are certain
procedures which should be followed to effect the transfer of the
entire or partial balance in your Shares to one of the other
Janus funds. The Funds reserve the right to reject any exchange
request and to modify or terminate the exchange privilege at any
time. For example, the Funds may reject exchanges from accounts
engaged in excessive trading (including market timing
transactions) that are detrimental to the Funds. If you would
like more information regarding this option, please call
Institutional Services at 1-800-29JANUS.
HOW TO REDEEM SHARES
PARTIAL OR COMPLETE REDEMPTIONS
You may redeem all or a portion of your Shares on any business
day. Your Shares will be redeemed at the NAV next calculated
after your Fund has received your redemption request in good
order and meeting all the requirements of this Prospectus.
Proceeds of such redemption generally will be wired to your
predesignated bank account as of the day of redemption, or, if
that day is a bank holiday, on the next bank business day.
IN WRITING
To redeem all or part of your Shares in writing, send a letter of
instruction to the following address:
<TABLE>
<S> <C>
Via Regular Mail Via Express Mail - Overnight Delivery
Janus Janus
P.O. Box 173375 100 Fillmore Street
Denver, CO 80217-3375 Denver, CO 80206-4928
Attn: Extended Services Attn: Extended Services
</TABLE>
The letter should be on company letterhead (in the case of
institutional clients) and should specify the name of the Fund,
the
28 Janus Money Market Funds - Institutional Shares
<PAGE>
number of Shares or dollars being redeemed, the account number,
appropriate wiring instructions, the name(s) on the account, your
name and your daytime telephone number. The letter must be signed
by an authorized person whose signature is on file with the Fund.
For IRA shareholders, written instructions must be signed by the
account owner. If you do not want federal income tax withheld
from your redemption, you must state that you elect not to have
such withholding apply. In addition, your instructions must state
whether the distribution is normal (after age 59 1/2) or
premature (before age 59 1/2) and, if premature, whether any
exceptions apply with regard to the 10% additional tax on early
distributions.
BY TELEPHONE
Shares may be redeemed by telephone. If a request for a
redemption is received by 3:00 p.m. (New York time) for Janus
Money Market Fund, 5:00 p.m. for Janus Government Money Market
Fund and 12:00 p.m. for Janus Tax-Exempt Money Market Fund on a
bank business day, Shares will be redeemed and the redemption
amount wired in federal funds to the shareholder's predesignated
bank account that day. After these times, a redemption request
will be processed at that day's NAV and will include that day's
dividends, but generally will not be wired until the next bank
business day. The Funds reserve the right to require redemption
requests prior to these times on days when the bond market or
NYSE close early. There is no fee for redemptions by wire.
BY A FUND
Your account may be terminated by your Fund if, due to the
transfer or redemption of Shares, the value of the remaining
Shares in your account falls below the minimum investment
required to open a new account, or if you engage in illegal or
other conduct detrimental to the Funds. In the case of
insufficient account size, your Fund will notify you that you
have 30 days for Janus Money Market Fund or 60 days for Janus
Government
Shareholder's guide 29
<PAGE>
Money Market Fund and Janus Tax-Exempt Money Market Fund to
increase your account to the minimum required before redeeming
your account.
SPECIAL SHAREHOLDER SERVICES AND OTHER INFORMATION
PORTFOLIO INFORMATION
You may call 1-800-29JANUS by TouchTone(TM) telephone for access
to certain information regarding your account, including current
yield and dividend rate information, Monday through Friday from
7:00 a.m. to 10:00 p.m. (New York time).
TELEPHONE INSTRUCTIONS
You may initiate many transactions by telephone. The Funds and
their agents will not be responsible for any losses resulting
from unauthorized transactions when procedures designed to verify
the identity of the caller are followed.
ACCOUNT ADDRESS AND NAME CHANGES
To change the address on your account, you may call 1-800-
29JANUS or send a written request signed by all registered owners
of your account. Please include the name of the Fund(s), the
account number(s), the name(s) on the account and both the old
and new addresses. Within the first 10 days of an address change,
redemptions by institutional clients are permissible only if the
redemption proceeds are wired to a pre-designated bank account or
you provide the Funds with appropriate corporate resolutions
changing wire instructions. Please call 1-800-29JANUS for
additional information.
To change the name on an account, the Shares must be transferred
to a new account. Such a change generally requires written
instructions with the guaranteed signatures of all registered
owners, as well as an Application and supporting legal
documentation, if applicable. Please call 1-800-29JANUS for
additional information.
30 Janus Money Market Funds - Institutional Shares
<PAGE>
STATEMENTS AND REPORTS
Each shareholder will receive daily confirmations of purchases
and redemptions made in the Funds. On the last day of each month,
the shareholder will receive a statement reporting all purchases
and redemptions made during that month, and dividends paid during
the month.
Twice each year you will receive the financial statements of the
Funds, including a statement listing portfolio securities. To
reduce expenses, only one copy of most reports (such as the
Funds' Annual Report) may be mailed to all accounts with the same
tax identification number. Please call 1-800-29JANUS if you need
additional reports sent each time. The Funds reserve the right to
charge a fee for additional statement and report requests.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may temporarily suspend telephone
transactions and other shareholder services described in this
Prospectus upon reasonable notice or to the extent that any
circumstance reasonably beyond the control of the Funds or their
agents materially hampers the provision of such services.
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may purchase or sell Fund shares through a broker-dealer,
bank or other financial institution, or an organization that
provides recordkeeping and consulting services to retirement or
other employee benefit plans (a "Processing Organization").
Processing Organizations may charge you a fee for this service
and may require different minimum initial and subsequent
investments than the Funds. Processing Organizations may also
impose other charges or restrictions different from those
applicable to shareholders who invest in the Funds directly. A
Processing Organization, rather than its customers, may be the
shareholder of record of your shares. The Funds are not
responsible for the failure of any Processing Organization to
carry out its obligations to its customers. Janus Capital or its
affiliates, from their own assets,
Shareholder's guide 31
<PAGE>
may compensate certain Processing Organizations for providing
administrative, recordkeeping and similar services, as well as
distribution-related services.
32 Janus Money Market Funds - Institutional Shares
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-29JANUS
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-29JANUS or visiting our Web
site at janus.com. In the Funds' Annual Report you will find a
discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during their last
fiscal year. Other information is also available from financial
intermediaries that sell shares of the Funds.
The Statement of Additional Information provides detailed
information about the Funds and is incorporated into this Prospectus
by reference. You may review the Funds' Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3168
<PAGE>
[JANUS LOGO]
Janus Money Market Funds
Service Shares
PROSPECTUS
FEBRUARY 17, 1999
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Janus Money Market Fund, Janus Government Money Market
Fund, and Janus Tax-Exempt Money Market Fund are
designed for investors who seek maximum current income
consistent with stability of capital. This prospectus
offers a separate class of shares of each Fund
(collectively, the "Shares") exclusively through banks
and other financial institutions ("Financial
Institutions") in connection with trust accounts, cash
management programs and similar programs provided to
their customers. Each Fund is a separate series of
Janus Investment Fund, an open-end management
investment company.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Money Market Fund...................... 2
Janus Government Money Market Fund........... 2
Janus Tax-Exempt Money Market Fund........... 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objectives and principal
investment strategies........................ 6
Common investment policies................... 7
Types of investments......................... 7
Common investment techniques................. 10
MANAGEMENT OF THE FUNDS
Investment adviser and administrator......... 13
Portfolio managers........................... 14
Assistant portfolio manager.................. 15
DISTRIBUTIONS AND TAXES............ ............ 16
FINANCIAL HIGHLIGHTS.............. ............. 18
OTHER INFORMATION............... ............... 21
SHAREHOLDER'S GUIDE
Purchases.................................... 26
Minimum investment........................... 27
Net asset value.............................. 27
Redemptions.................................. 28
Shareholder communications................... 29
</TABLE>
Table of contents 1
<PAGE>
Risk return summary
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE MONEY MARKET FUNDS?
- --------------------------------------------------------------------------------
- JANUS MONEY MARKET FUND AND JANUS GOVERNMENT MONEY MARKET
FUND seek maximum current income to the extent consistent
with stability of capital.
- JANUS TAX-EXEMPT MONEY MARKET FUND seeks maximum current
income that is exempt from federal income taxes to the
extent consistent with stability of capital.
The Funds' Trustees may change these objectives without a
shareholder vote and the Funds will notify you of any changes
that are material. If there is a material change in a Fund's
objective or policies, you should consider whether that Fund
remains an appropriate investment for you. There is no guarantee
that any Fund will meet its objective.
2. WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE MONEY MARKET FUNDS?
The Money Market Funds will invest only in high-quality, short-
term money market instruments that present minimal credit risks,
as determined by Janus Capital.
JANUS MONEY MARKET FUND invests primarily in high quality debt
obligations and obligations of financial institutions. Debt
obligations may include commercial paper, notes and bonds, and
variable amount master demand notes. Obligations of financial
institutions include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND invests exclusively in
obligations issued and/or guaranteed as to principal and interest
by the United States government or by its agencies and
instrumentalities and repurchase agreements secured by such
obligations.
JANUS TAX-EXEMPT MONEY MARKET FUND invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. The Fund may
invest up to 20% of its net assets in taxable securities and may
invest without limit in cash and cash equivalents that may be
2 Janus Money Market Funds - Service Shares
<PAGE>
federally taxable to the extent the portfolio manager cannot
locate investment opportunities with desirable risk/reward
characteristics.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE MONEY MARKET FUNDS?
The Funds' yields will vary as the short-term securities in their
portfolios mature and the proceeds are reinvested in securities
with different interest rates. Over time, the real value of a
Fund's yield may be eroded by inflation. Although the Money
Market Funds invest only in high-quality, short-term money market
instruments, there is a risk that the value of the securities
they hold will fall as a result of changes in interest rates, an
issuer's actual or perceived credit-worthiness or an issuer's
ability to meet its obligations.
Economic, business, or political development or change affecting
tax-exempt securities may affect Janus Tax-Exempt Money Market
Fund's holdings similarly. This could result in increased
variability of performance. Income from the Fund's investments
may be taxable by your state or local government.
An investment in the Money Market Funds is not a deposit of a
bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although
the Funds seek to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in these
Funds.
The following information illustrates how Service Shares of each
Money Market Fund's performance has varied over time. The bar
charts depict the change in performance from year to year.
Risk return summary 3
<PAGE>
JANUS MONEY MARKET FUND - SERVICE SHARES
A BAR CHART showing Annual Total Returns for Janus Money Market Fund - Service
Shares from 1997 through 1998:
Annual returns for periods ended 12/31
5.46% 5.40%
1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.38%; Worst Quarter: 1st-1997 1.27%
JANUS GOVERNMENT MONEY MARKET FUND - SERVICE SHARES
A BAR CHART showing Annual Total Returns for Janus Government Money Market Fund
- - Service Shares:
Annual returns for periods ended 12/31
5.33% 5.28%
1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 4th-1997 1.35%; Worst Quarter: 1st-1997 1.23%
JANUS TAX-EXEMPT MONEY MARKET FUND - SERVICE SHARES
A BAR CHART showing Annual Total Returns for Janus Tax-Exempt Money Market Fund
- - Service Shares:
Annual returns for periods ended 12/31
3.44% 3.41%
1997 1998
Each percentage is represented by a bar of proportionate size with the actual
total return printed above the bar.
Best Quarter: 2nd-1997 0.92%; Worst Quarter: 1st-1997 0.75%
The 7-day yield on December 31, 1998 was 5.17% for Janus Money
Market Fund - Service Shares; 4.90% for Janus Government Money
Market Fund - Service Shares; and 3.66% for Janus Tax-Exempt
Money Market Fund - Service Shares, respectively. For the Funds'
current yields, call the Janus XpressLine(TM) at 1-888-979-7737.
The Money Market Funds' past performance does not necessarily
indicate how they will perform in the future.
4 Janus Money Market Funds - Service Shares
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or
exchange fees, are charged directly to an investor's account. All
Janus funds are no-load investments, so you will not pay any
shareholder fees when you buy or sell shares of the Funds.
ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets
and include fees for portfolio management, maintenance of
shareholder accounts, shareholder servicing, accounting and other
services. You do not pay these fees directly but, as the example
below shows, these costs are borne indirectly by all
shareholders.
This table describes the fees and expenses that you may pay if
you buy and hold Shares of the Funds. It is based upon gross
expenses (without the effect of expense offset arrangements) for
the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
Janus Money Janus Government Janus Tax-Exempt
Service Shares Market Fund Money Market Fund Money Market Fund
<S> <C> <C> <C>
Management Fee .20 % .20 % .20 %
Other Expenses .40 % .40 % .40 %
Total Annual Fund Operating
Expenses Without Waivers* .60 % .60 % .60 %
Total Waivers (.20)% (.20)% (.20)%
Total Annual Fund Operating
Expenses With Waivers* .40 % .40 % .40 %
</TABLE>
- --------------------------------------------------------------------------------
* All expenses are stated both with and without contractual waivers by
Janus Capital. Janus Capital has agreed to continue such waivers until
at least the next annual renewal of the advisory agreements.
- --------------------------------------------------------------------------------
EXAMPLE:
THE FOLLOWING EXAMPLE IS BASED ON FUND EXPENSES WITHOUT WAIVERS.
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in each of the Funds for the time periods
indicated then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and
that the Funds' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-----------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund $61 $192 $335 $750
Janus Government Money Market Fund $61 $192 $335 $750
Janus Tax-Exempt Money Market Fund $61 $192 $335 $750
</TABLE>
Risk return summary 5
<PAGE>
Investment objectives, principal
investment strategies
and risks
This section takes a closer look at the investment objective of
each of the Funds, their principal investment strategies and
certain risks of investing in the Funds. Strategies and policies
that are noted as "fundamental" cannot be changed without a
shareholder vote.
Money market funds are subject to certain specific SEC rule
requirements. Among other things, the Funds are limited to
investing in U.S. dollar-denominated instruments with a remaining
maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the 1940 Act).
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
JANUS MONEY MARKET FUND
Janus Money Market Fund seeks maximum current income to the
extent consistent with stability of capital. It pursues its
objective by investing primarily in high quality debt obligations
and obligations of financial institutions. Debt obligations may
include commercial paper, notes and bonds, and variable amount
master demand notes. Obligations of financial institutions
include certificates of deposit and time deposits.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund seeks maximum current income
to the extent consistent with stability of capital. It pursues
its objective by investing exclusively in obligations issued
and/or guaranteed as to principal and interest by the United
States government or by its agencies and instrumentalities and
repurchase agreements secured by such obligations.
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund seeks maximum current income
that is exempt from federal income taxes to the extent consistent
with stability of capital. It pursues it objective by investing
primarily in municipal securities whose interest is exempt from
federal income taxes, including the federal alternative
6 Janus Money Market Funds - Service Shares
<PAGE>
minimum tax. The Fund may invest up to 20% of its net assets in
taxable securities and may invest without limit in cash and cash
equivalents to the extent the portfolio manager cannot locate
investment opportunities with desirable risk/reward
characteristics.
COMMON INVESTMENT POLICIES
Each of the Money Market Funds will:
- invest in high quality, short-term money market instruments
that present minimal credit risks, as determined by Janus
Capital
- invest only in U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less (as calculated pursuant
to Rule 2a-7 under the 1940 Act)
- maintain a dollar-weighted average portfolio maturity of 90
days or less
TYPES OF INVESTMENTS
JANUS MONEY MARKET FUND
Janus Money Market Fund invests primarily in:
- high quality debt obligations
- obligations of financial institutions
This Fund may also invest (to a lesser degree) in:
- U.S. Government Securities (securities issued or guaranteed by
the U.S. government, its agencies and instrumentalities)
- municipal securities
DEBT OBLIGATIONS
The Fund may invest in debt obligations of domestic issuers. Debt
obligations include:
- commercial paper
- notes and bonds
Investment objectives, principal investment strategies and risks 7
<PAGE>
- variable amount master demand notes (the payment obligations on
these instruments may be backed by securities, swap agreements
or other assets, by a guarantee of a third party or solely by
the unsecured promise of the issuer to make payments when due)
- privately issued commercial paper or other securities that are
restricted as to disposition under the federal securities laws
OBLIGATIONS OF FINANCIAL INSTITUTIONS
Examples of obligations of financial institutions include:
- negotiable certificates of deposit, bankers' acceptances, time
deposits and other obligations of U.S. banks (including savings
and loan associations) having total assets in excess of one
billion dollars and U.S. branches of foreign banks having total
assets in excess of ten billion dollars
- Eurodollar and Yankee bank obligations (Eurodollar bank
obligations are dollar-denominated certificates of deposit or
time deposits issued outside the U.S. capital markets by
foreign branches of U.S. banks and by foreign banks. Yankee
bank obligations are dollar-denominated obligations issued in
the U.S. capital markets by foreign banks)
- other U.S. dollar-denominated obligations of foreign banks
having total assets in excess of ten billion dollars that Janus
Capital believes are of an investment quality comparable to
obligations of U.S. banks in which the Fund may invest
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-denominated funds from flowing across its borders. Other
risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation
of financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of
foreign issuers.
8 Janus Money Market Funds - Service Shares
<PAGE>
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
JANUS TAX-EXEMPT MONEY MARKET FUND
Janus Tax-Exempt Money Market Fund invests primarily in municipal
securities whose interest is exempt from federal income taxes,
including the federal alternative minimum tax. However, this Fund
reserves the right to invest:
- up to 20% of its net assets in securities whose interest is
federally taxable
- without limit in cash and cash equivalents, including
obligations that may be federally taxable (when its portfolio
manager is unable to locate investment opportunities with
desirable risk/reward characteristics)
MUNICIPAL SECURITIES
Municipal securities include:
- municipal notes
- short-term municipal bonds
- participation interests in municipal securities
At times, the Fund may invest more than 25% of its total assets
in tax-exempt securities that are related in such a way that an
economic, business, or political development or change affecting
one such security could similarly affect the other securities.
Examples include securities whose issuers are located in the same
state, or securities whose interest is derived from revenues of
similar type projects. The Fund may also invest more than 25% of
its assets in industrial development bonds or participation
interests therein.
Investment objectives, principal investment strategies and risks 9
<PAGE>
Yields on municipal securities are dependent on a variety of
factors, including general market conditions, the size of a
particular offering, the maturity of the obligation and the
rating of the issue. Municipal securities investments may lose
money if the municipal securities issuer does not pay principal
and interest when due. Bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors may affect the
issuer's ability to pay.
MUNICIPAL LEASES
The Fund may invest in municipal leases or participation
interests therein. The issuing municipality's credit will not
necessarily back a lease obligation. Interest on lease
obligations may become taxable if the lease is assigned. The Fund
may incur losses if the issuer does not appropriate funds for the
lease payment on an annual basis.
TAXABLE INVESTMENTS
As discussed above, although the Fund will attempt to invest
substantially all of its assets in municipal securities whose
interest is exempt from federal income tax, the Fund may under
certain circumstances invest in certain securities whose interest
is subject to such taxation, as described under Janus Money
Market Fund's investments.
COMMON INVESTMENT TECHNIQUES
The following is a description of other investment techniques
that the Money Market Funds may use:
PARTICIPATION INTERESTS
A participation interest gives a Money Market Fund a
proportionate, undivided interest in underlying debt securities
and usually carries a demand feature.
DEMAND FEATURES
Demand features give the Money Market Funds the right to resell
securities at specified periods prior to their maturity dates.
10 Janus Money Market Funds - Service Shares
<PAGE>
Demand features may shorten the life of a variable or floating
rate security, enhance the instrument's credit quality and
provide a source of liquidity.
Demand features are often issued by third party financial
institutions, generally domestic and foreign banks. Accordingly,
the credit quality and liquidity of the Money Market Funds'
investments may be dependent in part on the credit quality of the
banks supporting the Money Market Funds' investments. This will
result in exposure to risks pertaining to the banking industry,
including the foreign banking industry. Brokerage firms and
insurance companies also provide certain liquidity and credit
support. A substantial portion of the Janus Tax-Exempt Money
Market Fund's portfolio in particular may consist of securities
backed by banks and other financial institutions, and thus
adverse changes in the credit quality of these institutions could
cause losses to the Fund and affect its share price.
VARIABLE AND FLOATING RATE SECURITIES
The Money Market Funds may invest in securities which have
variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a
specified formula, usually with reference to an interest rate
index or market interest rate. Variable and floating rate
securities are subject to changes in value based on changes in
market interest rates or changes in the issuer's or guarantor's
creditworthiness.
MORTGAGE- AND ASSET-BACKED SECURITIES
The Money Market Funds may purchase fixed or variable rate
mortgage-backed securities issued by the Government National
Mortgage Association, Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or other governmental or
other government-related entity. Janus Money Market Fund and
Janus Tax-Exempt Money Market Fund may purchase other mortgage-
and asset-backed securities including securities backed by
automobile loans, equipment leases or credit card receivables.
Investment objectives, principal investment strategies and risks 11
<PAGE>
Unlike traditional debt instruments, payments on these securities
include both interest and a partial payment of principal.
Prepayments of the principal of underlying loans may shorten the
effective maturities of these securities and may result in a Fund
having to reinvest proceeds at a lower interest rate.
REPURCHASE AGREEMENTS
Each Money Market Fund may enter into a collateralized repurchase
agreements. Repurchase agreements are transactions in which a
Fund purchases securities and simultaneously commits to resell
those securities to the seller at an agreed-upon price on an
agreed-upon future date. The repurchase price reflects a market
rate of interest and is collateralized by cash or securities.
If the seller of the securities underlying a repurchase agreement
fails to pay the agreed resale price on the agreed delivery date,
a Money Market Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its
ability to do so.
12 Janus Money Market Funds - Service Shares
<PAGE>
Management of the funds
INVESTMENT ADVISER AND ADMINISTRATOR
Each Fund has a separate Investment Advisory Agreement with Janus
Capital, 100 Fillmore Street, Denver, Colorado 80206-4923. Janus
Capital has served as investment adviser to Janus Fund since 1970
and currently serves as investment adviser to all of the Janus
funds, acts as sub-adviser for a number of private-label mutual
funds and provides separate account advisory services for
institutional accounts.
Pursuant to the Investment Advisory Agreements, Janus Capital
furnishes continuous advice and recommendations concerning each
Fund's investments. Each of the Funds has agreed to compensate
Janus Capital for its advisory services by the monthly payment of
a fee at the annual rate of 0.20% of the value of the average
daily net assets of each Fund. However, Janus Capital has agreed
to waive a portion of its fee and accordingly, the advisory fee
of each Fund will be calculated at the annual rate of 0.10% of
the value of each Fund's average daily net assets. Janus Capital
has agreed to continue such waivers until at least the next
annual renewal of the advisory agreements. You will be notified
of any change in this limit.
The Funds have entered into an Administrative Agreement with
Janus Capital where Janus Capital is compensated for providing
administrative, compliance and accounting services including
custody and transfer agency services. Janus Capital may use all
or a portion of its administrative fee to compensate Financial
Institutions for providing administrative services to their
customers who invest in the Shares. The types of services that
the Financial Institutions would provide include serving as the
sole shareholder of record, shareholder recordkeeping, processing
and aggregating purchase and redemption transactions, providing
periodic statements, forwarding shareholder reports and other
materials, providing tax information, and providing similar
services that the Funds would have to perform if they were
dealing directly with the beneficial owners, rather than the
Financial Institutions, as shareholders of record.
Management of the funds 13
<PAGE>
The Glass-Steagall Act prohibits a depository institution (such
as a commercial bank or savings and loan association) from being
an underwriter or distributor of most securities. In the event
the Glass-Steagall Act is deemed to prohibit depository
institutions from acting in the administrative capacities
described above or should Congress relax current restriction on
depository institutions, the Trustees will consider appropriate
changes in the services.
PORTFOLIO MANAGERS
SHARON S. PICHLER
- --------------------------------------------------------------------------------
is Executive Vice President of Janus Money Market Fund,
Janus Government Money Market Fund and Janus Tax-Exempt
Money Market Fund. She is portfolio manager of Janus Money
Market Fund and Janus Tax-Exempt Money Market Fund, which
she has managed since inception. She previously served as
portfolio manager of Janus Government Money Market Fund
from inception to February 1999. She holds a Bachelor of
Arts in Economics from Michigan State University and a
Master of Business Administration from the University of
Texas at San Antonio. Ms. Pichler received the Chartered
Financial Analyst designation.
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is portfolio manager of Janus Government Money Market Fund
which he has managed since February 1999. Prior to
assuming management of the Fund, he served as assistant
portfolio manager of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money
Market Fund. He joined Janus Capital in May 1996 as a
senior fixed income analyst. Prior to joining Janus
Capital, he was a portfolio manager for USAA Investment
Management Company from 1991 to 1996. He holds a Bachelor
of Arts in Business Administration from Wayne State
University and a Master's Degree in Business
Administration from the University of Illinois. Mr.
Thorderson received the Chartered Financial Analyst
designation.
14 Janus Money Market Funds - Service Shares
<PAGE>
ASSISTANT PORTFOLIO MANAGER
JEANINE M. MORRONI
- --------------------------------------------------------------------------------
is assistant portfolio manager of Janus Government Money
Market Fund. Ms. Morroni joined Janus Capital in January
1994 as a Fund Accountant and began trading short-term
securities in July 1994. She has been a credit analyst for
the Money Market Funds since 1996. Prior to joining Janus
Capital, she worked as a Fund Accountant at Oppenheimer
Management Corporation. She holds a Bachelor of Science in
Accounting from Colorado State University. She is a
candidate for the Chartered Financial Analyst designation.
Management of the funds 15
<PAGE>
Distributions and taxes
Dividends representing substantially all of the net investment
income and any net realized gains on sales of securities are
declared daily, Saturdays, Sundays and holidays included, and
distributed on the last business day of each month. If a month
begins on a Saturday, Sunday or holiday, dividends for those days
are declared at the end of the preceding month and distributed on
the first business day of the month. Distributions will be
reinvested in Shares of a Fund unless otherwise elected by the
shareholder pursuant to the options offered by the Financial
Institution.
Distributions for all of the Funds (except Janus Tax-Exempt Money
Market Fund) are taxable income and are subject to federal income
tax (except for shareholders exempt from income tax), whether
such distributions are received in cash or are reinvested in
additional Shares. Full information regarding the tax status of
income dividends and any capital gains distributions will be
mailed to Financial Institutions who will forward the information
to their customers for tax purposes on or before January 31st of
each year. Because the Funds are money market funds, they do not
anticipate making any capital gains distributions.
Janus Tax-Exempt Money Market Fund anticipates that substantially
all income dividends it pays will be exempt from federal income
tax. However, dividends attributable to interest on taxable
investments, together with distributions from any net realized
capital gains, are taxable. In addition, interest on certain
private activity bonds is a preference item for purposes of the
individual and corporate alternative minimum taxes. To the extent
that the Fund earns such income, shareholders who are subject to
the alternative minimum tax must include such income as a
preference item. The Fund will advise shareholders of the
percentage of dividends, if any, subject to the alternative
minimum tax.
Dividends and capital gains distributions may also be subject to
state and local taxes. In certain states some portion of
dividends and distributions (depending on the sources of the
Fund's net income) of Janus Tax-Exempt Money Market Fund may be
exempt
16 Janus Money Market Funds - Service Shares
<PAGE>
from state and local taxes. Shareholders should consult their own
tax adviser regarding exemption from any applicable state and
local tax, as well as the tax treatment of any dividends or
distributions from the Shares.
The Funds intend to comply with provisions of the Internal
Revenue Code applicable to investment companies, and thus it is
not expected that any of the Funds will be required to pay any
federal income or excise taxes. The SAI further explains the
Funds' tax status.
Distributions and taxes 17
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand
the Funds' financial performance of the Funds' Shares through
October 31st of each fiscal period shown. Items 1 through 8
reflect financial results for a single Fund share. The total
returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Shares of each of
the Funds, (assuming the reinvestment of all dividends and
distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds'
financial statements, are included in the Annual Report, which is
available upon request, and incorporated by reference into the
SAI.
<TABLE>
<CAPTION>
JANUS MONEY MARKET FUND - SERVICE SHARES
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997(1)
<S> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05
3. Net gains or (losses) on securities (both realized
and unrealized) -- --
4. Total from investment operations 0.05 0.05
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.05)
6. Distributions (from capital gains) -- --
7. Total dividends and distributions (0.05) (0.05)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00
9. Total return* 5.45% 5.14%
10. Net assets, end of period (in thousands) $42,520 $10,341
11. Average net assets for the period (in thousands) $29,322 $913
12. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2)
13. Ratio of net investment income to average net
assets** 5.30% 5.02%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Period from November 22, 1996 (inception of Shares) to October 31, 1997.
(2) The ratio was .60% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
18 Janus Money Market Funds - Service Shares
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND - SERVICE SHARES
- --------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997(1)
<S> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05
3. Net gains or (losses) on securities (both realized
and unrealized) -- --
4. Total from investment operations 0.05 0.05
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.05) (0.05)
6. Distributions (from capital gains) -- --
7. Total dividends and distributions (0.05) (0.05)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00
9. Total return* 5.33% 5.01%
10. Net assets, end of period (in thousands) $2,770 $628
11. Average net assets for the period (in thousands) $639 $1,141
12. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2)
13. Ratio of net investment income to average net
assets** 5.15% 5.23%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Period from November 22, 1996 (inception of Shares) to October 31, 1997.
(2) The ratio was .60% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Financial highlights 19
<PAGE>
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - SERVICE SHARES
- --------------------------------------------------------------------------------------
Periods ending October 31st
1998 1997(1)
<S> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.03 0.03
3. Net gains or (losses) on securities (both realized
and unrealized) -- --
4. Total from investment operations 0.03 0.03
LESS DIVIDENDS AND DISTRIBUTIONS:
5. Dividends (from net investment income) (0.03) (0.03)
6. Distributions (from capital gains) -- --
7. Total dividends and distributions (0.03) (0.03)
8. NET ASSET VALUE, END OF PERIOD $1.00 $1.00
9. Total return* 3.44% 3.22%
10. Net assets, end of period (in thousands) $17,696 $10
11. Average net assets for the period (in thousands) $3,215 $10
12. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2)
13. Ratio of net investment income to average net
assets** 3.32% 3.17%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Period from November 22, 1996 (inception of Shares) to October 31, 1997.
(2) The ratio was .60% before waiver.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
20 Janus Money Market Funds - Service Shares
<PAGE>
Other information
CLASSES OF SHARES
Each Fund currently offers three classes of shares by separate
prospectuses. The Shares offered by this Prospectus are available
only to banks and other Financial Institutions that meet minimum
investment requirements in connection with trust accounts, cash
management programs and similar programs. A second class of
shares, Institutional Shares of each Fund, are available only to
institutional clients, including corporations, foundations and
trusts, and individuals meeting certain minimum investment
requirements. A third class of shares, Investor Shares of each
Fund, are available to the general public. Because the expenses
of each class may differ, the performance of each class is
expected to differ. If you would like additional information,
please call 1-800-29JANUS.
SIGNIFICANT SHAREHOLDERS
As of January 20, 1999, the following shareholder owned more than
25% of the Shares of Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Norwest Investment Services, Inc. 608 2nd Avenue, South 89.46%
Minneapolis, MN 55402-1916
</TABLE>
As of January 20, 1999, the following shareholder owned more than
25% of the Shares of Janus Government Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
EGAP & Co. Chittenden Trust Co. P.O. Box 820 98.71%
Burlington, VT 05402-0820
</TABLE>
Other information 21
<PAGE>
As of January 20, 1999, the following shareholder owned more than
25% of the Shares of Janus Tax-Exempt Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Norwest Investment Services, Inc. 608 2nd Avenue, South 99.18%
Minneapolis, MN 55402-1916
- -------------------------------------------------------------------------------
</TABLE>
Thus, these shareholders may have the power to control any vote
of the Shares of these Funds.
YEAR 2000
Preparing for Year 2000 is a high priority for Janus Capital,
which has established a dedicated group to address this issue.
Janus Capital has devoted considerable internal resources and has
engaged one of the foremost experts in the field to help achieve
Year 2000 readiness. Janus Capital does not anticipate that Year
2000-related issues will have a material impact on its ability to
continue to provide the Funds with service at current levels;
however, Janus Capital cannot make any assurances that the steps
it has taken to ensure Year 2000 readiness will be successful. In
addition, there can be no assurance that Year 2000 issues will
not affect the companies in which the Funds invest or worldwide
markets and economies.
22 Janus Money Market Funds - Service Shares
<PAGE>
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23
<PAGE>
Janus Money Market Funds
Service Shares
<PAGE>
Shareholder's
Guide
Investors may not purchase or
redeem shares of the Funds
directly. Shares may be purchased
or redeemed only through Financial
Institutions in connection with
trust accounts, Cash management
programs and similar programs.
Your Financial Institution will
provide you with instructions on
purchasing or redeeming shares.
[JANUS LOGO]
<PAGE>
The Financial Institutions are responsible for promptly
transmitting purchase, redemption and other requests to the Funds
under the arrangements made between the Financial Institutions
and their customers. The Funds are not responsible for the
failure of any Financial Institution to carry out its obligations
to its customers.
PURCHASES
Purchases of Fund Shares may be made only through omnibus
accounts of Financial Institutions in connection with trust
accounts, cash management programs and similar programs. Your
Financial Institution will provide you with instructions on
purchasing Shares. The following information applies to purchase
orders from Financial Institutions to Janus (Check with your
Financial Institution directly for deadlines for purchase orders
from you to your Financial Institution). Requests to purchase
received from a Financial Institution before 3:00 p.m. (New York
time) for Janus Money Market Fund, 5:00 p.m., for Janus
Government Money Market Fund, and 12:00 p.m. for Janus Tax-
Exempt Money Market Fund on a bank business day (a day when both
the New York Stock Exchange ("NYSE") and the Federal Reserve
Banks are open) will receive dividends declared on the purchase
date. In addition, the Funds' transfer agent must receive payment
from the Financial Institution in federal funds by 6:00 p.m. (New
York time). The Funds also reserve the right to require purchase
requests and payments from the Financial Institution prior to
these times on days when the bond market or NYSE close early.
Purchase orders received after these times will receive the
dividend declared the following day.
The Financial Institutions may impose charges and restrictions
different from those imposed by the Funds. The Financial
Institutions may also require different minimum initial and
subsequent investments than required by the Funds.
Each Fund reserves the right to reject any specific purchase
order. Purchase orders may be refused if, in Janus Capital's
opinion, they are of a size that would disrupt the management of
a Fund. Any Fund may discontinue sales of its Shares if
management believes
26 Janus Money Market Funds - Service Shares
<PAGE>
that a substantial further increase may adversely affect that
Fund's ability to achieve its investment objective. In such
event, however, it is anticipated that existing Financial
Institution customers in that Fund would be permitted to continue
to authorize investment in such Fund and to reinvest any
dividends or capital gains distributions.
MINIMUM INVESTMENT
There is a $250,000 initial aggregate investment minimum by each
Financial Institution. The Funds may, in their discretion, waive
this minimum under certain circumstances but, in such event, the
minimum must be reached within 90 days of opening the account.
Financial Institutions who do not maintain the $250,000 minimum
will be given the option of requesting their customers to
exchange into Investor Shares if the required minimum investment
for Investor Shares is met or having their customers' Shares
redeemed.
NET ASSET VALUE
The net asset value of the Shares is determined at the close of
the regular trading session of the NYSE (normally 4:00 p.m., New
York time) each day that both the NYSE and the New York Federal
Reserve Bank are open (bank business day), except that Janus
Government Money Market Fund's NAV is normally calculated at 5:00
p.m. (New York time) on such days. The NAV of Fund shares is not
determined on days the NYSE is closed (generally, New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas) and
when the Federal Reserve Banks are closed (generally, the same
days as the NYSE is closed and also Columbus Day and Veterans'
Day). NAV per share is determined by dividing the total value of
the securities and other assets, less liabilities, by the total
number of Shares outstanding. Portfolio securities are valued at
their amortized cost. Amortized cost valuation involves valuing
an instrument at its cost and thereafter assuming a constant
amortization to maturity (or such other date as permitted by Rule
2a-7) of any discount or
Shareholder's guide 27
<PAGE>
premium. If fluctuating interest rates cause the market value of
a portfolio to deviate more than 1/2 of 1% from the value
determined on the basis of amortized cost, the Trustees will
consider whether any action, such as adjusting the Share's NAV to
reflect current market conditions, should be initiated to prevent
any material dilutive effect on shareholders.
SHARE CERTIFICATES
Share certificates are not available for the Shares in order to
maintain the general liquidity that is representative of a money
market fund and to help facilitate transactions in shareholder
accounts.
REDEMPTIONS
Redemptions, like purchases, may be effected only through the
accounts of participating Financial Institutions. Your Financial
Institution will provide you with instructions on redeeming
shares. The following information applies to redemption orders
from Financial Institutions to Janus (Check with your Financial
Institution directly for deadlines for redemption orders from you
to your Financial Institution). If a request for a redemption is
received from a Financial Institution by 3:00 p.m. (New York
time) for Janus Money Market Fund, 5:00 p.m. for Janus Government
Money Market Fund and 12:00 p.m. for Janus Tax-Exempt Money
Market Fund on a bank business day, Shares will be redeemed and
the redemption amount wired in federal funds to the Financial
Institution's omnibus account that day. After these times, a
redemption request will be processed at that day's NAV and will
include that day's dividends, but generally will not be wired
until the next bank business day. The Funds reserve the right to
require redemption requests prior to these times on days when the
bond market or NYSE close early.
28 Janus Money Market Funds - Service Shares
<PAGE>
SHAREHOLDER COMMUNICATIONS
Shareholders will receive annual and semiannual reports including
the financial statements of the Funds that they have authorized
for investment from their Financial Institution. Each report will
show the investments owned by each Fund and the market values
thereof, as well as other information about the Funds and their
operations. The Trust's fiscal year ends October 31. The Funds
reserve the right to charge a fee for additional statement and
report requests.
Shareholder's guide 29
<PAGE>
[JANUS LOGO]
1-800-29JANUS
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
You can request other information, including a Statement of
Additional Information, Annual Report or Semiannual Report, free of
charge, by contacting Janus at 1-800-29JANUS or visiting our Web
site at janus.com. In the Funds' Annual Report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during their last
fiscal year. Other information is also available from financial
intermediaries that sell shares of the Funds.
The Statement of Additional Information provides detailed
information about the Funds and is incorporated into this Prospectus
by reference. You may review the Funds' Statement of Additional
Information at the Public Reference Room of the SEC or get text only
copies for a fee, by writing to or calling the Public Reference
Room, Washington, D.C. 20549-6009 (1-800-SEC-0330). You may obtain
the Statement of Additional Information for free from the SEC's Web
site at http://www.sec.gov.
Investment Company Act File No. 811-1879
3169
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Domestic Growth Funds
Janus Fund Janus Enterprise Fund
Janus Mercury Fund Janus Olympus Fund
Janus Special Situations Fund Janus Twenty Fund
Global Growth Funds
Janus Global Life Sciences Fund Janus Worldwide Fund
Janus Global Technology Fund
Combination Funds
Janus Balanced Fund Janus Growth and Income Fund
Janus Equity Income Fund
Fixed-Income Funds
Janus Flexible Income Fund Janus High-Yield Fund
Janus Federal Tax-Exempt Fund Janus Short-Term Bond
Fund
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
Statement of Additional Information
February 17, 1999
This Statement of Additional Information pertains to the
Funds listed above, each of which is a separate series of
Janus Investment Fund, a Massachusetts business trust.
This SAI is not a Prospectus and should be read in
conjunction with the Funds' Prospectuses dated February
17, 1999, which are incorporated by reference into this
SAI and may be obtained from the Trust at the above phone
number or address. This SAI contains additional and more
detailed information about the Funds' operations and
activities than the Prospectuses. The Annual Reports,
which contain important financial information about the
Funds, are incorporated by reference into this SAI and
are also available, without charge, at the above phone
number or address.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
Classification, Portfolio Turnover,
Investment Policies and Restrictions,
and Investment Strategies and Risks............. 2
Investment Adviser.............................. 40
Custodian, Transfer Agent
and Certain Affiliations........................ 46
Portfolio Transactions and Brokerage............ 48
Trustees and Officers........................... 55
Purchase of Shares.............................. 64
Net Asset Value Determination................ 64
Reinvestment of Dividends and Distributions.. 65
Redemption of Shares............................ 66
Shareholder Accounts............................ 67
Telephone Transactions....................... 67
Systematic Redemptions....................... 67
Tax-Deferred Accounts........................... 68
Income Dividends,
Capital Gains Distributions and Tax Status...... 70
Principal Shareholders.......................... 72
Miscellaneous Information....................... 74
Shares of the Trust.......................... 75
Shareholder Meetings......................... 75
Voting Rights................................ 76
Master/Feeder Option......................... 76
Independent Accountants...................... 76
Registration Statement....................... 77
Performance Information......................... 78
Financial Statements............................ 81
Appendix A...................................... 82
</TABLE>
1
<PAGE>
Classification, portfolio turnover,
investment policies
and restrictions, and
investment strategies
and risks
CLASSIFICATION
Each Fund is a series of the Trust, an open-end, management
investment company. The Investment Company Act of 1940 ("1940
Act") classifies mutual funds as either diversified or
nondiversified. Janus Enterprise Fund, Janus Olympus Fund, Janus
Special Situations Fund, Janus Twenty Fund, Janus Global Life
Sciences Fund and Janus Global Technology Fund are nondiversified
funds. Each of these Funds reserves the right to become a
diversified fund by limiting the investments in which more than
5% of its total assets are invested. Janus Fund, Janus Mercury
Fund, Janus Worldwide Fund, Janus Balanced Fund, Janus Equity
Income Fund, Janus Growth and Income Fund, Janus Flexible Income
Fund, Janus High-Yield Fund, Janus Federal Tax-Exempt Fund and
Janus Short-Term Bond Fund are diversified funds.
PORTFOLIO TURNOVER
The Prospectuses include a discussion of portfolio turnover
policies. Portfolio turnover is calculated by dividing total
purchases or sales, whichever is less, by the average monthly
value of a Fund's portfolio securities. The following table
summarizes the portfolio turnover rates for the fiscal periods
indicated. The information below is for fiscal years ended
October 31.
2
<PAGE>
<TABLE>
<CAPTION>
Fund Name 1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Janus Fund.................................................. 70% 132%
Janus Enterprise Fund....................................... 134% 111%
Janus Mercury Fund.......................................... 105% 157%
Janus Olympus Fund.......................................... 123% 244%
Janus Special Situations Fund............................... 117% 146%(1)
Janus Twenty Fund........................................... 54% 123%
Janus Global Life Sciences Fund(2).......................... N/A N/A
Janus Global Technology Fund(2)............................. N/A N/A
Janus Worldwide Fund........................................ 86% 79%
Janus Balanced Fund......................................... 73% 139%
Janus Equity Income Fund.................................... 101% 180%
Janus Growth and Income Fund................................ 95% 127%
Janus Flexible Income Fund.................................. 148% 207%
Janus High-Yield Fund....................................... 336% 404%
Janus Federal Tax-Exempt Fund............................... 227% 304%
Janus Short-Term Bond Fund.................................. 101% 133%
</TABLE>
(1) Annualized rate based on the ten month period ended October 31, 1997.
(2) The Fund had not commenced operations as of October 31, 1998.
INVESTMENT POLICIES AND RESTRICTIONS APPLICABLE TO ALL FUNDS
The Funds are subject to certain fundamental policies and
restrictions that may not be changed without shareholder
approval. Shareholder approval means approval by the lesser of
(i) more than 50% of the outstanding voting securities of the
Trust (or a particular Fund if a matter affects just that Fund),
or (ii) 67% or more of the voting securities present at a meeting
if the holders of more than 50% of the outstanding voting
securities of the Trust (or a particular Fund) are present or
represented by proxy. As fundamental policies, no Fund may:
(1) Own more than 10% of the outstanding voting securities of any
one issuer and, as to fifty percent (50%) of the value of its
total assets for the nondiversified Funds and as to seventy-five
percent (75%) of the value of the total assets of the diversified
Funds, purchase the securities of any one issuer (except cash
items and "government securities" as defined under the 1940 Act,
as amended), if immediately after and as a result of such
purchase, the value of the holdings of a Fund in the securities
of such issuer exceeds 5% of the value of such Fund's total
assets.
3
<PAGE>
With respect to the other 50% of the value of their total assets,
the nondiversified Funds may invest in the securities of as few
as two issuers.
(2) Invest 25% or more of the value of its total assets in any
particular industry (other than U.S. government securities). This
policy does not apply to Janus Global Life Sciences Fund. This
policy does not apply to Janus Federal Tax-Exempt Fund regarding
municipal obligations only. For the purposes of this limitation
only, industrial development bonds issued by nongovernmental
users shall not be deemed to be municipal obligations. Industrial
development bonds shall be classified according to the industry
of the entity that has the ultimate responsibility for the
payment of principal and interest on the obligation.
(3) Invest directly in real estate or interests in real estate;
however, the Funds may own debt or equity securities issued by
companies engaged in those businesses.
(4) Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities
(but this limitation shall not prevent the Funds from purchasing
or selling options, futures, swaps and forward contracts or from
investing in securities or other instruments backed by physical
commodities).
(5) Lend any security or make any other loan if, as a result,
more than 25% of the Fund's total assets would be lent to other
parties (but this limitation does not apply to purchases of
commercial paper, debt securities or repurchase agreements).
(6) Act as an underwriter of securities issued by others, except
to the extent that the Fund may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund.
As a fundamental policy, each Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental),
invest all of its assets in the securities of a single open-end
management investment company with substantially the same
fundamental investment objectives, policies and limitations as
such Fund.
4
<PAGE>
The Trustees have adopted additional investment restrictions for
the Funds. These restrictions are operating policies of the Funds
and may be changed by the Trustees without shareholder approval.
The additional investment restrictions adopted by the Trustees to
date include the following:
(a) A Fund will not (i) enter into any futures contracts and
related options for purposes other than bona fide hedging
transactions within the meaning of Commodity Futures Trading
Commission ("CFTC") regulations if the aggregate initial margin
and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of
bona fide hedging transactions will exceed 5% of the fair market
value of a Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it
has entered into; and (ii) enter into any futures contracts if
the aggregate amount of such Fund's commitments under outstanding
futures contracts positions would exceed the market value of its
total assets.
(b) The Funds do not currently intend to sell securities short,
unless they own or have the right to obtain securities equivalent
in kind and amount to the securities sold short without the
payment of any additional consideration therefor, and provided
that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Funds do not currently intend to purchase securities on
margin, except that the Funds may obtain such short-term credits
as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with
transactions in futures, options, swaps and forward contracts
shall not be deemed to constitute purchasing securities on
margin.
(d) A Fund may not mortgage or pledge any securities owned or
held by such Fund in amounts that exceed, in the aggregate, 15%
of that Fund's net asset value, provided that this limitation
does not apply to reverse repurchase agreements, deposits of
assets to margin, guarantee positions in futures, options, swaps
or forward
5
<PAGE>
contracts, or the segregation of assets in connection with such
contracts.
(e) The Funds may borrow money for temporary or emergency
purposes (not for leveraging or investment) in an amount not
exceeding 25% of the value of their respective total assets
(including the amount borrowed) less liabilities (other than
borrowings). If borrowings exceed 25% of the value of a Fund's
total assets by reason of a decline in net assets, the Fund will
reduce its borrowings within three business days to the extent
necessary to comply with the 25% limitation. This policy shall
not prohibit reverse repurchase agreements, deposits of assets to
margin or guarantee positions in futures, options, swaps or
forward contracts, or the segregation of assets in connection
with such contracts.
(f) The Funds do not currently intend to purchase any security or
enter into a repurchase agreement if, as a result, more than 15%
of their respective net assets would be invested in repurchase
agreements not entitling the holder to payment of principal and
interest within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The Trustees, or the
Funds' investment adviser acting pursuant to authority delegated
by the Trustees, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities"), or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(g) The Funds may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC"), each of the Funds may
borrow money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. A Fund will borrow money through the
6
<PAGE>
program only when the costs are equal to or lower than the cost
of bank loans. Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. A Fund
will lend through the program only when the returns are higher
than those available from other short-term instruments (such as
repurchase agreements). A Fund may have to borrow from a bank at
a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending Fund could result in
a lost investment opportunity or additional borrowing costs.
For the purposes of these investment restrictions, the
identification of the issuer of a municipal obligation depends on
the terms and conditions of the security. When assets and
revenues of a political subdivision are separate from those of
the government that created the subdivision and the security is
backed only by the assets and revenues of the subdivision, the
subdivision is deemed to be the sole issuer. Similarly, in the
case of an industrial development bond, if the bond is backed
only by assets and revenues of a nongovernmental user, then the
nongovernmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other
entity guarantees the security, the guarantee would be considered
a separate security that would be treated as an issue of the
guaranteeing entity.
For the purposes of each Fund's policies on investing in
particular industries, the Funds will rely primarily on industry
or industry group classifications published by Bloomberg L.P. To
the extent that Bloomberg L.P. industry classifications are so
broad that the primary economic characteristics in a single
industry are materially different, the Funds may further classify
issuers in accordance with industry classifications as published
by the SEC.
INVESTMENT POLICIES APPLICABLE TO CERTAIN FUNDS
JANUS GLOBAL LIFE SCIENCES FUND. As a fundamental policy, Janus
Global Life Sciences Fund will normally invest at least 25% of
its total assets, in the aggregate, in the following industry
7
<PAGE>
groups: health care; pharmaceuticals; agriculture;
cosmetics/personal care; and biotechnology.
JANUS BALANCED FUND. As an operational policy, at least 25% of
the assets of Janus Balanced Fund normally will be invested in
fixed-income securities.
JANUS FLEXIBLE INCOME FUND. As a fundamental policy, this Fund
may not purchase a non-income-producing security if, after such
purchase, less than 80% of the Fund's total assets would be
invested in income-producing securities. Income-producing
securities include securities that make periodic interest
payments as well as those that make interest payments on a
deferred basis or pay interest only at maturity (e.g., Treasury
bills or zero coupon bonds).
JANUS FEDERAL TAX-EXEMPT FUND. As a fundamental policy, this Fund
will normally invest at least 80% of its net assets in securities
whose income is not subject to federal income taxes, including
the alternative minimum tax.
JANUS SHORT-TERM BOND FUND. As an operational policy, this Fund
expects to maintain an average weighted effective maturity of
three years or less. The portfolio manager may consider estimated
prepayment dates or call dates of certain securities in computing
the portfolio's effective maturity.
INVESTMENT STRATEGIES AND RISKS
Cash Position
As discussed in the Prospectuses, when a Fund's portfolio manager
believes that market conditions are unfavorable for profitable
investing, or when he is otherwise unable to locate attractive
investment opportunities, the Fund's investment in cash and
similar investments may increase. Securities that the Funds may
invest in as a means of receiving a return on idle cash include
commercial paper, certificates of deposit, repurchase agreements
or other short-term debt obligations. The Funds may also invest
in money market funds, including funds managed by Janus Capital.
(See "Investment Company Securities" on page 15).
8
<PAGE>
Illiquid Investments
Each Fund may invest up to 15% of its net assets in illiquid
investments (i.e., securities that are not readily marketable).
The Trustees have authorized Janus Capital to make liquidity
determinations with respect to certain securities, including Rule
144A Securities, commercial paper and municipal lease obligations
purchased by the Funds. Under the guidelines established by the
Trustees, Janus Capital will consider the following factors: 1)
the frequency of trades and quoted prices for the obligation; 2)
the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; 3) the willingness
of dealers to undertake to make a market in the security; and 4)
the nature of the security and the nature of marketplace trades,
including the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the transfer. In the
case of commercial paper, Janus Capital will also consider
whether the paper is traded flat or in default as to principal
and interest and any ratings of the paper by a nationally
recognized statistical rating organization ("NRSRO"). A foreign
security that may be freely traded on or through the facilities
of an offshore exchange or other established offshore securities
market is not deemed to be a restricted security subject to these
procedures.
If illiquid securities exceed 15% of a Fund's net assets after
the time of purchase the Fund will take steps to reduce in an
orderly fashion its holdings of illiquid securities. Because
illiquid securities may not be readily marketable, a portfolio
manager may not be able to dispose of them in a timely manner. As
a result, a Fund may be forced to hold illiquid securities while
their price depreciates. Depreciation in the price of illiquid
securities may cause the net asset value of a Fund to decline.
Foreign Securities
The Funds may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic
9
<PAGE>
securities, because the Funds' performance may depend on issues
other than the performance of a particular company. These issues
include:
CURRENCY RISK. As long as a Fund holds a foreign security, its
value will be affected by the value of the local currency
relative to the U.S. dollar. When a Fund sells a foreign
denominated security, its value may be worth less in U.S. dollars
even if the security increases in value in its home country. U.S.
dollar denominated securities of foreign issuers may also be
affected by currency risk.
POLITICAL AND ECONOMIC RISK. Foreign investments may be subject
to heightened political and economic risks, particularly in
emerging markets which may have relatively unstable governments,
immature economic structures, national policies restricting
investments by foreigners, different legal systems, and economies
based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations
of a company or that the government may impose taxes or limits on
the removal of a Fund's assets from that country.
REGULATORY RISK. There may be less government supervision of
foreign markets. As a result, foreign issuers may not be subject
to the uniform accounting, auditing and financial reporting
standards and practices applicable to domestic issuers and there
may be less publicly available information about foreign issuers.
MARKET RISK. Foreign securities markets, particularly those of
emerging market countries, may be less liquid and more volatile
than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in
settling securities transactions. In some foreign markets, there
may not be protection against failure by other parties to
complete transactions.
TRANSACTION COSTS. Costs of buying, selling and holding foreign
securities, including brokerage, tax and custody costs, may be
higher than those involved in domestic transactions.
10
<PAGE>
Short Sales
Each Fund may engage in "short sales against the box." This
technique involves selling either a security that a Fund owns, or
a security equivalent in kind and amount to the security sold
short that the Fund has the right to obtain, for delivery at a
specified date in the future. A Fund may enter into a short sale
against the box to hedge against anticipated declines in the
market price of portfolio securities. If the value of the
securities sold short increases prior to the scheduled delivery
date, a Fund loses the opportunity to participate in the gain.
Zero Coupon, Step Coupon and Pay-In-Kind Securities
Each Fund may invest up to 10% (without limit for Janus High-
Yield Fund and Janus Flexible Income Fund) of its assets in zero
coupon, pay-in-kind and step coupon securities. Zero coupon bonds
are issued and traded at a discount from their face value. They
do not entitle the holder to any periodic payment of interest
prior to maturity. Step coupon bonds trade at a discount from
their face value and pay coupon interest. The coupon rate is low
for an initial period and then increases to a higher coupon rate
thereafter. The discount from the face amount or par value
depends on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer. Pay-in-kind bonds
normally give the issuer an option to pay cash at a coupon
payment date or give the holder of the security a similar bond
with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made. For the purposes of
any Fund's restriction on investing in income-producing
securities, income-producing securities include securities that
make periodic interest payments as well as those that make
interest payments on a deferred basis or pay interest only at
maturity (e.g., Treasury bills or zero coupon bonds).
Current federal income tax law requires holders of zero coupon
and step coupon securities to report the portion of the original
issue discount on such securities that accrues during a given
year
11
<PAGE>
as interest income, even though the holders receive no cash
payments of interest during the year. In order to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986 and the regulations thereunder (the "Code"), a Fund must
distribute its investment company taxable income, including the
original issue discount accrued on zero coupon or step coupon
bonds. Because a Fund will not receive cash payments on a current
basis in respect of accrued original-issue discount on zero
coupon bonds or step coupon bonds during the period before
interest payments begin, in some years that Fund may have to
distribute cash obtained from other sources in order to satisfy
the distribution requirements under the Code. A Fund might obtain
such cash from selling other portfolio holdings which might cause
the Fund to incur capital gains or losses on the sale.
Additionally, these actions are likely to reduce the assets to
which Fund expenses could be allocated and to reduce the rate of
return for the Fund. In some circumstances, such sales might be
necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it
undesirable for a Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and
pay-in-kind securities are more volatile than the prices of
securities that pay interest periodically and in cash and are
likely to respond to changes in interest rates to a greater
degree than other types of debt securities having similar
maturities and credit quality.
Pass-Through Securities
The Funds may invest in various types of pass-through securities,
such as mortgage-backed securities, asset-backed securities and
participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have
been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives
an undivided interest in the underlying pool of securities. The
issuers of the underlying securities make interest and principal
payments to the intermediary which are passed through to
purchasers, such as the
12
<PAGE>
Funds. The most common type of pass-through securities are
mortgage-backed securities. Government National Mortgage
Association ("GNMA") Certificates are mortgage-backed securities
that evidence an undivided interest in a pool of mortgage loans.
GNMA Certificates differ from bonds in that principal is paid
back monthly by the borrowers over the term of the loan rather
than returned in a lump sum at maturity. A Fund will generally
purchase "modified pass-through" GNMA Certificates, which entitle
the holder to receive a share of all interest and principal
payments paid and owned on the mortgage pool, net of fees paid to
the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment. GNMA Certificates are backed as to
the timely payment of principal and interest by the full faith
and credit of the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two
types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC
represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. FHLMC guarantees
timely payments of interest on PCs and the full return of
principal. GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semiannually
and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment
of principal and interest but it is not guaranteed by the full
faith and credit of the U.S. government.
The Federal National Mortgage Association ("FNMA") issues
guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely
payment of principal and interest but it is not guaranteed by the
full faith and credit of the U.S. government.
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Except for GMCs, each of the mortgage-backed securities described
above is characterized by monthly payments to the holder,
reflecting the monthly payments made by the borrowers who
received the underlying mortgage loans. The payments to the
security holders (such as the Funds), like the payments on the
underlying loans, represent both principal and interest. Although
the underlying mortgage loans are for specified periods of time,
such as 20 or 30 years, the borrowers can, and typically do, pay
them off sooner. Thus, the security holders frequently receive
prepayments of principal in addition to the principal that is
part of the regular monthly payments. A portfolio manager will
consider estimated prepayment rates in calculating the average
weighted maturity of a Fund. A borrower is more likely to prepay
a mortgage that bears a relatively high rate of interest. This
means that in times of declining interest rates, higher yielding
mortgage-backed securities held by a Fund might be converted to
cash and that Fund will be forced to accept lower interest rates
when that cash is used to purchase additional securities in the
mortgage-backed securities sector or in other investment sectors.
Additionally, prepayments during such periods will limit a Fund's
ability to participate in as large a market gain as may be
experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer
loans and are backed by paper or accounts receivables originated
by banks, credit card companies or other providers of credit.
Generally, the originating bank or credit provider is neither the
obligor nor the guarantor of the security, and interest and
principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed
securities include units of beneficial interests in pools of
purchase contracts, financing leases, and sales agreements that
may be created when a municipality enters into an installment
purchase contract or lease with a vendor. Such securities may be
secured by the assets purchased or leased by the municipality;
however, if the municipality stops making payments, there
generally will be no recourse against the vendor. These
obligations are likely to involve unscheduled prepayments of
principal.
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Investment Company Securities
From time to time, the Funds may invest in securities of other
investment companies, subject to the provisions of Section
12(d)(1) of the 1940 Act. The Funds may invest in securities of
money market funds managed by Janus Capital in excess of the
limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus funds.
Depositary Receipts
The Funds may invest in sponsored and unsponsored American
Depositary Receipts ("ADRs"), which are receipts issued by an
American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. ADRs, in registered form,
are designed for use in U.S. securities markets. Unsponsored ADRs
may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in
a sponsored ADR. The bank or trust company depositary of an
unsponsored ADR may be under no obligation to distribute
shareholder communications received from the foreign issuer or to
pass through voting rights. The Funds may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs")
and in other similar instruments representing securities of
foreign companies. EDRs are receipts issued by a European
financial institution evidencing an arrangement similar to that
of ADRs. EDRs, in bearer form, are designed for use in European
securities markets.
Depositary Receipts are generally subject to the same sort of
risks as direct investments in a foreign country, such as,
currency risk, political and economic risk, and market risk,
because their values depend on the performance of a foreign
security denominated in its home currency. The risks of foreign
investing are addressed in some detail in the Funds'
prospectuses.
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Municipal Obligations
The Funds may invest in municipal obligations issued by states,
territories and possessions of the United States and the District
of Columbia. Janus Federal Tax-Exempt Fund may, at times, invest
more than 25% of the value of its assets in industrial
development bonds, a type of revenue bond which, although issued
by a public authority, may be backed only by the credit and
security of a private issuer, thus presenting a greater credit
risk.
The value of municipal obligations can be affected by changes in
their actual or perceived credit quality. The credit quality of
municipal obligations can be affected by among other things the
financial condition of the issuer or guarantor, the issuer's
future borrowing plans and sources of revenue, the economic
feasibility of the revenue bond project or general borrowing
purpose, political or economic developments in the region where
the security is issued, and the liquidity of the security.
Because municipal securities are generally traded
over-the-counter, the liquidity of a particular issue often
depends on the willingness of dealers to make a market in the
security. The liquidity of some municipal obligations may be
enhanced by demand features, which would enable a Fund to demand
payment on short notice from the issuer or a financial
intermediary.
Other Income-Producing Securities
Other types of income producing securities that the Funds may
purchase include, but are not limited to, the following types of
securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities
have variable or floating rates of interest and, under certain
limited circumstances, may have varying principal amounts. These
securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some
interest rate index or market interest rate. The floating rate
tends to decrease the security's price sensitivity to changes in
interest rates. These types of securities are relatively
long-term instruments that often carry demand features permitting
the holder to demand
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payment of principal at any time or at specified intervals prior
to maturity.
In order to most effectively use these investments, a portfolio
manager must correctly assess probable movements in interest
rates. This involves different skills than those used to select
most portfolio securities. If the portfolio manager incorrectly
forecasts such movements, a Fund could be adversely affected by
the use of variable or floating rate obligations.
STANDBY COMMITMENTS. These instruments, which are similar to a
put, give a Fund the option to obligate a broker, dealer or bank
to repurchase a security held by that Fund at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-
term bonds that are coupled with the agreement of a third party
(such as a broker, dealer or bank) to grant the holders of such
securities the option to tender the securities to the institution
at periodic intervals.
INVERSE FLOATERS. Inverse floaters are debt instruments whose
interest bears an inverse relationship to the interest rate on
another security. No Fund will invest more than 5% of its assets
in inverse floaters. Similar to variable and floating rate
obligations, effective use of inverse floaters requires skills
different from those needed to select most portfolio securities.
If movements in interest rates are incorrectly anticipated, a
Fund could lose money or its NAV could decline by the use of
inverse floaters.
STRIP BONDS. Strip bonds are debt securities that are stripped of
their interest (usually by a financial intermediary) after the
securities are issued. The market value of these securities
generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
The Funds will purchase standby commitments, tender option bonds
and instruments with demand features primarily for the purpose of
increasing the liquidity of their portfolios.
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Repurchase and Reverse Repurchase Agreements
In a repurchase agreement, a Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon price on an agreed upon date within a number of
days (usually not more than seven) from the date of purchase. The
resale price consists of the purchase price plus an agreed upon
incremental amount that is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon
price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or
"collateral." A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed,
which may cause a Fund to suffer a loss if the market value of
such securities declines before they can be liquidated on the
open market. In the event of bankruptcy or insolvency of the
seller, a Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that
mature in more than seven days are subject to the 15% limit on
illiquid investments. While it is not possible to eliminate all
risks from these transactions, it is the policy of the Funds to
limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by
Janus Capital.
A Fund may use reverse repurchase agreements to obtain cash to
satisfy unusually heavy redemption requests or for other
temporary or emergency purposes without the necessity of selling
portfolio securities, or to earn additional income on portfolio
securities, such as Treasury bills or notes. In a reverse
repurchase agreement, a Fund sells a portfolio security to
another party, such as a bank or broker-dealer, in return for
cash and agrees to repurchase the instrument at a particular
price and time. While a reverse repurchase agreement is
outstanding, a Fund will maintain cash and appropriate liquid
assets in a segregated custodial account to cover its obligation
under the agreement. The Funds will enter into reverse repurchase
agreements only with parties that Janus Capital deems
creditworthy. Using reverse repurchase
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agreements to earn additional income involves the risk that the
interest earned on the invested proceeds is less than the expense
of the reverse repurchase agreement transaction. This technique
may also have a leveraging effect on the Fund's portfolio,
although the Fund's intent to segregate assets in the amount of
the reverse repurchase agreement minimizes this effect.
High-Yield/High-Risk Securities
Janus Flexible Income Fund and Janus High-Yield Fund may invest
without limit in securities that are rated below investment grade
(e.g., securities rated BB or lower by Standard & Poor's Ratings
Services or Ba or lower by Moody's Investors Service, Inc.). No
other Fund intends to invest 35% or more of its net assets in
such securities. Lower rated securities involve a higher degree
of credit risk, which is the risk that the issuer will not make
interest or principal payments when due. In the event of an
unanticipated default, a Fund would experience a reduction in its
income, and could expect a decline in the market value of the
securities so affected.
Any Fund may also invest in unrated debt securities of foreign
and domestic issuers. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a
market. Because of the size and perceived demand of the issue,
among other factors, certain municipalities may not incur the
costs of obtaining a rating. A Fund's portfolio manager will
analyze the creditworthiness of the issuer, as well as any
financial institution or other party responsible for payments on
the security, in determining whether to purchase unrated
municipal bonds. Unrated debt securities will be included in the
35% limit of each Fund unless its portfolio manager deems such
securities to be the equivalent of investment grade securities.
Subject to the above limits, each Fund may purchase defaulted
securities only when its portfolio manager believes, based upon
his analysis of the financial condition, results of operations
and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an
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unusual opportunity for capital appreciation. Notwithstanding the
portfolio manager's belief about the resumption of income,
however, the purchase of any security on which payment of
interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
Financial and Market Risks. Investments in securities that are in
default involve a high degree of financial and market risks that
can result in substantial or, at times, even total losses.
Issuers of defaulted securities may have substantial capital
needs and may become involved in bankruptcy or reorganization
proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain
information about the condition of such issuers. The market
prices of such securities also are subject to abrupt and erratic
movements and above average price volatility, and the spread
between the bid and asked prices of such securities may be
greater than normally expected.
Disposition of Portfolio Securities. Although these Funds
generally will purchase securities for which their portfolio
managers expect an active market to be maintained, defaulted
securities may be less actively traded than other securities and
it may be difficult to dispose of substantial holdings of such
securities at prevailing market prices. The Funds will limit
holdings of any such securities to amounts that the portfolio
managers believe could be readily sold, and holdings of such
securities would, in any event, be limited so as not to limit the
Funds' ability to readily dispose of securities to meet
redemptions.
Other. Defaulted securities require active monitoring and may, at
times, require participation in bankruptcy or receivership
proceedings on behalf of the Funds.
Futures, Options and Other Derivative Instruments
FUTURES CONTRACTS. The Funds may enter into contracts for the
purchase or sale for future delivery of fixed-income securities,
foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign
government securities, equity or fixed-income securities. U.S.
futures contracts
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<PAGE>
are traded on exchanges which have been designated "contract
markets" by the CFTC and must be executed through a futures
commission merchant ("FCM"), or brokerage firm, which is a member
of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However, both the buyer and
seller are required to deposit "initial margin" for the benefit
of the FCM when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as
set by the exchange on which the contract is traded, and may be
maintained in cash or certain other liquid assets by the Funds'
custodian for the benefit of the FCM. Initial margin payments are
similar to good faith deposits or performance bonds. Unlike
margin extended by a securities broker, initial margin payments
do not constitute purchasing securities on margin for purposes of
the Fund's investment limitations. If the value of either party's
position declines, that party will be required to make additional
"variation margin" payments for the benefit of the FCM to settle
the change in value on a daily basis. The party that has a gain
may be entitled to receive all or a portion of this amount. In
the event of the bankruptcy of the FCM that holds margin on
behalf of a Fund, that Fund may be entitled to return of margin
owed to such Fund only in proportion to the amount received by
the FCM's other customers. Janus Capital will attempt to minimize
the risk by careful monitoring of the creditworthiness of the
FCMs with which the Funds do business and by depositing margin
payments in a segregated account with the Funds' custodian.
The Funds intend to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool
operator" adopted by the CFTC and the National Futures
Association, which regulate trading in the futures markets. The
Funds will use futures contracts and related options primarily
for bona fide hedging purposes within the meaning of CFTC
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regulations. To the extent that the Funds hold positions in
futures contracts and related options that do not fall within the
definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions
will not exceed 5% of the fair market value of a Fund's net
assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
Although a Fund will segregate cash and liquid assets in an
amount sufficient to cover its open futures obligations, the
segregated assets would be available to that Fund immediately
upon closing out the futures position, while settlement of
securities transactions could take several days. However, because
a Fund's cash that may otherwise be invested would be held
uninvested or invested in other liquid assets so long as the
futures position remains open, such Fund's return could be
diminished due to the opportunity losses of foregoing other
potential investments.
A Fund's primary purpose in entering into futures contracts is to
protect that Fund from fluctuations in the value of securities or
interest rates without actually buying or selling the underlying
debt or equity security. For example, if the Fund anticipates an
increase in the price of stocks, and it intends to purchase
stocks at a later time, that Fund could enter into a futures
contract to purchase a stock index as a temporary substitute for
stock purchases. If an increase in the market occurs that
influences the stock index as anticipated, the value of the
futures contracts will increase, thereby serving as a hedge
against that Fund not participating in a market advance. This
technique is sometimes known as an anticipatory hedge. To the
extent a Fund enters into futures contracts for this purpose, the
segregated assets maintained to cover such Fund's obligations
with respect to the futures contracts will consist of other
liquid assets from its portfolio in an amount equal to the
difference between the contract price and the aggregate value of
the initial and variation margin payments made by that Fund with
respect to the futures contracts. Conversely, if a Fund holds
stocks and seeks to protect itself from a decrease in stock
prices, the Fund might sell stock index futures contracts,
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<PAGE>
thereby hoping to offset the potential decline in the value of
its portfolio securities by a corresponding increase in the value
of the futures contract position. A Fund could protect against a
decline in stock prices by selling portfolio securities and
investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without
having to sell portfolio securities.
If a Fund owns Treasury bonds and the portfolio manager expects
interest rates to increase, that Fund may take a short position
in interest rate futures contracts. Taking such a position would
have much the same effect as that Fund selling Treasury bonds in
its portfolio. If interest rates increase as anticipated, the
value of the Treasury bonds would decline, but the value of that
Fund's interest rate futures contract will increase, thereby
keeping the net asset value of that Fund from declining as much
as it may have otherwise. If, on the other hand, a portfolio
manager expects interest rates to decline, that Fund may take a
long position in interest rate futures contracts in anticipation
of later closing out the futures position and purchasing the
bonds. Although a Fund can accomplish similar results by buying
securities with long maturities and selling securities with short
maturities, given the greater liquidity of the futures market
than the cash market, it may be possible to accomplish the same
result more easily and more quickly by using futures contracts as
an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures
market are subject to initial margin and variation margin
requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal price
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the
extent partici-
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<PAGE>
pants decide to make or take delivery, liquidity in the futures
market could be reduced and prices in the futures market
distorted. Third, from the point of view of speculators, the
margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures
market may cause temporary price distortions. Due to the
possibility of the foregoing distortions, a correct forecast of
general price trends by a portfolio manager still may not result
in a successful use of futures.
Futures contracts entail risks. Although the Funds believe that
use of such contracts will benefit the Funds, a Fund's overall
performance could be worse than if such Fund had not entered into
futures contracts if the portfolio manager's investment judgement
proves incorrect. For example, if a Fund has hedged against the
effects of a possible decrease in prices of securities held in
its portfolio and prices increase instead, that Fund will lose
part or all of the benefit of the increased value of these
securities because of offsetting losses in its futures positions.
In addition, if a Fund has insufficient cash, it may have to sell
securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at
increased prices which reflect the rising market and may occur at
a time when the sales are disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of
their underlying instruments. Because there are a limited number
of types of futures contracts, it is possible that the
standardized futures contracts available to a Fund will not match
exactly such Fund's current or potential investments. A Fund may
buy and sell futures contracts based on underlying instruments
with different characteristics from the securities in which it
typically invests -- for example, by hedging investments in
portfolio securities with a futures contract based on a broad
index of securities -- which involves a risk that the futures
position will not correlate precisely with the performance of
such Fund's investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments
closely correlate
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with a Fund's investments. Futures prices are affected by factors
such as current and anticipated short-term interest rates,
changes in volatility of the underlying instruments and the time
remaining until expiration of the contract. Those factors may
affect securities prices differently from futures prices.
Imperfect correlations between a Fund's investments and its
futures positions also may result from differing levels of demand
in the futures markets and the securities markets, from
structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures
contracts. A Fund may buy or sell futures contracts with a
greater or lesser value than the securities it wishes to hedge or
is considering purchasing in order to attempt to compensate for
differences in historical volatility between the futures contract
and the securities, although this may not be successful in all
cases. If price changes in a Fund's futures positions are poorly
correlated with its other investments, its futures positions may
fail to produce desired gains or result in losses that are not
offset by the gains in that Fund's other investments.
Because futures contracts are generally settled within a day from
the date they are closed out, compared with a settlement period
of three days for some types of securities, the futures markets
can provide superior liquidity to the securities markets.
Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any
particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts and may halt
trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price
fluctuation limit is reached, it may be impossible for a Fund to
enter into new positions or close out existing positions. If the
secondary market for a futures contract is not liquid because of
price fluctuation limits or otherwise, a Fund may not be able to
promptly liquidate unfavorable futures positions and potentially
could be required to continue to hold a futures position until
the delivery date, regardless of changes in its value. As a
result, such Fund's access
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to other assets held to cover its futures positions also could be
impaired.
OPTIONS ON FUTURES CONTRACTS. The Funds may buy and write put and
call options on futures contracts. An option on a future gives a
Fund the right (but not the obligation) to buy or sell a futures
contract at a specified price on or before a specified date. The
purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based
or the price of the underlying instrument, ownership of the
option may or may not be less risky than ownership of the futures
contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market
advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising,
the futures contract. If the futures' price at the expiration of
the option is below the exercise price, a Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in that Fund's
portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of
the security or foreign currency which is deliverable under, or
of the index comprising, the futures contract. If the futures'
price at expiration of the option is higher than the exercise
price, a Fund will retain the full amount of the option premium
which provides a partial hedge against any increase in the price
of securities which that Fund is considering buying. If a call or
put option a Fund has written is exercised, such Fund will incur
a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between the
change in the value of its portfolio securities and changes in
the value of the futures positions, a Fund's losses from existing
options on futures
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may to some extent be reduced or increased by changes in the
value of portfolio securities.
The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on
portfolio securities. For example, a Fund may buy a put option on
a futures contract to hedge its portfolio against the risk of
falling prices or rising interest rates.
The amount of risk a Fund assumes when it buys an option on a
futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that
changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two
parties in which one party is obligated to deliver a stated
amount of a stated asset at a specified time in the future and
the other party is obligated to pay a specified amount for the
assets at the time of delivery. The Funds may enter into forward
contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial
instruments. Forward contracts generally are traded in an
interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts
can be specifically drawn to meet the needs of the parties that
enter into them. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold
the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). A Fund may enter into forward currency contracts
with stated contract values of up to the value of that Fund's
assets. A forward currency contract is an obligation to buy or
sell an amount of a specified currency for an agreed price (which
may be in U.S. dollars or a foreign currency). A Fund will
exchange
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foreign currencies for U.S. dollars and for other foreign
currencies in the normal course of business and may buy and sell
currencies through forward currency contracts in order to fix a
price for securities it has agreed to buy or sell ("transaction
hedge"). A Fund also may hedge some or all of its investments
denominated in a foreign currency or exposed to foreign currency
fluctuations against a decline in the value of that currency
relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency (or a proxy currency
whose performance is expected to replicate or exceed the
performance of that currency relative to the U.S. dollar)
approximating the value of some or all of its portfolio
securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the
currency. A Fund also may enter into a forward currency contract
with respect to a currency where the Fund is considering the
purchase or sale of investments denominated in that currency but
has not yet selected the specific investments ("anticipatory
hedge"). In any of these circumstances a Fund may, alternatively,
enter into a forward currency contract to purchase or sell one
foreign currency for a second currency that is expected to
perform more favorably relative to the U.S. dollar if the
portfolio manager believes there is a reasonable degree of
correlation between movements in the two currencies
("cross-hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of
the proceeds of or rates of return on a Fund's foreign currency
denominated portfolio securities. The matching of the increase in
value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise.
Shifting a Fund's currency exposure from one foreign currency to
another removes that Fund's opportunity to profit from increases
in the value of the original currency and involves a risk of
increased losses to such Fund if its portfolio manager's
projection of future exchange rates is inaccurate. Proxy hedges
and cross-hedges may result in losses
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<PAGE>
if the currency used to hedge does not perform similarly to the
currency in which hedged securities are denominated. Unforeseen
changes in currency prices may result in poorer overall
performance for a Fund than if it had not entered into such
contracts.
The Funds will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in or whose
value is tied to, the currency underlying the forward contract or
the currency being hedged. To the extent that a Fund is not able
to cover its forward currency positions with underlying portfolio
securities, the Funds' custodian will segregate cash or other
liquid assets having a value equal to the aggregate amount of
such Fund's commitments under forward contracts entered into with
respect to position hedges, cross-hedges and anticipatory hedges.
If the value of the securities used to cover a position or the
value of segregated assets declines, a Fund will find alternative
cover or segregate additional cash or liquid assets on a daily
basis so that the value of the covered and segregated assets will
be equal to the amount of such Fund's commitments with respect to
such contracts. As an alternative to segregating assets, a Fund
may buy call options permitting such Fund to buy the amount of
foreign currency being hedged by a forward sale contract or a
Fund may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC,
the CFTC may in the future assert authority to regulate forward
contacts. In such event, the Funds' ability to utilize forward
contracts may be restricted. In addition, a Fund may not always
be able to enter into forward contracts at attractive prices and
may be limited in its ability to use these contracts to hedge
Fund assets.
OPTIONS ON FOREIGN CURRENCIES. The Funds may buy and write
options on foreign currencies in a manner similar to that in
which futures or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a
foreign currency in which portfolio securities are denominated
will reduce
29
<PAGE>
the U.S. dollar value of such securities, even if their value in
the foreign currency remains constant. In order to protect
against such diminutions in the value of portfolio securities, a
Fund may buy put options on the foreign currency. If the value of
the currency declines, such Fund will have the right to sell such
currency for a fixed amount in U.S. dollars, thereby offsetting,
in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, a Fund may buy
call options on the foreign currency. The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to a Fund from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent
projected, a Fund could sustain losses on transactions in foreign
currency options that would require such Fund to forego a portion
or all of the benefits of advantageous changes in those rates.
The Funds may also write options on foreign currencies. For
example, to hedge against a potential decline in the U.S. dollar
value of foreign currency denominated securities due to adverse
fluctuations in exchange rates, a Fund could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the decline in value of portfolio
securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a
potential increase in the U.S. dollar cost of securities to be
acquired, a Fund could write a put option on the relevant
currency which, if rates move in the manner projected, should
expire unexercised and allow that Fund to hedge the increased
cost up to the amount of the premium. As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the
30
<PAGE>
premium. If exchange rates do not move in the expected direction,
the option may be exercised and a Fund would be required to buy
or sell the underlying currency at a loss which may not be offset
by the amount of the premium. Through the writing of options on
foreign currencies, a Fund also may lose all or a portion of the
benefits which might otherwise have been obtained from favorable
movements in exchange rates.
The Funds may write covered call options on foreign currencies. A
call option written on a foreign currency by a Fund is "covered"
if that Fund owns the foreign currency underlying the call or has
an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other foreign currencies held in its
portfolio. A call option is also covered if a Fund has a call on
the same foreign currency in the same principal amount as the
call written if the exercise price of the call held (i) is equal
to or less than the exercise price of the call written or (ii) is
greater than the exercise price of the call written, if the
difference is maintained by such Fund in cash or other liquid
assets in a segregated account with the Funds' custodian.
The Funds also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is designed to provide a hedge
against a decline due to an adverse change in the exchange rate
in the U.S. dollar value of a security which a Fund owns or has
the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which
are entered into for cross-hedging purposes are not covered.
However, in such circumstances, a Fund will collateralize the
option by segregating cash or other liquid assets in an amount
not less than the value of the underlying foreign currency in
U.S. dollars marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income
and to reduce fluctuations in net asset value, the Funds may
write
31
<PAGE>
covered put and call options and buy put and call options on
securities that are traded on United States and foreign
securities exchanges and over-the-counter. The Funds may write
and buy options on the same types of securities that the Funds
may purchase directly.
A put option written by a Fund is "covered" if that Fund (i)
segregates cash not available for investment or other liquid
assets with a value equal to the exercise price of the put with
the Funds' custodian or (ii) holds a put on the same security and
in the same principal amount as the put written and the exercise
price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the buyer of an
option will reflect, among other things, the relationship of the
exercise price to the market price and the volatility of the
underlying security, the remaining term of the option, supply and
demand and interest rates.
A call option written by a Fund is "covered" if that Fund owns
the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional
cash consideration (or for additional cash consideration held in
a segregated account by the Funds' custodian) upon conversion or
exchange of other securities held in its portfolio. A call option
is also deemed to be covered if a Fund holds a call on the same
security and in the same principal amount as the call written and
the exercise price of the call held (i) is equal to or less than
the exercise price of the call written or (ii) is greater than
the exercise price of the call written if the difference is
maintained by that Fund in cash and other liquid assets in a
segregated account with its custodian.
The Funds also may write call options that are not covered for
cross-hedging purposes. A Fund collateralizes its obligation
under a written call option for cross-hedging purposes by
segregating cash or other liquid assets in an amount not less
than the market value of the underlying security,
marked-to-market daily. A Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received
32
<PAGE>
from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its portfolio
manager believes that writing the option would achieve the
desired hedge.
The writer of an option may have no control over when the
underlying securities must be sold, in the case of a call option,
or bought, in the case of a put option, since with regard to
certain options, the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or
not an option expires unexercised, the writer retains the amount
of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value
of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to buy the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation
may effect a "closing purchase transaction." This is accomplished
by buying an option of the same series as the option previously
written. The effect of the purchase is that the writer's position
will be canceled by the clearing corporation. However, a writer
may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who
is the holder of an option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by
selling an option of the same series as the option previously
bought. There is no guarantee that either a closing purchase or a
closing sale transaction can be effected.
In the case of a written call option, effecting a closing
transaction will permit a Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both. In the case of a written put option,
such transaction will permit a Fund to write another put option
to the extent that the
33
<PAGE>
exercise price is secured by other liquid assets. Effecting a
closing transaction also will permit a Fund to use the cash or
proceeds from the concurrent sale of any securities subject to
the option for other investments. If a Fund desires to sell a
particular security from its portfolio on which it has written a
call option, such Fund will effect a closing transaction prior to
or concurrent with the sale of the security.
A Fund will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium
received from writing the option or the price received from a
sale transaction is more than the premium paid to buy the option.
A Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium
received from writing the option or the price received from a
sale transaction is less than the premium paid to buy the option.
Because increases in the market of a call option generally will
reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the
underlying security owned by a Fund.
An option position may be closed out only where a secondary
market for an option of the same series exists. If a secondary
market does not exist, the Fund may not be able to effect closing
transactions in particular options and the Fund would have to
exercise the options in order to realize any profit. If a Fund is
unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon
exercise. The absence of a liquid secondary market may be due to
the following: (i) insufficient trading interest in certain
options, (ii) restrictions imposed by a national securities
exchange ("Exchange") on which the option is traded on opening or
closing transactions or both, (iii) trading halts, suspensions or
other restrictions imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or
unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options
Clearing Corporation ("OCC") may not at all times be adequate to
handle
34
<PAGE>
current trading volume, or (vi) one or more Exchanges could, for
economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on
that Exchange (or in that class or series of options) would cease
to exist, although outstanding options on that Exchange that had
been issued by the OCC as a result of trades on that Exchange
would continue to be exercisable in accordance with their terms.
A Fund may write options in connection with buy-and-write
transactions. In other words, a Fund may buy a security and then
write a call option against that security. The exercise price of
such call will depend upon the expected price movement of the
underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-
of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that
the price of the underlying security will remain flat or decline
moderately during the option period. Buy-and-write transactions
using at-the-money call options may be used when it is expected
that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write
transactions using out-of-the-money call options may be used when
it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the
underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone.
If the call options are exercised in such transactions, a Fund's
maximum gain will be the premium received by it for writing the
option, adjusted upwards or downwards by the difference between
that Fund's purchase price of the security and the exercise
price. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be
offset by the amount of premium received.
The writing of covered put options is similar in terms of risk
and return characteristics to buy-and-write transactions. If the
market
35
<PAGE>
price of the underlying security rises or otherwise is above the
exercise price, the put option will expire worthless and a Fund's
gain will be limited to the premium received. If the market price
of the underlying security declines or otherwise is below the
exercise price, a Fund may elect to close the position or take
delivery of the security at the exercise price and that Fund's
return will be the premium received from the put options minus
the amount by which the market price of the security is below the
exercise price.
A Fund may buy put options to hedge against a decline in the
value of its portfolio. By using put options in this way, a Fund
will reduce any profit it might otherwise have realized in the
underlying security by the amount of the premium paid for the put
option and by transaction costs.
A Fund may buy call options to hedge against an increase in the
price of securities that it may buy in the future. The premium
paid for the call option plus any transaction costs will reduce
the benefit, if any, realized by such Fund upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to that Fund.
EURODOLLAR INSTRUMENTS. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated
futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed
rate for the lending of funds and sellers to obtain a fixed rate
for borrowings. A Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many
interest rate swaps and fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. A Fund may enter into interest
rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its
assets or its liabilities, and will usually enter into interest
rate swaps on a net basis (i.e., the two payment streams are
netted out, with a Fund receiving or paying, as the case may be,
only the
36
<PAGE>
net amount of the two payments). The net amount of the excess, if
any, of a Fund's obligations over its entitlement with respect to
each interest rate swap will be calculated on a daily basis and
an amount of cash or other liquid assets having an aggregate net
asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a
Fund enters into an interest rate swap on other than a net basis,
it would maintain a segregated account in the full amount accrued
on a daily basis of its obligations with respect to the swap. A
Fund will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is rated in one of the three
highest rating categories of at least one NRSRO at the time of
entering into such transaction. Janus Capital will monitor the
creditworthiness of all counterparties on an ongoing basis. If
there is a default by the other party to such a transaction, a
Fund will have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap
documentation. Janus Capital has determined that, as a result,
the swap market has become relatively liquid. Caps and floors are
more recent innovations for which standardized documentation has
not yet been developed and, accordingly, they are less liquid
than swaps. To the extent a Fund sells (i.e., writes) caps and
floors, it will segregate cash or other liquid assets having an
aggregate net asset value at least equal to the full amount,
accrued on a daily basis, of its obligations with respect to any
caps or floors.
There is no limit on the amount of interest rate swap
transactions that may be entered into by a Fund. These
transactions may in some instances involve the delivery of
securities or other underlying assets by a Fund or its
counterparty to collateralize obligations under the swap. Under
the documentation currently used in those markets, the risk of
loss with respect to interest rate swaps is limited to the net
amount of the payments that a Fund is contractually obligated to
make. If the other party to an interest
37
<PAGE>
rate swap that is not collateralized defaults, a Fund would risk
the loss of the net amount of the payments that it contractually
is entitled to receive. A Fund may buy and sell (i.e., write)
caps and floors without limitation, subject to the segregation
requirement described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD
CONTRACTS AND FOREIGN INSTRUMENTS. Unlike transactions entered
into by the Funds in futures contracts, options on foreign
currencies and forward contracts are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such
instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded
on certain Exchanges, such as the Philadelphia Stock Exchange and
the Chicago Board Options Exchange, subject to SEC regulation.
Similarly, options on currencies may be traded over-the-counter.
In an over-the-counter trading environment, many of the
protections afforded to Exchange participants will not be
available. For example, there are no daily price fluctuation
limits, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the buyer of
an option cannot lose more than the amount of the premium plus
related transaction costs, this entire amount could be lost.
Moreover, an option writer and a buyer or seller of futures or
forward contracts could lose amounts substantially in excess of
any premium received or initial margin or collateral posted due
to the potential additional margin and collateral requirements
associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on
Exchanges. As a result, many of the protections provided to
traders on organized Exchanges will be available with respect to
such transactions. In particular, all foreign currency option
positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default.
Further, a liquid secondary market in options traded on an
Exchange may be more readily available than in the over-the-
38
<PAGE>
counter market, potentially permitting a Fund to liquidate open
positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other political
and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures
contracts, options on futures contracts, forward contracts and
options on foreign currencies may be traded on foreign exchanges
and over-the-counter in foreign countries. Such transactions are
subject to the risk of governmental actions affecting trading in
or the prices of foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other
complex foreign political and economic factors, (ii) lesser
availability than in the United States of data on which to make
trading decisions, (iii) delays in a Fund's ability to act upon
economic events occurring in foreign markets during non-business
hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) low trading
volume.
39
<PAGE>
Investment adviser
As stated in the Prospectuses, each Fund has an Investment
Advisory Agreement with Janus Capital, 100 Fillmore Street,
Denver, Colorado 80206-4928. Each Advisory Agreement provides
that Janus Capital will furnish continuous advice and
recommendations concerning the Funds' investments, provide office
space for the Funds, and pay the salaries, fees and expenses of
all Fund officers and of those Trustees who are affiliated with
Janus Capital. Janus Capital also may make payments to selected
broker-dealer firms or institutions which perform recordkeeping
or other services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such
payments, and the factors in selecting the broker-dealer firms
and institutions to which they will be made, are determined from
time to time by Janus Capital. Janus Capital is also authorized
to perform the management and administrative services necessary
for the operation of the Funds.
The Funds pay custodian and transfer agent fees and expenses,
brokerage commissions and dealer spreads and other expenses in
connection with the execution of portfolio transactions, legal
and accounting expenses, interest and taxes, registration fees,
expenses of shareholders' meetings and reports to shareholders,
fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Funds'
Prospectuses and SAI to current shareholders, and other costs of
complying with applicable laws regulating the sale of Fund
shares. Pursuant to the Advisory Agreements, Janus Capital
furnishes certain other services, including net asset value
determination and fund accounting, recordkeeping, and blue sky
registration and monitoring services, for which the Funds may
reimburse Janus Capital for its costs.
Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus
Olympus Fund, Janus Special Situations Fund, Janus Twenty Fund,
Janus Global Life Sciences Fund, Janus Global Technology Fund,
Janus Worldwide Fund, Janus Balanced Fund, Janus Equity Income
Fund and Janus Growth and Income Fund have each agreed to
compensate Janus Capital for its services by the monthly payment
of a fee at the annual rate of 0.75% of the first
40
<PAGE>
$300 million of the average daily net assets of each Fund, 0.70%
of the next $200 million of the average daily net assets of each
Fund and 0.65% on the average daily net assets of each Fund in
excess of $500 million.
Janus High Yield Fund has agreed to compensate Janus Capital for
its services by the monthly payment of a fee at the annual rate
of 0.75% of the first $300 million of average daily net assets of
the Fund and 0.65% of the average daily net assets in excess of
$300 million. Janus Flexible Income Fund and Janus Short-Term
Bond Fund have each agreed to compensate Janus Capital for its
services by the monthly payment of a fee at the annual rate of
0.65% of the first $300 million of the average daily net assets
of the Fund, plus 0.55% of the average daily net assets of the
Fund in excess of $300 million. Janus Federal Tax-Exempt Fund has
agreed to compensate Janus Capital for its services by the
monthly payment of a fee at the annual rate of 0.60% of the first
$300 million of average daily net assets of the Fund and 0.55% of
the average daily net assets in excess of $300 million. Janus
Capital has agreed to waive the advisory fee payable by any of
these Funds in an amount equal to the amount, if any, that such
Fund's normal operating expenses chargeable to its income account
in any fiscal year, including the investment advisory fee but
excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1% of the average daily net assets
for a fiscal year for Janus Flexible Income Fund and Janus
High-Yield Fund and 0.65% of the average daily net assets for a
fiscal year for Janus Short-Term Bond Fund and Janus Federal
Tax-Exempt Fund.
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<PAGE>
The following table summarizes the advisory fees paid by the
Funds and any advisory fee waivers for the last three fiscal
periods of each Fund. The information below is for fiscal years
ended October 31.
<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ------------------------ ------------------------
Fund Name Advisory Fees Waiver Advisory Fees Waiver Advisory Fees Waiver
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund $135,223,467 - $114,245,282 - $89,848,418 -
Janus Enterprise Fund $ 3,982,454 - $ 4,438,870 - $ 4,348,549 -
Janus Mercury Fund $ 14,070,962 - $ 13,721,557 - $12,407,830 -
Janus Olympus Fund $ 5,433,827 - $ 3,801,421 - $ 1,783,296(3) -
Janus Special
Situations Fund $ 5,040,157 - $ 1,090,013(4) - N/A -
Janus Twenty Fund $ 52,476,576 - $ 32,875,794 - $22,477,667 -
Janus Global Life
Sciences Fund(1) N/A - N/A - N/A -
Janus Global
Technology Fund(1) N/A - N/A - N/A -
Janus Worldwide Fund $ 85,269,327 - $ 51,015,512 - $19,645,721 -
Janus Balanced Fund $ 3,869,978 - $ 2,167,710 - $ 1,264,551 -
Janus Equity Income
Fund $ 1,002,095 - $ 394,962 - $ 71,858(2) -
Janus Growth and
Income Fund $ 16,512,709 - $ 9,650,498 - $ 5,501,734 -
Janus Flexible Income
Fund $ 5,210,692 - $ 3,910,319 - $ 3,620,317 -
Janus High-Yield Fund $ 2,772,932 - $ 1,993,630 $ 18,746 $ 556,207(3) $122,504
Janus Federal Tax-
Exempt Fund $ 444,799 $236,058 $ 321,447 $236,762 $ 217,873 $167,598
Janus Short-Term Bond
Fund $ 582,112 $354,262 $ 314,737 $258,118 $ 274,319 $238,092
</TABLE>
(1) The Fund had not commenced operations as of October 31, 1998.
(2) June 28, 1996 (inception) to October 31, 1996.
(3) December 29, 1995 (inception) to October 31, 1996.
(4) December 31, 1996 (inception) to October 31, 1997.
The Advisory Agreement for each of the Funds is dated July 1,
1997 (except Janus Global Life Sciences Fund and Janus Global
Technology Fund which are dated September 14, 1998). Each
Advisory Agreement will continue in effect until July 1, 1999
(except Janus Global Life Sciences Fund's and Janus Global
42
<PAGE>
Technology Fund's agreements which will continue in effect until
July 1, 2000), and thereafter from year to year so long as such
continuance is approved annually by a majority of the Funds'
Trustees who are not parties to the Advisory Agreements or
interested persons of any such party, and by either a majority of
the outstanding voting shares or the Trustees of the Funds. Each
Advisory Agreement (i) may be terminated without the payment of
any penalty by a Fund or Janus Capital on 60 days' written
notice; (ii) terminates automatically in the event of its
assignment; and (iii) generally, may not be amended without the
approval by vote of a majority of the Trustees of the affected
Fund, including the Trustees who are not interested persons of
that Fund or Janus Capital and, to the extent required by the
1940 Act, the vote of a majority of the outstanding voting
securities of that Fund.
Janus Capital acts as sub-adviser for a number of private-label
mutual funds and provides separate account advisory services for
institutional accounts. Investment decisions for each account
managed by Janus Capital, including the Funds, are made
independently from those for any other account that is or may in
the future become managed by Janus Capital or its affiliates. If,
however, a number of accounts managed by Janus Capital are
contemporaneously engaged in the purchase or sale of the same
security, the orders may be aggregated and/or the transactions
may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the
price paid or received by an account or the size of the position
obtained or liquidated for an account. Pursuant to an exemptive
order granted by the SEC, the Funds and other funds advised by
Janus Capital may also transfer daily uninvested cash balances
into one or more joint trading accounts. Assets in the joint
trading accounts are invested in money market instruments and the
proceeds are allocated to the participating funds on a pro rata
basis.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transporta-
43
<PAGE>
tion, information processing and financial services. Thomas H.
Bailey, President and Chairman of the Board of Janus Capital,
owns approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and policies and is managed accordingly by a particular
portfolio manager or team of portfolio managers. As a result,
from time to time two or more different managed accounts may
pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit the Funds' portfolio managers to
purchase and sell securities for their own accounts except under
the limited exceptions contained in Janus Capital's policy
regarding personal investing by directors/Trustees, officers and
employees of Janus Capital and the Trust. The policy requires
investment personnel and officers of Janus Capital, inside
directors/Trustees of Janus Capital and the Funds and other
designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not
otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal
transaction would be contrary to the provisions of the policy or
would be deemed to adversely affect any transaction then known to
be under consideration for or to have been effected on behalf of
any client account, including the Funds.
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and directors/
Trustees of Janus Capital and the Trust to various trading
restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's
44
<PAGE>
policy. Those persons also may be required under certain
circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
45
<PAGE>
Custodian, transfer agent and
certain affiliations
State Street Bank and Trust Company, P.O. Box 0351, Boston,
Massachusetts 02117-0351 is the custodian of the domestic
securities and cash of the Fund. State Street and the foreign
subcustodians selected by it and approved by the Trustees have
custody of the assets of the Funds held outside the U.S. and cash
incidental thereto. The custodian and subcustodians hold the
Funds' assets in safekeeping and collect and remit the income
thereon, subject to the instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Funds' transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Funds. For transfer agency and other
services, Janus Service receives a fee calculated at an annual
rate of 0.16% of average net assets of each Fund and, in
addition, $4 per open shareholder account in each Fund except
Janus Fund. In addition, the Funds pay DST Systems, Inc. ("DST"),
a subsidiary of KCSI, license fees at the rate of $3.06 per
shareholder account for the growth and combination funds and
$3.98 per shareholder account for the fixed-income funds for the
use of DST's shareholder accounting system. The Funds also pay
DST $1.10 per closed shareholder account. The Funds pay DST for
the use of its portfolio and fund accounting system a monthly
base fee of $250 to $1,250 per month based on the number of Janus
funds using the system and an asset charge of $1 per million
dollars of net assets (not to exceed $500 per month). In
addition, the Funds pay DST postage and forms costs of a DST
affiliate incurred in mailing Fund shareholder transaction
confirmations.
The Trustees have authorized the Funds to use another affiliate
of DST as introducing broker for certain Fund portfolio
transactions as a means to reduce Fund expenses through credits
against the charges of DST and its affiliates with regard to
commissions earned by such affiliate. See "Portfolio Transactions
and Brokerage."
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
46
<PAGE>
distributor of the Funds. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Janus Distributors acts as the agent of the Funds in connection
with the sale of their shares in all states in which the shares
are registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
47
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the
Funds and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions. The Funds may trade foreign
securities in foreign countries because the best available market
for these securities is often on foreign exchanges. In
transactions on foreign stock exchanges, brokers' commissions are
frequently fixed and are often higher than in the United States,
where commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to a Fund or
to a third party service provider to the Fund to pay Fund
expenses; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
Research may include furnishing advice, either directly or
through publications or writings, as to the value of securities,
the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of
securities; furnishing seminars, information, analyses and
48
<PAGE>
reports concerning issuers, industries, securities, trading
markets and methods, legislative developments, changes in
accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials;
comparative performance evaluation and technical measurement
services and quotation services, and products and other services
(such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information
and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist
Janus Capital in carrying out its responsibilities. Research
received from brokers or dealers is supplemental to Janus
Capital's own research efforts. Most brokers and dealers used by
Janus Capital provide research and other services described
above.
For the year ended October 31, 1998, the total brokerage
commissions paid by the Funds to brokers and dealers in
transactions identified for execution primarily on the basis of
research and other services provided to the Funds are summarized
below:
<TABLE>
<CAPTION>
Fund Name Commissions Transactions
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Janus Fund $9,507,495 $9,765,974,357
Janus Enterprise Fund $ 445,410 $ 349,429,266
Janus Mercury Fund $1,159,118 $1,070,596,847
Janus Olympus Fund $ 269,118 $ 245,178,152
Janus Special Situations Fund $ 379,217 $ 246,365,009
Janus Twenty Fund $2,611,302 $2,933,293,562
Janus Global Life Sciences Fund(1) N/A N/A
Janus Global Technology Fund(1) N/A N/A
Janus Worldwide Fund $1,883,915 $1,252,006,241
Janus Balanced Fund $ 118,210 $ 100,895,837
Janus Equity Income Fund $ 51,202 $ 46,376,244
Janus Growth and Income Fund $1,157,382 $1,074,570,353
</TABLE>
(1) The Fund had not commenced operations as of October 31, 1998.
Note: Funds that are not included in the table did not pay any commissions
related to research for the stated period.
49
<PAGE>
Janus Capital may use research products and services in servicing
other accounts in addition to the Funds. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers
regarding the placement of securities transactions because of the
research services they provide. It does, however, have an
internal procedure for allocating transactions in a manner
consistent with its execution policy to brokers that it has
identified as providing superior execution and research,
research-related products or services which benefit its advisory
clients, including the Funds. Research products and services
incidental to effecting securities transactions furnished by
brokers or dealers may be used in servicing any or all of Janus
Capital's clients and such research may not necessarily be used
by Janus Capital in connection with the accounts which paid
commissions to the broker-dealer providing such research products
and services.
Janus Capital may consider sales of Fund shares by a broker-
dealer or the recommendation of a broker-dealer to its customers
that they purchase Fund shares as a factor in the selection of
broker-dealers to execute Fund portfolio transactions. Janus
Capital may also consider payments made by brokers effecting
transactions for a Fund i) to the Fund or ii) to other persons on
behalf of the Fund for services provided to the Fund for which it
would be obligated to pay. In placing portfolio business with
such broker-dealers, Janus Capital will seek the best execution
of each transaction.
When the Funds purchase or sell a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
50
<PAGE>
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
The Funds' Trustees have authorized Janus Capital to place
transactions with DST Securities, Inc. ("DSTS"), a wholly-owned
broker-dealer subsidiary of DST. Janus Capital may do so if it
reasonably believes that the quality of the transaction and the
associated commission are fair and reasonable and if, overall,
the associated transaction costs, net of any credits described
above under "Custodian, Transfer Agent and Certain Affiliations,"
are lower than those that would otherwise be incurred.
51
<PAGE>
The following table lists the total amount of brokerage
commissions paid by each Fund for the fiscal periods ending on
October 31st of each year:
<TABLE>
<CAPTION>
Fund Name 1998 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund $28,468,686 $44,265,867 $29,000,380
Janus Enterprise Fund $ 1,281,067 $ 1,366,558 $ 1,188,690
Janus Mercury Fund $ 3,829,712 $ 5,379,505 $ 5,337,713
Janus Olympus Fund $ 1,285,709 $ 1,188,032 $ 713,190(2)
Janus Special Situations Fund $ 2,183,339 $ 833,811(3) -
Janus Twenty Fund $ 6,924,862 $ 8,145,093 $ 7,346,447
Janus Global Life Sciences Fund(4) N/A - -
Janus Global Technology Fund(4) N/A - -
Janus Worldwide Fund $32,987,352 $26,537,096 $10,947,924
Janus Balanced Fund $ 471,225 $ 642,234 $ 64,843
Janus Equity Income Fund $ 218,190 $ 179,800 $ 63,683(1)
Janus Growth and Income Fund $ 3,923,528 $ 3,401,847 $ 1,985,334
Janus Flexible Income Fund $ 35,152 $ 35,674 $ 15,386
Janus High-Yield Fund $ 101,250 $ 55,654 $ 39,981(2)
Janus Federal Tax-Exempt Fund $ 11,882 - -
Janus Short-Term Bond Fund $ 500 $ 3,092 -
</TABLE>
(1) June 28, 1996 (inception) to October 31, 1996.
(2) December 29, 1995 (inception) to October 31, 1996.
(3) December 31, 1996 (inception) to October 31, 1997.
(4) The Fund had not commenced operations as of October 31, 1998.
Note: Funds that are not included in the table did not pay brokerage commissions
because securities transactions for such Funds involved dealers acting as
principals.
52
<PAGE>
Included in such brokerage commissions are the following amounts
paid to DSTS, which served to reduce each Fund's out-of-pocket
expenses as follows:
<TABLE>
<CAPTION>
Commission Paid
through DSTS for the
Period Ended Reduction of % of Total % of Total
Fund Name October 31, 1998* Expenses* Commissions+ Transactions
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $517,147 $387,860 1.82% 1.44%
Janus Enterprise Fund $ 9,121 $ 6,841 .71% .67%
Janus Mercury Fund $ 17,664 $ 13,248 .46% .51%
Janus Olympus Fund $ 12,268 $ 9,201 .95% 1.20%
Janus Special Situations Fund $ 21,682 $ 16,262 .99% .85%
Janus Twenty Fund $ 45,075 $ 33,807 .65% .95%
Janus Worldwide Fund $ 54,582 $ 40,937 .17% .29%
Janus Balanced Fund $ 9,864 $ 7,398 2.09% 1.22%
Janus Equity Income Fund $ 1,944 $ 1,458 .89% .74%
Janus Growth and Income Fund $ 70,167 $ 52,625 1.79% 1.42%
</TABLE>
Note: Funds that did not execute trades with DSTS during the stated period are
not included in the table.
<TABLE>
<CAPTION>
Commission Paid Commission
through DSTS for the Paid through DSTS
Period Ended Reduction of for the Period Ended Reduction
Fund Name October 31, 1997* Expenses* October 31, 1996* of Expenses*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $1,118,869 $839,152 $ 470,414 $352,810
Janus Enterprise Fund $ 33,551 $ 28,388 $ 11,030 $ 8,273
Janus Mercury Fund $ 95,033 $ 71,275 $ 88,645 $ 66,483
Janus Olympus Fund $ 5,922 $ 4,442 $ 1,117(2) $ 838
Janus Twenty Fund $ 177,408 $133,056 $ 183,255 $137,441
Janus Worldwide Fund $ 177,943 $133,457 $ 104,173 $ 78,130
Janus Balanced Fund $ 2,636 $ 1,977 $ 9,591 $ 7,194
Janus Equity Income Fund $ 1,920 $ 1,440 $ 83(1) $ 62
Janus Growth and Income
Fund $ 76,575 $ 57,431 $ 79,006 $ 59,254
</TABLE>
* The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
+ Differences in the percentage of total commissions versus the percentage of
total transactions is due, in part, to variations among share prices and
number of shares traded, while average price per share commission rates were
substantially the same.
(1) June 28, 1996 (inception) to October 31, 1996.
(2) December 29, 1995 (inception) to October 31, 1996.
Note: Funds that did not execute trades with DSTS during the stated periods are
not included in the table.
53
<PAGE>
As of October 31, 1998, certain Funds owned securities of their
regular broker-dealers (or parents), as shown below:
<TABLE>
<CAPTION>
Value of
Name of Securities
Fund Name Broker-Dealer Owned
- --------------------------------------------------------------------
<S> <C> <C>
Janus Fund Charles Schwab Corp. $407,513,667
Janus Enterprise Fund Charles Schwab Corp. $ 7,242,973
Janus Growth and Income Fund Charles Schwab Corp. $ 23,968,750
Janus Balanced Fund Charles Schwab Corp. $ 14,388,920
Janus Short-Term Bond Fund Merrill Lynch, Pierce
Fenner & Smith, Inc. $ 3,773,437
Janus Olympus Fund Charles Schwab Corp. $ 11,735,483
Janus Equity Income Fund Charles Schwab Corp. $ 5,308,389
</TABLE>
54
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years. In August 1992, Janus
Venture Fund, Inc. and Janus Twenty Fund, Inc. (both separate
Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of Janus Flexible Income
Fund series) were reorganized into separate series of the Trust.
In general, all references to Trust offices in this section
include comparable offices with the respective predecessor funds,
unless a Trust office was filled subsequent to the
reorganization.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee and Executive Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
55
<PAGE>
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly (1997-
1998), Chief Financial Officer-Boston Market Concepts, Boston
Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
56
<PAGE>
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly
(1993-1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
David J. Corkins, Age 32 - Executive Vice President*+
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Growth
and Income Fund. Executive Vice President of Janus Aspen Series.
Vice President of Janus Capital. Formerly, research analyst and
assistant portfolio manager at Janus Capital (1995-1997).
Formerly, Chief Financial Officer of Chase U.S. Consumer
Services, Inc., a Chase Manhattan mortgage business (1993-1995).
David C. Decker, Age 32 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Special
Situations Fund. Assistant Portfolio Manager of Janus Fund. Vice
President of Janus Capital. Formerly, research analyst at Janus
Capital (1992-1996).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
+Mr. Corkins and Mr. Lammert are related by marriage.
57
<PAGE>
James P. Goff, Age 34 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus
Enterprise Fund. Executive Vice President of Janus Aspen Series.
Vice President of Janus Capital. Formerly, Executive Vice
President and Portfolio Manager of Janus Venture Fund (December
1993 to February 1997).
Helen Young Hayes, Age 36 - Executive Vice President*+
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Worldwide
Fund. Executive Vice President and Co-Manager of Janus Overseas
Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital.
Warren B. Lammert, Age 37 - Executive Vice President*++
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Mercury
Fund. Vice President of Janus Capital. Formerly, Executive Vice
President and Portfolio Manager of Janus Venture Fund (December
1993-December 1996).
C. Mike Lu, Age 29 - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Global
Technology Fund. Formerly, research analyst at Janus Capital
(1991-1998).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
+Ms. Hayes and Ms. Young are sisters.
++Mr. Lammert and Mr. Corkins are related by marriage.
58
<PAGE>
Thomas R. Malley, Age 30 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Global
Life Sciences Fund. Formerly, research analyst at Janus Capital
(1991-1998).
Blaine P. Rollins, Age 31 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Balanced
Fund and Janus Equity Income Fund. Assistant Portfolio Manager of
Janus Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly, fixed-income trader and
equity securities analyst at Janus Capital (1990-1995).
Sandy R. Rufenacht, Age 33 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Short-
Term Bond Fund and Janus High-Yield Fund. Executive Vice
President of Janus Aspen Series. Vice President of Janus Capital.
Formerly, Co-Manager of Janus Flexible Income Fund (June 1996-
February 1998). Formerly senior accountant, fixed-income trader
and fixed-income research analyst at Janus Capital (1990-1995).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
59
<PAGE>
Scott W. Schoelzel, Age 40 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Twenty
Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly (1995-1997), Executive Vice
President and Portfolio Manager of Janus Olympus Fund. Formerly
(January 1994-June 1995), Vice President of Investments at Janus
Capital.
Ronald V. Speaker, Age 34 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Flexible
Income Fund. Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital. Formerly, Co-Manager of Janus High-
Yield Fund (December 1995-February 1998). Formerly, Portfolio
Manager of Janus Short-Term Bond Fund (September 1992-December
1995) and Janus Federal Tax-Exempt Fund (May 1993-December 1995).
Darrell W. Watters, Age 35 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Federal
Tax-Exempt Fund. Executive Vice President of Janus Aspen Series.
Vice President of Janus Capital. Formerly, municipal bond trader
and research analyst at Janus Capital (1993-1995).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
60
<PAGE>
Claire Young, Age 33 - Executive Vice President*+
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Olympus
Fund. Vice President of Janus Capital. Formerly, research analyst
and assistant portfolio manager at Janus Capital (1992-1997).
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
+Ms. Young and Ms. Hayes are sisters.
61
<PAGE>
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly (1990
to 1994), with The Boston Company Advisors, Inc., Boston, MA
(mutual fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly (1991-1997) Director of
Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
62
<PAGE>
The Trustees are responsible for major decisions relating to each
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Funds by their officers and review
the investment decisions of the officers, although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Agreement and Declaration of Trust, Massachusetts law or the
1940 Act.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Funds described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Funds or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
Thomas H. Bailey, Chairman and Trustee* $ 0 $ 0
James P. Craig, Trustee* $ 0 $ 0
William D. Stewart, Trustee $63,741 $82,000
Gary O. Loo, Trustee $50,063 $74,000
Dennis B. Mullen, Trustee $57,978 $82,000
Martin H. Waldinger, Trustee $60,572 $74,000
James T. Rothe, Trustee $58,504 $82,000
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
** As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
63
<PAGE>
Purchase of shares
Shares of the Funds are sold at the net asset value per share as
determined at the close of the regular trading session of the New
York Stock Exchange (the "NYSE") next occurring after a purchase
order is received and accepted by a Fund. The Shareholder's
Manual Section of the Prospectus contains detailed information
about the purchase of shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectuses, the net asset value ("NAV") of
Fund shares is determined once each day on which the NYSE is
open, at the close of its regular trading session (normally 4:00
p.m., New York time, Monday through Friday). As stated in the
Prospectus, the NAV of Fund shares is not determined on days the
NYSE is closed (generally, New Year's Day, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas). The per share NAV of
each Fund is determined by dividing the total value of a Fund's
securities and other assets, less liabilities, by the total
number of shares outstanding. In determining NAV, securities
listed on an Exchange, the NASDAQ National Market and foreign
markets are valued at the closing prices on such markets, or if
such price is lacking for the trading period immediately
preceding the time of determination, such securities are valued
at their current bid price. Municipal securities held by the
Funds are traded primarily in the over-the-counter market.
Valuations of such securities are furnished by one or more
pricing services employed by the Funds and are based upon a
computerized matrix system or appraisals obtained by a pricing
service, in each case in reliance upon information concerning
market transactions and quotations from recognized municipal
securities dealers. Other securities that are traded on the
over-the-counter market are valued at their closing bid prices.
Foreign securities and currencies are converted to U.S. dollars
using the exchange rate in effect at the close of the NYSE. Each
Fund will determine the market value of individual securities
held by it, by using prices provided by one or more professional
pricing services which may provide market prices to other funds,
or, as needed, by obtaining market quotations from independent
broker-dealers. Short-term securities maturing within 60 days are
valued on an amortized cost basis. Securities for which
quotations
64
<PAGE>
are not readily available, and other assets, are valued at fair
values determined in good faith under procedures established by
and under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business on each business day in New York
(i.e., a day on which the NYSE is open). In addition, European or
Far Eastern securities trading generally or in a particular
country or countries may not take place on all business days in
New York. Furthermore, trading takes place in Japanese markets on
certain Saturdays and in various foreign markets on days which
are not business days in New York and on which a Fund's NAV is
not calculated. A Fund calculates its NAV per share, and
therefore effects sales, redemptions and repurchases of its
shares, as of the close of the NYSE once on each day on which the
NYSE is open. Such calculation may not take place
contemporaneously with the determination of the prices of the
foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their
dividends and distributions in cash, all income dividends and
capital gains distributions, if any, on a Fund's shares are
reinvested automatically in additional shares of that Fund at the
NAV determined on the payment date. Checks for cash dividends and
distributions and confirmations of reinvestments are usually
mailed to shareholders within ten days after the record date. Any
election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account
Application form or by phone) will apply to dividends and
distributions the record dates of which fall on or after the date
that a Fund receives such notice. Changes to distribution options
must be received at least three days prior to the record date to
be effective for such date. Investors receiving cash
distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
65
<PAGE>
Redemption of shares
Procedures for redemption of shares are set forth in the
Shareholder's Manual section of the Prospectuses. Shares normally
will be redeemed for cash, although each Fund retains the right
to redeem its shares in kind under unusual circumstances, in
order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its
discretion. However, the Funds are governed by Rule 18f-1 under
the 1940 Act, which requires each Fund to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the NAV of that Fund
during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, a Fund
will have the option of redeeming the excess in cash or in kind.
If shares are redeemed in kind, the redeeming shareholder might
incur brokerage costs in converting the assets to cash. The
method of valuing securities used to make redemptions in kind
will be the same as the method of valuing portfolio securities
described under "Purchase of Shares - Net Asset Value
Determination" and such valuation will be made as of the same
time the redemption price is determined.
The right to require the Funds to redeem its shares may be
suspended, or the date of payment may be postponed, whenever (1)
trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed except for holidays and weekends, (2) the SEC
permits such suspension and so orders, or (3) an emergency exists
as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
66
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts and specific types of accounts is set forth in the
Prospectuses. Applications for specific types of accounts may be
obtained by calling the Funds at 1-800-525-3713 or writing to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectuses, shareholders may initiate a number
of transactions by telephone. The Funds, their transfer agent and
their distributor disclaim responsibility for the authenticity of
instructions received by telephone. Such entities will employ
reasonable procedures to confirm that instructions communicated
by telephone are genuine. Such procedures may include, among
others, requiring personal identification prior to acting upon
telephone instructions, providing written confirmation of the
transactions and tape recording telephone conversations.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the
Prospectuses, if you have a regular account or are eligible for
distributions from a retirement plan, you may establish a
systematic redemption option. The payments will be made from the
proceeds of periodic redemptions of shares in the account at the
NAV. Depending on the size or frequency of the disbursements
requested, and the fluctuation in value of a Fund's portfolio,
redemptions for the purpose of making such disbursements may
reduce or even exhaust the shareholder's account. Either an
investor or a Fund, by written notice to the other, may terminate
the investor's systematic redemption option without penalty at
any time.
Information about requirements to establish a systematic
redemption option may be obtained by writing or calling the Funds
at the address or phone number shown above.
67
<PAGE>
Tax-deferred accounts
The Funds offer several different types of tax-deferred accounts
that an investor may establish to invest in Fund shares,
depending on rules prescribed by the Code. Traditional and Roth
Individual Retirement Accounts may be used by most individuals
who have taxable compensation. Simplified Employee Pensions and
Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including
corporations, partnerships and sole proprietors, for the benefit
of business owners and their employees. Education IRAs allow
individuals, subject to certain income limitations, to contribute
up to $500 annually on behalf of any child under the age of 18.
In addition, the Funds offer a Section 403(b)(7) Plan for
employees of educational organizations and other qualifying
tax-exempt organizations. Investors should consult their tax
adviser or legal counsel before selecting a tax-deferred account.
Contributions under Traditional and Roth IRAs, Education IRAs,
SEPs, Defined Contribution Plans and Section 403(b)(7) Plans are
subject to specific contribution limitations. Generally, such
contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary
Trust Company as custodian. Each participant's account is charged
an annual fee of $12 per taxpayer identification number no matter
how many tax-deferred accounts the participant has with Janus.
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
Distributions from tax-deferred accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax
if withdrawn prior to age 59 1/2 or used for a nonqualifying
purpose. Additionally, shareholders generally must start
withdrawing retirement plan assets no later than April 1 of the
year after they reach age 70 1/2. Several exceptions to these
general rules may apply and several methods exist to determine
the amount and timing of the minimum annual distribution (if
any). Shareholders should consult with their tax adviser or legal
counsel prior to receiving any distribution from any tax-deferred
account, in order to determine the income tax impact of any such
distribution.
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<PAGE>
To receive additional information about Traditional and Roth
IRAs, SEPs, Defined Contribution Plans and Section 403(b)(7)
Plans along with the necessary materials to establish an account,
please call the Funds at 1-800-525-3713 or write to the Funds at
P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to
a Traditional or Roth IRA, SEP, Defined Contribution Plan or
Section 403(b)(7) Plan can be made until the appropriate forms to
establish any such plan have been completed.
69
<PAGE>
Income dividends, capital gains
distributions and tax status
It is a policy of the Funds to make distributions of
substantially all of their investment income and any net realized
capital gains. Any capital gains realized during each fiscal year
ended October 31, as defined by the Code, are normally declared
and payable to shareholders in December. Janus Fund, Janus
Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus
Special Situations Fund, Janus Twenty Fund, Janus Global Life
Sciences Fund, Janus Global Technology Fund and Janus Worldwide
Fund, declare and make annual distributions of income (if any);
Janus Equity Income Fund, Janus Balanced Fund and Janus Growth
and Income Fund declare and make quarterly distributions of
income and Janus Flexible Income Fund, Janus High-Yield Fund,
Janus Federal Tax-Exempt Fund and Janus Short-Term Bond Fund
declare dividends daily and make monthly distributions of income.
If a month begins on a Saturday, Sunday or holiday, dividends for
daily dividend Funds for those days are declared at the end of
the preceding month. Janus Federal Tax-Exempt Fund will use the
"average annual method" to determine the designated percentage of
each distribution that is tax-exempt. Under this method, the
percentage of income designated as tax-exempt is based on the
percentage of tax-exempt income earned for each annual period,
and may be substantially different from the Fund's income that
was tax-exempt during any monthly period. The Funds intend to
qualify as regulated investment companies by satisfying certain
requirements prescribed by Subchapter M of the Code. Accordingly,
a Fund will invest no more than 25% of its total assets in a
single issuer (other than U.S. government securities).
The Funds may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS.
In order to avoid taxes and interest that must be paid by the
Funds if these instruments are profitable, the Funds may make
various elections permitted by the tax laws. However, these
elections could require that the Funds recognize taxable income,
which in turn must be distributed.
Some foreign securities purchased by the Funds may be subject to
foreign taxes which could reduce the yield on such securities.
The amount of such foreign taxes is expected to be insignificant.
The
70
<PAGE>
Funds may from year to year make the election permitted under
section 853 of the Code to pass through such taxes to
shareholders, who will each decide whether to deduct such taxes
or claim a foreign tax credit. If such election is not made,
foreign taxes paid or accrued will represent an expense to each
Fund which will reduce its investment company taxable income.
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<PAGE>
Principal shareholders
As of January 20, 1999, the officers and Trustees of the Funds as
a group owned less than 1% of the outstanding shares of each of
the Funds. In addition, as of January 20, 1999, Charles Schwab &
Co., Inc. ("Schwab"), 101 Montgomery Street, San Francisco, CA
94104-4122, and National Financial Services Co. ("National
Financial"), P.O. Box 3908, Church Street Station, New York, NY
10008-3908, owned of record 5% or more of the outstanding shares
of the Funds, as shown below:
<TABLE>
<CAPTION>
Fund Name Held by Schwab
- ----------------------------------------------------------------------------
<S> <C>
Janus Fund.................................................. 14.16%
Janus Enterprise Fund....................................... 15.74%
Janus Mercury Fund.......................................... 15.76%
Janus Olympus Fund.......................................... 27.33%
Janus Special Situations Fund............................... 15.85%
Janus Twenty Fund........................................... 13.57%
Janus Global Life Sciences Fund............................. 29.79%
Janus Worldwide Fund........................................ 24.67%
Janus Balanced Fund......................................... 22.68%
Janus Equity Income Fund.................................... 30.55%
Janus Growth and Income Fund................................ 17.25%
Janus Flexible Income Fund.................................. 36.12%
Janus High-Yield Fund....................................... 33.61%
Janus Federal Tax-Exempt Fund............................... 13.60%
Janus Short-Term Bond Fund.................................. 13.72%
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fund Name Held by National Financial
- -----------------------------------------------------------------------------------
<S> <C>
Janus Mercury Fund..................................... 5.07%
Janus Olympus Fund..................................... 10.19%
Janus Special Situations Fund.......................... 7.17%
Janus Twenty Fund...................................... 9.45%
Janus Global Life Sciences Fund........................ 6.30%
Janus Worldwide Fund................................... 10.26%
Janus Balanced Fund.................................... 9.03%
Janus Equity Income Fund............................... 11.08%
Janus Growth and Income Fund........................... 6.99%
Janus Flexible Income Fund............................. 8.80%
Janus High-Yield Fund.................................. 13.39%
- -----------------------------------------------------------------------------------
</TABLE>
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<PAGE>
According to information provided by Schwab and National
Financial, this ownership is by nominee only and does not
represent beneficial ownership of such shares, because they have
no investment discretion or voting power with respect to such
shares.
In addition, as of January 20, 1999, more than 5% of the
outstanding shares of the following Fund was owned of record by
the shareholder listed below:
<TABLE>
<CAPTION>
Shareholder and
Fund Address of Record Percentage Ownership
- ----------------------------------------------------------------------------------
<S> <C> <C>
Janus Worldwide Fund FIIOC 5.87%
100 Magellan Way
Covington, KY 41015-1987
- ----------------------------------------------------------------------------------
</TABLE>
To the knowledge of the Funds, no other shareholder owned more
than 5% of the outstanding shares of any Fund as of January 20,
1999.
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<PAGE>
Miscellaneous information
Each Fund is a series of the Trust, a Massachusetts business
trust that was created on February 11, 1986. The Trust is an
open-end management investment company registered under the 1940
Act. As of the date of this SAI, the Trust offers 21 separate
series, three of which currently offer three classes of shares.
On June 16, 1986, the Trust assumed all the assets and
liabilities of its predecessor corporation, Janus Fund, Inc.,
which was incorporated under the laws of Maryland on September
18, 1968. All references in this SAI to Janus Fund and all
financial and other information about Janus Fund prior to June
16, 1986, are to the former Janus Fund, Inc.; all references
after June 16, 1986 are to the Janus Fund series of the Trust.
On August 7, 1992, in a tax-free reorganization, the Trust
assumed all the assets and liabilities of (i) the Janus Flexible
Income Fund series of Janus Income Series, a separate
Massachusetts business trust created on May 28, 1986; and (ii)
Janus Twenty Fund, Inc., a Maryland corporation originally
incorporated as Janus Value Fund in 1984. Shareholders received
shares of the series of the Trust equal both in number and net
asset value to their shares of the respective predecessor entity.
In connection with the reorganization, Janus Flexible Income Fund
changed its fiscal year end from December 31 to October 31. All
references in this SAI to Janus Flexible Income Fund and Janus
Twenty Fund, and all financial and other information about such
Funds prior to August 7, 1992, are to the respective predecessor
entities; all references after August 7, 1992, are to the
respective series of the Trust.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Funds, the Funds must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under
certain circumstances, be held liable for the obligations of
their Fund. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Funds and
requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed by
the Funds or the Trustees.
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<PAGE>
The Declaration of Trust also provides for indemnification from
the assets of the Funds for all losses and expenses of any Fund
shareholder held liable for the obligations of their Fund. Thus,
the risk of a shareholder incurring a financial loss on account
of its liability as a shareholder of one of the Funds is limited
to circumstances in which their Fund would be unable to meet its
obligations. The possibility that these circumstances would occur
is remote. The Trustees intend to conduct the operations of the
Funds to avoid, to the extent possible, liability of shareholders
for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of each Fund are fully paid and
nonassessable when issued. All shares of a Fund participate
equally in dividends and other distributions by such Fund, and in
residual assets of that Fund in the event of liquidation. Shares
of each Fund have no preemptive, conversion or subscription
rights. Shares of each Fund may be transferred by endorsement or
stock power as is customary, but a Fund is not bound to recognize
any transfer until it is recorded on its books.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by each Fund only if a matter affects or requires the vote of
only that Fund or that Fund's interest in the matter differs from
the interest of other portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.
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<PAGE>
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders
held on July 10, 1992, with the exception of Mr. Craig and Mr.
Rothe who were appointed by the Trustees as of June 30, 1995 and
January 1, 1997, respectively. Under the Declaration of Trust,
each Trustee will continue in office until the termination of the
Trust or his earlier death, retirement, resignation, bankruptcy,
incapacity or removal. Vacancies will be filled by a majority of
the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held,
unless otherwise required by the Declaration of Trust or the 1940
Act. Subject to the foregoing, shareholders have the power to
vote to elect or remove Trustees, to terminate or reorganize
their Fund, to amend the Declaration of Trust, to bring certain
derivative actions and on any other matters on which a
shareholder vote is required by the 1940 Act, the Declaration of
Trust, the Trust's Bylaws or the Trustees.
As mentioned above in "Shareholder Meetings," each share of each
series of the Trust has one vote (and fractional votes for
fractional shares). Shares of all series of the Trust have
noncumulative voting rights, which means that the holders of more
than 50% of the shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they
choose to do so and, in such event, the holders of the remaining
shares will not be able to elect any Trustees.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve a Fund's objective by
investing all of that Fund's assets in another investment company
having the same investment objective and substantially the same
investment policies and restrictions as those applicable to that
Fund. Unless otherwise required by law, this policy may be
implemented by the Trustees without shareholder approval.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Funds,
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<PAGE>
audit the Funds' annual financial statements and prepare their
tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
77
<PAGE>
Performance information
Quotations of average annual total return for a Fund will be
expressed in terms of the average annual compounded rate of
return of a hypothetical investment in such Fund over periods of
1, 5, and 10 years (up to the life of the Fund). These are the
annual total rates of return that would equate the initial amount
invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula: P(1 + T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years and ERV =
the ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period). All total return figures reflect
the deduction of a proportional share of Fund expenses on an
annual basis, and assume that all dividends and distributions are
reinvested when paid.
The average annual total return of each Fund, computed as of
October 31, 1998, is shown in the table below:
<TABLE>
<CAPTION>
Average Annual Total Return
Date Number -----------------------------------
Available of Months One Five Ten Life of
Fund Name for Sale in Lifetime Year Years Years Fund
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund 2/5/70 245 15.12% 16.08% 17.93% 16.85%
Janus Enterprise Fund 9/1/92 74 11.79% 13.34% N/A 17.68%
Janus Mercury Fund 5/3/93 66 24.75% 21.20% N/A 22.54%
Janus Olympus Fund 12/29/95 34 23.10% N/A N/A 25.55%
Janus Special Situations
Fund 12/31/96 22 8.49% N/A N/A 26.00%
Janus Twenty Fund 4/30/85 162 40.58% 23.22% 23.41% 19.20%
Janus Global Life Sciences
Fund 12/31/98 * N/A N/A N/A N/A
Janus Global Technology
Fund 12/31/98 * N/A N/A N/A N/A
Janus Worldwide Fund 5/15/91 89.5 11.40% 17.60% N/A 19.04%
Janus Balanced Fund 9/1/92 74 15.48% 15.35% N/A 16.26%
Janus Equity Income Fund 6/28/96 28 19.21% N/A N/A 27.00%
Janus Growth and Income
Fund 5/15/91 89.5 16.73% 20.01% N/A 19.94%
Janus Flexible Income Fund 7/7/87 136 8.14% 8.40% 9.22% 9.36%
Janus High-Yield Fund 12/29/95 34 (1.45%) N/A N/A 12.01%
Janus Federal Tax-Exempt
Fund 5/3/93 66 7.65% 5.25% N/A 5.94%
Janus Short-Term Bond Fund 9/1/92 74 6.49% 5.47% N/A 5.40%
</TABLE>
* The Fund had not commenced operations as of October 31, 1998.
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<PAGE>
Quotations of a Fund's yield are based on the investment income
per share earned during a particular 30-day period (including
dividends, if any, and interest), less expenses accrued during
the period ("net investment income"), and are computed by
dividing net investment income by the net asset value per share
on the last day of the period, according to the following
formula:
YIELD = 2[(a - b + 1)(6) - 1]
-----
cd
where a = dividend and interest income
b = expenses accrued for the period (net of reimbursements)
c = average daily number of shares outstanding during the
period that were entitled to receive dividends
d = maximum net asset value per share on the last day of
the period
The tax-equivalent yield used for Janus Federal Tax-Exempt Fund
is the rate that an investor would have to earn from a fully
taxable investment after taxes to equal the Fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a Fund's
yield by the result of one minus a stated federal or combined
federal and state tax rate. If only a portion of a Funds' yield
is tax-exempt, only that portion is adjusted in the calculation.
Janus Federal Tax-Exempt Fund may invest a portion of its assets
in obligations that are subject to federal income tax. When the
Fund invests in these obligations, its tax-equivalent yield will
be lower.
The yield for the 30-day period ending October 31, 1998, for the
Fixed-Income Funds is shown below:
<TABLE>
<S> <C>
Janus Flexible Income Fund 6.05%
Janus High-Yield Fund 9.50%
Janus Federal Tax-Exempt Fund 4.89%
Janus Short-Term Bond Fund 4.78%
</TABLE>
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<PAGE>
From time to time in advertisements or sales material, the Funds
may discuss their performance ratings or other information as
published by recognized mutual fund statistical rating services,
including, but not limited to, Lipper Analytical Services, Inc.
("Lipper"), Ibbotson Associates, Micropal or Morningstar, Inc.
("Morningstar") or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Mutual Funds Magazine,
Kiplinger's, or Smart Money. The Funds may also compare their
performance to that of other selected mutual funds (for example,
peer groups created by Lipper or Morningstar), mutual fund
averages or recognized stock market indicators, including, but
not limited to, the Standard & Poor's 500 Composite Stock Price
Index, the Standard & Poor's 400 Midcap Index, the Dow Jones
Industrial Average, the Lehman Brothers Government/Corporate Bond
Index, the Lehman Brothers Government/ Corporate 1-3 Year Bond
Index, the Lehman Brothers Long Government/Corporate Bond Index,
the Lehman Brothers Intermediate Government Bond Index, the
Lehman Brothers Municipal Bond Index, the Russell 2000 Index and
the NASDAQ composite. In addition, the Funds may compare their
total return or yield to the yield on U.S. Treasury obligations
and to the percentage change in the Consumer Price Index. Janus
Worldwide Fund may also compare its performance to the record of
global market indicators, such as the Morgan Stanley
International World Index. Such performance ratings or
comparisons may be made with funds that may have different
investment restrictions, objectives, policies or techniques than
the Funds and such other funds or market indicators may be
comprised of securities that differ significantly from the Funds'
investments.
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<PAGE>
Financial statements
The following audited financial statements for the period ended
October 31, 1998 are hereby incorporated into this SAI by
reference to the Funds' Annual Reports dated October 31, 1998
(with the exception of Janus Global Life Sciences Fund and Janus
Global Technology Fund which did not commence operations until
December 31, 1998).
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS:
Schedules of Investments as of October 31, 1998
Statements of Operations for the period ended October 31, 1998
Statements of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Reports of Independent Accountants
The portions of such Annual Reports that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
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<PAGE>
Appendix A
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of
the major credit ratings agencies. Credit ratings evaluate only
the safety of principal and interest payments, not the market
value risk of lower quality securities. Credit rating agencies
may fail to change credit ratings to reflect subsequent events on
a timely basis. Although Janus Capital considers security ratings
when making investment decisions, it also performs its own
investment analysis and does not rely solely on the ratings
assigned by credit agencies.
STANDARD & POOR'S
RATINGS SERVICES
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
AAA......................... Highest rating; extremely strong
capacity to pay principal and
interest.
AA.......................... High quality; very strong capacity
to pay principal and interest.
A........................... Strong capacity to pay principal
and interest; somewhat more
susceptible to the adverse effects
of changing circumstances and
economic conditions.
BBB......................... Adequate capacity to pay principal
and interest; normally exhibit
adequate protection parameters, but
adverse economic conditions or
changing circumstances more likely
to lead to a weakened capacity to
pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, CCC, CC, C........... Predominantly speculative with
respect to the issuer's capacity to
meet required interest and
principal payments. BB -- lowest
degree of speculation; C -- the
highest degree of speculation.
Quality and protective
characteristics outweighed by large
uncertainties or major risk
exposure to adverse conditions.
D........................... In default.
</TABLE>
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<PAGE>
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
Aaa......................... Highest quality, smallest degree of
investment risk.
Aa.......................... High quality; together with Aaa
bonds, they compose the high-grade
bond group.
A........................... Upper-medium grade obligations;
many favorable investment
attributes.
Baa......................... Medium-grade obligations; neither
highly protected nor poorly
secured. Interest and principal
appear adequate for the present but
certain protective elements may be
lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba.......................... More uncertain, with speculative
elements. Protection of interest
and principal payments not well
safeguarded during good and bad
times.
B........................... Lack characteristics of desirable
investment; potentially low
assurance of timely interest and
principal payments or maintenance
of other contract terms over time.
Caa......................... Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
Ca.......................... Speculative in a high degree; could
be in default or have other marked
shortcomings.
C........................... Lowest-rated; extremely poor
prospects of ever attaining
investment standing.
</TABLE>
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<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless a portfolio manager determines that such
securities are the equivalent of investment grade securities.
Securities that have received different ratings from more than
one agency are considered investment grade if at least one agency
has rated the security investment grade.
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<PAGE> 88
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3170
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Investor Shares
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
Statement of Additional Information
February 17, 1999
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectus for the Investor Shares (the "Shares") of
Janus Money Market Fund, Janus Government Money Market
Fund and Janus Tax-Exempt Money Market Fund. The Funds
are each a separate series of Janus Investment Fund, a
Massachusetts business trust.
This SAI is not a Prospectus and should be read in
conjunction with the Prospectus dated February 17, 1999,
which is incorporated by reference into this SAI and may
be obtained from the Trust at the above phone number or
address. This SAI contains additional and more detailed
information about the Funds' operations and activities
than the Prospectus. The Annual Report, which contains
important financial information about the Funds, is
incorporated by reference into this SAI and is also
available, without charge, at the above phone number or
address.
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[JANUS LOGO]
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Table of contents
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Investment Restrictions
and Investment Strategies....................... 2
Performance Data................................ 18
Investment Adviser and Administrator............ 22
Custodian, Transfer Agent
and Certain Affiliations........................ 26
Portfolio Transactions and Brokerage............ 27
Trustees and Officers........................... 30
Purchase of Shares.............................. 35
Redemption of Shares............................ 36
Shareholder Accounts............................ 37
Tax-Deferred Accounts........................... 38
Dividends and Tax Status........................ 40
Principal Shareholders.......................... 42
Miscellaneous Information....................... 43
Financial Statements............................ 46
Appendix A - Description of Securities Ratings.. 47
Appendix B - Description of Municipal
Securities...................................... 51
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Investment restrictions and
investment strategies
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions
that cannot be changed without shareholder approval. Shareholder
approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund
or particular class of Shares if a matter affects just that Fund
or that class of Shares), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50%
of the outstanding voting securities of the Trust (or a
particular Fund or class of Shares) are present or represented by
proxy.
As used in the restrictions set forth below and as used elsewhere
in this SAI, the term "U.S. Government Securities" shall have the
meaning set forth in the 1940 Act. The 1940 Act defines U.S.
Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S.
Government Securities may also include repurchase agreements
collateralized and municipal securities escrowed with or refunded
with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a
security other than a U.S. Government Security, if, as a result,
more than 5% of the Fund's total assets would be invested in the
securities of a single issuer or the Fund would own more than 10%
of the outstanding voting securities of any single issuer. (As
noted in the Prospectus, the Funds are also currently subject to
the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the
value of a Fund's total assets would be invested in the
securities of issuers conducting their principal business
activities in the same industry; provided that: (i) there is no
limit on investments in U.S. Government Securities or in
obligations of domestic commercial banks (including U.S. branches
of foreign banks subject to regulations under U.S. laws
applicable to domestic banks and, to the extent that its parent
is unconditionally liable
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for the obligation, foreign branches of U.S. banks); (ii) this
limitation shall not apply to a Fund's investments in municipal
securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies
are classified according to the end users of their services (for
example, automobile finance, bank finance and diversified finance
are each considered to be a separate industry); and (v) utility
companies are classified according to their services (for
example, gas, gas transmission, electric, and telephone are each
considered to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by
others, except to the extent that a Fund may be deemed an
underwriter in connection with the disposition of portfolio
securities of such Fund.
(4) A Fund may not lend any security or make any other loan if,
as a result, more than 25% of a Fund's total assets would be lent
to other parties (but this limitation does not apply to purchases
of commercial paper, debt securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest
therein, except that the Fund may invest in debt obligations
secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes
(not for leveraging) in an amount not exceeding 25% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings). If borrowings exceed 25% of
the value of a Fund's total assets by reason of a decline in net
assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation.
Reverse repurchase agreements or the segregation of assets in
connection with such agreements shall not be considered borrowing
for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its
assets
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in the securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies and restrictions as that Fund.
Investment restriction (1) is intended to reflect the
requirements under Section 5(b)(1) of the 1940 Act for a
diversified fund. Rule 2a-7 provides that money market funds that
comply with the diversification limits of Rule 2a-7 are deemed to
comply with the diversification limits of Section 5(b)(1). Thus,
the Funds interpret restriction (1) in accordance with Rule 2a-7.
Accordingly, if securities are subject to a guarantee provided by
a non-controlled person, the Rule 2a-7 diversification tests
apply to the guarantor, and the diversification test in
restriction (1) does not apply to the issuer.
Each Fund has adopted the following nonfundamental investment
restrictions that may be changed by the Trustees without
shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase
agreements with respect to any securities if, as a result, more
than 10% of the Fund's net assets would be invested in repurchase
agreements not entitling the holder to payment of principal
within seven days and in other securities that are not readily
marketable ("illiquid securities"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists
for certain securities such as securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short
sales of securities, except for short sales against the box and
the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
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(3) A Fund may not pledge, mortgage, hypothecate or encumber any
of its assets except to secure permitted borrowings or in
connection with permitted short sales.
(4) A Fund may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC"), each of the Funds may
borrow money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. A Fund will borrow money through the program only
when the costs are equal to or lower than the cost of bank loans.
Interfund loans and borrowings normally extend overnight, but can
have a maximum duration of seven days. A Fund will lend through
the program only when the returns are higher than those available
from other short-term instruments (such as repurchase
agreements). A Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending Fund could result in a lost
investment opportunity or additional borrowing costs.
For the purposes of the Funds' policies on investing in
particular industries, the Funds will rely primarily on industry
or industry group classifications published by Bloomberg L.P. To
the extent that Bloomberg L.P. industry classifications are so
broad that the primary economic characteristics in a single
industry are materially different, the Funds may further classify
issuers in accordance with industry classifications as published
by the SEC.
INVESTMENT STRATEGIES
Each of the Funds may invest only in "eligible securities" as
defined in Rule 2a-7 adopted under the 1940 Act. Generally, an
eligible security is a security that (i) is denominated in U.S.
dollars and has a remaining maturity of 397 days or less (as
calculated pursuant to Rule 2a-7); (ii) is rated, or is issued by
an
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issuer with short-term debt outstanding that is rated, in one of
the two highest rating categories by any two nationally
recognized statistical rating organizations ("NRSROs") or, if
only one NRSRO has issued a rating, by that NRSRO (the "Requisite
NRSROs") or is unrated and of comparable quality to a rated
security, as determined by Janus Capital; and (iii) has been
determined by Janus Capital to present minimal credit risks
pursuant to procedures approved by the Trustees. In addition, the
Funds will maintain a dollar-weighted average portfolio maturity
of 90 days or less. A description of the ratings of some NRSROs
appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of
its total assets in the securities of any one issuer other than
U.S. Government Securities, provided that in certain cases a Fund
may invest more than 5% of its assets in a single issuer for a
period of up to three business days. Investment in demand
features, guarantees and other types of instruments or features
are subject to the diversification limits under Rule 2a-7.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money
Market Fund) will invest at least 95% of its total assets in
"first-tier" securities. First-tier securities are eligible
securities that are rated, or are issued by an issuer with
short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable
quality to a rated security. In addition, a Fund may invest in
"second-tier" securities which are eligible securities that are
not first-tier securities. However, a Fund (except for Janus
Tax-Exempt Money Market Fund, in certain cases) may not invest in
a second-tier security if immediately after the acquisition
thereof the Fund would have invested more than (i) the greater of
one percent of its total assets or one million dollars in
second-tier securities issued by that issuer, or (ii) five
percent of its total assets in second-tier securities.
The following discussion of types of securities in which the
Funds may invest supplements and should be read in conjunction
with the Prospectus.
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Participation Interests
Each Fund may purchase participation interests in loans or
securities in which the Funds may invest directly. Participation
interests are generally sponsored or issued by banks or other
financial institutions. A participation interest gives a Fund an
undivided interest in the underlying loans or securities in the
proportion that the Fund's interest bears to the total principal
amount of the underlying loans or securities. Participation
interests, which may have fixed, floating or variable rates, may
carry a demand feature backed by a letter of credit or guarantee
of a bank or institution permitting the holder to tender them
back to the bank or other institution. For certain participation
interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's
participation interest. The Funds intend to exercise any demand
rights they may have upon default under the terms of the loan or
security, to provide liquidity or to maintain or improve the
quality of the Funds' investment portfolio. A Fund will only
purchase participation interests that Janus Capital determines
present minimal credit risks.
Variable and Floating Rate Notes
Janus Money Market Fund also may purchase variable and floating
rate demand notes of corporations and other entities, which are
unsecured obligations redeemable upon not more than 30 days'
notice. These obligations include master demand notes that permit
investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangements with the issuer of the
instrument. The issuer of these obligations often has the right,
after a given period, to prepay the outstanding principal amount
of the obligations upon a specified number of days' notice. These
obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent
a demand note does not have a seven day or shorter demand feature
and there is no readily available market for the obligation, it
is treated as an illiquid investment.
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Securities with ultimate maturities of greater than 397 days may
be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which
comply with certain requirements and certain variable rate U.S.
Government Securities may be purchased. The rate of interest on
securities purchased by a Fund may be tied to short-term Treasury
or other government securities or indices on securities that are
permissible investments of the Funds, as well as other money
market rates of interest. The Funds will not purchase securities
whose values are tied to interest rates or indices that are not
appropriate for the duration and volatility standards of a money
market fund.
Mortgage- and Asset-Backed Securities
The Funds may invest in mortgage-backed securities, which
represent an interest in a pool of mortgages made by lenders such
as commercial banks, savings and loan institutions, mortgage
bankers, mortgage brokers and savings banks. Mortgage-backed
securities may be issued by governmental or government-related
entities or by non-governmental entities such as banks, savings
and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from
other forms of debt securities which normally provide for
periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates. In contrast,
mortgage-backed securities provide periodic payments which
consist of interest and, in most cases, principal. In effect,
these payments are a "pass-through" of the periodic payments and
optional prepayments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor
of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting
from the sale of the underlying residential property, refinancing
or foreclosure, net of fees or costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary
widely, it is not possible to predict accurately the average life
of a
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particular security. Although mortgage-backed securities are
issued with stated maturities of up to forty years, unscheduled
or early payments of principal and interest on the underlying
mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for
average life. The volume of prepayments of principal on a pool of
mortgages underlying a particular security will influence the
yield of that security, and the principal returned to a Fund may
be reinvested in instruments whose yield may be higher or lower
than that which might have been obtained had the prepayments not
occurred. When interest rates are declining, prepayments usually
increase, with the result that reinvestment of principal
prepayments will be at a lower rate than the rate applicable to
the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are
issued by agencies or instrumentalities of the U.S. government.
The Government National Mortgage Association ("GNMA") is the
principal federal government guarantor of mortgage-backed
securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA
Certificates are debt securities which represent an interest in
one mortgage or a pool of mortgages which are insured by the
Federal Housing Administration or the Farmers Home Administration
or are guaranteed by the Veterans Administration. The Funds may
also invest in pools of conventional mortgages which are issued
or guaranteed by agencies of the U.S. government. GNMA
pass-through securities are considered to be riskless with
respect to default in that (i) the underlying mortgage loan
portfolio is comprised entirely of government-backed loans and
(ii) the timely payment of both principal and interest on the
securities is guaranteed by the full faith and credit of the U.S.
government, regardless of whether or not payments have been made
on the underlying mortgages. GNMA pass-through securities are,
however, subject to the same market risk as comparable debt
securities. Therefore, the market value of a
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Fund's GNMA securities can be expected to fluctuate in response
to changes in prevailing interest rate levels.
Residential mortgage loans are pooled also by the Federal Home
Loan Mortgage Corporation ("FHLMC"). FHLMC is a privately
managed, publicly chartered agency created by Congress in 1970
for the purpose of increasing the availability of mortgage credit
for residential housing. FHLMC issues participation certificates
("PCs") which represent interests in mortgages from FHLMC's
national portfolio. The mortgage loans in FHLMC's portfolio are
not U.S. government backed; rather, the loans are either
uninsured with loan-to-value ratios of 80% or less, or privately
insured if the loan-to-value ratio exceeds 80%. FHLMC guarantees
the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee
any aspect of FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private
shareholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks,
commercial banks, credit unions and mortgage bankers. FNMA
guarantees the timely payment of principal and interest on the
pass-through securities issued by FNMA; the U.S. government does
not guarantee any aspect of the FNMA pass-through securities.
The Funds may also invest in privately-issued mortgage-backed
securities to the extent permitted by their investment
restrictions. Mortgage-backed securities offered by private
issuers include pass-through securities comprised of pools of
conventional residential mortgage loans; mortgage-backed bonds
which are considered to be debt obligations of the institution
issuing the bonds and which are collateralized by mortgage loans;
and collateralized mortgage obligations ("CMOs") which are
collateralized by mortgage-backed securities issued by GNMA,
FHLMC or FNMA or by pools of conventional mortgages.
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Asset-backed securities represent direct or indirect
participations in, or are secured by and payable from, assets
other than mortgage-backed assets such as motor vehicle
installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables
from revolving credit agreements (credit cards). Asset-backed
securities have yield characteristics similar to those of
mortgage-backed securities and, accordingly, are subject to many
of the same risks.
Reverse Repurchase Agreements
Reverse repurchase agreements are transactions in which a Fund
sells a security and simultaneously commits to repurchase that
security from the buyer at an agreed upon price on an agreed upon
future date. The resale price in a reverse repurchase agreement
reflects a market rate of interest that is not related to the
coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest
payments are calculated daily, often based upon the prevailing
overnight repurchase rate. The Funds will use the proceeds of
reverse repurchase agreements only to satisfy unusually heavy
redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to
recover for the term of the reverse repurchase agreement all or
most of the cash invested in the portfolio securities sold and to
keep the interest income associated with those portfolio
securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction
is less than the cost of obtaining the cash otherwise. In
addition, interest costs on the money received in a reverse
repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
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When-Issued and Delayed Delivery Securities
Each Fund may purchase securities on a when-issued or delayed
delivery basis. A Fund will enter into such transactions only
when it has the intention of actually acquiring the securities.
To facilitate such acquisitions, the Funds' custodian will
segregate cash or high quality liquid assets in an amount at
least equal to such commitments. On delivery dates for such
transactions, the Fund will meet its obligations from maturities,
sales of the segregated securities or from other available
sources of cash. If a Fund chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. At the time a
Fund makes the commitment to purchase securities on a when-issued
or delayed delivery basis, it will record the transaction as a
purchase and thereafter reflect the value of such securities in
determining its net asset value.
Investment Company Securities
From time to time, the Funds may invest in securities of other
investment companies. The Funds are subject to the provisions of
Section 12(d)(1) of the 1940 Act. Funds managed by Janus Capital
("Janus Funds") may invest in securities of the Funds and any
other money market funds managed by Janus Capital in excess of
the limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus Funds.
Debt Obligations
Janus Money Market Fund may invest in debt obligations of
domestic issuers. In general, sales of these securities may not
be made absent registration under the Securities Act of 1933 or
the availability of an appropriate exemption. Pursuant to Section
4(2) of the 1933 Act or Rule 144A adopted under the 1933 Act,
however, some of these securities are eligible for resale to
institutional investors, and accordingly, Janus Capital may
determine that a liquid market exists for such a security
pursuant to guidelines adopted by the Trustees.
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Obligations of Financial Institutions
Janus Money Market Fund may invest in obligations of financial
institutions. Examples of obligations in which the Fund may
invest include negotiable certificates of deposit, bankers'
acceptances, time deposits and other obligations of U.S. banks
(including savings and loan associations) having total assets in
excess of one billion dollars and U.S. branches of foreign banks
having total assets in excess of ten billion dollars. The Fund
may also invest in Eurodollar and Yankee bank obligations as
discussed below and other U.S. dollar-denominated obligations of
foreign banks having total assets in excess of ten billion
dollars that Janus Capital believes are of an investment quality
comparable to obligations of U.S. banks in which the Fund may
invest.
Certificates of deposit represent an institution's obligation to
repay funds deposited with it that earn a specified interest rate
over a given period. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a
customer and are usually backed by goods in international trade.
Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given
period. Fixed time deposits, which are payable at a stated
maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Fund but may be subject to early
withdrawal penalties and that could reduce the Fund's yield.
Unless there is a readily available market for them, time
deposits that are subject to early withdrawal penalties and that
mature in more than seven days will be treated as illiquid
securities.
Eurodollar bank obligations are dollar-denominated certificates
of deposit or time deposits issued outside the U.S. capital
markets by foreign branches of U.S. banks and by foreign banks.
Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-
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denominated funds from flowing across its borders. Other risks
include: adverse political and economic developments in a foreign
country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign
withholding taxes; and exploration or nationalization of foreign
issuers.
U.S. Government Securities
Janus Government Money Market Fund and to a lesser extent, Janus
Money Market Fund, invest in U.S. Government Securities. U.S.
Government Securities shall have the meaning set forth in the
1940 Act. The 1940 Act defines U.S. Government Securities to
include securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities. U.S. Government Securities
may also include repurchase agreements collateralized by and
municipal securities escrowed with or refunded with U.S.
government securities. U.S. Government Securities in which the
Fund may invest include U.S. Treasury securities and obligations
issued or guaranteed by U.S. government agencies and
instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small
Business Administration or issued by the Government National
Mortgage Association. In addition, U.S. Government Securities in
which the Fund may invest include securities supported primarily
or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and the Tennessee Valley
Authority. There is no guarantee that the U.S. government will
support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may
involve more risk than securities backed by the full faith and
credit of the U.S. government.
Municipal Securities
The municipal securities in which Janus Tax-Exempt Money Market
Fund may invest include municipal notes and short-term municipal
bonds. Municipal notes are generally used to provide for the
issuer's short-term capital needs and generally have
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maturities of 397 days or less. Examples include tax anticipation
and revenue anticipation notes, which generally are issued in
anticipation of various seasonal revenues, bond anticipation
notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation
bonds," which are secured by the issuer's pledge of its faith,
credit and taxing power for payment of principal and interest;
"revenue bonds," which are generally paid from the revenues of a
particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf
of public authorities to provide funding for various privately
operated industrial and commercial facilities. The Fund may also
invest in high quality participation interests in municipal
securities. A more detailed description of various types of
municipal securities is contained in Appendix B.
When the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from
those of the government creating the issuing entity and a
security is backed only by the assets and revenues of the issuing
entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development
bond backed only by the assets and revenues of the
non-governmental issuer, the non-governmental issuer will be
deemed to be the sole issuer of the bond.
Municipal Leases
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund
may invest in municipal leases. Municipal leases are municipal
securities which may take the form of a lease or an installment
purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire
a wide variety of equipment and facilities. Municipal leases
frequently have special risks not normally associated with
general obligation or revenue bonds. Leases and installment
purchase or conditional sales contracts (which normally provide
for title to the leased asset to pass eventually to the
government issuer) have
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evolved as a means for governmental issuers to acquire property
and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance
limitations of many state constitutions and statutes are deemed
to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the
governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on a yearly or other
periodic basis. The Funds will only purchase municipal leases
subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by an unconditional,
irrevocable letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the Prospectus under
"Taxable Investments".
In evaluating municipal lease obligations, Janus Capital will
consider such factors as it deems appropriate, including: (a)
whether the lease can be canceled; (b) the ability of the lease
obligee to direct the sale of the underlying assets; (c) the
general creditworthiness of the lease obligor; (d) the likelihood
that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer
considered essential by the municipality; (e) the legal recourse
of the lease obligee in the event of such a failure to
appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations
which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the
lease obligation. If a lease is backed by an unconditional letter
of credit or other unconditional credit enhancement, then Janus
Capital may determine that a lease is an eligible security solely
on the basis of its evaluation of the credit enhancement.
Municipal leases, like other municipal debt obligations, are
subject to the risk of non-payment. The ability of issuers of
municipal leases to make timely lease payments may be adversely
impacted in general economic downturns and as relative
governmental cost burdens are allocated and reallocated among
federal, state and
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local governmental units. Such non-payment would result in a
reduction of income to the Fund, and could result in a reduction
in the value of the municipal lease experiencing non-payment and
a potential decrease in the net asset value of the Fund.
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Performance data
A Fund may provide current annualized and effective annualized
yield quotations based on its daily dividends. These quotations
may from time to time be used in advertisements, shareholder
reports or other communications to shareholders. All performance
information supplied by the Funds in advertising is historical
and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares'
performance information with data published by independent
evaluators such as Morningstar, Inc., Lipper Analytical Services,
Inc., CDC/Wiesenberger, IBC/Donoghue's Money Fund Report or other
companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare
their Shares' performance information with the performance of
recognized stock, bond and other indices, including but not
limited to the Municipal Bond Buyers Indices, the Salomon
Brothers Bond Index, the Lehman Bond Index, the Standard & Poor's
500 Composite Stock Price Index, the Dow Jones Industrial
Average, U.S. Treasury bonds, bills or notes and changes in the
Consumer Price Index as published by the U.S. Department of
Commerce. The Funds may refer to general market performance over
past time periods such as those published by Ibbotson Associates
(for instance, its "Stocks, Bonds, Bills and Inflation
Yearbook"). The Funds may also refer in such materials to mutual
fund performance rankings and other data published by Fund
Tracking Companies. Performance advertising may also refer to
discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers
and financial magazines. The Funds may also compare the Shares'
yield to those of certain U.S. Treasury obligations or other
money market instruments.
Any current yield quotation of the Shares which is used in such a
manner as to be subject to the provisions of Rule 482(d) under
the Securities Act of 1933, as amended, shall consist of an
annualized historical yield, carried at least to the nearest
hundredth of one percent, based on a specific seven calendar day
period. The Fund's current yield shall be calculated by (a)
determining the net change during a seven calendar day period
18
<PAGE>
in the value of a hypothetical account having a balance of one
share at the beginning of the period, (b) dividing the net change
by the value of the account at the beginning of the period to
obtain a base period return, and (c) multiplying the quotient by
365/7 (i.e., annualizing). For this purpose, the net change in
account value would reflect the value of additional Shares
purchased with dividends declared on the original Share and
dividends declared on both the original Share and any such
additional Shares, but would not reflect any realized gains or
losses from the sale of securities or any unrealized appreciation
or depreciation on portfolio securities. In addition, the Shares
may advertise effective yield quotations. Effective yield
quotations are calculated by adding 1 to the base period return,
raising the sum to a power equal to 365/7, and subtracting 1 from
the result (i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the
rate an investor would have to earn from a fully taxable
investment in order to equal such Shares' yield after taxes. Tax
equivalent yields are calculated by dividing Janus Tax-Exempt
Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the
Shares' yield is tax-exempt, only that portion is adjusted in the
calculation.
The Shares' current yield and effective yield for the seven-day
period ended October 31, 1998 is shown below:
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Investor Shares 4.89% 5.01%
Janus Government Money Market Fund - Investor Shares 4.73% 4.84%
Janus Tax-Exempt Money Market Fund - Investor Shares* 3.08% 3.13%
</TABLE>
*Janus Tax-Exempt Money Market Fund Investor Shares' tax equivalent yield for
the seven day period ended October 31, 1998 was 4.28%.
19
<PAGE>
Although published yield information is useful to investors in
reviewing a Fund's performance, investors should be aware that
the Fund's yield fluctuates from day to day and that the Fund's
yield for any given period is not an indication or representation
by the Fund of future yields or rates of return on the Shares.
Also, processing organizations or other institutions may charge
their customers direct fees in connection with an investment in a
Fund, which will have the effect of reducing the Fund's net yield
to those shareholders. The yield on a class of Shares is not
fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly, yield information may not necessarily be
used to compare Shares with investment alternatives which, like
money market instruments or bank accounts, may provide a fixed
rate of interest. In addition, because investments in the Funds
are not insured or guaranteed, yield on the Shares may not
necessarily be used to compare the Shares with investment
alternatives which are insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the SEC, the Trustees have established
procedures to stabilize each Fund's net asset value at $1.00 per
Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating
interest rates, based on available market rates, from the Fund's
$1.00 amortized cost price per Share. Should that deviation
exceed 1/2 of 1%, the Trustees will consider whether any action
should be initiated to eliminate or reduce material dilution or
other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior
to maturity, reducing or withholding dividends and utilizing a
net asset value per Share as determined by using available market
quotations. Each Fund i) will maintain a dollar-weighted average
portfolio maturity of 90 days or less; ii) will not purchase any
instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater
than 397 days; iii) will limit portfolio investments, including
repurchase agreements, to those U.S. dollar-denominated
instruments that Janus Capital has determined present minimal
credit
20
<PAGE>
risks pursuant to procedures established by the Trustees; and iv)
will comply with certain reporting and recordkeeping procedures.
The Trust has also established procedures to ensure that
portfolio securities meet the Funds' high quality criteria.
21
<PAGE>
Investment adviser and
administrator
As stated in the Prospectus, each Fund has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver,
Colorado 80206-4928. Each Advisory Agreement provides that Janus
Capital will furnish continuous advice and recommendations
concerning the Funds' investments. The Funds have each agreed to
compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the
average daily net assets of each Fund. However, Janus Capital has
agreed to waive .10% of the value of each Fund's average daily
net assets of the advisory fee. Janus Capital has agreed to
continue such waivers until at least the next annual renewal of
the advisory agreements. In addition, the Funds pay brokerage
commissions or dealer spreads and other expenses in connection
with the execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into
an Administration Agreement with Janus Capital. Under the terms
of the Administration Agreements, each of the Funds has agreed to
compensate Janus Capital for administrative services at the
annual rate of .50% of the value of the average daily net assets
of the Shares for certain services, including custody, transfer
agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and Fund
accounting, recordkeeping, and blue sky registration and
monitoring services, registration fees, expenses of shareholders'
meetings and reports to shareholders, costs of preparing,
printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs
of complying with applicable laws regulating the sale of Shares.
Each Fund will pay those expenses not assumed by Janus Capital,
including interest and taxes, fees and expenses of Trustees who
are not affiliated with Janus Capital, audit fees and expenses,
and extraordinary costs.
22
<PAGE>
The following table summarizes the advisory fees paid by the
Funds for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ----------------------- -----------------------
Advisory Advisory Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver to Waiver Waiver
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Money Market
Fund $9,548,370 $4,774,185 $6,858,596 $3,429,298 $3,101,530 $1,550,765
Janus Government Money
Market Fund $944,654 $472,327 $362,308 $181,154 $330,914 $165,457
Janus Tax-Exempt Money
Market Fund $226,264 $113,132 $158,812 $79,406 $140,898 $70,449
</TABLE>
(1) February 15, 1995 (inception) to October 31, 1995.
The following table summarizes the administration fees paid by
the Shares for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
Administration Administration Administration
Fund Name Fees Fees Fees
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund - Investor Shares $5,619,954 $4,415,259 $3,381,669
Janus Government Money Market Fund - Investor
Shares $752,625 $615,966 $560,294
Janus Tax-Exempt Money Market Fund - Investor
Shares $455,293 $379,650 $343,475
</TABLE>
Advisory fees are paid on the Fund level while administration
fees are paid on the class level.
The Advisory Agreements for each Fund were reexecuted on July 1,
1997 (without amendment other than effective dates) and will
continue in effect until July 1, 1999, and thereafter from year
to year so long as such continuance is approved annually by a
majority of the Trustees who are not parties to the Advisory
Agreements or interested persons of any such party, and by either
a majority of the outstanding voting shares or the Trustees of
the Funds. Each Advisory Agreement i) may be terminated without
23
<PAGE>
the payment of any penalty by any Fund or Janus Capital on
60 days' written notice; ii) terminates automatically in the
event of its assignment; and iii) generally, may not be amended
without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested
persons of that Fund or Janus Capital and, to the extent required
by the 1940 Act, the vote of a majority of the outstanding voting
securities of that Fund.
Janus Capital also acts as sub-adviser for a number of
private-label mutual funds and provides separate account advisory
services for institutional accounts. Investment decisions for
each account managed by Janus Capital, including the Funds, are
made independently from those for any other account that is or
may in the future become managed by Janus Capital or its
affiliates. If, however, a number of accounts managed by Janus
Capital are contemporaneously engaged in the purchase or sale of
the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely
affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to
an exemptive order granted by the SEC, the Funds and other funds
advised by Janus Capital may also transfer daily uninvested cash
balances into one or more joint trading accounts. Assets in the
joint trading accounts are invested in money market instruments
and the proceeds are allocated to the participating funds on a
pro rata basis.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
24
<PAGE>
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and is managed in accordance with that objective by a
particular portfolio manager or team of portfolio managers. As a
result, from time to time two or more different managed accounts
may pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit portfolio managers to purchase and
sell securities for their own accounts except under the limited
exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital
and the Funds. The policy requires investment personnel and
officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to
current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for
trading authority will be denied when, among other reasons, the
proposed personal transaction would be contrary to the provisions
of the policy or would be deemed to adversely affect any
transaction then known to be under consideration for or to have
been effected on behalf of any client account, including the
Funds.
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and
directors/Trustees of Janus Capital and the Funds to various
trading restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's policy. Those persons also may be required under
certain circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
25
<PAGE>
Custodian, transfer agent and
certain affiliations
UMB Bank, N.A. ("UMB"), P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' current custodian. However, it is
expected that Citibank, N.A., 111 Wall Street 24th Floor, Zone 5,
New York, NY 10043, will replace UMB as custodian for the Funds
in the first quarter of 1999. The custodian holds the Funds'
assets in safekeeping and collects and remits the income thereon,
subject to the instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Funds' transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Funds. The Funds do not pay Janus
Service a fee.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Janus Distributors acts as the agent of the Funds in connection
with the sale of their shares in all states in which the shares
are registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer
firms or institutions which were instrumental in the acquisition
of shareholders for the Funds or which performed services with
respect to shareholder accounts. The minimum aggregate size
required for eligibility for such payments, and the factors in
selecting the broker-dealer firms and institutions to which they
will be made, are determined from time to time by Janus Capital.
26
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the
Funds and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
These research and other services may include, but are not
limited to, general economic and security market reviews,
industry and company reviews, evaluations of securities,
recommendations as to the purchase and sale of securities, and
access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers
is supplemental to Janus Capital's own research efforts.
For the fiscal year ended October 31, 1998, the Funds paid no
brokerage commissions to brokers and dealers in transactions
27
<PAGE>
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1998, October 31, 1997 and
October 31, 1996, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $4,851
Janus Government Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
</TABLE>
The Funds generally buy and sell securities in principal
transactions, in which no commissions are paid. However, the
Funds may engage an agent and pay commissions for such
transactions if Janus Capital believes that the net result of the
transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing
other accounts in addition to the Funds. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or
the recommendation of a broker-dealer to its customers that they
purchase Shares as a factor in the selection of broker-dealers to
execute Fund portfolio transactions. Janus Capital may also
consider payments made by brokers effecting transactions for a
Fund (i) to the Fund or (ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be
obligated to pay. In placing portfolio business with such broker-
dealers, Janus Capital will seek the best execution of each
transaction.
28
<PAGE>
When the Funds purchase or sell a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
As of October 31, 1998, certain Funds owned securities of their
regular broker-dealers (or parents), as shown below:
<TABLE>
<CAPTION>
Name of Value of
Fund Name Broker-Dealer Securities Owned
- -----------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund Banker's Trust Securities Corp. $262,495,236
Merrill Lynch, Pierce, Fenner &
Smith, Inc. $139,999,803
Lehman Brothers, Inc. $300,000,000
Goldman Sachs Group L.P. $300,000,000
Deutsche Morgan Grenfell, Inc. $150,000,000
Bear Stearns Co., Inc. $ 99,015,375
ABN AMRO Securities, Inc. $586,000,000
BT Alex Brown, Inc. $ 50,000,000
Salomon Smith Barney, Inc. $675,000,000
HSBC America, Inc. $ 73,435,489
CIT Group, Inc. $149,881,540
Barclay Capital, Inc. $250,000,000
Janus Government Money
Market Fund ABN AMRO Securities, Inc. $ 93,200,000
CS First Boston, Inc. $250,000,000
JP Morgan Securities, Inc. $ 25,100,000
Salomon Smith Barney, Inc. $125,000,000
</TABLE>
29
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
30
<PAGE>
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly (1997-
1998), Chief Financial Officer-Boston Market Concepts, Boston
Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly (1993
- 1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
31
<PAGE>
Sharon S. Pichler, Age 49 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money Market
Fund. Portfolio Manager of Janus Money Market Fund and Janus
Tax-Exempt Money Market Fund. Formerly, Portfolio Manager of
Janus Government Money Market Fund (February 1995-February 1999).
Vice President of Janus Capital. Formerly, Assistant Vice
President and Portfolio Manager at USAA Investment Management Co.
(1990-1994).
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
32
<PAGE>
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly (1990
- 1994), with The Boston Company Advisors, Inc., Boston, MA
(mutual fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly (1991-1997) Director of
Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
33
<PAGE>
The Trustees are responsible for major decisions relating to each
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Funds by their officers and review
the investment decisions of the officers, although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Declaration of Trust, Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Loo,
Mullen and Rothe, monitors the compliance with policies and
procedures adopted particularly for money market funds.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Funds described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Funds or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $ 5,754 $82,000
Gary O. Loo, Trustee $13,896 $74,000
Dennis B. Mullen, Trustee $12,531 $82,000
Martin H. Waldinger, Trustee $ 5,517 $74,000
James T. Rothe, Trustee $11,913 $82,000
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
34
<PAGE>
Purchase of shares
Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock
Exchange (the "NYSE" or the "Exchange") next occurring after a
purchase order is received and accepted by a Fund (except net
asset value is normally determined at 5:00 p.m. (New York time)
for Janus Government Money Market Fund). A Fund's net asset value
is calculated each day that both the NYSE and the Federal Reserve
Banks are open ("bank business day"). As stated in the
Prospectus, the Funds each seek to maintain a stable net asset
value per share of $1.00. The Shareholder's Manual Section of the
Prospectus contains detailed information about the purchase of
Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their
dividends and distributions in cash, all income dividends and
capital gains distributions, if any, on Shares are reinvested
automatically in additional Shares of that Fund at the NAV
determined on the payment date. Checks for cash dividends and
distributions and confirmations of reinvestments are usually
mailed to shareholders within ten days after the record date. Any
election (which may be made on the New Account Application form
or by phone) will apply to dividends and distributions the record
dates of which fall on or after the date that a Fund receives
such notice. Changes to distribution options must be received at
least three days prior to the record date to be effective for
such date. Investors receiving cash distributions and dividends
may elect in writing or by phone to change back to automatic
reinvestment at any time.
35
<PAGE>
Redemption of shares
Procedures for redemption of Shares are set forth in the
Shareholder's Manual section of the Prospectus. Shares normally
will be redeemed for cash, although each Fund retains the right
to redeem Shares in kind under unusual circumstances, in order to
protect the interests of remaining shareholders, by delivery of
securities selected from its assets at its discretion. However,
the Funds are governed by Rule 18f-1 under the 1940 Act, which
requires each Fund to redeem Shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of that Fund
during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, their Fund
will have the option of redeeming the excess in cash or in kind.
If Shares are redeemed in kind, the redeeming shareholder might
incur brokerage costs in converting the assets to cash. The
method of valuing securities used to make redemptions in kind
will be the same as the method of valuing portfolio securities
described under "Determination of Net Asset Value" and such
valuation will be made as of the same time the redemption price
is determined.
The right to require the Funds to redeem Shares may be suspended,
or the date of payment may be postponed, whenever (1) trading on
the NYSE is restricted, as determined by the SEC, or the NYSE is
closed except for holidays and weekends, (2) the SEC permits such
suspension and so orders, or (3) an emergency exists as
determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
36
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts and specific types of accounts is set forth in the
Prospectus. Applications for specific types of accounts may be
obtained by calling the Funds at 1-800-525-3713 or writing to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectus,
if you have a regular account or are eligible for distributions
from a retirement plan, you may establish a systematic redemption
option. The payments will be made from the proceeds of periodic
redemptions of Shares in the account at the net asset value.
Depending on the size or frequency of the disbursements
requested, and the fluctuation in value of the Shares in the
Fund's portfolio, redemptions for the purpose of making such
disbursements may reduce or even exhaust the shareholder's
account. Either an investor or their Fund, by written notice to
the other, may terminate the investor's systematic redemption
option without penalty at any time.
Information about requirements to establish a systematic
redemption option may be obtained by writing or calling the Funds
at the address or phone number shown above.
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Tax-Deferred accounts
The Funds offer several different types of tax-deferred
retirement plans that an investor may establish to invest in
Shares, depending on rules prescribed by the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code").
Traditional and Roth Individual Retirement Accounts may be used
by most individuals who have taxable compensation. Simplified
Employee Pensions and the Defined Contribution Plans may be used
by most employers, including corporations, partnerships and sole
proprietors, for the benefit of business owners and their
employees. Education IRAs allow individuals, subject to certain
income limitations, to contribute up to $500 annually on behalf
of any child under the age of 18. In addition, the Funds offer a
Section 403(b)(7) Plan for employees of educational organizations
and other qualifying tax-exempt organizations. Investors should
consult their tax adviser or legal counsel before selecting a
tax-deferred account.
Contributions under Traditional and Roth IRAs, Education IRAs,
SEPs, Defined Contribution Plans (Profit Sharing or Money
Purchase Pension Plans) and Section 403(b)(7) Plans are subject
to specific contribution limitations. Generally, such
contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary
Trust Company as custodian. Each participant's account is charged
an annual fee of $12 per taxpayer identification number no matter
how many tax-deferred accounts the participant has with Janus.
Distributions from tax deferred accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax
if withdrawn prior to age 59 1/2 or used for a nonqualifying
purpose. Several exceptions to the general rule may apply.
Additionally, shareholders generally must start withdrawing
retirement plan assets no later than April 1 of the year after
they reach age 70 1/2. Several exceptions to these general rules
may apply and several methods exist to determine the amount and
timing of the minimum annual distribution (if any). Shareholders
should consult with their tax adviser or legal counsel prior to
receiving any distribution from any tax-deferred plan, in order
to determine the income tax impact of any such distribution.
To receive additional information about Traditional and Roth
IRAs, SEPs, Defined Contribution Plans and Section 403(b)(7)
Plans
38
<PAGE>
along with the necessary materials to establish an account,
please call the Funds at 1-800-525-3713 or write to the Funds at
P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to
a Traditional or Roth IRA, SEP, Defined Contribution Plan or
Section 403(b)(7) Plan can be made until the appropriate forms to
establish any such plan have been completed.
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<PAGE>
Dividends and tax status
Dividends representing substantially all of the net investment
income and any net realized gains on sales of securities are
declared daily, Saturdays, Sundays and holidays included, and
distributed on the last business day of each month. If a month
begins on a Saturday, Sunday, or holiday, dividends for those
days are declared at the end of the preceding month and
distributed on the first business day of the month. A shareholder
may receive dividends in cash or may choose to have dividends
automatically reinvested in a Fund's Shares. As described in the
Prospectus, Shares purchased by wire on a bank business day will
receive that day's dividend if the purchase is effected at or
prior to 3:00 p.m. (New York time) for Janus Money Market Fund,
5:00 p.m. for Janus Government Money Market Fund and 12:00 p.m.
for Janus Tax-Exempt Money Market Fund. Otherwise, such Shares
will begin to accrue dividends on the following day. Orders for
purchase accompanied by a check or other negotiable bank draft
will be accepted and effected as of 4:00 p.m. (New York time),
(5:00 p.m. for Janus Government Money Market Fund) on the day of
receipt and such Shares will begin to accrue dividends on the
first bank business day following receipt of the order. Requests
for redemption of Shares of a Fund will be redeemed at the next
determined net asset value. If processed by 4:00 p.m. (New York
time), (5:00 p.m. for Janus Government Money Market Fund) such
redemption will generally include dividends declared through the
day of redemption. However, redemption requests made by wire that
are received prior to 3:00 p.m. (New York time) for Janus Money
Market Fund, 5:00 p.m. for Janus Government Money Market Fund and
12:00 p.m. for Janus Tax-Exempt Money Market Fund on a bank
business day will result in Shares being redeemed that day and no
dividend will be accrued for such day. Proceeds of such a
redemption will normally be sent to the predesignated bank
account on that day, but that day's dividend will not be
received. If shares of a Fund were originally purchased by check
or through an Automated Clearing House transaction, the Fund may
delay transmittal of redemption proceeds up to 15 days in order
to ensure that purchase funds have been collected. Closing times
for purchase and redemption of Shares may be changed for days in
which the bond market or the NYSE close early.
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Distributions for all of the Funds (except Janus Tax-Exempt Money
Market Fund) are taxable income and are subject to federal income
tax (except for shareholders exempt from income tax), whether
such distributions are received in cash or are reinvested in
additional Shares. Full information regarding the tax status of
income dividends and any capital gains distributions will be
mailed to shareholders for tax purposes on or before January 31st
of each year. As described in detail in the Prospectus, Janus
Tax-Exempt Money Market Fund anticipates that substantially all
income dividends it pays will be exempt from federal income tax,
although dividends attributable to interest on taxable
investments, together with distributions from any net realized
short- or long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by
satisfying certain requirements prescribed by Subchapter M of the
Code. Accordingly, a Fund will invest no more than 25% of its
total assets in a single issuer (other than U.S. government
securities).
Some money market securities employ a trust or other similar
structure to modify the maturity, price characteristics, or
quality of financial assets. For example, put features can be
used to modify the maturity of a security, or interest rate
adjustment features can be used to enhance price stability. If
the structure does not perform as intended, adverse tax or
investment consequences may result. Neither the Internal Revenue
Service nor any other regulatory authority has ruled definitively
on certain legal issues presented by structured securities.
Future tax or other regulatory determinations could adversely
affect the value, liquidity, or tax treatment of the income
received from these securities or the nature and timing of
distributions made by a Fund.
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Principal shareholders
As of January 20, 1999, the officers and Trustees as a group
owned less than 1% of the outstanding Shares.
As of January 20, 1999, Janus Capital Corporation, 100 Fillmore
Street, Denver, CO 80206-4928, owned 6.15% of the Shares of Janus
Money Market Fund.
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Miscellaneous information
Each Fund is a series of the Trust, a Massachusetts business
trust that was created on February 11, 1986. The Trust is an
open-end management investment company registered under the 1940
Act. As of the date of this SAI, the Trust offers 21 separate
series, three of which currently offer three classes of shares.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Funds, the Funds must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under
certain circumstances, be held liable for the obligations of
their Fund. However, the Agreement and Declaration of Trust (the
"Declaration of Trust") disclaims shareholder liability for acts
or obligations of the Funds and requires that notice of this
disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The
Declaration of Trust also provides for indemnification from the
assets of the Funds for all losses and expenses of any Fund
shareholder held liable for the obligations of their Fund. Thus,
the risk of a shareholder incurring a financial loss on account
of its liability as a shareholder of one of the Funds is limited
to circumstances in which their Fund would be unable to meet its
obligations. The possibility that these circumstances would occur
is remote. The Trustees intend to conduct the operations of the
Funds to avoid, to the extent possible, liability of shareholders
for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of each Fund are fully paid and
nonassessable when issued. All shares of a Fund participate
equally in dividends and other distributions by such Fund, and in
residual assets of that Fund in the event of liquidation. Shares
of each Fund have no preemptive, conversion or subscription
rights.
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The Trust is authorized to issue multiple classes of shares for
each Fund. Currently, Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt Money Market Fund each
offer three classes of shares by separate prospectuses. The
Shares discussed in this SAI are offered to the general public. A
second class of shares, Service Shares, is offered through banks
and other financial institutions that meet minimum investment
requirements in connection with trust accounts, cash management
programs and similar programs. A third class of shares,
Institutional Shares, is offered only to clients meeting certain
minimum investment criteria.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by each Fund only if a matter affects or requires the vote of
only that Fund or that Fund's interest in the matter differs from
the interest of other portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders
held on July 10, 1992 with the exception of Mr. Craig and Mr.
Rothe who were appointed by the Trustees as of June 30, 1995 and
January 1, 1997, respectively. Under the Declaration of Trust,
each Trustee will continue in office until the termination of the
Trust or his earlier death, retirement, resignation, bankruptcy,
incapacity or removal. Vacancies will be filled by a majority of
the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held,
unless otherwise required by the Declaration of Trust or the 1940
Act. Subject to the foregoing, shareholders have the power to
vote to elect or remove Trustees, to terminate or reorganize
their Fund, to amend the Declaration of Trust, to bring certain
derivative actions
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and on any other matters on which a shareholder vote is required
by the 1940 Act, the Declaration of Trust, the Trust's Bylaws or
the Trustees.
As mentioned above in "Shareholder Meetings," each share of each
series of the Trust has one vote (and fractional votes for
fractional shares). Shares of all series of the Trust have
noncumulative voting rights, which means that the holders of more
than 50% of the shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they
choose to do so and, in such event, the holders of the remaining
shares will not be able to elect any Trustees.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Funds,
audit the Funds' annual financial statements and prepare their
tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
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Financial statements
The following audited financial statements of the Funds for the
period ended October 31, 1998 are hereby incorporated into this
SAI by reference to the Funds' Annual Report dated October 31,
1998.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1998
Statements of Operations for the period ended October 31, 1998
Statements of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
46
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Appendix A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS. The two
highest ratings of Standard & Poor's Ratings Services for
municipal and corporate bonds are AAA and AA. Bonds rated AAA
have the highest rating assigned by S&P to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
a small degree. The AA rating may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within
that rating category.
The two highest ratings of Moody's Investors Service, Inc. for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are
judged by Moody's to be of the best quality. Bonds rated Aa are
judged to be of high quality by all standards. Together with the
Aaa group, they comprise what are generally known as high-grade
bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The
generic rating Aa may be modified by the addition of the numerals
1, 2 or 3. The modifier 1 indicates that the security ranks in
the higher end of the Aa rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT-TERM MUNICIPAL LOANS. S&P's highest rating for short-term
municipal loans is SP-1. S&P states that short-term municipal
securities bearing the SP-1 designation have a strong capacity to
pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service
will be given a plus (+) designation. Issues rated SP-2 have
satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the
term of the notes.
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal securities
rated MIG-1/VMIG-1 are of the best quality, enjoying strong
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protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES. Prime-1 and Prime-2 are the two
highest ratings assigned by Moody's for other short-term debt
securities and commercial paper, and A-1 and A-2 are the two
highest ratings for commercial paper assigned by S&P. Moody's
uses the numbers 1, 2 and 3 to denote relative strength within
its highest classification of Prime, while S&P uses the numbers
1, 2 and 3 to denote relative strength within its highest
classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt
obligations and have many of the following characteristics:
leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset
protection, broad margins in earnings coverage of fixed financial
charges and high internal cash generation, and well established
access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 by Moody's have a
strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics
displayed by issuers rated Prime-1, but to a lesser degree.
Issuers rated A-1 by S&P carry a strong degree of safety
regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
(+) designation. Issuers rated A-2 by S&P carry a satisfactory
degree of safety regarding timely repayment.
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FITCH
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
F-1+........................ Exceptionally strong credit
quality. Issues assigned this
rating are regarded as having the
strongest degree of assurance for
timely payment.
F-1......................... Very strong credit quality. Issues
assigned this rating reflect an
assurance for timely payment only
slightly less in degree than issues
rated F-1+.
F-2......................... Good credit quality. Issues
assigned this rating have a
satisfactory degree of assurance
for timely payments, but the margin
of safety is not as great as the F-
1+ and F-1 ratings.
</TABLE>
DUFF & PHELPS INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Duff 1+..................... Highest certainty of timely
payment. Short-term liquidity,
including internal operating
factors and/or ready access to
alternative sources of funds, is
clearly outstanding, and safety is
just below risk-free U.S. Treasury
short-term obligations.
Duff 1...................... Very high certainty of timely
payment. Liquidity factors are
excellent and supported by good
fundamental protection factors.
Risk factors are minor.
Duff 1-..................... High certainty of timely payment.
Liquidity factors are strong and
supported by good fundamental
protection factors. Risk factors
are very small.
Duff 2...................... Good certainty of timely payment.
Liquidity factors and company
fundamentals are sound. Although
ongoing funding needs may enlarge
total financing requirements,
access to capital markets is good.
Risk factors are small.
</TABLE>
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THOMSON BANKWATCH, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
TBW-1....................... The highest category; indicates a
very high degree of likelihood that
principal and interest will be paid
on a timely basis.
TBW-2 The second highest category; while
the degree of safety regarding
timely repayment of principal and
interest is strong, the relative
degree of safety is not as high as
for issues rated TBW-1.
TBW-3....................... The lowest investment grade
category; indicates that while more
susceptible to adverse developments
(both internal and external) than
obligations with higher ratings,
capacity to service principal and
interest in a timely fashion is
considered adequate.
TBW-4....................... The lowest rating category; this
rating is regarded as
non-investment grade and therefore
speculative.
</TABLE>
IBCA, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
A1+......................... Obligations supported by the
highest capacity for timely
repayment. Where issues possess a
particularly strong credit feature,
a rating of A1+ is assigned.
A2.......................... Obligations supported by a good
capacity for timely repayment.
A3.......................... Obligations supported by a
satisfactory capacity for timely
repayment.
B........................... Obligations for which there is an
uncertainty as to the capacity to
ensure timely repayment.
C Obligations for which there is a
high risk of default or which are
currently in default.
</TABLE>
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Appendix B
DESCRIPTION OF MUNICIPAL SECURITIES
MUNICIPAL NOTES generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. PROJECT NOTES, which carry a U.S. government guarantee, are
issued by public bodies (called "local issuing agencies") created
under the laws of a state, territory, or U.S. possession. They
have maturities that range up to one year from the date of
issuance. Project Notes are backed by an agreement between the
local issuing agency and the Federal Department of Housing and
Urban Development. These Notes provide financing for a wide range
of financial assistance programs for housing, redevelopment, and
related needs (such as low-income housing programs and renewal
programs).
2. TAX ANTICIPATION NOTES are issued to finance working capital
needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income,
sales, use and business taxes, and are payable from these
specific future taxes.
3. REVENUE ANTICIPATION NOTES are issued in expectation of
receipt of other types of revenues, such as Federal revenues
available under the Federal Revenue Sharing Programs.
4. BOND ANTICIPATION NOTES are issued to provide interim
financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the
repayment of the Notes.
5. CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration under the Federal National Mortgage Association
("Fannie Mae") or the Government National Mortgage Association
("Ginnie Mae").
6. TAX-EXEMPT COMMERCIAL PAPER is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
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MUNICIPAL BONDS, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. GENERAL OBLIGATION BONDS are issued by such entities as
states, counties, cities, towns and regional districts. The
proceeds of these obligations are used to fund a wide range of
public projects, including construction or improvement of
schools, highways and roads, and water and sewer systems. The
basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can be levied
for the payment of debt service may be limited or unlimited as to
the rate or amount of special assessments.
2. REVENUE BONDS in recent years have come to include an
increasingly wide variety of types of municipal obligations. As
with other kinds of municipal obligations, the issuers of revenue
bonds may consist of virtually any form of state or local
governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or
redevelopment authorities, and special districts, such as water,
sewer or sanitary districts. Generally, revenue bonds are secured
by the revenues or net revenues derived from a particular
facility, group of facilities, or, in some cases, the proceeds of
a special excise or other specific revenue source. Revenue bonds
are issued to finance a wide variety of capital projects
including electric, gas, water and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals. Many of these bonds provide
additional security in the form of a debt service reserve fund to
be used to make principal and interest payments. Various forms of
credit enhancement, such as a bank letter of credit or municipal
bond insurance, may also be employed in revenue bond issues.
Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or
other public projects. Some authorities provide further security
in the form of a state's ability (without
52
<PAGE>
obligation) to make up deficiencies in the debt service reserve
fund.
In recent years, revenue bonds have been issued in large volumes
for projects that are privately owned and operated (see 3 below).
3. PRIVATE ACTIVITY BONDS are considered municipal bonds if the
interest paid thereon is exempt from Federal income tax and are
issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and
manufacturing, housing and health. These bonds are also used to
finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such
bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While, at one time, the pertinent provisions of the Internal
Revenue Code permitted private activity bonds to bear tax-exempt
interest in connection with virtually any type of commercial or
industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying
projects under the Code have become increasingly limited,
particularly since the enactment of the Tax Reform Act of 1986.
Under current provisions of the Code, tax-exempt financing
remains available, under prescribed conditions, for certain
privately owned and operated rental multi-family housing
facilities, nonprofit hospital and nursing home projects,
airports, docks and wharves, mass commuting facilities and solid
waste disposal projects, among others, and for the refunding
(that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt
bonds. In future years, the types of projects qualifying under
the Code for tax-exempt financing are expected to become
increasingly limited.
Because of terminology formerly used in the Internal Revenue
Code, virtually any form of private activity bond may still be
referred to as an "industrial development bond," but more and
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<PAGE>
more frequently revenue bonds have become classified according to
the particular type of facility being financed, such as hospital
revenue bonds, nursing home revenue bonds, multi-family housing
revenues bonds, single family housing revenue bonds, industrial
development revenue bonds, solid waste resource recovery revenue
bonds, and so on.
OTHER MUNICIPAL OBLIGATIONS, incurred for a variety of financing
purposes, include: municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract,
are issued by state and local governments and authorities to
acquire a wide variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications equipment and other
capital assets. Municipal leases frequently have special risks
not normally associated with general obligation or revenue bonds.
Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass
eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without
meeting the constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations of many state
constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease
or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
To reduce this risk, the Fund will only purchase municipal leases
subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by an unconditional
irrevocable letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the Prospectus.
Tax-exempt bonds are also categorized according to whether the
interest is or is not includible in the calculation of
alternative minimum taxes imposed on individuals, according to
whether the costs of acquiring or carrying the bonds are or are
not deductible in part by banks and other financial institutions,
and according to other criteria relevant for Federal income tax
purposes. Due to the
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<PAGE>
increasing complexity of Internal Revenue Code and related
requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required, as a condition to the issuance
of such bonds, but particularly for revenue bonds, an opinion of
nationally recognized bond counsel as to the tax-exempt status of
interest on the bonds.
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[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3171
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Janus Venture Fund
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
Statement of Additional Information
February 17, 1999
Janus Venture Fund is a no-load, diversified mutual fund
that seeks capital appreciation. The Fund normally
invests at least 50% of its equity assets in securities
issued by small-sized companies. Small-sized companies
are those who have market capitalizations of less than $1
billion or annual gross revenues of less than $500
million. Subject to this policy, the Fund may also invest
in larger issuers. Depending upon its portfolio managers'
opinion of prevailing market, financial and economic
conditions, the Fund may at times hold substantial
positions in cash or interest-bearing securities.
The Fund is a separate series of Janus Investment Fund, a
Massachusetts business trust.
The Fund has discontinued public sales of its shares to
new investors. However, shareholders who maintain open
Fund accounts are permitted to continue to purchase
shares of the Fund and to reinvest any dividends and/or
capital gains distributions in shares of the Fund. Once a
shareholder's Fund account is closed, it may not be
possible for that shareholder to purchase additional Fund
shares. See the "Shareholder's Manual" section of the
Prospectus for more details. The Fund may resume sales of
its shares at some future date, although it has no
present intention of doing so.
This Statement of Additional Information is not a
Prospectus and should be read in conjunction with the
Fund's Prospectus dated February 17, 1999, which is
incorporated by reference into this SAI and may be
obtained from the Trust at the above phone number or
address. This SAI contains additional and more detailed
information about the Fund's operations and activities
than the Prospectus. The Annual Report, which contains
important financial information about the Fund, is
incorporated by reference into this SAI and is also
available, without charge, at the above phone number or
address.
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[JANUS LOGO]
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Table of contents
<TABLE>
<S> <C>
Classification, Portfolio Turnover, Investment
Policies and Restrictions, and Investment
Strategies and Risks............................ 2
Investment Adviser.............................. 38
Custodian, Transfer Agent and Certain
Affiliations.................................... 42
Portfolio Transactions and Brokerage............ 44
Trustees and Officers........................... 48
Purchase of Shares.............................. 54
Net Asset Value Determination................ 54
Reinvestment of Dividends and Distributions.. 55
Redemption of Shares............................ 57
Shareholder Accounts............................ 58
Telephone Transactions....................... 58
Systematic Redemptions....................... 58
Tax-Deferred Accounts........................... 59
Income Dividends, Capital Gains Distributions
and Tax Status.................................. 61
Principal Shareholders.......................... 62
Miscellaneous Information....................... 63
Shares of the Trust.......................... 64
Shareholder Meetings......................... 64
Voting Rights................................ 64
Master/Feeder Option......................... 65
Independent Accountants...................... 65
Registration Statement....................... 65
Performance Information......................... 66
Financial Statements............................ 67
Appendix A...................................... 68
</TABLE>
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Classification, portfolio turnover,
investment policies
and restrictions, and
investment strategies
and risks
CLASSIFICATION
The Fund is a series of the Trust, an open-end, management
investment company. The Investment Company Act of 1940 ("1940
Act") classifies mutual funds as either diversified or
nondiversified, and the Fund is a diversified fund.
PORTFOLIO TURNOVER
The Prospectus includes a discussion of portfolio turnover
policies. The Fund's portfolio turnover rates (total purchases or
sales, whichever is less, compared to average monthly value of
portfolio securities) for the fiscal years ended October 31, 1998
and October 31, 1997, were 90% and 146%, respectively.
INVESTMENT POLICIES AND RESTRICTIONS
The Fund is subject to certain fundamental policies and
restrictions that may not be changed without shareholder
approval. Shareholder approval means approval by the lesser of
(i) more than 50% of the outstanding voting securities of the
Trust (or the Fund if a matter affects just the Fund), or (ii)
67% or more of the voting securities present at a meeting if the
holders of more than 50% of the outstanding voting securities of
the Trust (or the Fund) are present or represented by proxy. As
fundamental policies, the Fund may not:
(1) Own more than 10% of the outstanding voting securities of any
one issuer and, as to seventy-five percent (75%) of the value of
its total assets, purchase the securities of any one issuer
(except cash items and "government securities" as defined under
the 1940 Act, if immediately after and as a result of such
purchase, the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's total
assets.
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(2) Invest 25% or more of the value of its total assets in any
particular industry (other than U.S. government securities).
(3) Invest directly in real estate or interests in real estate;
however, the Fund may own debt or equity securities issued by
companies engaged in those businesses.
(4) Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities
(but this limitation shall not prevent the Fund from purchasing
or selling options, futures, swaps and forward contracts or from
investing in securities or other instruments backed by physical
commodities).
(5) Lend any security or make any other loan if, as a result,
more than 25% of its total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial
paper, debt securities or repurchase agreements).
(6) Act as an underwriter of securities issued by others, except
to the extent that the Fund may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund.
As a fundamental policy, the Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental),
invest all of its assets in the securities of a single open-end
management investment company with substantially the same
fundamental investment objective, policies and limitations as the
Fund.
The Trustees have adopted additional investment restrictions for
the Fund. These restrictions are operating policies of the Fund
and may be changed by the Trustees without shareholder approval.
The additional investment restrictions adopted by the Trustees to
date include the following:
(a) The Fund will not (i) enter into any futures contracts and
related options for purposes other than bona fide hedging
transactions within the meaning of Commodity Futures Trading
Commission ("CFTC") regulations if the aggregate initial margin
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and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of
bona fide hedging transactions will exceed 5% of the fair market
value of the Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it
has entered into; and (ii) enter into any futures contracts if
the aggregate amount of the Fund's commitments under outstanding
futures contracts positions would exceed the market value of its
total assets.
(b) The Fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short without the
payment of any additional consideration therefor, and provided
that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Fund does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits
as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with
transactions in futures, options, swaps and forward contracts
shall not be deemed to constitute purchasing securities on
margin.
(d) The Fund may not mortgage or pledge any securities owned or
held by the Fund in amounts that exceed, in the aggregate, 15% of
the Fund's net asset value, provided that this limitation does
not apply to reverse repurchase agreements, deposits of assets to
margin, guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such
contracts.
(e) The Fund may borrow money for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25%
of the value of its total assets (including the amount borrowed)
less liabilities (other than borrowings). If borrowings exceed
25% of the value of the Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the
25% limitation. This policy shall not prohibit
4
<PAGE>
reverse repurchase agreements, deposits of assets to margin or
guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such
contracts.
(f) The Fund does not currently intend to purchase any security
or enter into a repurchase agreement if, as a result, more than
15% of its net assets would be invested in repurchase agreements
not entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by virtue
of legal or contractual restrictions on resale or the absence of
a readily available market. The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists
for securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 ("Rule 144A Securities"), or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(g) The Fund may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC") the Fund may borrow
money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. The Fund will borrow money through the program only
when the costs are equal to or lower than the cost of bank loans.
Interfund loans and borrowings normally extend overnight, but can
have maximum duration of seven days. The Fund will lend through
the program only when the returns are higher than those available
from other short-term instruments (such as repurchase
agreements). The Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending Fund could result in a lost
investment opportunity or additional borrowing costs.
5
<PAGE>
For the purposes of the Fund's policies on investing in
particular industries, the Fund will rely primarily on industry
or industry group classifications published by Bloomberg L.P. To
the extent that Bloomberg L.P. industry classifications are so
broad that the primary economic characteristics in a single
industry are materially different, the Fund may further classify
issuers in accordance with industry classifications as published
by the SEC.
INVESTMENT STRATEGIES AND RISKS
Cash Position
As discussed in the Prospectus, when the Fund's portfolio
managers believe that market conditions are unfavorable for
profitable investing, or when they are otherwise unable to locate
attractive investment opportunities, the Fund's investment in
cash and similar investments may increase. Securities that the
Fund may invest in as a means of receiving a return on idle cash
include commercial paper, certificates of deposit, repurchase
agreements or other short-term debt obligations. The Fund may
also invest in money market funds, including funds managed by
Janus Capital. (See "Investment Company Securities" on page 12).
Illiquid Investments
The Fund may invest up to 15% of its net assets in illiquid
investments (i.e., securities that are not readily marketable).
The Trustees have authorized Janus Capital to make liquidity
determinations with respect to certain securities, including Rule
144A Securities, commercial paper and municipal lease obligations
purchased by the Fund. Under the guidelines established by the
Trustees, Janus Capital will consider the following factors: 1)
the frequency of trades and quoted prices for the obligation; 2)
the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; 3) the willingness
of dealers to undertake to make a market in the security; and 4)
the nature of the security and the nature of marketplace trades,
including the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the
6
<PAGE>
transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as
to principal and interest and any ratings of the paper by a
Nationally Recognized Statistical Rating Organization ("NRSRO").
A foreign security that may be freely traded on or through the
facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security
subject to these procedures.
If illiquid securities exceed 15% of the Fund's net assets after
the time of purchase the Fund will take steps to reduce in an
orderly fashion its holdings of illiquid securities. Because
illiquid securities may not be readily marketable, the portfolio
managers may not be able to dispose of them in a timely manner.
As a result, the Fund may be forced to hold illiquid securities
while their price depreciates. Depreciation in the price of
illiquid securities may cause the net asset value of the Fund to
decline.
Foreign Securities
The Fund may invest without limit in foreign securities either
indirectly (e.g., depositary receipts) or directly in foreign
markets. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in
domestic securities, because the Fund's performance may depend on
issues other than the performance of a particular company. These
issues include:
- CURRENCY RISK. As long as the Fund holds a foreign security,
its value will be affected by the value of the local currency
relative to the U.S. dollar. When the Fund sells a foreign
denominated security, its value may be worth less in U.S.
dollars even if the security increases in value in its home
country. U.S. dollar denominated securities of foreign issuers
may also be affected by currency risk.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject
to heightened political and economic risks, particularly in
emerging markets which may have relatively unstable
7
<PAGE>
governments, immature economic structures, national policies
restricting investments by foreigners, different legal systems,
and economies based on only a few industries. In some
countries, there is the risk that the government may take over
the assets or operations of a company or that the government
may impose taxes or limits on the removal of a Fund's assets
from that country.
- REGULATORY RISK. There may be less government supervision of
foreign markets. As a result, foreign issuers may not be
subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to domestic
issuers and there may be less publicly available information
about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of
emerging market countries, may be less liquid and more volatile
than domestic markets. Certain markets may require payment for
securities before delivery and delays may be encountered in
settling securities transactions. In some foreign markets,
there may not be protection against failure by other parties to
complete transactions.
- TRANSACTION COSTS. Costs of buying, selling and holding foreign
securities, including brokerage, tax and custody costs, may be
higher than those involved in domestic transactions.
Short Sales
The Fund may engage in "short sales against the box." This
technique involves selling either a security that the Fund owns,
or a security equivalent in kind and amount to the security sold
short that the Fund has the right to obtain, for delivery at a
specified date in the future. The Fund may enter into a short
sale against the box to hedge against anticipated declines in the
market price of portfolio securities. If the value of the
securities sold short increases prior to the scheduled delivery
date, the Fund loses the opportunity to participate in the gain.
8
<PAGE>
Zero Coupon, Step Coupon and Pay-In-Kind Securities
The Fund may invest up to 10% of its assets in zero coupon, pay-
in-kind and step coupon securities. Zero coupon bonds are issued
and traded at a discount from their face value. They do not
entitle the holder to any periodic payment of interest prior to
maturity. Step coupon bonds trade at a discount from their face
value and pay coupon interest. The coupon rate is low for an
initial period and then increases to a higher coupon rate
thereafter. The discount from the face amount or par value
depends on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer. Pay-in-kind bonds
normally give the issuer an option to pay cash at a coupon
payment date or give the holder of the security a similar bond
with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon
and step coupon securities to report the portion of the original
issue discount on such securities that accrues during a given
year as interest income, even though the holders receive no cash
payments of interest during the year. In order to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986 and the regulations thereunder (the "Code"), the Fund must
distribute its investment company taxable income, including the
original issue discount accrued on zero coupon or step coupon
bonds. Because the Fund will not receive cash payments on a
current basis in respect of accrued original issue discount on
zero coupon bonds or step coupon bonds during the period before
interest payments begin, in some years the Fund may have to
distribute cash obtained from other sources in order to satisfy
the distribution requirements under the Code. The Fund might
obtain such cash from selling other portfolio holdings which
might cause the Fund to incur capital gains or losses on the
sale. Additionally, these actions are likely to reduce the assets
to which Fund expenses could be allocated and to reduce the rate
of return for the Fund. In some circumstances, such sales might
be
9
<PAGE>
necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it
undesirable for the Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and
pay-in-kind securities are more volatile than the prices of
securities that pay interest periodically and in cash and are
likely to respond to changes in interest rates to a greater
degree than other types of debt securities having similar
maturities and credit quality.
Pass-Through Securities
The Fund may invest in various types of pass-through securities,
such as mortgage-backed securities, asset-backed securities and
participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have
been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives
an undivided interest in the underlying pool of securities. The
issuers of the underlying securities make interest and principal
payments to the intermediary which are passed through to
purchasers, such as the Fund. The most common type of
pass-through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates
are mortgage-backed securities that evidence an undivided
interest in a pool of mortgage loans. GNMA Certificates differ
from bonds in that principal is paid back monthly by the
borrowers over the term of the loan rather than returned in a
lump sum at maturity. The Fund will generally purchase "modified
pass-through" GNMA Certificates, which entitle the holder to
receive a share of all interest and principal payments paid and
owned on the mortgage pool, net of fees paid to the "issuer" and
GNMA, regardless of whether or not the mortgagor actually makes
the payment. GNMA Certificates are backed as to the timely
payment of principal and interest by the full faith and credit of
the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two
types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage
10
<PAGE>
certificates ("GMCs"). PCs resemble GNMA Certificates in that
each PC represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. FHLMC guarantees
timely payments of interest on PCs and the full return of
principal. GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semiannually
and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment
of principal and interest but it is not guaranteed by the full
faith and credit of the U.S. government.
The Federal National Mortgage Association ("FNMA") issues
guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely
payment of principal and interest but it is not guaranteed by the
full faith and credit of the U.S. government.
Except for GMCs, each of the mortgage-backed securities described
above is characterized by monthly payments to the holder,
reflecting the monthly payments made by the borrowers who
received the underlying mortgage loans. The payments to the
security holders (such as the Fund), like the payments on the
underlying loans, represent both principal and interest. Although
the underlying mortgage loans are for specified periods of time,
such as 20 or 30 years, the borrowers can, and typically do, pay
them off sooner. Thus, the security holders frequently receive
prepayments of principal in addition to the principal that is
part of the regular monthly payments. The Fund's portfolio
managers will consider estimated prepayment rates in calculating
the average weighted maturity of the Fund. A borrower is more
likely to prepay a mortgage that bears a relatively high rate of
interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by the Fund might
be converted to cash and the Fund will be forced to accept lower
interest rates when that cash is used to purchase additional
securities in the
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<PAGE>
mortgage-backed securities sector or in other investment sectors.
Additionally, prepayments during such periods will limit the
Fund's ability to participate in as large a market gain as may be
experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer
loans and are backed by paper or accounts receivables originated
by banks, credit card companies or other providers of credit.
Generally, the originating bank or credit provider is neither the
obligor nor the guarantor of the security, and interest and
principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed
securities include units of beneficial interests in pools of
purchase contracts, financing leases, and sales agreements that
may be created when a municipality enters into an installment
purchase contract or lease with a vendor. Such securities may be
secured by the assets purchased or leased by the municipality;
however, if the municipality stops making payments, there
generally will be no recourse against the vendor. These
obligations are likely to involve unscheduled prepayments of
principal.
Investment Company Securities
From time to time, the Fund may invest in securities of other
investment companies, subject to the provisions of Section
12(d)(1) of the 1940 Act. The Fund may invest in securities of
money market funds managed by Janus Capital in excess of the
limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus funds.
Depositary Receipts
The Fund may invest in sponsored and unsponsored American
Depositary Receipts ("ADRs"), which are receipts issued by an
American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. ADRs, in registered form,
are designed for use in U.S. securities markets. Unsponsored ADRs
may be created without the participation of
12
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the foreign issuer. Holders of these ADRs generally bear all the
costs of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company
depositary of an unsponsored ADR may be under no obligation to
distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Fund may also invest
in European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") and in other similar instruments representing
securities of foreign companies. EDRs are receipts issued by a
European financial institution evidencing an arrangement similar
to that of ADRs. EDRs, in bearer form, are designed for use in
European securities markets.
Depositary Receipts are generally subject to the same sort of
risks as direct investments in a foreign country, such as,
currency risk, political and economic risk, and market risk,
because their values depend on the performance of a foreign
security denominated in its home currency. The risks of foreign
investing are addressed in some detail in the Fund's prospectus.
Municipal Obligations
The Fund may invest in municipal obligations issued by states,
territories and possessions of the United States and the District
of Columbia. The value of municipal obligations can be affected
by changes in their actual or perceived credit quality. The
credit quality of municipal obligations can be affected by, among
other things the financial condition of the issuer or guarantor,
the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the revenue bond project or general
borrowing purpose, political or economic developments in the
region where the security is issued, and the liquidity of the
security. Because municipal securities are generally traded over-
the-counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The
liquidity of some municipal obligations may be enhanced by demand
features, which would enable the Fund to demand
13
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payment on short notice from the issuer or a financial
intermediary.
Other Income-Producing Securities
Other types of income producing securities that the Fund may
purchase include, but are not limited to, the following types of
securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities
have variable or floating rates of interest and, under certain
limited circumstances, may have varying principal amounts. These
securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some
interest rate index or market interest rate. The floating rate
tends to decrease the security's price sensitivity to changes in
interest rates. These types of securities have variable or
floating rates of interest and, under certain limited
circumstances, may have varying principal amounts. Variable and
floating rate securities pay interest at rates that are adjusted
periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate
(the "underlying index"). See also "Inverse Floaters."
In order to most effectively use these investments, the portfolio
managers must correctly assess probable movements in interest
rates. This involves different skills than those used to select
most portfolio securities. If the portfolio managers incorrectly
forecast such movements, the Fund could be adversely affected by
the use of variable or floating rate obligations.
STANDBY COMMITMENTS. These instruments, which are similar to a
put, give the Fund the option to obligate a broker, dealer or
bank to repurchase a security held by the Fund at a specified
price.
TENDER OPTION BONDS. Tender option bonds are generally long-term
securities that are coupled with the option to tender the
securities to a bank, broker-dealer or other financial
institution at periodic intervals and receive the face value of
the bond. This type of security is commonly used as a means of
enhancing the security's liquidity.
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<PAGE>
INVERSE FLOATERS. Inverse floaters are debt instruments whose
interest bears an inverse relationship to the interest rate on
another security. The Fund will not invest more than 5% of its
assets in inverse floaters. Similar to variable and floating rate
obligations, effective use of inverse floaters requires skills
different from those needed to select most portfolio securities.
If movements in interest rates are incorrectly anticipated, the
Fund could lose money or its NAV could decline by the use of
inverse floaters.
STRIP BONDS. Strip bonds are debt securities that are stripped of
their interest (usually by a financial intermediary) after the
securities are issued. The market value of these securities
generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
The Fund will purchase standby commitments, tender option bonds
and instruments with demand features primarily for the purpose of
increasing the liquidity of its portfolio.
High-Yield/High-Risk Securities
The Fund intends to invest less than 35% of its net assets in
securities that are rated below investment grade (e.g.,
securities rated BB or lower by Standard & Poor's Ratings
Services or Ba or lower by Moody's Investors Service, Inc.).
Lower rated securities involve a higher degree of credit risk,
which is the risk that the issuer will not make interest or
principal payments when due. In the event of an unanticipated
default, the Fund would experience a reduction in its income, and
could expect a decline in the market value of the securities so
affected.
The Fund may also invest in unrated debt securities of foreign
and domestic issuers. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a
market. Sovereign debt of foreign governments is generally rated
by country. Because these ratings do not take into account
individual factors relevant to each issue and may not be updated
regularly, Janus Capital may treat such securities as unrated
debt. Because of
15
<PAGE>
the size and perceived demand of the issue, among other factors,
certain municipalities may not incur the costs of obtaining a
rating. The Fund's portfolio managers will analyze the
creditworthiness of the issuer, as well as any financial
institution or other party responsible for payments on the
security, in determining whether to purchase unrated municipal
bonds. Unrated debt securities will be included in the 35% limit
unless the portfolio managers deem such securities to be the
equivalent of investment grade securities.
Subject to the above limits, the Fund may purchase defaulted
securities only when its portfolio managers believe, based upon
their analysis of the financial condition, results of operations
and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an
unusual opportunity for capital appreciation. Notwithstanding the
portfolio managers' belief about the resumption of income,
however, the purchase of any security on which payment of
interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
Financial and Market Risks. Investments in securities that are in
default involve a high degree of financial and market risks that
can result in substantial or, at times, even total losses.
Issuers of defaulted securities may have substantial capital
needs and may become involved in bankruptcy or reorganization
proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain
information about the condition of such issuers. The market
prices of such securities also are subject to abrupt and erratic
movements and above average price volatility, and the spread
between the bid and asked prices of such securities may be
greater than normally expected.
Disposition of Portfolio Securities. Although the Fund generally
will purchase securities for which its portfolio managers expect
an active market to be maintained, defaulted securities may be
less actively traded than other securities and it may be
difficult to dispose of substantial holdings of such securities
at prevailing market prices. The Fund will limit holdings of any
such securities
16
<PAGE>
to amounts that the portfolio managers believe could be readily
sold, and holdings of such securities would, in any event, be
limited so as not to limit the Fund's ability to readily dispose
of securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at
times, require participation in bankruptcy or receivership
proceedings on behalf of the Fund.
Repurchase and Reverse Repurchase Agreements
In a repurchase agreement, the Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon price on an agreed upon date within a number of
days (usually not more than seven) from the date of purchase. The
resale price consists of the purchase price plus an agreed upon
incremental amount that is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon
price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or
"collateral." A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed,
which may cause the Fund to suffer a loss if the market value of
such securities declines before they can be liquidated on the
open market. In the event of bankruptcy or insolvency of the
seller, the Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that
mature in more than seven days are subject to the 15% limit on
illiquid investments. While it is possible to eliminate all risks
from these transactions, it is the policy of the Fund to limit
repurchase agreements to those parties whose creditworthiness has
been reviewed and found satisfactory by Janus Capital.
The Fund may use reverse repurchase agreements to obtain cash to
satisfy unusually heavy redemption requests or for other
temporary or emergency purposes without the necessity of selling
portfolio securities or to earn additional income on portfolio
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securities, such as Treasury bills or notes. In a reverse
repurchase agreement, the Fund sells a portfolio security to
another party, such as a bank or broker-dealer, in return for
cash and agrees to repurchase the instrument at a particular
price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain cash and appropriate liquid
assets in a segregated custodial account to cover its obligation
under the agreement. The Fund will enter into reverse repurchase
agreements only with parties that Janus Capital deems
creditworthy. Using reverse repurchase agreements to earn
additional income involves the risk that the interest earned on
the invested proceeds is less than the expense of the reverse
repurchase agreement transaction. This technique may also have a
leveraging effect on the Fund's portfolio, although the Fund's
intent to segregate assets in the amount of the reverse
repurchase agreement minimizes this effect.
Futures, Options and Other Derivative Instruments
FUTURES CONTRACTS. The Fund may enter into contracts for the
purchase or sale for future delivery of fixed-income securities,
foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign
government securities, equity or fixed-income securities. U.S.
futures contracts are traded on exchanges which have been
designated "contract markets" by the CFTC and must be executed
through a futures commission merchant ("FCM"), or brokerage firm,
which is a member of the relevant contract market. Through their
clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However, both the buyer and
seller are required to deposit "initial margin" for the benefit
of the FCM when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as
set by the exchange on which the contract is traded, and may be
maintained in cash or certain other liquid assets by the Fund's
custodian for the benefit of the FCM. Initial margin payments are
similar to good faith
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deposits or performance bonds. Unlike margin extended by a
securities broker, initial margin payments do not constitute
purchasing securities on margin for purposes of the Fund's
investment limitations. If the value of either party's position
declines, that party will be required to make additional
"variation margin" payments for the benefit of the FCM to settle
the change in value on a daily basis. The party that has a gain
may be entitled to receive all or a portion of this amount. In
the event of the bankruptcy of the FCM that holds margin on
behalf of the Fund, the Fund may be entitled to a return of
margin owed to the Fund only in proportion to the amount received
by the FCM's other customers. Janus Capital will attempt to
minimize the risk by careful monitoring of the creditworthiness
of the FCMs with which the Fund does business and by depositing
margin payments in a segregated account with the Fund's
custodian.
The Fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool
operator" adopted by the CFTC and the National Futures
Association, which regulate trading in the futures markets. The
Fund will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC
regulations. To the extent that the Fund holds positions in
futures contracts and related options that do not fall within the
definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions
will not exceed 5% of the fair market value of the Fund's net
assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
Although the Fund will segregate cash and liquid assets in an
amount sufficient to cover its open futures obligations, the
segregated assets would be available to the Fund immediately upon
closing out the futures position, while settlement of securities
transactions could take several days. However, because the Fund's
cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures
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<PAGE>
position remains open, the Fund's return could be diminished due
to the opportunity losses of foregoing other potential
investments.
The Fund's primary purpose in entering into futures contracts is
to protect the Fund from fluctuations in the value of securities
or interest rates without actually buying or selling the
underlying debt or equity security. For example, if the Fund
anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, the Fund could enter into a
futures contract to purchase a stock index as a temporary
substitute for stock purchases. If an increase in the market
occurs that influences the stock index as anticipated, the value
of the futures contracts will increase, thereby serving as a
hedge against the Fund not participating in a market advance.
This technique is sometimes known as an anticipatory hedge. To
the extent the Fund enters into futures contracts for this
purpose, the segregated assets maintained to cover the Fund's
obligations with respect to the futures contracts will consist of
other liquid assets from its portfolio in an amount equal to the
difference between the contract price and the aggregate value of
the initial and variation margin payments made by the Fund with
respect to the futures contracts. Conversely, if the Fund holds
stocks and seeks to protect itself from a decrease in stock
prices, the Fund might sell stock index futures contracts,
thereby hoping to offset the potential decline in the value of
its portfolio securities by a corresponding increase in the value
of the futures contract position. The Fund could protect against
a decline in stock prices by selling portfolio securities and
investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without
having to sell portfolio securities.
If the Fund owns Treasury bonds and the portfolio managers expect
interest rates to increase, the Fund may take a short position in
interest rate futures contracts. Taking such a position would
have much the same effect as the Fund selling Treasury bonds in
its portfolio. If interest rates increase as anticipated, the
value of the Treasury bonds would decline, but the value of the
Fund's interest rate futures contract will increase, thereby
keeping the net asset value of the Fund from declining as much as
it may
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have otherwise. If, on the other hand, the portfolio managers
expect interest rates to decline, the Fund may take a long
position in interest rate futures contracts in anticipation of
later closing out the futures position and purchasing bonds.
Although the Fund can accomplish similar results by buying
securities with long maturities and selling securities with short
maturities, given the greater liquidity of the futures market
than the cash market, it may be possible to accomplish the same
result more easily and more quickly by using futures contracts as
an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures
market are subject to initial margin and variation margin
requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal price
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the
extent participants decide to make or take delivery, liquidity in
the futures market could be reduced and prices in the futures
market distorted. Third, from the point of view of speculators,
the margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures
market may cause temporary price distortions. Due to the
possibility of the foregoing distortions, a correct forecast of
general price trends by the portfolio managers still may not
result in a successful use of futures.
Futures contracts entail risks. Although the Fund believes that
use of such contracts will benefit the Fund, the Fund's overall
performance could be worse than if the Fund had not entered into
futures contracts if the portfolio managers' investment judgement
proves incorrect. For example, if the Fund has hedged
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<PAGE>
against the effects of a possible decrease in prices of
securities held in its portfolio and prices increase instead, the
Fund will lose part or all of the benefit of the increased value
of these securities because of offsetting losses in its futures
positions. In addition, if the Fund has insufficient cash, it may
have to sell securities from its portfolio to meet daily
variation margin requirements. Those sales may be, but will not
necessarily be, at increased prices which reflect the rising
market and may occur at a time when the sales are disadvantageous
to the Fund.
The prices of futures contracts depend primarily on the value of
their underlying instruments. Because there are a limited number
of types of futures contracts, it is possible that the
standardized futures contracts available to the Fund will not
match exactly the Fund's current or potential investments. The
Fund may buy and sell futures contracts based on underlying
instruments with different characteristics from the securities in
which it typically invests D for example, by hedging investments
in portfolio securities with a futures contract based on a broad
index of securities D which involves a risk that the futures
position will not correlate precisely with the performance of the
Fund's investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments
closely correlate with the Fund's investments. Futures prices are
affected by factors such as current and anticipated short-term
interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the
contract. Those factors may affect securities prices differently
from futures prices. Imperfect correlations between the Fund's
investments and its futures positions also may result from
differing levels of demand in the futures markets and the
securities markets, from structural differences in how futures
and securities are traded, and from imposition of daily price
fluctuation limits for futures contracts. The Fund may buy or
sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in
order to attempt to compensate for differences in historical
volatility between the futures contract and the securities,
although this may
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<PAGE>
not be successful in all cases. If price changes in the Fund's
futures positions are poorly correlated with its other
investments, its futures positions may fail to produce desired
gains or result in losses that are not offset by the gains in the
Fund's other investments.
Because futures contracts are generally settled within a day from
the date they are closed out, compared with a settlement period
of three days for some types of securities, the futures markets
can provide superior liquidity to the securities markets.
Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any
particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts and may halt
trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price
fluctuation limit is reached, it may be impossible for the Fund
to enter into new positions or close out existing positions. If
the secondary market for a futures contract is not liquid because
of price fluctuation limits or otherwise, the Fund may not be
able to promptly liquidate unfavorable futures positions and
potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its
value. As a result, the Fund's access to other assets held to
cover its futures positions also could be impaired.
OPTIONS ON FUTURES CONTRACTS. The Fund may buy and write put and
call options on futures contracts. An option on a future gives
the Fund the right (but not the obligation) to buy or sell a
futures contract at a specified price on or before a specified
date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which
it is based or the price of the underlying instrument, ownership
of the option may or may not be less risky than ownership of the
futures contract or the underlying instrument. As with the
purchase of futures contracts,
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<PAGE>
when the Fund is not fully invested it may buy a call option on a
futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising,
the futures contract. If the future's price at the expiration of
the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of
the security or foreign currency which is deliverable under, or
of the index comprising, the futures contract. If the futures'
price at expiration of the option is higher than the exercise
price, the Fund will retain the full amount of the option premium
which provides a partial hedge against any increase in the price
of securities which the Fund is considering buying. If a call or
put option the Fund has written is exercised, the Fund will incur
a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between the
change in the value of its portfolio securities and changes in
the value of the futures positions, the Fund's losses from
existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on
portfolio securities. For example, the Fund may buy a put option
on a futures contract to hedge its portfolio against the risk of
falling prices or rising interest rates.
The amount of risk the Fund assumes when it buys an option on a
futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that
changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
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<PAGE>
FORWARD CONTRACTS. A forward contract is an agreement between two
parties in which one party is obligated to deliver a stated
amount of a stated asset at a specified time in the future and
the other party is obligated to pay a specified amount for the
assets at the time of delivery. The Fund may enter into forward
contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial
instruments. Forward contracts generally are traded in an
interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts
can be specifically drawn to meet the needs of the parties that
enter into them. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold
the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Fund's principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). The Fund may enter into forward currency contracts
with stated contract values of up to the value of the Fund's
assets. A forward currency contract is an obligation to buy or
sell an amount of a specified currency for an agreed price (which
may be in U.S. dollars or a foreign currency). The Fund will
exchange foreign currencies for U.S. dollars and for other
foreign currencies in the normal course of business and may buy
and sell currencies through forward currency contracts in order
to fix a price for securities it has agreed to buy or sell
("transaction hedge"). The Fund also may hedge some or all of its
investments denominated in a foreign currency or exposed to
foreign currency fluctuations against a decline in the value of
that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency (or
a proxy currency whose performance is expected to replicate or
exceed the performance of that currency relative to the U.S.
dollar) approximating the value of some or all of its portfolio
securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the
currency. The Fund also may enter
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<PAGE>
into a forward currency contract with respect to a currency where
the Fund is considering the purchase or sale of investments
denominated in that currency but has not yet selected the
specific investments ("anticipatory hedge"). In any of these
circumstances the Fund may, alternatively, enter into a forward
currency contract to purchase or sell one foreign currency for a
second currency that is expected to perform more favorably
relative to the U.S. dollar if the portfolio managers believe
there is a reasonable degree of correlation between movements in
the two currencies ("cross-hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of
the proceeds of or rates of return on the Fund's foreign currency
denominated portfolio securities. The matching of the increase in
value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise.
Shifting the Fund's currency exposure from one foreign currency
to another removes the Fund's opportunity to profit from
increases in the value of the original currency and involves a
risk of increased losses to the Fund if its portfolio managers'
projection of future exchange rates is inaccurate. Proxy hedges
and cross-hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices
may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
The Fund will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in or whose
value its tied to, the currency underlying the forward contract
or the currency being hedged. To the extent that the Fund is not
able to cover its forward currency positions with underlying
portfolio securities, the Fund's custodian will segregate cash or
other liquid assets having a value equal to the aggregate amount
of the Fund's commitments under forward contracts entered into
with respect to position hedges, cross-hedges and anticipatory
26
<PAGE>
hedges. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund will find
alternative cover or segregate additional cash or liquid assets
on a daily basis so that the value of the covered and segregated
assets will be equal to the amount of the Fund's commitments with
respect to such contracts. As an alternative to segregating
assets, the Fund may buy call options permitting the Fund to buy
the amount of foreign currency being hedged by a forward sale
contract or the Fund may buy put options permitting it to sell
the amount of foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC,
the CFTC may in the future assert authority to regulate forward
contacts. In such event, the Fund's ability to utilize forward
contracts may be restricted. In addition, the Fund may not always
be able to enter into forward contracts at attractive prices and
may be limited in its ability to use these contracts to hedge
Fund assets.
OPTIONS ON FOREIGN CURRENCIES. The Fund may buy and write options
on foreign currencies in a manner similar to that in which
futures or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a
foreign currency in which portfolio securities are denominated
will reduce the U.S. dollar value of such securities, even if
their value in the foreign currency remains constant. In order to
protect against such diminutions in the value of portfolio
securities, the Fund may buy put options on the foreign currency.
If the value of the currency declines, the Fund will have the
right to sell such currency for a fixed amount in U.S. dollars,
thereby offsetting, in whole or in part, the adverse effect on
its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, the Fund may buy
call options on the foreign currency. The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other
types of options,
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however, the benefit to the Fund from purchases of foreign
currency options will be reduced by the amount of the premium and
related transaction costs. In addition, if currency exchange
rates do not move in the direction or to the extent projected,
the Fund could sustain losses on transactions in foreign currency
options that would require the Fund to forego a portion or all of
the benefits of advantageous changes in those rates.
The Fund may also write options on foreign currencies. For
example, to hedge against a potential decline in the U.S. dollar
value of foreign currency denominated securities due to adverse
fluctuations in exchange rates, the Fund could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the decline in value of portfolio
securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a
potential increase in the U.S. dollar cost of securities to be
acquired, the Fund could write a put option on the relevant
currency which, if rates move in the manner projected, should
expire unexercised and allow the Fund to hedge the increased cost
up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium.
If exchange rates do not move in the expected direction, the
option may be exercised and the Fund would be required to buy or
sell the underlying currency at a loss which may not be offset by
the amount of the premium. Through the writing of options on
foreign currencies, the Fund also may lose all or a portion of
the benefits which might otherwise have been obtained from
favorable movements in exchange rates.
The Fund may write covered call options on foreign currencies. A
call option written on a foreign currency by the Fund is
"covered" if the Fund owns the foreign currency underlying the
call or has an absolute and immediate right to acquire that
foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its
custodian) upon
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<PAGE>
conversion or exchange of other foreign currencies held in its
portfolio. A call option is also covered if the Fund has a call
on the same foreign currency in the same principal amount as the
call written if the exercise price of the call held (i) is equal
to or less than the exercise price of the call written or (ii) is
greater than the exercise price of the call written, if the
difference is maintained by the Fund in cash or other liquid
assets in a segregated account with the Fund's custodian.
The Fund also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is designed to provide a hedge
against a decline due to an adverse change in the exchange rate
in the U.S. dollar value of a security which the Fund owns or has
the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which
are entered into for cross-hedging purposes are not covered.
However, in such circumstances, the Fund will collateralize the
option by segregating cash or other liquid assets in an amount
not less than the value of the underlying foreign currency in
U.S. dollars marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income
and to reduce fluctuations in net asset value, the Fund may write
covered put and call options and buy put and call options on
securities that are traded on United States and foreign
securities exchanges and over-the-counter. The Fund may write and
buy options on the same types of securities that the Fund may
purchase directly.
A put option written by the Fund is "covered" if the Fund (i)
segregates cash not available for investment or other liquid
assets with a value equal to the exercise price of the put with
the Fund's custodian or (ii) holds a put on the same security and
in the same principal amount as the put written and the exercise
price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the buyer of an
option will reflect, among other things, the relationship of the
exercise
29
<PAGE>
price to the market price and the volatility of the underlying
security, the remaining term of the option, supply and demand and
interest rates.
A call option written by the Fund is "covered" if the Fund owns
the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional
cash consideration (or for additional cash consideration held in
a segregated account by the Fund's custodian) upon conversion or
exchange of other securities held in its portfolio. A call option
is also deemed to be covered if the Fund holds a call on the same
security and in the same principal amount as the call written and
the exercise price of the call held (i) is equal to or less than
the exercise price of the call written or (ii) is greater than
the exercise price of the call written if the difference is
maintained by the Fund in cash and other liquid assets in a
segregated account with its custodian.
The Fund also may write call options that are not covered for
cross-hedging purposes. The Fund collateralizes its obligation
under a written call option for cross-hedging purposes by
segregating cash or other liquid assets in an amount not less
than the market value of the underlying security,
marked-to-market daily. The Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received from the cross-hedge transaction
would exceed that which would be received from writing a covered
call option and its portfolio managers believe that writing the
option would achieve the desired hedge.
The writer of an option may have no control over when the
underlying securities must be sold, in the case of a call option,
or bought, in the case of a put option, since with regard to
certain options, the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or
not an option expires unexercised, the writer retains the amount
of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value
of the underlying security during the option period. If a call
option is
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exercised, the writer experiences a profit or loss from the sale
of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security
at the exercise price, which will usually exceed the then market
value of the underlying security.
The writer of an option that wishes to terminate its obligation
may effect a "closing purchase transaction." This is accomplished
by buying an option of the same series as the option previously
written. The effect of the purchase is that the writer's position
will be canceled by the clearing corporation. However, a writer
may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who
is the holder of an option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by
selling an option of the same series as the option previously
bought. There is no guarantee that either a closing purchase or a
closing sale transaction can be effected.
In the case of a written call option, effecting a closing
transaction will permit the Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both. In the case of a written put option,
such transaction will permit the Fund to write another put option
to the extent that the exercise price is secured by other liquid
assets. Effecting a closing transaction also will permit the Fund
to use the cash or proceeds from the concurrent sale of any
securities subject to the option for other investments. If the
Fund desires to sell a particular security from its portfolio on
which it has written a call option, the Fund will effect a
closing transaction prior to or concurrent with the sale of the
security.
The Fund will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium
received from writing the option or the price received from a
sale transaction is more than the premium paid to buy the option.
The Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium
received from
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writing the option or the price received from a sale transaction
is less than the premium paid to buy the option. Because
increases in the market of a call option generally will reflect
increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only where a secondary
market for an option of the same series exists. If a secondary
market does not exist, the Fund may not be able to effect closing
transactions in particular options and the Fund would have to
exercise the options in order to realize any profit. If the Fund
is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon
exercise. The absence of a liquid secondary market may be due to
the following: (i) insufficient trading interest in certain
options, (ii) restrictions imposed by a national securities
exchange ("Exchange") on which the option is traded on opening or
closing transactions or both, (iii) trading halts, suspensions or
other restrictions imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or
unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options
Clearing Corporation ("OCC") may not at all times be adequate to
handle current trading volume, or (vi) one or more Exchanges
could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a
particular class or series of options), in which event the
secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on
that Exchange that had been issued by the OCC as a result of
trades on that Exchange would continue to be exercisable in
accordance with their terms.
The Fund may write options in connection with buy-and-write
transactions. In other words, the Fund may buy a security and
then write a call option against that security. The exercise
price of such call will depend upon the expected price movement
of the
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underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-
of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that
the price of the underlying security will remain flat or decline
moderately during the option period. Buy-and-write transactions
using at-the-money call options may be used when it is expected
that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write
transactions using out-of-the-money call options may be used when
it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the
underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone.
If the call options are exercised in such transactions, the
Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the
difference between the Fund's purchase price of the security and
the exercise price. If the options are not exercised and the
price of the underlying security declines, the amount of such
decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk
and return characteristics to buy-and-write transactions. If the
market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the
position or take delivery of the security at the exercise price
and the Fund's return will be the premium received from the put
options minus the amount by which the market price of the
security is below the exercise price.
The Fund may buy put options to hedge against a decline in the
value of its portfolio. By using put options in this way, the
Fund will reduce any profit it might otherwise have realized in
the
33
<PAGE>
underlying security by the amount of the premium paid for the put
option and by transaction costs.
The Fund may buy call options to hedge against an increase in the
price of securities that it may buy in the future. The premium
paid for the call option plus any transaction costs will reduce
the benefit, if any, realized by the Fund upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Fund.
EURODOLLAR INSTRUMENTS. The Fund may make investments in
Eurodollar instruments. Eurodollar instruments are U.S. dollar-
denominated futures contracts or options thereon which are linked
to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed
rate for the lending of funds and sellers to obtain a fixed rate
for borrowings. The Fund might use Eurodollar futures contracts
and options thereon to hedge against changes in LIBOR, to which
many interest rate swaps and fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. The Fund may enter into interest
rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its
assets or its liabilities, and will usually enter into interest
rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments). The net amount of
the excess, if any, of the Fund's obligations over its
entitlement with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid
assets having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the
Fund's custodian. If the Fund enters into an interest rate swap
on other than a net basis, it would maintain a segregated account
in the full amount accrued on a daily basis of its obligations
with respect to the swap. The Fund will not enter into any
interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party
thereto is rated in one of the
34
<PAGE>
three highest rating categories of at least one NRSRO at the time
of entering into such transaction. Janus Capital will monitor the
creditworthiness of all counterparties on an ongoing basis. If
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap
documentation. Janus Capital has determined that, as a result,
the swap market has become relatively liquid. Caps and floors are
more recent innovations for which standardized documentation has
not yet been developed and, accordingly, they are less liquid
than swaps. To the extent the Fund sells (i.e., writes) caps and
floors, it will segregate cash or other liquid assets having an
aggregate net asset value at least equal to the full amount,
accrued on a daily basis, of its obligations with respect to any
caps or floors.
There is no limit on the amount of interest rate swap
transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of
securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under
the documentation currently used in those markets, the risk of
loss with respect to interest rate swaps is limited to the net
amount of the payments that the Fund is contractually obligated
to make. If the other party to an interest rate swap that is not
collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to
receive. The Fund may buy and sell (i.e., write) caps and floors
without limitation, subject to the segregation requirement
described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD
CONTRACTS AND FOREIGN INSTRUMENTS. Unlike transactions entered
into by the Fund in futures contracts, options on foreign
currencies and forward contracts are not traded on contract
35
<PAGE>
markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such
instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded
on certain Exchanges, such as the Philadelphia Stock Exchange and
the Chicago Board Options Exchange, subject to SEC regulation.
Similarly, options on currencies may be traded over the-counter.
In an over-the-counter trading environment, many of the
protections afforded to Exchange participants will not be
available. For example, there are no daily price fluctuation
limits, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the buyer of
an option cannot lose more than the amount of the premium plus
related transaction costs, this entire amount could be lost.
Moreover, an option writer and a buyer or seller of futures or
forward contracts could lose amounts substantially in excess of
any premium received or initial margin or collateral posted due
to the potential additional margin and collateral requirements
associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on
Exchanges. As a result, many of the protections provided to
traders on organized Exchanges will be available with respect to
such transactions. In particular, all foreign currency option
positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default.
Further, a liquid secondary market in options traded on an
Exchange may be more readily available than in the over-the-
counter market, potentially permitting the Fund to liquidate open
positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other
36
<PAGE>
political and economic events. In addition, exchange-traded
options on foreign currencies involve certain risks not presented
by the over-the-counter market. For example, exercise and
settlement of such options must be made exclusively through the
OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if
it determines that foreign governmental restrictions or taxes
would prevent the orderly settlement of foreign currency option
exercises, or would result in undue burdens on the OCC or its
clearing member, impose special procedures on exercise and
settlement, such as technical changes in the mechanics of
delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
In addition, options on U.S. government securities, futures
contracts, options on futures contracts, forward contracts and
options on foreign currencies may be traded on foreign exchanges
and over-the-counter in foreign countries. Such transactions are
subject to the risk of governmental actions affecting trading in
or the prices of foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other
complex foreign political and economic factors, (ii) lesser
availability than in the United States of data on which to make
trading decisions, (iii) delays in the Fund's ability to act upon
economic events occurring in foreign markets during non-business
hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) low trading
volume.
37
<PAGE>
Investment adviser
As stated in the Prospectus, the Fund has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver,
Colorado 80206-4928. The Advisory Agreement provides that Janus
Capital will furnish continuous advice and recommendations
concerning the Fund's investments, provide office space for the
Fund, and pay the salaries, fees and expenses of all Fund
officers and of those Trustees who are affiliated with Janus
Capital. Janus Capital also may make payments to selected
broker-dealer firms or institutions which perform recordkeeping
or other services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such
payments, and the factors in selecting the broker-dealer firms
and institutions to which they will be made, are determined from
time to time by Janus Capital. Janus Capital is also authorized
to perform the management and administrative services necessary
for the operation of the Fund.
The Fund pays custodian and transfer agent fees and expenses,
brokerage commissions and dealer spreads and other expenses in
connection with the execution of portfolio transactions, legal
and accounting expenses, interest and taxes, registration fees,
expenses of shareholders' meetings and reports to shareholders,
fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Fund's
Prospectus and SAI to current shareholders, and other costs of
complying with applicable laws regulating the sale of Fund
shares. Pursuant to the Advisory Agreement, Janus Capital
furnishes certain other services, including net asset value
determination and Fund accounting, recordkeeping, and blue sky
registration and monitoring services, for which the Fund may
reimburse Janus Capital for its costs.
The Fund has agreed to compensate Janus Capital for its services
by the monthly payment of a fee at the annual rate of 0.75% of
the first $300 million of the Fund's average daily net assets,
0.70% of the next $200 million of the Fund's average daily net
assets, and 0.65% of the average daily net assets of the Fund in
excess of $500 million.
For the fiscal year ended October 31, 1998, the investment
advisory fee was $8,032,427. For the fiscal years ended October
31, 1997 and October 31, 1996, the Fund incurred
38
<PAGE>
investment advisory fees of $9,406,417 and $12,316,252,
respectively. Janus Capital did not waive any portion of its fee
in any of these years.
The Advisory Agreement is dated July 1, 1997, and it will
continue in effect until July 1, 1999, and thereafter from year
to year so long as such continuance is approved annually by a
majority of the Fund's Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, and
by either a majority of the outstanding voting shares or the
Trustees of the Fund. The Advisory Agreement i) may be terminated
without the payment of any penalty by the Fund or Janus Capital
on 60 days' written notice; ii) terminates automatically in the
event of its assignment; and iii) generally, may not be amended
without the approval by vote of a majority of the Trustees of the
Fund, including the Trustees who are not interested persons of
the Fund or Janus Capital and, to the extent required by the 1940
Act, the vote of a majority of the outstanding voting securities
of the Fund.
Janus Capital also acts as sub-adviser for a number of
private-label mutual funds and provides separate account advisory
services for institutional accounts. Investment decisions for
each account managed by Janus Capital, including the Fund, are
made independently from those for any other account that is or
may in the future become managed by Janus Capital or its
affiliates. If, however, a number of accounts managed by Janus
Capital are contemporaneously engaged in the purchase or sale of
the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely
affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to
an exemptive order granted by the SEC, the Fund and other funds
advised by Janus Capital may also transfer daily uninvested cash
balances into one or more joint trading accounts. Assets in the
joint trading accounts are invested in money market instruments
and the proceeds are allocated to the participating Funds on a
pro rata basis.
39
<PAGE>
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and policies and is managed accordingly by a particular
portfolio manager or team of portfolio managers. As a result,
from time to time two or more different managed accounts may
pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit the Fund's portfolio managers to
purchase and sell securities for their own accounts except under
the limited exceptions contained in Janus Capital's policy
regarding personal investing by directors/Trustees, officers and
employees of Janus Capital and the Trust. The policy requires
investment personnel and officers of Janus Capital, inside
directors/Trustees of Janus Capital and the Fund and other
designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not
otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal
transaction would be contrary to the provisions of the policy or
would be deemed to adversely affect any transaction known to be
under consideration for or to have been effected on behalf of any
client account, including the Fund.
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and directors/
40
<PAGE>
Trustees of Janus Capital and the Trust to various trading
restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's policy. Those persons also may be required under
certain circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
41
<PAGE>
Custodian, transfer agent and
certain affiliations
State Street Bank and Trust Company, P.O. Box 0351, Boston,
Massachusetts 02117-0351 is the custodian of the domestic
securities and cash of the Fund. State Street and the foreign
subcustodians selected by it and approved by the Trustees have
custody of the assets of the Fund held outside the U.S. and cash
incidental thereto. The custodian and subcustodians hold the
Fund's assets in safekeeping and collect and remit the income
thereon, subject to the instructions of the Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Fund's transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Fund. For transfer agency and other
services, Janus Service receives a fee calculated at an annual
rate of 0.16% of average net assets of the Fund. In addition, the
Fund pays DST Systems, Inc. ("DST"), a subsidiary of KCSI,
license fees at the rate of $3.06 per shareholder account for the
use of DST's shareholder accounting system. The fund also pays
DST $1.10 per closed shareholder account. The Fund pays DST for
the use of its portfolio and fund accounting system a monthly
base fee of $250 to $1,250 based on the number of Janus funds
using the system and an asset charge of $1 per million dollars of
net assets (not to exceed $500 per month). In addition, the Fund
pays DST postage and forms costs of a DST affiliate incurred in
mailing Fund shareholder transaction confirmations.
The Trustees have authorized the Fund to use another affiliate of
DST as introducing broker for certain Fund portfolio transactions
as a means to reduce Fund expenses through credits against the
charges of DST and its affiliates with regard to commissions
earned by such affiliate. See "Portfolio Transactions and
Brokerage."
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Fund. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Janus Distributors acts as the agent of the Fund in connection
42
<PAGE>
with the sale of its shares in all states in which the shares are
registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Fund's shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
43
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the Fund
and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions. The Fund may trade foreign securities
in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on
foreign stock exchanges, brokers' commissions are frequently
fixed and are often higher than in the United States, where
commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to the Fund
or to a third party service provider to the Fund to pay Fund
expenses; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
Research may include furnishing advice, either directly or
through publications or writings, as to the value of securities,
the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of
securities; furnishing seminars, information, analyses and
44
<PAGE>
reports concerning issuers, industries, securities, trading
markets and methods, legislative developments, changes in
accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials;
comparative performance evaluation and technical measurement
services and quotation services, and products and other services
(such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information
and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist
Janus Capital in carrying out its responsibilities.
Most brokers and dealers used by Janus Capital provide research
and other services described above. For the year ended October
31, 1998, the Fund paid $557,951 of its total brokerage
commissions to brokers and dealers in transactions identified for
execution primarily on the basis of research and other services
provided to the Fund on transactions of $328,322,385. Research
received from brokers or dealers is supplemental to Janus
Capital's own research efforts.
Janus Capital may use research products and services in servicing
other accounts in addition to the Fund. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers
regarding the placement of securities transactions because of the
research services they provide. It does, however, have an
internal procedure for allocating transactions in a manner
consistent with its execution policy to brokers that it has
identified as providing
45
<PAGE>
superior execution and research, research-related products or
services which benefit its advisory clients, including the Fund.
Research products and services incidental to effecting securities
transactions furnished by brokers or dealers may be used in
servicing any or all of Janus Capital's clients and such research
may not necessarily be used by Janus Capital in connection with
the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-
dealer or the recommendation of a broker-dealer to its customers
that they purchase Fund shares as a factor in the selection of
broker-dealers to execute Fund portfolio transactions. Janus
Capital may also consider payments made by brokers effecting
transactions for the Fund i) to the Fund or ii) to other persons
on behalf of the Fund for services provided to the Fund for which
it would be obligated to pay. In placing portfolio business with
such broker-dealers, Janus Capital will seek the best execution
of each transaction.
When the Fund purchases or sells a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
The Fund's Trustees have authorized Janus Capital to place
transactions with DST Securities, Inc. ("DSTS"), a wholly-owned
broker-dealer subsidiary of DST. Janus Capital may do so if it
reasonably believes that the quality of the transaction and the
associated commission are fair and reasonable and if, overall,
the associated transaction costs, net of any credits described
above under "Custodian, Transfer Agent and Certain Affiliations,"
are lower than those that would otherwise be incurred.
The total amount of brokerage commissions paid by the Fund during
the fiscal year ended October 31, 1998, was $1,688,512. For the
fiscal years ended October 31, 1997 and October 31, 1996, the
Fund paid brokerage commissions of $3,599,484 and
46
<PAGE>
$3,945,142, respectively. Included in the brokerage commissions
paid for the fiscal year ended October 31, 1998, was $15,909 paid
through DSTS, which served to reduce by $11,932 certain
out-of-pocket expenses paid by the Fund. Included in brokerage
commissions paid for the fiscal years ended October 31, 1997 and
October 31, 1996, was $51,096 and $64,665, respectively, paid
through DSTS which served to reduce by $38,322 and $48,499,
respectively, certain out-of-pocket expenses. Brokerage
commissions paid through DSTS for the 1998 fiscal year
represented 0.94% of the Fund's aggregate brokerage commissions
for such fiscal year, while 0.66% of the aggregate dollar amount
of the Fund's portfolio transactions involving a commission
payment were executed through DSTS. The difference between
commissions paid through DSTS and expenses reduced constitute
commissions paid to an unaffiliated clearing broker. Differences
in the percentage of total commissions versus the percentage of
total transactions is due, in part, to variations among share
prices and number of shares traded, while average price per share
commission rates were substantially the same.
As of October 31, 1998, the Fund did not own securities of
regular broker-dealers (or parents).
47
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years. In August 1992, Janus
Venture Fund, Inc. and Janus Twenty Fund, Inc. (both separate
Maryland corporations) and the Janus Income Series (a
Massachusetts business trust comprised of Janus Flexible Income
Fund series) were reorganized into separate series of the Trust.
In general, all references to Trust offices in this section
include comparable offices with the respective predecessor funds,
unless a Trust office was filled subsequent to the
reorganization.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee and Executive Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
48
<PAGE>
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly (1997-
1998), Chief Financial Officer-Boston Market Concepts, Boston
Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
49
<PAGE>
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly
(1993-1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
William H. Bales, Age 30 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Venture
Fund. Formerly, research analyst at Janus Capital (1993-1996).
Jonathan D. Coleman, Age 27 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Venture
Fund. Formerly, research analyst at Janus Capital (1994-1996).
Fulbright Fellow (1993-1994).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
50
<PAGE>
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
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<PAGE>
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly (1990-
1994), with The Boston Company Advisors, Inc., Boston, MA (mutual
fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly (1991 to 1997),
Director of Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
52
<PAGE>
The Trustees are responsible for major decisions relating to the
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Fund by its officers and review
the investment decisions of the officers, although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Agreement and Declaration of Trust, Massachusetts law or the
1940 Act.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Fund described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Fund or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Fund for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $1,519 $82,000
Gary O. Loo, Trustee $1,181 $74,000
Dennis B. Mullen, Trustee $1,380 $82,000
Martin H. Waldinger, Trustee $1,450 $74,000
James T. Rothe, Trustee $1,395 $82,000
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
53
<PAGE>
Purchase of shares
The Fund has discontinued public sales of its shares to new
investors. Only shareholders who maintain open accounts are
permitted to continue to make investments in the Fund and to
reinvest any dividends and capital gains distributions. Once a
Fund account is closed, additional investments in the Fund may
not be possible. The Shareholder's Manual section of the
Prospectus contains detailed information about the purchase of
shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund
shares is determined once each day on which the New York Stock
Exchange ("NYSE") is open, at the close of its regular trading
session (normally 4:00 p.m., New York time, Monday through
Friday). As stated in the Prospectus, the NAV of Fund shares is
not determined on days the NYSE is closed (generally, New Year's
Day, Presidents' Day, Martin Luther King Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas). The per share NAV of the Fund is determined by
dividing the total value of the Fund's securities and other
assets, less liabilities, by the total number of shares
outstanding. In determining NAV, securities listed on an
Exchange, the NASDAQ National Market and foreign markets are
valued at the closing prices on such markets, or if such price is
lacking for the trading period immediately preceding the time of
determination, such securities are valued at their current bid
price. Municipal securities held by the Fund are traded primarily
in the over-the-counter market. Valuations of such securities are
furnished by one or more pricing services employed by the Fund
and are based upon a computerized matrix system or appraisals
obtained by a pricing service, in each case in reliance upon
information concerning market transactions and quotations from
recognized municipal securities dealers. Other securities that
are traded on the over-the-counter market are valued at their
closing bid prices. Foreign securities and currencies are
converted to U.S. dollars using the exchange rate in effect at
the close of the NYSE. The Fund will determine the market value
of individual securities held by it, by using prices provided by
one or more professional pricing services
54
<PAGE>
which may provide market prices to other funds, or, as needed, by
obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on an
amortized cost basis. Securities for which quotations are not
readily available, and other assets, are valued at fair values
determined in good faith under procedures established by and
under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business on each business day in New York
(i.e., a day on which the NYSE is open). In addition, European or
Far Eastern securities trading generally or in a particular
country or countries may not take place on all business days in
New York. Furthermore, trading takes place in Japanese markets on
certain Saturdays and in various foreign markets on days which
are not business days in New York and on which the Fund's NAV is
not calculated. The Fund calculates its NAV per share, and
therefore effects sales, redemptions and repurchases of its
shares, as of the close of the NYSE once on each day on which the
NYSE is open. Such calculation may not take place
contemporaneously with the determination of the prices of the
foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their
dividends and distributions in cash, all income dividends and
capital gains distributions, if any, on the Fund's shares are
reinvested automatically in additional shares of the Fund at the
NAV determined on the payment date. Checks for cash dividends and
distributions and confirmations of reinvestments are usually
mailed to shareholders within ten days after the record date. Any
election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account
Application form or by phone) will apply to dividends and
distributions the record dates of which fall on or after the date
that the Fund receives such notice. Changes to distribution
55
<PAGE>
options must be received at least three days prior to the record
date to be effective for such date. Investors receiving cash
distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
56
<PAGE>
Redemption of shares
Procedures for redemption of shares are set forth in the
Shareholder's Manual section of the Prospectus. Shares normally
will be redeemed for cash, although the Fund retains the right to
redeem its shares in kind under unusual circumstances, in order
to protect the interests of remaining shareholders, by delivery
of securities selected from its assets at its discretion.
However, the Fund is governed by Rule 18f-1 under the 1940 Act,
which requires the Fund to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the NAV of the Fund during any 90-day
period for any one shareholder. Should redemptions by any
shareholder exceed such limitation, the Fund will have the option
of redeeming the excess in cash or in kind. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as
the method of valuing portfolio securities described under
"Purchase of Shares D Net Asset Value Determination" and such
valuation will be made as of the same time the redemption price
is determined.
The right to require the Fund to redeem its shares may be
suspended, or the date of payment may be postponed, whenever (1)
trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed except for holidays and weekends, (2) the SEC
permits such suspension and so orders, or (3) an emergency exists
as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
57
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts and specific types of accounts is set forth in the
Prospectus. Applications for specific types of accounts may be
obtained by calling the Fund at 1-800-525-3713 or writing to the
Fund at P.O. Box 173375, Denver, Colorado 80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone. The Fund, its transfer agent and
its distributor disclaim responsibility for the authenticity of
instructions received by telephone. Such entities will employ
reasonable procedures to confirm that instructions communicated
by telephone are genuine. Such procedures may include, among
others, requiring personal identification prior to acting upon
telephone instructions, providing written confirmation of the
transactions and tape recording telephone conversations.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectus,
if you have a regular account or are eligible for distributions
from a retirement plan, you may establish a systematic redemption
option. The payments will be made from the proceeds of periodic
redemptions of shares in the account at the NAV. Depending on the
size or frequency of the disbursements requested, and the
fluctuation in value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even exhaust
the shareholder's account. Either an investor or the Fund, by
written notice to the other, may terminate the investor's
systematic redemption option without penalty at any time.
Information about requirements to establish a systematic
redemption option may be obtained by writing or calling the Fund
at the address or phone number shown above.
58
<PAGE>
Tax-deferred accounts
The Fund offers several different types of tax-deferred accounts
that an investor may establish to invest in Fund shares,
depending on rules prescribed by the Code. Traditional and Roth
Individual Retirement Accounts may be used by most individuals
who have taxable compensation. Simplified Employee Pensions and
Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including
corporations, partnerships and sole proprietors, for the benefit
of business owners and their employees. Education IRAs allow
individuals, subject to certain income limitations, to contribute
up to $500 annually on behalf of any child under the age of 18.
In addition, the Fund offers a Section 403(b)(7) Plan for
employees of educational organizations and other qualifying
tax-exempt organizations. Investors should consult their tax
adviser or legal counsel before selecting a tax-deferred account.
Contributions under Traditional and Roth IRAs, Education IRAs,
SEPs, Defined Contribution Plans and Section 403(b)(7) Plans are
subject to specific contribution limitations. Generally, such
contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary
Trust Company as custodian. Each participant's account is charged
an annual fee of $12 per taxpayer identification number no matter
how many tax-deferred accounts the participant has with Janus.
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
Distributions from tax-deferred accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax
if withdrawn prior to age 59 1/2 or used for a nonqualifying
purpose. Additionally, shareholders generally must start
withdrawing retirement plan assets no later than April 1 of the
year after they reach age 70 1/2. Several exceptions to these
general rules may apply and several methods exist to determine
the amount and timing of the minimum annual distribution (if
any). Shareholders should consult with their tax adviser or legal
counsel prior to receiving any distribution from any tax-deferred
account, in order to determine the income tax impact of any such
distribution.
59
<PAGE>
To receive additional information about Traditional and Roth
IRAs, SEPs, Defined Contribution Plans and Section 403(b)(7)
Plans along with the necessary materials to establish an account,
please call the Fund at 1-800-525-3713 or write to the Fund at
P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to
a Traditional or Roth IRA, SEP, Defined Contribution Plan or
Section 403(b)(7) Plan can be made until the appropriate forms to
establish any such plan have been completed.
60
<PAGE>
Income dividends, capital gains
distributions and tax status
It is a policy of the Fund to make distributions of substantially
all of its investment income and any net realized capital gains.
Any capital gains realized during each fiscal year of the Fund
ended October 31, as defined by the Code, are normally declared
and payable to shareholders in December. The Fund intends to
qualify as a regulated investment company by satisfying certain
requirements prescribed by Subchapter M of the Code. Accordingly,
the Fund will invest no more than 25% of its total assets in a
single issuer (other than U.S. government securities).
The Fund may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS.
In order to avoid taxes and interest that must be paid by the
Fund, if these instruments are profitable, the Fund may make
various elections permitted by the tax laws. However, these
elections could require that the Fund recognize taxable income,
which in turn must be distributed.
Some foreign securities purchased by the Fund may be subject to
foreign taxes which could reduce the yield on such securities.
The amount of such foreign taxes is expected to be insignificant.
Accordingly, the Fund does not intend to make the election
permitted under section 853 of the Code to pass through such
taxes to shareholders as a foreign tax credit as this would
increase the taxable income reported to shareholders and require
shareholders to take the credit on their tax returns,
complicating the preparation of such returns. As a result, any
foreign taxes paid or accrued will represent an expense to the
Fund which will reduce its investment company taxable income.
61
<PAGE>
Principal shareholders
As of January 20, 1999, the officers and Trustees of the Fund as
a group owned less than 1% of the outstanding shares of the Fund.
In addition, as of January 20, 1999, Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104-4122, owned 8.67%
of the outstanding shares of the Fund.
According to information provided by Charles Schwab & Co., Inc.,
this ownership is by nominee only and does not represent
beneficial ownership of such shares, because they have no
investment discretion or voting power with respect to such
shares.
62
<PAGE>
Miscellaneous information
The Fund was originally organized in 1984 as a Maryland
corporation. On August 7, 1992, the Fund was reorganized from a
Maryland corporation into Janus Venture Fund, a separate series
of the Trust. Pursuant to this reorganization, the Trust assumed
all the assets and liabilities of Janus Venture Fund, Inc., and
shareholders received shares of Janus Venture Fund series of the
Trust equal both in number and net asset value to their shares of
Janus Venture Fund, Inc. All references in this SAI to the Fund
and all financial and other information about the Fund prior to
August 7, 1992 are to the former Janus Venture Fund, Inc.; all
references after August 7, 1992, are to the Janus Venture Fund
series of the Trust. As the result of the reorganization, the
fiscal year end of the Fund changed from July 31 to October 31.
As of the date of this SAI, the Trust offers 21 separate series,
three of which currently offer three classes of shares.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Fund, the Fund must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Fund could, under
certain circumstances, be held liable for the obligations of the
Fund. However, the Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
notice of this disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or the
Trustees. The Declaration of Trust also provides for
indemnification from the assets of the Fund for all losses and
expenses of any Fund shareholder held liable for the obligations
of the Fund. Thus, the risk of a shareholder incurring a
financial loss on account of its liability as a shareholder of
the Fund is limited to circumstances in which the Fund would be
unable to meet its obligations. The possibility that these
circumstances would occur is remote. The Trustees intend to
conduct the operations of the Fund to avoid, to the extent
possible, liability of shareholders for liabilities of the Fund.
63
<PAGE>
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of the Fund are fully paid and
nonassessable when issued. All shares of the Fund participate
equally in dividends and other distributions by the Fund, and in
residual assets of the Fund in the event of liquidation. Shares
of the Fund have no preemptive, conversion or subscription
rights. Shares of the Fund may be transferred by endorsement or
stock power as is customary, but the Fund is not bound to
recognize any transfer until it is recorded on its books.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by the Fund only if a matter affects or requires the vote of only
the Fund or the Fund's interest in the matter differs from the
interest of other portfolios of the Trust. As a shareholder, you
are entitled to one vote for each share that you own.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders
held on July 10, 1992, with the exception of Mr. Craig and Mr.
Rothe who were appointed by the Trustees as of June 30, 1995 and
January 1, 1997, respectively. Under the Declaration of Trust,
each Trustee will continue in office until the termination of the
Trust or his earlier death, retirement, resignation, bankruptcy,
incapacity or removal. Vacancies will be filled by a majority of
the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held,
unless otherwise required by the Declaration of Trust or the 1940
Act. Subject to the foregoing, shareholders have the power to
vote to elect or remove Trustees, to terminate or reorganize the
Fund, to
64
<PAGE>
amend the Declaration of Trust, to bring certain derivative
actions and on any other matters on which a shareholder vote is
required by the 1940 Act, the Declaration of Trust, the Trust's
Bylaws or the Trustees.
As mentioned above in "Shareholder Meetings," each share of the
Fund and of each other series of the Trust has one vote (and
fractional votes for fractional shares). Shares of all series of
the Trust have noncumulative voting rights, which means that the
holders of more than 50% of the shares of all series of the Trust
voting for the election of Trustees can elect 100% of the
Trustees if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any Trustees.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve the Fund's objective
by investing all of the Fund's assets in another investment
company having the same investment objective and substantially
the same investment policies and restrictions as those applicable
to the Fund. Unless otherwise required by law, this policy may be
implemented by the Trustees without shareholder approval.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Fund,
audit the Fund's annual financial statements and prepare its tax
returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Fund or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
65
<PAGE>
Performance information
Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of
return of a hypothetical investment in the Fund over periods of
1, 5, and 10 years (up to the life of the Fund). These are the
annual total rates of return that would equate the initial amount
invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula: P(1 + T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years and
ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period). All total return
figures reflect the deduction of a proportional share of Fund
expenses on an annual basis, and assume that all dividends and
distributions are reinvested when paid.
The Fund was made available for public sale on April 30, 1985.
The one year, five year, ten year and lifetime average annual
total returns, computed as of October 31, 1998, for each of those
periods, are 1.07%, 10.28%, 14.55% and 15.28%, respectively.
From time to time in advertisements or sales material, the Fund
may discuss its performance ratings or other information as
published by recognized mutual fund statistical rating services,
including, but not limited to, Lipper Analytical Services, Inc.
("Lipper"), Ibbotson Associates, Micropal or Morningstar, Inc.
("Morningstar") or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Mutual Funds Magazine,
Kiplinger's or Smart Money. The Fund may also compare its
performance to that of other selected mutual funds (for example,
peer groups created by Lipper or Morningstar), mutual fund
averages or recognized stock market indicators, including, but
not limited to, the Russell 2000 Index and the NASDAQ composite.
In addition, the Fund may compare its total return to the yield
on U.S. Treasury obligations and to the percentage change in the
Consumer Price Index. Such performance ratings or comparisons may
be made with funds that may have different investment
restrictions, objectives, policies or techniques than the Fund
and such other funds or market indicators may be comprised of
securities that differ significantly from the Fund's investments.
66
<PAGE>
Financial statements
The following audited financial statements for the period ended
October 31, 1998 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1998
Statement of Operations for the period ended October 31, 1998
Statement of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
67
<PAGE>
Appendix A
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of
the major credit ratings agencies. Credit ratings evaluate only
the safety of principal and interest payments, not the market
value risk of lower quality securities. Credit rating agencies
may fail to change credit ratings to reflect subsequent events on
a timely basis. Although Janus Capital considers security ratings
when making investment decisions, it also performs its own
investment analysis and does not rely solely on the ratings
assigned by credit agencies.
STANDARD & POOR'S
RATINGS SERVICES
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
AAA......................... Highest rating; extremely strong
capacity to pay principal and
interest.
AA.......................... High quality; very strong capacity
to pay principal and interest.
A........................... Strong capacity to pay principal
and interest; somewhat more
susceptible to the adverse effects
of changing circumstances and
economic conditions.
BBB......................... Adequate capacity to pay principal
and interest; normally exhibit
adequate protection parameters, but
adverse economic conditions or
changing circumstances more likely
to lead to a weakened capacity to
pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, CCC, CC, C........... Predominantly speculative with
respect to the issuer's capacity to
meet required interest and
principal payments. BB - lowest
degree of speculation; C - the
highest degree of speculation.
Quality and protective
characteristics outweighed by large
uncertainties or major risk
exposure to adverse conditions.
D........................... In default.
</TABLE>
68
<PAGE>
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
Aaa......................... Highest quality, smallest degree of
investment risk.
Aa.......................... High quality; together with Aaa
bonds, they compose the high-grade
bond group.
A........................... Upper-medium grade obligations;
many favorable investment
attributes.
Baa......................... Medium-grade obligations; neither
highly protected nor poorly
secured. Interest and principal
appear adequate for the present but
certain protective elements may be
lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba.......................... More uncertain, with speculative
elements. Protection of interest
and principal payments not well
safeguarded during good and bad
times.
B........................... Lack characteristics of desirable
investment; potentially low
assurance of timely interest and
principal payments or maintenance
of other contract terms over time.
Caa......................... Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
Ca.......................... Speculative in a high degree; could
be in default or have other marked
shortcomings.
C........................... Lowest-rated; extremely poor
prospects of ever attaining
investment standing.
</TABLE>
69
<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless the portfolio managers determine that such
securities are the equivalent of investment grade securities.
Securities that have received ratings from more than one agency
are considered investment grade if at least one agency has rated
the security investment grade.
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<PAGE>
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<PAGE>
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74
<PAGE>
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75
<PAGE>
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76
<PAGE>
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<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3173
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Janus Overseas Fund
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
Statement of Additional Information
February 17, 1999
Janus Overseas Fund is a no-load, diversified mutual fund
that seeks long-term growth of capital. It invests
primarily in common stocks of issuers located outside the
United States. The Fund has the flexibility to invest on
a worldwide basis in companies and other organizations of
any size, regardless of country of organization or place
of principal business activity. The Fund normally invests
at least 65% of its total assets in securities of issuers
from at least five different countries, excluding the
United States. Although the Fund intends to invest
substantially all of its assets in issuers located
outside the United States, it may at times invest in U.S.
issuers and it may at times invest all of its assets in
fewer than five countries or even a single country.
The Fund is a separate series of Janus Investment Fund, a
Massachusetts business trust.
The Fund has discontinued public sales of its shares to
new investors. However, shareholders who maintain open
Fund accounts are permitted to continue to purchase
shares of the Fund and to reinvest any dividends and/or
capital gains distributions in shares of the Fund. Once a
shareholder's Fund account is closed, it may not be
possible for that shareholder to purchase additional Fund
shares. See the "Shareholder's Manual" section of the
Prospectus for more details. The Fund may resume sales of
its shares at some future date, although it has no
present intention of doing so.
This Statement of Additional Information is not a
Prospectus and should be read in conjunction with the
Fund's Prospectus dated February 17, 1999, which is
incorporated by reference into this SAI and may be
obtained from the Trust at the above phone number or
address. This SAI contains additional and more detailed
information about the Fund's operations and activities
than the Prospectus. The Annual Report, which contains
important financial information about the Fund, is
incorporated by reference into this SAI and is also
available, without charge, at the above phone number or
address.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
Classification, Portfolio Turnover, Investment
Policies and Restrictions, and Investment
Strategies and Risks............................ 2
Investment Adviser.............................. 37
Custodian, Transfer Agent
and Certain Affiliations........................ 41
Portfolio Transactions and Brokerage............ 43
Trustees and Officers........................... 47
Purchase of Shares.............................. 52
Net Asset Value Determination................ 52
Reinvestment of Dividends and Distributions.. 53
Redemption of Shares............................ 55
Shareholder Accounts............................ 56
Telephone Transactions....................... 56
Systematic Redemptions....................... 56
Tax-Deferred Accounts........................... 57
Income Dividends, Capital Gains Distributions
and Tax Status.................................. 59
Principal Shareholders.......................... 60
Miscellaneous Information....................... 61
Shares of the Trust.......................... 61
Shareholder Meetings......................... 62
Voting Rights................................ 62
Master/Feeder Option......................... 63
Independent Accountants...................... 63
Registration Statement....................... 63
Performance Information......................... 64
Financial Statements............................ 66
Appendix A...................................... 67
</TABLE>
1
<PAGE>
Classification, portfolio turnover,
investment policies
and restrictions, and
investment strategies
and risks
CLASSIFICATION
The Fund is a series of the Trust, an open-end, management
investment company. The Investment Company Act of 1940 ("1940
Act") classifies mutual funds as either diversified or
nondiversified, and the Fund is a diversified fund.
PORTFOLIO TURNOVER
The Prospectus includes a discussion of portfolio turnover
policies. The Fund's portfolio turnover rates (total purchases or
sales, whichever is less, compared to average monthly value of
portfolio securities) for the fiscal years ended October 31, 1998
and October 31, 1997, were 105% and 72%%, respectively.
INVESTMENT POLICIES AND RESTRICTIONS
The Fund is subject to certain fundamental policies and
restrictions that may not be changed without shareholder
approval. Shareholder approval means approval by the lesser of
(i) more than 50% of the outstanding voting securities of the
Trust (or the Fund if a matter affects just the Fund), or (ii)
67% or more of the voting securities present at a meeting if the
holders of more than 50% of the outstanding voting securities of
the Trust (or the Fund) are present or represented by proxy. As
fundamental policies, the Fund may not:
(1) Own more than 10% of the outstanding voting securities of any
one issuer and, as to seventy-five percent (75%) of the value of
its total assets, purchase the securities of any one issuer
(except cash items and "government securities" as defined under
the 1940 Act), if immediately after and as a result of such
purchase, the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's total
assets.
2
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(2) Invest 25% or more of the value of its total assets in any
particular industry (other than U.S. government securities).
(3) Invest directly in real estate or interests in real estate;
however, the Fund may own debt or equity securities issued by
companies engaged in those businesses.
(4) Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities
(but this limitation shall not prevent the Fund from purchasing
or selling options, futures, swaps and forward contracts or from
investing in securities or other instruments backed by physical
commodities).
(5) Lend any security or make any other loan if, as a result,
more than 25% of its total assets would be lent to other parties
(but this limitation does not apply to purchases of commercial
paper, debt securities or repurchase agreements).
(6) Act as an underwriter of securities issued by others, except
to the extent that the Fund may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund.
As a fundamental policy, the Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental),
invest all of its assets in the securities of a single open-end
management investment company with substantially the same
fundamental investment objective, policies and limitations as the
Fund.
The Trustees have adopted additional investment restrictions for
the Fund. These restrictions are operating policies of the Fund
and may be changed by the Trustees without shareholder approval.
The additional investment restrictions adopted by the Trustees to
date include the following:
(a) The Fund will not (i) enter into any futures contracts and
related options for purposes other than bona fide hedging
transactions within the meaning of Commodity Futures Trading
Commission ("CFTC") regulations if the aggregate initial margin
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and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of
bona fide hedging transactions will exceed 5% of the fair market
value of the Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it
has entered into; and (ii) enter into any futures contracts if
the aggregate amount of the Fund's commitments under outstanding
futures contracts positions would exceed the market value of its
total assets.
(b) The Fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short without the
payment of any additional consideration therefor, and provided
that transactions in futures, options, swaps and forward
contracts are not deemed to constitute selling securities short.
(c) The Fund does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits
as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with
transactions in futures, options, swaps and forward contracts
shall not be deemed to constitute purchasing securities on
margin.
(d) The Fund may not mortgage or pledge any securities owned or
held by the Fund in amounts that exceed, in the aggregate, 15% of
the Fund's net asset value, provided that this limitation does
not apply to reverse repurchase agreements, deposits of assets to
margin, guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such
contracts.
(e) The Fund may borrow money for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 25%
of the value of its total assets (including the amount borrowed)
less liabilities (other than borrowings). If borrowings exceed
25% of the value of the Fund's total assets by reason of a
decline in net assets, the Fund will reduce its borrowings within
three business days to the extent necessary to comply with the
25% limitation. This policy shall not prohibit
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reverse repurchase agreements, deposits of assets to margin or
guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such
contracts.
(f) The Fund does not currently intend to purchase any security
or enter into a repurchase agreement if, as a result, more than
15% of its net assets would be invested in repurchase agreements
not entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by virtue
of legal or contractual restrictions on resale or the absence of
a readily available market. The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists
for securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 ("Rule 144A Securities"), or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(g) The Fund may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC") the Fund may borrow
money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. The Fund will borrow money through the program only
when the costs are equal to or lower than the cost of bank loans.
Interfund loans and borrowings normally extend overnight, but can
have maximum duration of seven days. The Fund will lend through
the program only when the returns are higher than those available
from other short-term instruments (such as repurchase
agreements). The Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending Fund could result in a lost
investment opportunity or additional borrowing costs.
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For the purposes of the Fund's policies on investing in
particular industries, the Fund will rely primarily on industry
or industry group classifications published by Bloomberg L.P. To
the extent that Bloomberg L.P. industry classifications are so
broad that the primary economic characteristics in a single
industry are materially different, the Fund may further classify
issuers in accordance with industry classifications as published
by the SEC.
INVESTMENT STRATEGIES AND RISKS
Cash Position
As discussed in the Prospectus, when the Fund's portfolio
managers believe that market conditions are unfavorable for
profitable investing, or when they are otherwise unable to locate
attractive investment opportunities, the Fund's investment in
cash and similar investments may increase. Securities that the
Fund may invest in as a means of receiving a return on idle cash
include commercial paper, certificates of deposit, repurchase
agreements or other short-term debt obligations. The Fund may
also invest in money market funds, including funds managed by
Janus Capital. (See "Investment Company Securities" on page 11).
Illiquid Investments
The Fund may invest up to 15% of its net assets in illiquid
investments (i.e., securities that are not readily marketable).
The Trustees have authorized Janus Capital to make liquidity
determinations with respect to certain securities, including Rule
144A Securities, commercial paper and municipal lease obligations
purchased by the Fund. Under the guidelines established by the
Trustees, Janus Capital will consider the following factors: 1)
the frequency of trades and quoted prices for the obligation; 2)
the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; 3) the willingness
of dealers to undertake to make a market in the security; and 4)
the nature of the security and the nature of marketplace trades,
including the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the
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transfer. In the case of commercial paper, Janus Capital will
also consider whether the paper is traded flat or in default as
to principal and interest and any ratings of the paper by a
Nationally Recognized Statistical Rating Organization ("NRSRO").
A foreign security that may be freely traded on or through the
facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security
subject to these procedures.
If illiquid securities exceed 15% of the Fund's net assets after
the time of purchase the Fund will take steps to reduce in an
orderly fashion its holdings of illiquid securities. Because
illiquid securities may not be readily marketable, the portfolio
managers may not be able to dispose of them in a timely manner.
As a result, the Fund may be forced to hold illiquid securities
while their price depreciates. Depreciation in the price of
illiquid securities may cause the net asset value of the Fund to
decline.
Short Sales
The Fund may engage in "short sales against the box." This
technique involves selling either a security that the Fund owns,
or a security equivalent in kind and amount to the security sold
short that the Fund has the right to obtain, for delivery at a
specified date in the future. The Fund may enter into a short
sale against the box to hedge against anticipated declines in the
market price of portfolio securities. If the value of the
securities sold short increases prior to the scheduled delivery
date, the Fund loses the opportunity to participate in the gain.
Zero Coupon, Step Coupon and Pay-In-Kind Securities
The Fund may invest up to 10% of its assets in zero coupon, pay-
in-kind and step coupon securities. Zero coupon bonds are issued
and traded at a discount from their face value. They do not
entitle the holder to any periodic payment of interest prior to
maturity. Step coupon bonds trade at a discount from their face
value and pay coupon interest. The coupon rate is low for an
initial period and then increases to a higher coupon rate
thereafter. The
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<PAGE>
discount from the face amount or par value depends on the time
remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the
issuer. Pay-in-kind bonds normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the
security a similar bond with the same coupon rate and a face
value equal to the amount of the coupon payment that would have
been made.
Current federal income tax law requires holders of zero coupon
and step coupon securities to report the portion of the original
issue discount on such securities that accrues during a given
year as interest income, even though the holders receive no cash
payments of interest during the year. In order to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986 and the regulations thereunder (the "Code"), the Fund must
distribute its investment company taxable income, including the
original issue discount accrued on zero coupon or step coupon
bonds. Because the Fund will not receive cash payments on a
current basis in respect of accrued original issue discount on
zero coupon bonds or step coupon bonds during the period before
interest payments begin, in some years the Fund may have to
distribute cash obtained from other sources in order to satisfy
the distribution requirements under the Code. The Fund might
obtain such cash from selling other portfolio holdings which
might cause the Fund to incur capital gains or losses on the
sale. Additionally, these actions are likely to reduce the assets
to which Fund expenses could be allocated and to reduce the rate
of return for the Fund. In some circumstances, such sales might
be necessary in order to satisfy cash distribution requirements
even though investment considerations might otherwise make it
undesirable for the Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and
pay-in-kind securities are more volatile than the prices of
securities that pay interest periodically and in cash and are
likely to respond to changes in interest rates to a greater
degree than other types of debt securities having similar
maturities and credit quality.
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<PAGE>
Pass-Through Securities
The Fund may invest in various types of pass-through securities,
such as mortgage-backed securities, asset-backed securities and
participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have
been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives
an undivided interest in the underlying pool of securities. The
issuers of the underlying securities make interest and principal
payments to the intermediary which are passed through to
purchasers, such as the Fund. The most common type of
pass-through securities are mortgage-backed securities.
Government National Mortgage Association ("GNMA") Certificates
are mortgage-backed securities that evidence an undivided
interest in a pool of mortgage loans. GNMA Certificates differ
from bonds in that principal is paid back monthly by the
borrowers over the term of the loan rather than returned in a
lump sum at maturity. The Fund will generally purchase "modified
pass-through" GNMA Certificates, which entitle the holder to
receive a share of all interest and principal payments paid and
owned on the mortgage pool, net of fees paid to the "issuer" and
GNMA, regardless of whether or not the mortgagor actually makes
the payment. GNMA Certificates are backed as to the timely
payment of principal and interest by the full faith and credit of
the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two
types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC
represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. FHLMC guarantees
timely payments of interest on PCs and the full return of
principal. GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semiannually
and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to
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<PAGE>
timely payment of principal and interest but it is not guaranteed
by the full faith and credit of the U.S. government.
The Federal National Mortgage Association ("FNMA") issues
guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely
payment of principal and interest but it is not guaranteed by the
full faith and credit of the U.S. government.
Except for GMCs, each of the mortgage-backed securities described
above is characterized by monthly payments to the holder,
reflecting the monthly payments made by the borrowers who
received the underlying mortgage loans. The payments to the
security holders (such as the Fund), like the payments on the
underlying loans, represent both principal and interest. Although
the underlying mortgage loans are for specified periods of time,
such as 20 or 30 years, the borrowers can, and typically do, pay
them off sooner. Thus, the security holders frequently receive
prepayments of principal in addition to the principal that is
part of the regular monthly payments. The Fund's portfolio
managers will consider estimated prepayment rates in calculating
the average weighted maturity of the Fund. A borrower is more
likely to prepay a mortgage that bears a relatively high rate of
interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by the Fund might
be converted to cash and the Fund will be forced to accept lower
interest rates when that cash is used to purchase additional
securities in the mortgage-backed securities sector or in other
investment sectors. Additionally, prepayments during such periods
will limit the Fund's ability to participate in as large a market
gain as may be experienced with a comparable security not subject
to prepayment.
Asset-backed securities represent interests in pools of consumer
loans and are backed by paper or accounts receivables originated
by banks, credit card companies or other providers of credit.
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<PAGE>
Generally, the originating bank or credit provider is neither the
obligor nor the guarantor of the security, and interest and
principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed
securities include units of beneficial interests in pools of
purchase contracts, financing leases, and sales agreements that
may be created when a municipality enters into an installment
purchase contract or lease with a vendor. Such securities may be
secured by the assets purchased or leased by the municipality;
however, if the municipality stops making payments, there
generally will be no recourse against the vendor. These
obligations are likely to involve unscheduled prepayments of
principal.
Investment Company Securities
From time to time, the Fund may invest in securities of other
investment companies, subject to the provisions of Section
12(d)(1) of the 1940 Act. The Fund may invest in securities of
money market funds managed by Janus Capital in excess of the
limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus funds.
Depositary Receipts
The Fund may invest in sponsored and unsponsored American
Depositary Receipts ("ADRs"), which are receipts issued by an
American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. ADRs, in registered form,
are designed for use in U.S. securities markets. Unsponsored ADRs
may be created without the participation of the foreign issuer.
Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in
a sponsored ADR. The bank or trust company depositary of an
unsponsored ADR may be under no obligation to distribute
shareholder communications received from the foreign issuer or to
pass through voting rights. The Fund may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs")
and in other similar instruments representing
11
<PAGE>
securities of foreign companies. EDRs are receipts issued by a
European financial institution evidencing an arrangement similar
to that of ADRs. EDRs, in bearer form, are designed for use in
European securities markets.
Depositary Receipts are generally subject to the same sort of
risks as direct investments in a foreign country, such as,
currency risk, political and economic risk, and market risk,
because their values depend on the performance of a foreign
security denominated in its home currency. The risks of foreign
investing are addressed in some detail in the Fund's prospectus.
Municipal Obligations
The Fund may invest in municipal obligations issued by states,
territories and possessions of the United States and the District
of Columbia. The value of municipal obligations can be affected
by changes in their actual or perceived credit quality. The
credit quality of municipal obligations can be affected by, among
other things the financial condition of the issuer or guarantor,
the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the revenue bond project or general
borrowing purpose, political or economic developments in the
region where the security is issued, and the liquidity of the
security. Because municipal securities are generally traded over-
the-counter, the liquidity of a particular issue often depends on
the willingness of dealers to make a market in the security. The
liquidity of some municipal obligations may be enhanced by demand
features, which would enable the Fund to demand payment on short
notice from the issuer or a financial intermediary.
Other Income-Producing Securities
Other types of income producing securities that the Fund may
purchase include, but are not limited to, the following types of
securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities
have variable or floating rates of interest and, under certain
limited circumstances, may have varying principal amounts. These
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securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some
interest rate index or market interest rate. The floating rate
tends to decrease the security's price sensitivity to changes in
interest rates. These types of securities have variable or
floating rates of interest and, under certain limited
circumstances, may have varying principal amounts. Variable and
floating rate securities pay interest at rates that are adjusted
periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate
(the "underlying index"). See also "Inverse Floaters."
In order to most effectively use these investments, the portfolio
managers must correctly assess probable movements in interest
rates. This involves different skills than those used to select
most portfolio securities. If the portfolio managers incorrectly
forecasts such movements, the Fund could be adversely affected by
the use of variable or floating rate obligations.
STANDBY COMMITMENTS. These instruments, which are similar to a
put, give the Fund the option to obligate a broker, dealer or
bank to repurchase a security held by the Fund at a specified
price.
TENDER OPTION BONDS. Tender option bonds are generally long-term
securities that are coupled with the option to tender the
securities to a bank, broker-dealer or other financial
institution at periodic intervals and receive the face value of
the bond. This type of security is commonly used as a means of
enhancing the security's liquidity.
INVERSE FLOATERS. Inverse floaters are debt instruments whose
interest bears an inverse relationship to the interest rate on
another security. The Fund will not invest more than 5% of its
assets in inverse floaters. Similar to variable and floating rate
obligations, effective use of inverse floaters requires skills
different from those needed to select most portfolio securities.
If movements in interest rates are incorrectly anticipated, the
Fund could lose money or its NAV could decline by the use of
inverse floaters.
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STRIP BONDS. Strip bonds are debt securities that are stripped of
their interest (usually by a financial intermediary) after the
securities are issued. The market value of these securities
generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
The Fund will purchase standby commitments, tender option bonds
and instruments with demand features primarily for the purpose of
increasing the liquidity of its portfolio.
High-Yield/High-Risk Securities
The Fund intends to invest less than 35% of its net assets in
securities that are rated below investment grade (e.g.,
securities rated BB or lower by Standard & Poor's Ratings
Services or Ba or lower by Moody's Investors Service, Inc.).
Lower rated securities involve a higher degree of credit risk,
which is the risk that the issuer will not make interest or
principal payments when due. In the event of an unanticipated
default, the Fund would experience a reduction in its income, and
could expect a decline in the market value of the securities so
affected.
The Fund may also invest in unrated debt securities of foreign
and domestic issuers. Unrated debt, while not necessarily of
lower quality than rated securities, may not have as broad a
market. Sovereign debt of foreign governments is generally rated
by country. Because these ratings do not take into account
individual factors relevant to each issue and may not be updated
regularly, Janus Capital may treat such securities as unrated
debt. Because of the size and perceived demand of the issue,
among other factors, certain municipalities may not incur the
costs of obtaining a rating. The Fund's portfolio managers will
analyze the creditworthiness of the issuer, as well as any
financial institution or other party responsible for payments on
the security, in determining whether to purchase unrated
municipal bonds. Unrated debt securities will be included in the
35% limit unless the portfolio managers deem such securities to
be the equivalent of investment grade securities.
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Subject to the above limits, the Fund may purchase defaulted
securities only when its portfolio managers believe, based upon
their analysis of the financial condition, results of operations
and economic outlook of an issuer, that there is potential for
resumption of income payments and that the securities offer an
unusual opportunity for capital appreciation. Notwithstanding the
portfolio managers' belief about the resumption of income,
however, the purchase of any security on which payment of
interest or dividends is suspended involves a high degree of
risk. Such risk includes, among other things, the following:
Financial and Market Risks. Investments in securities that are in
default involve a high degree of financial and market risks that
can result in substantial or, at times, even total losses.
Issuers of defaulted securities may have substantial capital
needs and may become involved in bankruptcy or reorganization
proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain
information about the condition of such issuers. The market
prices of such securities also are subject to abrupt and erratic
movements and above average price volatility, and the spread
between the bid and asked prices of such securities may be
greater than normally expected.
Disposition of Portfolio Securities. Although the Fund generally
will purchase securities for which its portfolio managers expect
an active market to be maintained, defaulted securities may be
less actively traded than other securities and it may be
difficult to dispose of substantial holdings of such securities
at prevailing market prices. The Fund will limit holdings of any
such securities to amounts that the portfolio managers believe
could be readily sold, and holdings of such securities would, in
any event, be limited so as not to limit the Fund's ability to
readily dispose of securities to meet redemptions.
Other. Defaulted securities require active monitoring and may, at
times, require participation in bankruptcy or receivership
proceedings on behalf of the Fund.
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<PAGE>
Repurchase and Reverse Repurchase Agreements
In a repurchase agreement, the Fund purchases a security and
simultaneously commits to resell that security to the seller at
an agreed upon price on an agreed upon date within a number of
days (usually not more than seven) from the date of purchase. The
resale price consists of the purchase price plus an agreed upon
incremental amount that is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon
price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed upon resale price and
marked-to-market daily) of the underlying security or
"collateral." A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed,
which may cause the Fund to suffer a loss if the market value of
such securities declines before they can be liquidated on the
open market. In the event of bankruptcy or insolvency of the
seller, the Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that
mature in more than seven days are subject to the 15% limit on
illiquid investments. While it is possible to eliminate all risks
from these transactions, it is the policy of the Fund to limit
repurchase agreements to those parties whose creditworthiness has
been reviewed and found satisfactory by Janus Capital.
The Fund may use reverse repurchase agreements to obtain cash to
satisfy unusually heavy redemption requests or for other
temporary or emergency purposes without the necessity of selling
portfolio securities or to earn additional income on portfolio
securities, such as Treasury bills or notes. In a reverse
repurchase agreement, the Fund sells a portfolio security to
another party, such as a bank or broker-dealer, in return for
cash and agrees to repurchase the instrument at a particular
price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain cash and appropriate liquid
assets in a segregated custodial account to cover its obligation
under the agreement. The Fund will enter into reverse repurchase
agreements only with parties that Janus Capital deems
creditworthy. Using reverse
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<PAGE>
repurchase agreements to earn additional income involves the risk
that the interest earned on the invested proceeds is less than
the expense of the reverse repurchase agreement transaction. This
technique may also have a leveraging effect on the Fund's
portfolio, although the Fund's intent to segregate assets in the
amount of the reverse repurchase agreement minimizes this effect.
Futures, Options and Other Derivative Instruments
FUTURES CONTRACTS. The Fund may enter into contracts for the
purchase or sale for future delivery of fixed-income securities,
foreign currencies or contracts based on financial indices,
including indices of U.S. government securities, foreign
government securities, equity or fixed-income securities. U.S.
futures contracts are traded on exchanges which have been
designated "contract markets" by the CFTC and must be executed
through a futures commission merchant ("FCM"), or brokerage firm,
which is a member of the relevant contract market. Through their
clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
The buyer or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However, both the buyer and
seller are required to deposit "initial margin" for the benefit
of the FCM when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as
set by the exchange on which the contract is traded, and may be
maintained in cash or certain other liquid assets by the Fund's
custodian for the benefit of the FCM. Initial margin payments are
similar to good faith deposits or performance bonds. Unlike
margin extended by a securities broker, initial margin payments
do not constitute purchasing securities on margin for purposes of
the Fund's investment limitations. If the value of either party's
position declines, that party will be required to make additional
"variation margin" payments for the benefit of the FCM to settle
the change in value on a daily basis. The party that has a gain
may be entitled to receive all or a portion of this amount. In
the event of
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the bankruptcy of the FCM that holds margin on behalf of the
Fund, the Fund may be entitled to a return of margin owed to the
Fund only in proportion to the amount received by the FCM's other
customers. Janus Capital will attempt to minimize the risk by
careful monitoring of the creditworthiness of the FCMs with which
the Fund does business and by depositing margin payments in a
segregated account with the Fund's custodian.
The Fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool
operator" adopted by the CFTC and the National Futures
Association, which regulate trading in the futures markets. The
Fund will use futures contracts and related options primarily for
bona fide hedging purposes within the meaning of CFTC
regulations. To the extent that the Fund holds positions in
futures contracts and related options that do not fall within the
definition of bona fide hedging transactions, the aggregate
initial margin and premiums required to establish such positions
will not exceed 5% of the fair market value of the Fund's net
assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
Although the Fund will segregate cash and liquid assets in an
amount sufficient to cover its open futures obligations, the
segregated assets would be available to the Fund immediately upon
closing out the futures position, while settlement of securities
transactions could take several days. However, because the Fund's
cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position
remains open, the Fund's return could be diminished due to the
opportunity losses of foregoing other potential investments.
The Fund's primary purpose in entering into futures contracts is
to protect the Fund from fluctuations in the value of securities
or interest rates without actually buying or selling the
underlying debt or equity security. For example, if the Fund
anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, the Fund could enter into a
futures contract to purchase a stock index as a temporary
substitute for stock
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purchases. If an increase in the market occurs that influences
the stock index as anticipated, the value of the futures
contracts will increase, thereby serving as a hedge against the
Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent the Fund
enters into futures contracts for this purpose, the segregated
assets maintained to cover the Fund's obligations with respect to
the futures contracts will consist of other liquid assets from
its portfolio in an amount equal to the difference between the
contract price and the aggregate value of the initial and
variation margin payments made by the Fund with respect to the
futures contracts. Conversely, if the Fund holds stocks and seeks
to protect itself from a decrease in stock prices, the Fund might
sell stock index futures contracts, thereby hoping to offset the
potential decline in the value of its portfolio securities by a
corresponding increase in the value of the futures contract
position. The Fund could protect against a decline in stock
prices by selling portfolio securities and investing in money
market instruments, but the use of futures contracts enables it
to maintain a defensive position without having to sell portfolio
securities.
If the Fund owns Treasury bonds and the portfolio managers expect
interest rates to increase, the Fund may take a short position in
interest rate futures contracts. Taking such a position would
have much the same effect as the Fund selling Treasury bonds in
its portfolio. If interest rates increase as anticipated, the
value of the Treasury bonds would decline, but the value of the
Fund's interest rate futures contract will increase, thereby
keeping the net asset value of the Fund from declining as much as
it may have otherwise. If, on the other hand, the portfolio
managers expect interest rates to decline, the Fund may take a
long position in interest rate futures contracts in anticipation
of later closing out the futures position and purchasing bonds.
Although the Fund can accomplish similar results by buying
securities with long maturities and selling securities with short
maturities, given the greater liquidity of the futures market
than the cash market, it may be possible to accomplish the same
result more easily and
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more quickly by using futures contracts as an investment tool to
reduce risk.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures
market are subject to initial margin and variation margin
requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal price
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the
extent participants decide to make or take delivery, liquidity in
the futures market could be reduced and prices in the futures
market distorted. Third, from the point of view of speculators,
the margin deposit requirements in the futures market are less
onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures
market may cause temporary price distortions. Due to the
possibility of the foregoing distortions, a correct forecast of
general price trends by the portfolio managers still may not
result in a successful use of futures.
Futures contracts entail risks. Although the Fund believes that
use of such contracts will benefit the Fund, the Fund's overall
performance could be worse than if the Fund had not entered into
futures contracts if the portfolio managers' investment judgement
proves incorrect. For example, if the Fund has hedged against the
effects of a possible decrease in prices of securities held in
its portfolio and prices increase instead, the Fund will lose
part or all of the benefit of the increased value of these
securities because of offsetting losses in its futures positions.
In addition, if the Fund has insufficient cash, it may have to
sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at
increased prices which reflect the rising market and may occur at
a time when the sales are disadvantageous to the Fund.
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<PAGE>
The prices of futures contracts depend primarily on the value of
their underlying instruments. Because there are a limited number
of types of futures contracts, it is possible that the
standardized futures contracts available to the Fund will not
match exactly the Fund's current or potential investments. The
Fund may buy and sell futures contracts based on underlying
instruments with different characteristics from the securities in
which it typically invests D for example, by hedging investments
in portfolio securities with a futures contract based on a broad
index of securities D which involves a risk that the futures
position will not correlate precisely with the performance of the
Fund's investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments
closely correlate with the Fund's investments. Futures prices are
affected by factors such as current and anticipated short-term
interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the
contract. Those factors may affect securities prices differently
from futures prices. Imperfect correlations between the Fund's
investments and its futures positions also may result from
differing levels of demand in the futures markets and the
securities markets, from structural differences in how futures
and securities are traded, and from imposition of daily price
fluctuation limits for futures contracts. The Fund may buy or
sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in
order to attempt to compensate for differences in historical
volatility between the futures contract and the securities,
although this may not be successful in all cases. If price
changes in the Fund's futures positions are poorly correlated
with its other investments, its futures positions may fail to
produce desired gains or result in losses that are not offset by
the gains in the Fund's other investments.
Because futures contracts are generally settled within a day from
the date they are closed out, compared with a settlement period
of three days for some types of securities, the futures markets
can
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provide superior liquidity to the securities markets.
Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any
particular time. In addition, futures exchanges may establish
daily price fluctuation limits for futures contracts and may halt
trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price
fluctuation limit is reached, it may be impossible for the Fund
to enter into new positions or close out existing positions. If
the secondary market for a futures contract is not liquid because
of price fluctuation limits or otherwise, the Fund may not be
able to promptly liquidate unfavorable futures positions and
potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its
value. As a result, the Fund's access to other assets held to
cover its futures positions also could be impaired.
OPTIONS ON FUTURES CONTRACTS. The Fund may buy and write put and
call options on futures contracts. An option on a future gives
the Fund the right (but not the obligation) to buy or sell a
futures contract at a specified price on or before a specified
date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which
it is based or the price of the underlying instrument, ownership
of the option may or may not be less risky than ownership of the
futures contract or the underlying instrument. As with the
purchase of futures contracts, when the Fund is not fully
invested it may buy a call option on a futures contract to hedge
against a market advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising,
the futures contract. If the future's price at the expiration of
the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures
contract
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<PAGE>
constitutes a partial hedge against increasing prices of the
security or foreign currency which is deliverable under, or of
the index comprising, the futures contract. If the futures' price
at expiration of the option is higher than the exercise price,
the Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of
securities which the Fund is considering buying. If a call or put
option the Fund has written is exercised, the Fund will incur a
loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between the
change in the value of its portfolio securities and changes in
the value of the futures positions, the Fund's losses from
existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on
portfolio securities. For example, the Fund may buy a put option
on a futures contract to hedge its portfolio against the risk of
falling prices or rising interest rates.
The amount of risk the Fund assumes when it buys an option on a
futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that
changes in the value of the underlying futures contract will not
be fully reflected in the value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two
parties in which one party is obligated to deliver a stated
amount of a stated asset at a specified time in the future and
the other party is obligated to pay a specified amount for the
assets at the time of delivery. The Fund may enter into forward
contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial
instruments. Forward contracts generally are traded in an
interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures
contracts, which are
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<PAGE>
standardized contracts, forward contracts can be specifically
drawn to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to
maturity and complete the contemplated exchange.
The following discussion summarizes the Fund's principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). The Fund may enter into forward currency contracts
with stated contract values of up to the value of the Fund's
assets. A forward currency contract is an obligation to buy or
sell an amount of a specified currency for an agreed price (which
may be in U.S. dollars or a foreign currency). The Fund will
exchange foreign currencies for U.S. dollars and for other
foreign currencies in the normal course of business and may buy
and sell currencies through forward currency contracts in order
to fix a price for securities it has agreed to buy or sell
("transaction hedge"). The Fund also may hedge some or all of its
investments denominated in a foreign currency or exposed to
foreign currency fluctuations against a decline in the value of
that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency (or
a proxy currency whose performance is expected to replicate or
exceed the performance of that currency relative to the U.S.
dollar) approximating the value of some or all of its portfolio
securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the
currency. The Fund also may enter into a forward currency
contract with respect to a currency where the Fund is considering
the purchase or sale of investments denominated in that currency
but has not yet selected the specific investments ("anticipatory
hedge"). In any of these circumstances the Fund may,
alternatively, enter into a forward currency contract to purchase
or sell one foreign currency for a second currency that is
expected to perform more favorably relative to the U.S. dollar if
the portfolio managers believe there is a reasonable degree of
correlation between movements in the two currencies
("cross-hedge").
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<PAGE>
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of
the proceeds of or rates of return on the Fund's foreign currency
denominated portfolio securities. The matching of the increase in
value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise.
Shifting the Fund's currency exposure from one foreign currency
to another removes the Fund's opportunity to profit from
increases in the value of the original currency and involves a
risk of increased losses to the Fund if its portfolio managers'
projection of future exchange rates is inaccurate. Proxy hedges
and cross-hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices
may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
The Fund will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in or whose
value its tied to, the currency underlying the forward contract
or the currency being hedged. To the extent that the Fund is not
able to cover its forward currency positions with underlying
portfolio securities, the Fund's custodian will segregate cash or
other liquid assets having a value equal to the aggregate amount
of the Fund's commitments under forward contracts entered into
with respect to position hedges, cross-hedges and anticipatory
hedges. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund will find
alternative cover or segregate additional cash or liquid assets
on a daily basis so that the value of the covered and segregated
assets will be equal to the amount of the Fund's commitments with
respect to such contracts. As an alternative to segregating
assets, the Fund may buy call options permitting the Fund to buy
the amount of foreign currency being hedged by a forward sale
25
<PAGE>
contract or the Fund may buy put options permitting it to sell
the amount of foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC,
the CFTC may in the future assert authority to regulate forward
contacts. In such event, the Fund's ability to utilize forward
contracts may be restricted. In addition, the Fund may not always
be able to enter into forward contracts at attractive prices and
may be limited in its ability to use these contracts to hedge
Fund assets.
OPTIONS ON FOREIGN CURRENCIES. The Fund may buy and write options
on foreign currencies in a manner similar to that in which
futures or forward contracts on foreign currencies will be
utilized. For example, a decline in the U.S. dollar value of a
foreign currency in which portfolio securities are denominated
will reduce the U.S. dollar value of such securities, even if
their value in the foreign currency remains constant. In order to
protect against such diminutions in the value of portfolio
securities, the Fund may buy put options on the foreign currency.
If the value of the currency declines, the Fund will have the
right to sell such currency for a fixed amount in U.S. dollars,
thereby offsetting, in whole or in part, the adverse effect on
its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, the Fund may buy
call options on the foreign currency. The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to the Fund from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent
projected, the Fund could sustain losses on transactions in
foreign currency options that would require the Fund to forego a
portion or all of the benefits of advantageous changes in those
rates.
The Fund may also write options on foreign currencies. For
example, to hedge against a potential decline in the U.S. dollar
26
<PAGE>
value of foreign currency denominated securities due to adverse
fluctuations in exchange rates, the Fund could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the decline in value of portfolio
securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a
potential increase in the U.S. dollar cost of securities to be
acquired, the Fund could write a put option on the relevant
currency which, if rates move in the manner projected, should
expire unexercised and allow the Fund to hedge the increased cost
up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium.
If exchange rates do not move in the expected direction, the
option may be exercised and the Fund would be required to buy or
sell the underlying currency at a loss which may not be offset by
the amount of the premium. Through the writing of options on
foreign currencies, the Fund also may lose all or a portion of
the benefits which might otherwise have been obtained from
favorable movements in exchange rates.
The Fund may write covered call options on foreign currencies. A
call option written on a foreign currency by the Fund is
"covered" if the Fund owns the foreign currency underlying the
call or has an absolute and immediate right to acquire that
foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other foreign
currencies held in its portfolio. A call option is also covered
if the Fund has a call on the same foreign currency in the same
principal amount as the call written if the exercise price of the
call held (i) is equal to or less than the exercise price of the
call written or (ii) is greater than the exercise price of the
call written, if the difference is maintained by the Fund in cash
or other liquid assets in a segregated account with the Fund's
custodian.
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<PAGE>
The Fund also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is designed to provide a hedge
against a decline due to an adverse change in the exchange rate
in the U.S. dollar value of a security which the Fund owns or has
the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which
are entered into for cross-hedging purposes are not covered.
However, in such circumstances, the Fund will collateralize the
option by segregating cash or other liquid assets in an amount
not less than the value of the underlying foreign currency in
U.S. dollars marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income
and to reduce fluctuations in net asset value, the Fund may write
covered put and call options and buy put and call options on
securities that are traded on United States and foreign
securities exchanges and over-the-counter. The Fund may write and
buy options on the same types of securities that the Fund may
purchase directly.
A put option written by the Fund is "covered" if the Fund (i)
segregates cash not available for investment or other liquid
assets with a value equal to the exercise price of the put with
the Fund's custodian or (ii) holds a put on the same security and
in the same principal amount as the put written and the exercise
price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the buyer of an
option will reflect, among other things, the relationship of the
exercise price to the market price and the volatility of the
underlying security, the remaining term of the option, supply and
demand and interest rates.
A call option written by the Fund is "covered" if the Fund owns
the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional
cash consideration (or for additional cash consideration held in
a segregated account by the Fund's custodian) upon conversion or
exchange of other securities held in its portfolio. A call option
is
28
<PAGE>
also deemed to be covered if the Fund holds a call on the same
security and in the same principal amount as the call written and
the exercise price of the call held (i) is equal to or less than
the exercise price of the call written or (ii) is greater than
the exercise price of the call written if the difference is
maintained by the Fund in cash and other liquid assets in a
segregated account with its custodian.
The Fund also may write call options that are not covered for
cross-hedging purposes. The Fund collateralizes its obligation
under a written call option for cross-hedging purposes by
segregating cash or other liquid assets in an amount not less
than the market value of the underlying security,
marked-to-market daily. The Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received from the cross-hedge transaction
would exceed that which would be received from writing a covered
call option and its portfolio managers believe that writing the
option would achieve the desired hedge.
The writer of an option may have no control over when the
underlying securities must be sold, in the case of a call option,
or bought, in the case of a put option, since with regard to
certain options, the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or
not an option expires unexercised, the writer retains the amount
of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value
of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to buy the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation
may effect a "closing purchase transaction." This is accomplished
by buying an option of the same series as the option previously
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<PAGE>
written. The effect of the purchase is that the writer's position
will be canceled by the clearing corporation. However, a writer
may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who
is the holder of an option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by
selling an option of the same series as the option previously
bought. There is no guarantee that either a closing purchase or a
closing sale transaction can be effected.
In the case of a written call option, effecting a closing
transaction will permit the Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both. In the case of a written put option,
such transaction will permit the Fund to write another put option
to the extent that the exercise price is secured by other liquid
assets. Effecting a closing transaction also will permit the Fund
to use the cash or proceeds from the concurrent sale of any
securities subject to the option for other investments. If the
Fund desires to sell a particular security from its portfolio on
which it has written a call option, the Fund will effect a
closing transaction prior to or concurrent with the sale of the
security.
The Fund will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium
received from writing the option or the price received from a
sale transaction is more than the premium paid to buy the option.
The Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium
received from writing the option or the price received from a
sale transaction is less than the premium paid to buy the option.
Because increases in the market of a call option generally will
reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the
underlying security owned by the Fund.
An option position may be closed out only where a secondary
market for an option of the same series exists. If a secondary
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<PAGE>
market does not exist, the Fund may not be able to effect closing
transactions in particular options and the Fund would have to
exercise the options in order to realize any profit. If the Fund
is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon
exercise. The absence of a liquid secondary market may be due to
the following: (i) insufficient trading interest in certain
options, (ii) restrictions imposed by a national securities
exchange ("Exchange") on which the option is traded on opening or
closing transactions or both, (iii) trading halts, suspensions or
other restrictions imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or
unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options
Clearing Corporation ("OCC") may not at all times be adequate to
handle current trading volume, or (vi) one or more Exchanges
could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a
particular class or series of options), in which event the
secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on
that Exchange that had been issued by the OCC as a result of
trades on that Exchange would continue to be exercisable in
accordance with their terms.
The Fund may write options in connection with buy-and-write
transactions. In other words, the Fund may buy a security and
then write a call option against that security. The exercise
price of such call will depend upon the expected price movement
of the underlying security. The exercise price of a call option
may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security
at the time the option is written. Buy-and-write transactions
using in-the-money call options may be used when it is expected
that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write
transactions using at-the-money call options may be used when it
is expected
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<PAGE>
that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write
transactions using out-of-the-money call options may be used when
it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the
underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone.
If the call options are exercised in such transactions, the
Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the
difference between the Fund's purchase price of the security and
the exercise price. If the options are not exercised and the
price of the underlying security declines, the amount of such
decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk
and return characteristics to buy-and-write transactions. If the
market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the
position or take delivery of the security at the exercise price
and the Fund's return will be the premium received from the put
options minus the amount by which the market price of the
security is below the exercise price.
The Fund may buy put options to hedge against a decline in the
value of its portfolio. By using put options in this way, the
Fund will reduce any profit it might otherwise have realized in
the underlying security by the amount of the premium paid for the
put option and by transaction costs.
The Fund may buy call options to hedge against an increase in the
price of securities that it may buy in the future. The premium
paid for the call option plus any transaction costs will reduce
the benefit, if any, realized by the Fund upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Fund.
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<PAGE>
EURODOLLAR INSTRUMENTS. The Fund may make investments in
Eurodollar instruments. Eurodollar instruments are U.S. dollar-
denominated futures contracts or options thereon which are linked
to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed
rate for the lending of funds and sellers to obtain a fixed rate
for borrowings. The Fund might use Eurodollar futures contracts
and options thereon to hedge against changes in LIBOR, to which
many interest rate swaps and fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. The Fund may enter into interest
rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its
assets or its liabilities, and will usually enter into interest
rate swaps on a net basis (i.e., the two payment streams are
netted out, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments). The net amount of
the excess, if any, of the Fund's obligations over its
entitlement with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid
assets having an aggregate net asset value at least equal to the
accrued excess will be maintained in a segregated account by the
Fund's custodian. If the Fund enters into an interest rate swap
on other than a net basis, it would maintain a segregated account
in the full amount accrued on a daily basis of its obligations
with respect to the swap. The Fund will not enter into any
interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party
thereto is rated in one of the three highest rating categories of
at least one NRSRO at the time of entering into such transaction.
Janus Capital will monitor the creditworthiness of all
counterparties on an ongoing basis. If there is a default by the
other party to such a transaction, the Fund will have contractual
remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both
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<PAGE>
as principals and as agents utilizing standardized swap
documentation. Janus Capital has determined that, as a result,
the swap market has become relatively liquid. Caps and floors are
more recent innovations for which standardized documentation has
not yet been developed and, accordingly, they are less liquid
than swaps. To the extent the Fund sells (i.e., writes) caps and
floors, it will segregate cash or other liquid assets having an
aggregate net asset value at least equal to the full amount,
accrued on a daily basis, of its obligations with respect to any
caps or floors.
There is no limit on the amount of interest rate swap
transactions that may be entered into by the Fund. These
transactions may in some instances involve the delivery of
securities or other underlying assets by the Fund or its
counterparty to collateralize obligations under the swap. Under
the documentation currently used in those markets, the risk of
loss with respect to interest rate swaps is limited to the net
amount of the payments that the Fund is contractually obligated
to make. If the other party to an interest rate swap that is not
collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to
receive. The Fund may buy and sell (i.e., write) caps and floors
without limitation, subject to the segregation requirement
described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD
CONTRACTS AND FOREIGN INSTRUMENTS. Unlike transactions entered
into by the Fund in futures contracts, options on foreign
currencies and forward contracts are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such
instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded
on certain Exchanges, such as the Philadelphia Stock Exchange and
the Chicago Board Options Exchange, subject to SEC regulation.
Similarly, options on currencies may be traded over the-counter.
In an over-the-counter trading environment, many of the
protections afforded to Exchange participants will not be
available. For example, there are no daily price fluctuation
limits,
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<PAGE>
and adverse market movements could therefore continue to an
unlimited extent over a period of time. Although the buyer of an
option cannot lose more than the amount of the premium plus
related transaction costs, this entire amount could be lost.
Moreover, an option writer and a buyer or seller of futures or
forward contracts could lose amounts substantially in excess of
any premium received or initial margin or collateral posted due
to the potential additional margin and collateral requirements
associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on
Exchanges. As a result, many of the protections provided to
traders on organized Exchanges will be available with respect to
such transactions. In particular, all foreign currency option
positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default.
Further, a liquid secondary market in options traded on an
Exchange may be more readily available than in the over-the-
counter market, potentially permitting the Fund to liquidate open
positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other political
and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing
35
<PAGE>
member, impose special procedures on exercise and settlement,
such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions
on exercise.
In addition, options on U.S. government securities, futures
contracts, options on futures contracts, forward contracts and
options on foreign currencies may be traded on foreign exchanges
and over-the-counter in foreign countries. Such transactions are
subject to the risk of governmental actions affecting trading in
or the prices of foreign currencies or securities. The value of
such positions also could be adversely affected by (i) other
complex foreign political and economic factors, (ii) lesser
availability than in the United States of data on which to make
trading decisions, (iii) delays in the Fund's ability to act upon
economic events occurring in foreign markets during non-business
hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) low trading
volume.
36
<PAGE>
Investment adviser
As stated in the Prospectus, the Fund has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver,
Colorado 80206-4928. The Advisory Agreement provides that Janus
Capital will furnish continuous advice and recommendations
concerning the Fund's investments, provide office space for the
Fund, and pay the salaries, fees and expenses of all Fund
officers and of those Trustees who are affiliated with Janus
Capital. Janus Capital also may make payments to selected
broker-dealer firms or institutions which perform recordkeeping
or other services with respect to shareholder accounts. The
minimum aggregate size required for eligibility for such
payments, and the factors in selecting the broker-dealer firms
and institutions to which they will be made, are determined from
time to time by Janus Capital. Janus Capital is also authorized
to perform the management and administrative services necessary
for the operation of the Fund.
The Fund pays custodian and transfer agent fees and expenses,
brokerage commissions and dealer spreads and other expenses in
connection with the execution of portfolio transactions, legal
and accounting expenses, interest and taxes, registration fees,
expenses of shareholders' meetings and reports to shareholders,
fees and expenses of Trustees who are not affiliated with Janus
Capital, costs of preparing, printing and mailing the Fund's
Prospectus and SAI to current shareholders, and other costs of
complying with applicable laws regulating the sale of Fund
shares. Pursuant to the Advisory Agreement, Janus Capital
furnishes certain other services, including net asset value
determination and Fund accounting, recordkeeping, and blue sky
registration and monitoring services, for which the Fund may
reimburse Janus Capital for its costs.
The Fund has agreed to compensate Janus Capital for its services
by the monthly payment of a fee at the annual rate of 0.75% of
the first $300 million of the Fund's average daily net assets,
0.70% of the next $200 million of the Fund's average daily net
assets, and 0.65% of the average daily net assets of the Fund in
excess of $500 million.
For the fiscal year ended October 31, 1998, the investment
advisory fee was $26,060,535. For the fiscal years ended
37
<PAGE>
October 31, 1997 and October 31, 1996, the Fund incurred
investment advisory fees of $14,049,919 and $2,528,345,
respectively. Janus Capital did not waive any portion of its fee
in any of these years.
The Advisory Agreement is dated July 1, 1997, and it will
continue in effect until July 1, 1999, and thereafter from year
to year so long as such continuance is approved annually by a
majority of the Fund's Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, and
by either a majority of the outstanding voting shares or the
Trustees of the Fund. The Advisory Agreement i) may be terminated
without the payment of any penalty by the Fund or Janus Capital
on 60 days' written notice; ii) terminates automatically in the
event of its assignment; and iii) generally, may not be amended
without the approval by vote of a majority of the Trustees of the
Fund, including the Trustees who are not interested persons of
the Fund or Janus Capital and, to the extent required by the 1940
Act, the vote of a majority of the outstanding voting securities
of the Fund.
Janus Capital also acts as sub-adviser for a number of
private-label mutual funds and provides separate account advisory
services for institutional accounts. Investment decisions for
each account managed by Janus Capital, including the Fund, are
made independently from those for any other account that is or
may in the future become managed by Janus Capital or its
affiliates. If, however, a number of accounts managed by Janus
Capital are contemporaneously engaged in the purchase or sale of
the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely
affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to
an exemptive order granted by the SEC, the Fund and other funds
advised by Janus Capital may also transfer daily uninvested cash
balances into one or more joint trading accounts. Assets in the
joint trading accounts are invested in money market instruments
and the proceeds are allocated to the participating Funds on a
pro rata basis.
38
<PAGE>
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and policies and is managed accordingly by a particular
portfolio manager or team of portfolio managers. As a result,
from time to time two or more different managed accounts may
pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit the Fund's portfolio managers to
purchase and sell securities for their own accounts except under
the limited exceptions contained in Janus Capital's policy
regarding personal investing by directors/Trustees, officers and
employees of Janus Capital and the Trust. The policy requires
investment personnel and officers of Janus Capital, inside
directors/Trustees of Janus Capital and the Fund and other
designated persons deemed to have access to current trading
information to pre-clear all transactions in securities not
otherwise exempt under the policy. Requests for trading authority
will be denied when, among other reasons, the proposed personal
transaction would be contrary to the provisions of the policy or
would be deemed to adversely affect any transaction known to be
under consideration for or to have been effected on behalf of any
client account, including the Fund.
39
<PAGE>
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and directors/
Trustees of Janus Capital and the Trust to various trading
restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's policy. Those persons also may be required under
certain circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
40
<PAGE>
Custodian, transfer agent and
certain affiliations
State Street Bank and Trust Company, P.O. Box 0351, Boston,
Massachusetts 02117-0351 is the custodian of the domestic
securities and cash of the Fund. State Street and the foreign
subcustodians selected by it and approved by the Trustees have
custody of the assets of the Fund held outside the U.S. and cash
incidental thereto. The custodian and subcustodians hold the
Fund's assets in safekeeping and collect and remit the income
thereon, subject to the instructions of the Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Fund's transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Fund. For transfer agency and other
services, Janus Service receives a fee calculated at an annual
rate of 0.16% of average net assets of the Fund. In addition, the
Fund pays DST Systems, Inc. ("DST"), a subsidiary of KCSI,
license fees at the rate of $3.06 per shareholder account for the
use of DST's shareholder accounting system. The fund also pays
DST $1.10 per closed shareholder account. The Fund pays DST for
the use of its portfolio and fund accounting system a monthly
base fee of $250 to $1,250 based on the number of Janus funds
using the system and an asset charge of $1 per million dollars of
net assets (not to exceed $500 per month). In addition, the Fund
pays DST postage and forms costs of a DST affiliate incurred in
mailing Fund shareholder transaction confirmations.
The Trustees have authorized the Fund to use another affiliate of
DST as introducing broker for certain Fund portfolio transactions
as a means to reduce Fund expenses through credits against the
charges of DST and its affiliates with regard to commissions
earned by such affiliate. See "Portfolio Transactions and
Brokerage."
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Fund. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
41
<PAGE>
Janus Distributors acts as the agent of the Fund in connection
with the sale of its shares in all states in which the shares are
registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Fund's shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
42
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the Fund
and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions. The Fund may trade foreign securities
in foreign countries because the best available market for these
securities is often on foreign exchanges. In transactions on
foreign stock exchanges, brokers' commissions are frequently
fixed and are often higher than in the United States, where
commissions are negotiated.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; rebates of commissions by a broker to the Fund
or to a third party service provider to the Fund to pay Fund
expenses; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
Research may include furnishing advice, either directly or
through publications or writings, as to the value of securities,
the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers
43
<PAGE>
of securities; furnishing seminars, information, analyses and
reports concerning issuers, industries, securities, trading
markets and methods, legislative developments, changes in
accounting practices, economic factors and trends and portfolio
strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials;
comparative performance evaluation and technical measurement
services and quotation services, and products and other services
(such as third party publications, reports and analyses, and
computer and electronic access, equipment, software, information
and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist
Janus Capital in carrying out its responsibilities.
Most brokers and dealers used by Janus Capital provide research
and other services described above. For the year ended October
31, 1998, the Fund paid $559,952 of its total brokerage
commissions to brokers and dealers in transactions identified for
execution primarily on the basis of research and other services
provided to the Fund on transactions of $328,382,673. Research
received from brokers or dealers is supplemental to Janus
Capital's own research efforts.
Janus Capital may use research products and services in servicing
other accounts in addition to the Fund. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital does not enter into agreements with any brokers
regarding the placement of securities transactions because of the
research services they provide. It does, however, have an
internal procedure for allocating transactions in a manner
consistent with its execution policy to brokers that it has
identified as providing
44
<PAGE>
superior execution and research, research-related products or
services which benefit its advisory clients, including the Fund.
Research products and services incidental to effecting securities
transactions furnished by brokers or dealers may be used in
servicing any or all of Janus Capital's clients and such research
may not necessarily be used by Janus Capital in connection with
the accounts which paid commissions to the broker-dealer
providing such research products and services.
Janus Capital may consider sales of Fund shares by a broker-
dealer or the recommendation of a broker-dealer to its customers
that they purchase Fund shares as a factor in the selection of
broker-dealers to execute Fund portfolio transactions. Janus
Capital may also consider payments made by brokers effecting
transactions for the Fund i) to the Fund or ii) to other persons
on behalf of the Fund for services provided to the Fund for which
it would be obligated to pay. In placing portfolio business with
such broker-dealers, Janus Capital will seek the best execution
of each transaction.
When the Fund purchases or sells a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
The Fund's Trustees have authorized Janus Capital to place
transactions with DST Securities, Inc. ("DSTS"), a wholly-owned
broker-dealer subsidiary of DST. Janus Capital may do so if it
reasonably believes that the quality of the transaction and the
associated commission are fair and reasonable and if, overall,
the associated transaction costs, net of any credits described
above under "Custodian, Transfer Agent and Certain Affiliations,"
are lower than those that would otherwise be incurred.
The total amount of brokerage commissions paid by the Fund during
the fiscal year ended October 31, 1998, was $13,649,799. For the
fiscal years ended October 31, 1997 and October 31,
45
<PAGE>
1996, the Fund paid brokerage commissions of $9,508,507 and
$1,900,947, respectively. Included in the brokerage commissions
paid for the fiscal year ended October 31, 1998, was $4,968 paid
through DSTS, which served to reduce by $3,726 certain
out-of-pocket expenses paid by the Fund. Included in brokerage
commissions paid for the fiscal years ended October 31, 1997 and
October 31, 1996, was $15,169 and $5,123, respectively, paid
through DSTS which served to reduce by $11,377 and $3,842,
respectively, certain out-of-pocket expenses. Brokerage
commissions paid through DSTS for the 1998 fiscal year
represented 0.04% of the Fund's aggregate brokerage commissions
for such fiscal year, while 0.12% of the aggregate dollar amount
of the Fund's portfolio transactions involving a commission
payment were executed through DSTS. The difference between
commissions paid through DSTS and expenses reduced constitute
commissions paid to an unaffiliated clearing broker. Differences
in the percentage of total commissions versus the percentage of
total transactions is due, in part, to variations among share
prices and number of shares traded, while average price per share
commission rates were substantially the same.
As of October 31, 1998, the Fund did not own securities of
regular broker-dealers (or parents).
46
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee and Executive Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
47
<PAGE>
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly
(1997-1998), Chief Financial Officer-Boston Market Concepts,
Boston Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly
(1993-1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
48
<PAGE>
Laurence J. Chang, Age 33 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Co-Manager of Janus Overseas Fund.
Assistant Portfolio Manager of Janus Worldwide Fund. Executive
Vice President of Janus Aspen Series. Vice President of Janus
Capital. Formerly, research analyst at Janus Capital (1993-1996).
Helen Young Hayes, Age 36 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Co-Manager of Janus Overseas Fund.
Executive Vice President and Portfolio Manager of Janus Worldwide
Fund, Executive Vice President of Janus Aspen Series. Vice
President of Janus Capital.
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
49
<PAGE>
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly
(1990-1994), with The Boston Company Advisors, Inc., Boston, MA
(mutual fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly (1991 to 1997),
Director of Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
50
<PAGE>
The Trustees are responsible for major decisions relating to the
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Fund by its officers and review
the investment decisions of the officers, although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Agreement and Declaration of Trust, Massachusetts law or the
1940 Act.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Fund described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Fund or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Fund for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $4,934 $82,000
Gary O. Loo, Trustee $3,862 $74,000
Dennis B. Mullen, Trustee $4,488 $82,000
Martin H. Waldinger, Trustee $4,675 $74,000
James T. Rothe, Trustee $4,528 $82,000
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
51
<PAGE>
Purchase of shares
The Fund has discontinued public sales of its shares to new
investors. Only shareholders who maintain open accounts are
permitted to continue to make investments in the Fund and to
reinvest any dividends and capital gains distributions. Once a
Fund account is closed, additional investments in the Fund may
not be possible. The Shareholder's Manual section of the
Prospectus contains detailed information about the purchase of
shares.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value ("NAV") of Fund
shares is determined once each day on which the New York Stock
Exchange ("NYSE") is open, at the close of its regular trading
session (normally 4:00 p.m., New York time, Monday through
Friday). As stated in the Prospectus, the NAV of Fund shares is
not determined on days the NYSE is closed (generally, New Year's
Day, Presidents' Day, Martin Luther King Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas). The per share NAV of the Fund is determined by
dividing the total value of the Fund's securities and other
assets, less liabilities, by the total number of shares
outstanding. In determining NAV, securities listed on an
Exchange, the NASDAQ National Market and foreign markets are
valued at the closing prices on such markets, or if such price is
lacking for the trading period immediately preceding the time of
determination, such securities are valued at their current bid
price. Municipal securities held by the Fund are traded primarily
in the over-the-counter market. Valuations of such securities are
furnished by one or more pricing services employed by the Fund
and are based upon a computerized matrix system or appraisals
obtained by a pricing service, in each case in reliance upon
information concerning market transactions and quotations from
recognized municipal securities dealers. Other securities that
are traded on the over-the-counter market are valued at their
closing bid prices. Foreign securities and currencies are
converted to U.S. dollars using the exchange rate in effect at
the close of the NYSE. The Fund will determine the market value
of individual securities held by it, by using prices provided by
one or more professional pricing services
52
<PAGE>
which may provide market prices to other funds, or, as needed, by
obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days are valued on an
amortized cost basis. Securities for which quotations are not
readily available, and other assets, are valued at fair values
determined in good faith under procedures established by and
under the supervision of the Trustees.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business on each business day in New York
(i.e., a day on which the NYSE is open). In addition, European or
Far Eastern securities trading generally or in a particular
country or countries may not take place on all business days in
New York. Furthermore, trading takes place in Japanese markets on
certain Saturdays and in various foreign markets on days which
are not business days in New York and on which the Fund's NAV is
not calculated. The Fund calculates its NAV per share, and
therefore effects sales, redemptions and repurchases of its
shares, as of the close of the NYSE once on each day on which the
NYSE is open. Such calculation may not take place
contemporaneously with the determination of the prices of the
foreign portfolio securities used in such calculation.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their
dividends and distributions in cash, all income dividends and
capital gains distributions, if any, on the Fund's shares are
reinvested automatically in additional shares of the Fund at the
NAV determined on the payment date. Checks for cash dividends and
distributions and confirmations of reinvestments are usually
mailed to shareholders within ten days after the record date. Any
election of the manner in which a shareholder wishes to receive
dividends and distributions (which may be made on the New Account
Application form or by phone) will apply to dividends and
distributions the record dates of which fall on or after the date
that the Fund receives such notice. Changes to distribution
53
<PAGE>
options must be received at least three days prior to the record
date to be effective for such date. Investors receiving cash
distributions and dividends may elect in writing or by phone to
change back to automatic reinvestment at any time.
54
<PAGE>
Redemption of shares
Procedures for redemption of shares are set forth in the
Shareholder's Manual section of the Prospectus. Shares normally
will be redeemed for cash, although the Fund retains the right to
redeem its shares in kind under unusual circumstances, in order
to protect the interests of remaining shareholders, by delivery
of securities selected from its assets at its discretion.
However, the Fund is governed by Rule 18f-1 under the 1940 Act,
which requires the Fund to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the NAV of the Fund during any 90-day
period for any one shareholder. Should redemptions by any
shareholder exceed such limitation, the Fund will have the option
of redeeming the excess in cash or in kind. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as
the method of valuing portfolio securities described under
"Purchase of Shares D Net Asset Value Determination" and such
valuation will be made as of the same time the redemption price
is determined.
The right to require the Fund to redeem its shares may be
suspended, or the date of payment may be postponed, whenever (1)
trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed except for holidays and weekends, (2) the SEC
permits such suspension and so orders, or (3) an emergency exists
as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
55
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts and specific types of accounts is set forth in the
Prospectus. Applications for specific types of accounts may be
obtained by calling the Fund at 1-800-525-3713 or writing to the
Fund at P.O. Box 173375, Denver, Colorado 80217-3375.
TELEPHONE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone. The Fund, its transfer agent and
its distributor disclaim responsibility for the authenticity of
instructions received by telephone. Such entities will employ
reasonable procedures to confirm that instructions communicated
by telephone are genuine. Such procedures may include, among
others, requiring personal identification prior to acting upon
telephone instructions, providing written confirmation of the
transactions and tape recording telephone conversations.
SYSTEMATIC REDEMPTIONS
As stated in the Shareholder's Manual section of the Prospectus,
if you have a regular account or are eligible for distributions
from a retirement plan, you may establish a systematic redemption
option. The payments will be made from the proceeds of periodic
redemptions of shares in the account at the NAV. Depending on the
size or frequency of the disbursements requested, and the
fluctuation in value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even exhaust
the shareholder's account. Either an investor or the Fund, by
written notice to the other, may terminate the investor's
systematic redemption option without penalty at any time.
Information about requirements to establish a systematic
redemption option may be obtained by writing or calling the Fund
at the address or phone number shown above.
56
<PAGE>
Tax-deferred accounts
The Fund offers several different types of tax-deferred accounts
that an investor may establish to invest in Fund shares,
depending on rules prescribed by the Code. Traditional and Roth
Individual Retirement Accounts may be used by most individuals
who have taxable compensation. Simplified Employee Pensions and
Defined Contribution Plans (Profit Sharing or Money Purchase
Pension Plans) may be used by most employers, including
corporations, partnerships and sole proprietors, for the benefit
of business owners and their employees. Education IRAs allow
individuals, subject to certain income limitations, to contribute
up to $500 annually on behalf of any child under the age of 18.
In addition, the Fund offers a Section 403(b)(7) Plan for
employees of educational organizations and other qualifying
tax-exempt organizations. Investors should consult their tax
adviser or legal counsel before selecting a tax-deferred account.
Contributions under Traditional and Roth IRAs, Education IRAs,
SEPs, Defined Contribution Plans and Section 403(b)(7) Plans are
subject to specific contribution limitations. Generally, such
contributions may be invested at the direction of the
participant. The investment is then held by Investors Fiduciary
Trust Company as custodian. Each participant's account is charged
an annual fee of $12 per taxpayer identification number no matter
how many tax-deferred accounts the participant has with Janus.
The custodian reserves the right to change the amount of this fee
or to waive it in whole or in part for certain types of accounts.
Distributions from tax-deferred accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax
if withdrawn prior to age 59 1/2 or used for a nonqualifying
purpose. Additionally, shareholders generally must start
withdrawing retirement plan assets no later than April 1 of the
year after they reach age 70 1/2. Several exceptions to these
general rules may apply and several methods exist to determine
the amount and timing of the minimum annual distribution (if
any). Shareholders should consult with their tax adviser or legal
counsel prior to receiving any distribution from any tax-deferred
account, in order to determine the income tax impact of any such
distribution.
57
<PAGE>
To receive additional information about Traditional and Roth
IRAs, SEPs, Defined Contribution Plans and Section 403(b)(7)
Plans along with the necessary materials to establish an account,
please call the Fund at 1-800-525-3713 or write to the Fund at
P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to
a Traditional or Roth IRA, SEP, Defined Contribution Plan or
Section 403(b)(7) Plan can be made until the appropriate forms to
establish any such plan have been completed.
58
<PAGE>
Income dividends, capital gains
distributions and tax status
It is a policy of the Fund to make distributions of substantially
all of its investment income and any net realized capital gains.
Any capital gains realized during each fiscal year of the Fund
ended October 31, as defined by the Code, are normally declared
and payable to shareholders in December. The Fund intends to
qualify as a regulated investment company by satisfying certain
requirements prescribed by Subchapter M of the Code. Accordingly,
the Fund will invest no more than 25% of its total assets in a
single issuer (other than U.S. government securities).
The Fund may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS.
In order to avoid taxes and interest that must be paid by the
Fund, if these instruments are profitable, the Fund may make
various elections permitted by the tax laws. However, these
elections could require that the Fund recognize taxable income,
which in turn must be distributed.
Some foreign securities purchased by the Fund may be subject to
foreign taxes which could reduce the yield on such securities.
The amount of such foreign taxes is expected to be insignificant.
Accordingly, the Fund does not intend to make the election
permitted under section 853 of the Code to pass through such
taxes to shareholders as a foreign tax credit as this would
increase the taxable income reported to shareholders and require
shareholders to take the credit on their tax returns,
complicating the preparation of such returns. As a result, any
foreign taxes paid or accrued will represent an expense to the
Fund which will reduce its investment company taxable income.
59
<PAGE>
Principal shareholders
As of January 20, 1999, the officers and Trustees of the Fund as
a group owned less than 1% of the outstanding shares of the Fund.
In addition, as of January 20, 1999, the following shareholders
owned more than 5% of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Shareholder Address
- -----------------------------------------------------------------
<S> <C>
Charles Schwab & Co., Inc. 101 Montgomery Street
San Francisco, CA 94101-4122
Donaldson Lufkin & Jenrette P.O. Box 2052
Securities Corp. Jersey City, NJ 07303-2052
National Financial Services Co. P.O. Box 3908
Church Street Station
New York, NY 10008-3908
<CAPTION>
Percentage
Shareholder Ownership
<S> <C>
Charles Schwab & Co., Inc.
33.27%
Donaldson Lufkin & Jenrette
5.22%
Securities Corp.
National Financial Services Co.
13.44%
</TABLE>
According to information provided by Charles Schwab & Co., Inc.
and National Financial Services Co., this ownership is by nominee
only and does not represent beneficial ownership of such shares,
because they have no investment discretion or voting power with
respect to such shares.
60
<PAGE>
Miscellaneous information
The Fund is a series of the Trust, a Massachusetts business trust
that was created on February 11, 1986. The Trust is an open-end
management investment company registered under the 1940 Act. As
of the date of this SAI, the Trust offers 21 separate series,
three of which currently offer three classes of shares.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Fund, the Fund must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Fund could, under
certain circumstances, be held liable for the obligations of the
Fund. However, the Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
notice of this disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or the
Trustees. The Declaration of Trust also provides for
indemnification from the assets of the Fund for all losses and
expenses of any Fund shareholder held liable for the obligations
of the Fund. Thus, the risk of a shareholder incurring a
financial loss on account of its liability as a shareholder of
the Fund is limited to circumstances in which the Fund would be
unable to meet its obligations. The possibility that these
circumstances would occur is remote. The Trustees intend to
conduct the operations of the Fund to avoid, to the extent
possible, liability of shareholders for liabilities of the Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of the Fund are fully paid and
nonassessable when issued. All shares of the Fund participate
equally in dividends and other distributions by the Fund, and in
residual assets of the Fund in the event of liquidation. Shares
of the Fund have no preemptive, conversion or subscription
rights. Shares of the Fund may be transferred by endorsement or
stock power as is customary, but the Fund is not bound to
recognize any transfer until it is recorded on its books.
61
<PAGE>
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by the Fund only if a matter affects or requires the vote of only
the Fund or the Fund's interest in the matter differs from the
interest of other portfolios of the Trust. As a shareholder, you
are entitled to one vote for each share that you own.
VOTING RIGHTS
The present Trustees were elected at a meeting of shareholders
held on July 10, 1992, with the exception of Mr. Craig and Mr.
Rothe who were appointed by the Trustees as of June 30, 1995 and
January 1, 1997, respectively. Under the Declaration of Trust,
each Trustee will continue in office until the termination of the
Trust or his earlier death, retirement, resignation, bankruptcy,
incapacity or removal. Vacancies will be filled by a majority of
the remaining Trustees, subject to the 1940 Act. Therefore, no
annual or regular meetings of shareholders normally will be held,
unless otherwise required by the Declaration of Trust or the 1940
Act. Subject to the foregoing, shareholders have the power to
vote to elect or remove Trustees, to terminate or reorganize the
Fund, to amend the Declaration of Trust, to bring certain
derivative actions and on any other matters on which a
shareholder vote is required by the 1940 Act, the Declaration of
Trust, the Trust's Bylaws or the Trustees.
As mentioned above in "Shareholder Meetings," each share of the
Fund and of each other series of the Trust has one vote (and
fractional votes for fractional shares). Shares of all series of
the Trust have noncumulative voting rights, which means that the
holders of more than 50% of the shares of all series of the Trust
voting for the election of Trustees can elect 100% of the
Trustees if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any Trustees.
62
<PAGE>
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve the Fund's objective
by investing all of the Fund's assets in another investment
company having the same investment objective and substantially
the same investment policies and restrictions as those applicable
to the Fund. Unless otherwise required by law, this policy may be
implemented by the Trustees without shareholder approval.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Fund,
audit the Fund's annual financial statements and prepare its tax
returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Fund or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
63
<PAGE>
Performance information
Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of
return of a hypothetical investment in the Fund over periods of
1, 5, and 10 years (up to the life of the Fund). These are the
annual total rates of return that would equate the initial amount
invested to the ending redeemable value. These rates of return
are calculated pursuant to the following formula: P(1 + T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years and
ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period). All total return
figures reflect the deduction of a proportional share of Fund
expenses on an annual basis, and assume that all dividends and
distributions are reinvested when paid.
The Fund was made available for public sale on May 2, 1994. The
one year and lifetime average annual total returns, computed as
of October 31, 1998, for each of those periods, are 3.55% and
15.72%, respectively.
From time to time in advertisements or sales material, the Fund
may discuss its performance ratings or other information as
published by recognized mutual fund statistical rating services,
including, but not limited to, Lipper Analytical Services, Inc.,
("Lipper") Ibbotson Associates, Micropal or Morningstar, Inc.
("Morningstar") or by publications of general interest such as
Forbes, Money, The Wall Street Journal, Mutual Funds Magazine,
Kiplinger's or Smart Money. The Fund may also compare its
performance to that of other selected mutual funds (for example,
peer groups created by Lipper or Morningstar), mutual fund
averages or recognized stock market indicators, including, but
not limited to, the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE Index) and the NASDAQ composite. In
addition, the Fund may compare its total return to the yield on
U.S. Treasury obligations and to the percentage change in the
Consumer Price Index. Such performance ratings or comparisons may
be made with funds that may have different investment
restrictions, objectives, policies or techniques than the Fund
and
64
<PAGE>
such other funds or market indicators may be comprised of
securities that differ significantly from the Fund's investments.
65
<PAGE>
Financial statements
The following audited financial statements for the period ended
October 31, 1998 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1998
Statement of Operations for the period ended October 31, 1998
Statement of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
66
<PAGE>
Appendix A
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by two of
the major credit ratings agencies. Credit ratings evaluate only
the safety of principal and interest payments, not the market
value risk of lower quality securities. Credit rating agencies
may fail to change credit ratings to reflect subsequent events on
a timely basis. Although Janus Capital considers security ratings
when making investment decisions, it also performs its own
investment analysis and does not rely solely on the ratings
assigned by credit agencies.
STANDARD & POOR'S
RATINGS SERVICES
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
AAA......................... Highest rating; extremely strong
capacity to pay principal and
interest.
AA.......................... High quality; very strong capacity
to pay principal and interest.
A........................... Strong capacity to pay principal
and interest; somewhat more
susceptible to the adverse effects
of changing circumstances and
economic conditions.
BBB......................... Adequate capacity to pay principal
and interest; normally exhibit
adequate protection parameters, but
adverse economic conditions or
changing circumstances more likely
to lead to a weakened capacity to
pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB, B, CCC, CC, C........... Predominantly speculative with
respect to the issuer's capacity to
meet required interest and
principal payments. BB -- lowest
degree of speculation; C -- the
highest degree of speculation.
Quality and protective
characteristics outweighed by large
uncertainties or major risk
exposure to adverse conditions.
D........................... In default.
</TABLE>
67
<PAGE>
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Investment Grade
Aaa......................... Highest quality, smallest degree of
investment risk.
Aa.......................... High quality; together with Aaa
bonds, they compose the high-grade
bond group.
A........................... Upper-medium grade obligations;
many favorable investment
attributes.
Baa......................... Medium-grade obligations; neither
highly protected nor poorly
secured. Interest and principal
appear adequate for the present but
certain protective elements may be
lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba.......................... More uncertain, with speculative
elements. Protection of interest
and principal payments not well
safeguarded during good and bad
times.
B........................... Lack characteristics of desirable
investment; potentially low
assurance of timely interest and
principal payments or maintenance
of other contract terms over time.
Caa......................... Poor standing, may be in default;
elements of danger with respect to
principal or interest payments.
Ca.......................... Speculative in a high degree; could
be in default or have other marked
shortcomings.
C........................... Lowest-rated; extremely poor
prospects of ever attaining
investment standing.
</TABLE>
68
<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless the portfolio managers determine that such
securities are the equivalent of investment grade securities.
Securities that have received ratings from more than one agency
are considered investment grade if at least one agency has rated
the security investment grade.
69
<PAGE>
[JANUS LOGO]
1-800-525-3713
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3172
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Institutional Shares
100 Fillmore Street
Denver, CO 80206-4928
(800) 29JANUS
Statement of Additional Information
February 17, 1999
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectus for the Institutional Shares (the "Shares") of
Janus Money Market Fund, Janus Government Money Market
Fund and Janus Tax-Exempt Money Market Fund. The Funds
are each a separate series of Janus Investment Fund, a
Massachusetts business trust.
This SAI is not a Prospectus and should be read in
conjunction with the Prospectus dated February 17, 1999,
which is incorporated by reference into this SAI and may
be obtained from the Trust at the above phone number or
address. This SAI contains additional and more detailed
information about the Funds' operations and activities
than the Prospectus. The Annual Report, which contains
important financial information about the Funds, is
incorporated by reference into this SAI and is also
available, without charge, at the above phone number or
address.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
Investment Restrictions and Investment
Strategies...................................... 2
Performance Data................................ 18
Investment Adviser and Administrator............ 22
Custodian, Transfer Agent and Certain
Affiliations.................................... 26
Portfolio Transactions and Brokerage............ 27
Trustees and Officers........................... 30
Purchase of Shares.............................. 35
Redemption of Shares............................ 36
Tax-Deferred Accounts........................... 37
Shareholder Accounts............................ 38
Dividends and Tax Status........................ 38
Principal Shareholders.......................... 40
Miscellaneous Information....................... 41
Financial Statements............................ 44
Appendix A - Description of Securities Ratings.. 45
Appendix B - Description of Municipal
Securities...................................... 49
</TABLE>
1
<PAGE>
Investment restrictions and
investment strategies
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions
that cannot be changed without shareholder approval. Shareholder
approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund
or particular class of Shares if a matter affects just that Fund
or that class of Shares), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50%
of the outstanding voting securities of the Trust (or a
particular Fund or class of Shares) are present or represented by
proxy.
As used in the restrictions set forth below and as used elsewhere
in this SAI, the term "U.S. Government Securities" shall have the
meaning set forth in the 1940 Act. The 1940 Act defines U.S.
Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S.
Government Securities may also include repurchase agreements
collateralized and municipal securities escrowed with or refunded
with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a
security other than a U.S. Government Security, if, as a result,
more than 5% of the Fund's total assets would be invested in the
securities of a single issuer or the Fund would own more than 10%
of the outstanding voting securities of any single issuer. (As
noted in the Prospectus, the Funds are also currently subject to
the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the
value of a Fund's total assets would be invested in the
securities of issuers conducting their principal business
activities in the same industry; provided that: (i) there is no
limit on investments in U.S. Government Securities or in
obligations of domestic commercial banks (including U.S. branches
of foreign banks subject to regulations under U.S. laws
applicable to domestic banks and, to the extent that its parent
is unconditionally liable
2
<PAGE>
for the obligation, foreign branches of U.S. banks); (ii) this
limitation shall not apply to a Fund's investments in municipal
securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies
are classified according to the end users of their services (for
example, automobile finance, bank finance and diversified finance
are each considered to be a separate industry); and (v) utility
companies are classified according to their services (for
example, gas, gas transmission, electric, and telephone are each
considered to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by
others, except to the extent that a Fund may be deemed an
underwriter in connection with the disposition of portfolio
securities of such Fund.
(4) A Fund may not lend any security or make any other loan if,
as a result, more than 25% of a Fund's total assets would be lent
to other parties (but this limitation does not apply to purchases
of commercial paper, debt securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest
therein, except that the Fund may invest in debt obligations
secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes
(not for leveraging) in an amount not exceeding 25% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings). If borrowings exceed 25% of
the value of a Fund's total assets by reason of a decline in net
assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation.
Reverse repurchase agreements or the segregation of assets in
connection with such agreements shall not be considered borrowing
for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its
assets
3
<PAGE>
in the securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies and restrictions as that Fund.
Investment restriction (1) is intended to reflect the
requirements under Section 5(b)(1) of the 1940 Act for a
diversified fund. Rule 2a-7 provides that money market funds that
comply with the diversification limits of Rule 2a-7 are deemed to
comply with the diversification limits of Section 5(b)(1). Thus,
the Funds interpret restriction (1) in accordance with Rule 2a-7.
Accordingly, if securities are subject to a guarantee provided by
a non-controlled person, the Rule 2a-7 diversification tests
apply to the guarantor, and the diversification test in
restriction (1) does not apply to the issuer.
Each Fund has adopted the following nonfundamental investment
restrictions that may be changed by the Trustees without
shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase
agreements with respect to any securities if, as a result, more
than 10% of the Fund's net assets would be invested in repurchase
agreements not entitling the holder to payment of principal
within seven days and in other securities that are not readily
marketable ("illiquid investments"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists
for certain securities such as securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short
sales of securities, except for short sales against the box and
the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
4
<PAGE>
(3) A Fund may not pledge, mortgage, hypothecate or encumber any
of its assets except to secure permitted borrowings or in
connection with permitted short sales.
(4) A Fund may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC"), each of the Funds may
borrow money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. A Fund will borrow money through the program only
when the costs are equal to or lower than the costs of bank
loans. Interfund loans and borrowings normally extend overnight,
but can have a maximum duration of seven days. A Fund will lend
through the program only when the returns are higher than those
available from other short-term instruments (such as repurchase
agreements). A Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending Fund could result in a lost
investment opportunity or additional borrowing costs.
For purposes of the Funds' policies on investing in particular
industries, the Funds will rely primarily on industry or industry
group classifications published by Bloomberg L.P. To the extent
that Bloomberg L.P. industry classifications are so broad that
the primary economic characteristics in a single industry are
materially different, the Funds may further classify issuers in
accordance with industry classifications as published by the SEC.
5
<PAGE>
INVESTMENT STRATEGIES
Each of the Funds may invest only in "eligible securities" as
defined in Rule 2a-7 adopted under the 1940 Act. Generally, an
eligible security is a security that (i) is denominated in U.S.
dollars and has a remaining maturity of 397 days or less (as
calculated pursuant to Rule 2a-7); (ii) is rated, or is issued by
an issuer with short-term debt outstanding that is rated, in one
of the two highest rating categories by any two nationally
recognized statistical rating organizations ("NRSROs") or, if
only one NRSRO has issued a rating, by that NRSRO (the "Requisite
NRSROs") or is unrated and of comparable quality to a rated
security, as determined by Janus Capital; and (iii) has been
determined by Janus Capital to present minimal credit risks
pursuant to procedures approved by the Trustees. In addition, the
Funds will maintain a dollar-weighted average portfolio maturity
of 90 days or less. A description of the ratings of some NRSROs
appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of
its total assets in the securities of any one issuer other than
U.S. Government Securities, provided that in certain cases a Fund
may invest more than 5% of its assets in a single issuer for a
period of up to three business days. Investment in demand
features, guarantees, and other types of instruments or features
are subject to the diversification limits under Rule 2a-7.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money
Market Fund) will invest at least 95% of its total assets in
"first-tier" securities. First-tier securities are eligible
securities that are rated, or are issued by an issuer with
short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable
quality to a rated security. In addition, a Fund may invest in
"second-tier" securities which are eligible securities that are
not first-tier securities. However, a Fund (except for Janus
Tax-Exempt Money Market Fund, in certain cases) may not invest in
a second-tier security if immediately after the acquisition
thereof the Fund would have invested more than (i) the greater of
one percent of
6
<PAGE>
its total assets or one million dollars in second-tier securities
issued by that issuer, or (ii) five percent of its total assets
in second-tier securities.
The following discussion of types of securities in which the
Funds may invest supplements and should be read in conjunction
with the Prospectus.
Participation Interests
Each Fund may purchase participation interests in loans or
securities in which the Funds may invest directly. Participation
interests are generally sponsored or issued by banks or other
financial institutions. A participation interest gives a Fund an
undivided interest in the underlying loans or securities in the
proportion that the Fund's interest bears to the total principal
amount of the underlying loans or securities. Participation
interests, which may have fixed, floating or variable rates, may
carry a demand feature backed by a letter of credit or guarantee
of a bank or institution permitting the holder to tender them
back to the bank or other institution. For certain participation
interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's
participation interest. The Funds intend to exercise any demand
rights they may have upon default under the terms of the loan or
security, to provide liquidity or to maintain or improve the
quality of the Funds' investment portfolio. A Fund will only
purchase participation interests that Janus Capital determines
present minimal credit risks.
Variable and Floating Rate Notes
Janus Money Market Fund also may purchase variable and floating
rate demand notes of corporations and other entities, which are
unsecured obligations redeemable upon not more than 30 days'
notice. These obligations include master demand notes that permit
investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangements with the issuer of the
instrument. The issuer of these obligations often has the right,
after a given
7
<PAGE>
period, to prepay the outstanding principal amount of the
obligations upon a specified number of days' notice. These
obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent
a demand note does not have a seven day or shorter demand feature
and there is no readily available market for the obligation, it
is treated as an illiquid investment.
Securities with ultimate maturities of greater than 397 days may
be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which
comply with certain requirements and certain variable rate U.S.
Government Securities may be purchased. The rate of interest on
securities purchased by a Fund may be tied to short-term Treasury
or other government securities or indices on securities that are
permissible investments of the Funds, as well as other money
market rates of interest. The Funds will not purchase securities
whose values are tied to interest rates or indices that are not
appropriate for the duration and volatility standards of a money
market fund.
Mortgage- and Asset-Backed Securities
The Funds may invest in mortgage-backed securities, which
represent an interest in a pool of mortgages made by lenders such
as commercial banks, savings and loan institutions, mortgage
bankers, mortgage brokers and savings banks. Mortgage-backed
securities may be issued by governmental or government-related
entities or by non-governmental entities such as banks, savings
and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from
other forms of debt securities which normally provide for
periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates. In contrast,
mortgage-backed securities provide periodic payments which
consist of interest and, in most cases, principal. In effect,
these payments are a "pass-through" of the periodic payments and
optional prepayments made by the individual borrowers on their
mortgage loans, net of
8
<PAGE>
any fees paid to the issuer or guarantor of such securities.
Additional payments to holders of mortgage-backed securities are
caused by prepayments resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary
widely, it is not possible to predict accurately the average life
of a particular security. Although mortgage-backed securities are
issued with stated maturities of up to forty years, unscheduled
or early payments of principal and interest on the underlying
mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for
average life. The volume of prepayments of principal on a pool of
mortgages underlying a particular security will influence the
yield of that security, and the principal returned to a Fund may
be reinvested in instruments whose yield may be higher or lower
than that which might have been obtained had the prepayments not
occurred. When interest rates are declining, prepayments usually
increase, with the result that reinvestment of principal
prepayments will be at a lower rate than the rate applicable to
the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are
issued by agencies or instrumentalities of the U.S. government.
The Government National Mortgage Association ("GNMA") is the
principal federal government guarantor of mortgage-backed
securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA
Certificates are debt securities which represent an interest in
one mortgage or a pool of mortgages which are insured by the
Federal Housing Administration or the Farmers Home Administration
or are guaranteed by the Veterans Administration. The Funds may
also invest in pools of conventional mortgages which are issued
or guaranteed by agencies of the U.S. government. GNMA
pass-through securities are considered to be riskless with
respect to default in that (i) the underlying mortgage loan
portfolio is comprised entirely of government-backed loans and
(ii) the timely
9
<PAGE>
payment of both principal and interest on the securities is
guaranteed by the full faith and credit of the U.S. government,
regardless of whether or not payments have been made on the
underlying mortgages. GNMA pass-through securities are, however,
subject to the same market risk as comparable debt securities.
Therefore, the market value of a Fund's GNMA securities can be
expected to fluctuate in response to changes in prevailing
interest rate levels.
Residential mortgage loans are pooled also by the Federal Home
Loan Mortgage Corporation ("FHLMC"). FHLMC is a privately
managed, publicly chartered agency created by Congress in 1970
for the purpose of increasing the availability of mortgage credit
for residential housing. FHLMC issues participation certificates
("PCs") which represent interests in mortgages from FHLMC's
national portfolio. The mortgage loans in FHLMC's portfolio are
not U.S. government backed; rather, the loans are either
uninsured with loan-to-value ratios of 80% or less, or privately
insured if the loan-to-value ratio exceeds 80%. FHLMC guarantees
the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee
any aspect of FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private
shareholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks,
commercial banks, credit unions and mortgage bankers. FNMA
guarantees the timely payment of principal and interest on the
pass-through securities issued by FNMA; the U.S. government does
not guarantee any aspect of the FNMA pass-through securities.
The Funds may also invest in privately-issued mortgage-backed
securities to the extent permitted by their investment
restrictions. Mortgage-backed securities offered by private
issuers include pass-through securities comprised of pools of
conventional residential mortgage loans; mortgage-backed bonds
which are considered to
10
<PAGE>
be debt obligations of the institution issuing the bonds and
which are collateralized by mortgage loans; and collateralized
mortgage obligations ("CMOs") which are collateralized by
mortgage-backed securities issued by GNMA, FHLMC or FNMA or by
pools of conventional mortgages.
Asset-backed securities represent direct or indirect
participations in, or are secured by and payable from, assets
other than mortgage-backed assets such as motor vehicle
installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables
from revolving credit agreements (credit cards). Asset-backed
securities have yield characteristics similar to those of
mortgage-backed securities and, accordingly, are subject to many
of the same risks.
Reverse Repurchase Agreements
Reverse repurchase agreements are transactions in which a Fund
sells a security and simultaneously commits to repurchase that
security from the buyer at an agreed upon price on an agreed upon
future date. The resale price in a reverse repurchase agreement
reflects a market rate of interest that is not related to the
coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest
payments are calculated daily, often based upon the prevailing
overnight repurchase rate. The Funds will use the proceeds of
reverse repurchase agreements only to satisfy unusually heavy
redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to
recover for the term of the reverse repurchase agreement all or
most of the cash invested in the portfolio securities sold and to
keep the interest income associated with those portfolio
securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction
is less than the cost of obtaining the cash otherwise. In
addition, interest costs on the money received in a reverse
repurchase agreement may exceed the
11
<PAGE>
return received on the investments made by a Fund with those
monies.
When-Issued and Delayed Delivery Securities
Each Fund may purchase securities on a when-issued or delayed
delivery basis. A Fund will enter into such transactions only
when it has the intention of actually acquiring the securities.
To facilitate such acquisitions, the Funds' custodian will
segregate cash or high quality liquid assets in an amount at
least equal to such commitments. On delivery dates for such
transactions, the Fund will meet its obligations from maturities,
sales of the segregated securities or from other available
sources of cash. If a Fund chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. At the time a
Fund makes the commitment to purchase securities on a when-issued
or delayed delivery basis, it will record the transaction as a
purchase and thereafter reflect the value of such securities in
determining its net asset value.
Investment Company Securities
From time to time, the Funds may invest in securities of other
investment companies. The Funds are subject to the provisions of
Section 12(d)(1) of the 1940 Act. Funds managed by Janus Capital
("Janus Funds") may invest in securities of the Funds and any
other money market funds managed by Janus Capital in excess of
the limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus Funds.
Debt Obligations
Janus Money Market Fund may invest in debt obligations of
domestic issuers. In general, sales of these securities may not
be made absent registration under the Securities Act of 1933 or
the availability of an appropriate exemption. Pursuant to Section
4(2) of the 1933 Act or Rule 144A adopted under the 1933 Act,
however, some of these securities are eligible for resale to
institutional investors, and accordingly, Janus Capital may
deter-
12
<PAGE>
mine that a liquid market exists for such a security pursuant to
guidelines adopted by the Trustees.
Obligations of Financial Institutions
Janus Money Market Fund may invest in obligations of financial
institutions. Examples of obligations in which the Fund may
invest include negotiable certificates of deposit, bankers'
acceptances, time deposits and other obligations of U.S. banks
(including savings and loan associations) having total assets in
excess of one billion dollars and U.S. branches of foreign banks
having total assets in excess of ten billion dollars. The Fund
may also invest in Eurodollar and Yankee bank obligations as
discussed below and other U.S. dollar-denominated obligations of
foreign banks having total assets in excess of ten billion
dollars that Janus Capital believes are of an investment quality
comparable to obligations of U.S. banks in which the Fund may
invest.
Certificates of deposit represent an institution's obligation to
repay funds deposited with it that earn a specified interest rate
over a given period. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a
customer and are usually backed by goods in international trade.
Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given
period. Fixed time deposits, which are payable at a stated
maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Fund but may be subject to early
withdrawal penalties and that could reduce the Fund's yield.
Unless there is a readily available market for them, time
deposits that are subject to early withdrawal penalties and that
mature in more than seven days will be treated as illiquid
securities.
Eurodollar bank obligations are dollar-denominated certificates
of deposit or time deposits issued outside the U.S. capital
markets by foreign branches of U.S. banks and by foreign banks.
Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
13
<PAGE>
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-denominated funds from flowing across its borders. Other
risks include: adverse political and economic developments in a
foreign country; the extent and quality of government regulation
of financial markets and institutions; the imposition of foreign
withholding taxes; and exploration or nationalization of foreign
issuers.
U.S. Government Securities
Janus Government Money Market Fund and to a lesser extent, Janus
Money Market Fund, invest in U.S. Government Securities. U.S.
Government Securities shall have the meaning set forth in the
1940 Act. The 1940 Act defines U.S. Government Securities to
include securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities. U.S. Government Securities
may also include repurchase agreements collateralized by and
municipal securities escrowed with or refunded with U.S.
government securities. U.S. Government Securities in which the
Fund may invest include U.S. Treasury securities and obligations
issued or guaranteed by U.S. government agencies and
instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small
Business Administration or issued by the Government National
Mortgage Association. In addition, U.S. Government Securities in
which the Fund may invest include securities supported primarily
or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and the Tennessee Valley
Authority. There is no guarantee that the U.S. government will
support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may
involve more risk than securities backed by the full faith and
credit of the U.S. government.
14
<PAGE>
Municipal Securities
The municipal securities in which Janus Tax-Exempt Money Market
Fund may invest include municipal notes and short-term municipal
bonds. Municipal notes are generally used to provide for the
issuer's short-term capital needs and generally have maturities
of 397 days or less. Examples include tax anticipation and
revenue anticipation notes, which generally are issued in
anticipation of various seasonal revenues, bond anticipation
notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation
bonds," which are secured by the issuer's pledge of its faith,
credit and taxing power for payment of principal and interest;
"revenue bonds," which are generally paid from the revenues of a
particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf
of public authorities to provide funding for various privately
operated industrial and commercial facilities. The Fund may also
invest in high quality participation interests in municipal
securities. A more detailed description of various types of
municipal securities is contained in Appendix B.
When the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from
those of the government creating the issuing entity and a
security is backed only by the assets and revenues of the issuing
entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development
bond backed only by the assets and revenues of the
non-governmental issuer, the non-governmental issuer will be
deemed to be the sole issuer of the bond.
Municipal Leases
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund
may invest in municipal leases. Municipal leases are municipal
securities which may take the form of a lease or an installment
purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to
15
<PAGE>
acquire a wide variety of equipment and facilities. Municipal
leases frequently have special risks not normally associated with
general obligation or revenue bonds. Leases and installment
purchase or conditional sale contracts (which normally provide
for title to the leased asset to pass eventually to the
government issuer) have evolved as a means for governmental
issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of
debt. The debt-issuance limitations of many state constitutions
and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation"
clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract
unless money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis. A Fund will
only purchase municipal leases subject to a non-appropriation
clause when the payment of principal and accrued interest is
backed by an unconditional irrevocable letter of credit, or
guarantee of a bank or other entity that meets the criteria
described in the Prospectus under "Taxable Investments."
In evaluating municipal lease obligations, Janus Capital will
consider such factors as it deems appropriate, including: (a)
whether the lease can be canceled; (b) the ability of the lease
obligee to direct the sale of the underlying assets; (c) the
general creditworthiness of the lease obligor; (d) the likelihood
that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer
considered essential by the municipality; (e) the legal recourse
of the lease obligee in the event of such a failure to
appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations
which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the
lease obligation. If a lease is backed by an unconditional letter
of credit or other unconditional credit enhancement, then Janus
Capital may determine that a lease is an eligible security solely
on the basis of its evaluation of the credit enhancement.
16
<PAGE>
Municipal leases, like other municipal debt obligations, are
subject to the risk of non-payment. The ability of issuers of
municipal leases to make timely lease payments may be adversely
impacted in general economic downturns and as relative
governmental cost burdens are allocated and reallocated among
federal, state and local governmental units. Such non-payment
would result in a reduction of income to the Funds, and could
result in a reduction in the value of the municipal lease
experiencing non-payment and a potential decrease in the net
asset value of a Fund.
17
<PAGE>
Performance data
A Fund may provide current annualized and effective annualized
yield quotations based on its daily dividends. These quotations
may from time to time be used in advertisements, shareholder
reports or other communications to shareholders. All performance
information supplied by the Funds in advertising is historical
and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares'
performance information with data published by independent
evaluators such as Morningstar, Inc., Lipper Analytical Services,
Inc., or CDC/Wiesenberger, IBC/Donoghue's Money Fund Report or
other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may
also compare their Shares' performance information with the
performance of recognized stock, bond and other indices,
including but not limited to the Municipal Bond Buyers Indices,
the Salomon Brothers Bond Index, the Lehman Bond Index, the
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, U.S. Treasury bonds, bills or notes and
changes in the Consumer Price Index as published by the U.S.
Department of Commerce. The Funds may refer to general market
performance over past time periods such as those published by
Ibbotson Associates (for instance, its "Stocks, Bonds, Bills and
Inflation Yearbook"). The Funds may also refer in such materials
to mutual fund performance rankings and other data published by
Fund Tracking Companies. Performance advertising may also refer
to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers
and financial magazines. The Funds may also compare the Shares'
yield to those of certain U.S. Treasury obligations or other
money market instruments.
Any current yield quotation of the Shares which is used in such a
manner as to be subject to the provisions of Rule 482(d) under
the Securities Act of 1933, as amended, shall consist of an
annualized historical yield, carried at least to the nearest
hundredth of one percent, based on a specific seven calendar day
period. Current yield shall be calculated by (a) determining the
net change during a seven calendar day period in the value of a
18
<PAGE>
hypothetical account having a balance of one Share at the
beginning of the period, (b) dividing the net change by the value
of the account at the beginning of the period to obtain a base
period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing). For this purpose, the net change in account value
will reflect the value of additional Shares purchased with
dividends declared on the original Share and dividends declared
on both the original Share and any such additional Shares, but
will not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on
portfolio securities. In addition, the Shares may advertise
effective yield quotations. Effective yield quotations are
calculated by adding 1 to the base period return, raising the sum
to a power equal to 365/7, and subtracting 1 from the result
(i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the
rate an investor would have to earn from a fully taxable
investment in order to equal such Shares' yield after taxes. Tax
equivalent yields are calculated by dividing Janus Tax-Exempt
Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the
Shares' yield is tax-exempt, only that portion is adjusted in the
calculation.
The Shares' current yield and effective yield for the seven-day
period ended October 31, 1998 is shown below:
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Institutional Shares 5.33% 5.47%
Janus Government Money Market Fund - Institutional
Shares 5.15% 5.29%
Janus Tax-Exempt Money Market Fund - Institutional
Shares* 3.35% 3.40%
</TABLE>
*Janus Tax-Exempt Money Market Fund Institutional Shares' tax-equivalent yield
for the seven-day period ended October 31, 1998 was 4.65%.
19
<PAGE>
Although published yield information is useful to investors in
reviewing a Fund's performance, investors should be aware that
the Fund's yield fluctuates from day to day and that the Fund's
yield for any given period is not an indication or representation
by the Fund of future yields or rates of return on the Shares.
Also, processing organizations or other institutions may charge
their customers direct fees in connection with an investment in a
Fund, which will have the effect of reducing the Fund's net yield
to those shareholders. The yield on a class of Shares is not
fixed or guaranteed, and an investment in the Shares is not
insured. Accordingly, yield information may not necessarily be
used to compare Shares with investment alternatives which, like
money market instruments or bank accounts, may provide a fixed
rate of interest. In addition, because investments in the Funds
are not insured or guaranteed, yield on the Shares may not
necessarily be used to compare the Shares with investment
alternatives which are insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the SEC, the Trustees have established
procedures to stabilize each Fund's net asset value at $1.00 per
Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating
interest rates, based on available market rates, from the Fund's
$1.00 amortized cost price per Share. Should that deviation
exceed 1/2 of 1%, the Trustees will consider whether any action
should be initiated to eliminate or reduce material dilution or
other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior
to maturity, reducing or withholding dividends and utilizing a
net asset value per Share as determined by using available market
quotations. Each Fund (i) will maintain a dollar-weighted average
portfolio maturity of 90 days or less; (ii) will not purchase any
instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater
than 397 days; (iii) will limit portfolio investments, including
repurchase agreements, to those U.S. dollar-denominated
instruments that Janus Capital has determined present minimal
credit
20
<PAGE>
risks pursuant to procedures established by the Trustees; and
(iv) will comply with certain reporting and recordkeeping
procedures. The Trust has also established procedures to ensure
that portfolio securities meet the Funds' high quality criteria.
21
<PAGE>
Investment adviser and
administrator
As stated in the Prospectus, each Fund has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver,
Colorado 80206-4928. Each Advisory Agreement provides that Janus
Capital will furnish continuous advice and recommendations
concerning the Funds' investments. The Funds have each agreed to
compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the
average daily net assets of each Fund. However, Janus Capital has
agreed to waive .10% of the value of each Fund's average daily
net assets of the advisory fee. Janus Capital has agreed to
continue such waivers until at least the next annual renewal of
the advisory agreements. In addition, the Funds pay brokerage
commissions or dealer spreads and other expenses in connection
with the execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into
an Administration Agreement with Janus Capital. Under the terms
of the Administration Agreements, each of the Funds has agreed to
compensate Janus Capital for administrative services at the
annual rate of .15% of the value of the average daily net assets
of the Shares for certain services, including custody, transfer
agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and fund
accounting, recordkeeping, and blue sky registration and
monitoring services, registration fees, expenses of shareholders'
meetings and reports to shareholders, costs of preparing,
printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs
of complying with applicable laws regulating the sale of Shares.
Each Fund will pay those expenses not assumed by Janus Capital,
including interest and taxes, fees and expenses of Trustees who
are not affiliated with Janus Capital, audit fees and expenses,
and extraordinary costs. Janus Capital has agreed to waive a
portion of the administration fee, and accordingly the effective
rate for calculating the administration fee payable by the Shares
will be .05%. Janus Capital has agreed to continue such waivers
until at least the next annual renewal of the advisory
agreements.
22
<PAGE>
The following table summarizes the advisory fees paid by the
Funds for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ----------------------- -----------------------
Advisory Advisory Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver to Waiver Waiver
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Money Market
Fund $9,548,370 $4,774,185 $6,858,596 $3,429,298 $3,101,530 $1,550,765
Janus Government Money
Market Fund $944,654 $472,327 $362,308 $181,154 $330,914 $165,457
Janus Tax-Exempt Money
Market Fund $226,264 $113,132 $158,812 $79,406 $140,898 $70,449
</TABLE>
(1) February 15, 1995 (inception of Funds) to October 31, 1995.
The following table summarizes the administration fees paid by
the Shares for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ----------------------- -----------------------
Admin- Admin- Admin- Admin- Admin- Admin-
istration istration istration istration istration istration
Fees Prior Fees After Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver to Waiver Waiver
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Money Market
Fund - Institutional
Shares $5,431,308 $1,810,436 $3,818,091 $1,272,697 $1,311,645 $437,215
Janus Government Money
Market Fund -
Institutional Shares $481,760 $160,587 $85,227 $28,409 $80,097 $26,699
Janus Tax-Exempt Money
Market Fund -
Institutional Shares $28,289 $9,430 $5,199 $1,733 $2,631 $877
</TABLE>
Advisory fees are paid on the Fund level while administration
fees are paid on the class level.
The Advisory Agreements for each Fund were reexecuted on July 1,
1997 (without amendment other than effective dates) and will
continue in effect until July 1, 1999, and thereafter from year
to year so long as such continuance is approved annually by a
majority of the Trustees who are not parties to the Advisory
23
<PAGE>
Agreements or interested persons of any such party, and by either
a majority of the Funds' outstanding voting shares or the
Trustees. Each Advisory Agreement (i) may be terminated without
the payment of any penalty by any Fund or Janus Capital on 60
days' written notice; (ii) terminates automatically in the event
of its assignment; and (iii) generally, may not be amended
without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested
persons of that Fund or Janus Capital and, to the extent required
by the 1940 Act, the vote of a majority of the outstanding voting
securities of that Fund.
Janus Capital also acts as sub-adviser for a number of
private-label mutual funds and provides separate account advisory
services for institutional accounts. Investment decisions for
each account managed by Janus Capital, including the Funds, are
made independently from those for any other account that is or
may in the future become managed by Janus Capital or its
affiliates. If, however, a number of accounts managed by Janus
Capital are contemporaneously engaged in the purchase or sale of
the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely
affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to
an exemptive order granted by the SEC, the Funds and other funds
advised by Janus Capital may also transfer daily uninvested cash
balances into one or more joint trading accounts. Assets in the
joint trading accounts are invested in money market instruments
and the proceeds are allocated to the participating funds on a
pro rata basis.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
24
<PAGE>
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and is managed in accordance with that objective by a
particular portfolio manager or team of portfolio managers. As a
result, from time to time two or more different managed accounts
may pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit portfolio managers to purchase and
sell securities for their own accounts except under the limited
exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital
and the Funds. The policy requires investment personnel and
officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to
current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for
trading authority will be denied when, among other reasons, the
proposed personal transaction would be contrary to the provisions
of the policy or would be deemed to adversely affect any
transaction then known to be under consideration for or to have
been effected on behalf of any client account, including the
Funds.
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and directors/
Trustees of Janus Capital and the Funds to various trading
restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's policy. Those persons also may be required under
certain circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
25
<PAGE>
Custodian, transfer agent and
certain affiliations
UMB Bank, N.A. ("UMB"), P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' current custodian. However, it is
expected that Citibank, N.A., 111 Wall Street 24th Floor, Zone 5,
New York, NY 10043, will replace UMB as custodian for the Funds
in the first quarter of 1999. The custodian holds the Funds'
assets in safekeeping and collects and remits the income thereon,
subject to the instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Funds' transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Funds. The Funds do not pay Janus
Service a fee.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Janus Distributors acts as the agent of the Funds in connection
with the sale of their shares in all states in which the shares
are registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer
firms or institutions which were instrumental in the acquisition
of shareholders for the Funds or which performed services with
respect to shareholder accounts. The minimum aggregate size
required for eligibility for such payments, and the factors in
selecting the broker-dealer firms and institutions to which they
will be made, are determined from time to time by Janus Capital.
26
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the
Funds and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
These research and other services may include, but are not
limited to, general economic and security market reviews,
industry and company reviews, evaluations of securities,
recommendations as to the purchase and sale of securities and
access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers
is supplemental to Janus Capital's own research efforts.
For the fiscal year ended October 31, 1998, the Funds paid no
brokerage commissions to brokers and dealers in transactions
27
<PAGE>
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1998, October 31, 1997 and
October 31, 1996, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $4,851
Janus Government Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
</TABLE>
The Funds generally buy and sell securities in principal
transactions, in which no commissions are paid. However, the
Funds may engage an agent and pay commissions for such
transactions if Janus Capital believes that the net result of the
transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing
other accounts in addition to the Funds. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or
the recommendation of a broker-dealer to its customers that they
purchase Shares as a factor in the selection of broker-dealers to
execute Fund portfolio transactions. Janus Capital may also
consider payments made by brokers effecting transactions for a
Fund (i) to the Fund or (ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be
obligated to pay. In placing portfolio business with such broker-
dealers, Janus Capital will seek the best execution of each
transaction.
28
<PAGE>
When the Funds purchase or sell a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
As of October 31, 1998, certain Funds owned securities of their
regular broker-dealers (or parents), as shown below:
<TABLE>
<CAPTION>
Name of Value of
Fund Name Broker-Dealer Securities Owned
- ----------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund Banker's Trust Securities
Corp. $262,495,236
Merrill Lynch, Pierce,
Fenner & Smith, Inc. $139,999,803
Lehman Brothers, Inc. $300,000,000
Goldman Sachs Group L.P. $300,000,000
Deutsche Morgan Grenfell, Inc. $150,000,000
Bear Stearns Co., Inc. $ 99,015,375
ABN AMRO Securities, Inc. $586,000,000
BT Alex Brown, Inc. $ 50,000,000
Salomon Smith Barney, Inc. $675,000,000
HSBC America, Inc. $ 73,435,489
CIT Group, Inc. $149,881,540
Barclay Capital, Inc. $250,000,000
Janus Government Money
Market Fund ABN AMRO Securities, Inc. $ 93,200,000
CS First Boston, Inc. $250,000,000
JP Morgan Securities, Inc. $ 25,100,000
Salomon Smith Barney, Inc. $125,000,000
</TABLE>
29
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
30
<PAGE>
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly (1997-
1998), Chief Financial Officer-Boston Market Concepts, Boston
Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly (1993
- 1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
31
<PAGE>
Sharon S. Pichler, Age 49 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money Market
Fund. Portfolio Manager of Janus Money Market Fund and Janus
Tax-Exempt Money Market Fund. Formerly, Portfolio Manager of
Janus Government Money Market Fund (February 1995-February 1999).
Vice President of Janus Capital. Formerly, Assistant Vice
President and Portfolio Manager at USAA Investment Management Co.
(1990-1994).
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
32
<PAGE>
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly (1990
- 1994), with The Boston Company Advisors, Inc., Boston, MA
(mutual fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly, (1991-1997) Director
of Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
33
<PAGE>
The Trustees are responsible for major decisions relating to each
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Funds by their officers and review
the investment decisions of the officers although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Declaration of Trust, Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Loo,
Mullen and Rothe, monitors the compliance with policies and
procedures adopted particularly for money market funds.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Funds described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Funds or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $ 5,754 $82,000
Gary O. Loo, Trustee $13,896 $74,000
Dennis B. Mullen, Trustee $12,531 $82,000
Martin H. Waldinger, Trustee $ 5,517 $74,000
James T. Rothe, Trustee $11,913 $82,000
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
34
<PAGE>
Purchase of shares
Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock
Exchange (the "NYSE" or the "Exchange") next occurring after a
purchase order is received and accepted by a Fund (except net
asset value is normally determined at 5:00 p.m. (New York time)
for Janus Government Money Market Fund). A Fund's net asset value
is calculated each day that both the NYSE and the Federal Reserve
Banks are open ("bank business day"). As stated in the
Prospectus, the Funds each seek to maintain a stable net asset
value per share of $1.00. The Shareholder's Guide Section of the
Prospectus contains detailed information about the purchase of
Shares.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect in writing or by phone to receive their
dividends and distributions via wire transfer, all income
dividends and capital gains distributions, if any, on Shares are
reinvested automatically in additional Shares of that Fund at the
NAV determined on the payment date. Any such election (which may
be made on the Application or by phone) will apply to dividends
and distributions the record dates of which fall on or after the
date that a Fund receives such notice. Changes to distribution
options must be received at least three days prior to the record
date to be effective for such date. Investors receiving
distributions and dividends via wire transfer may elect in
writing or by phone to change back to automatic reinvestment at
any time.
35
<PAGE>
Redemption of shares
Procedures for redemption of Shares are set forth in the
Shareholder's Guide section of the Prospectus. Shares normally
will be redeemed for cash (via wire), although each Fund retains
the right to redeem Shares in kind under unusual circumstances,
in order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its
discretion. However, the Funds are governed by Rule 18f-1 under
the 1940 Act, which requires each Fund to redeem Shares solely in
cash up to the lesser of $250,000 or 1% of the net asset value of
that Fund during any 90-day period for any one shareholder.
Should redemptions by any shareholder exceed such limitation,
their Fund will have the option of redeeming the excess in cash
or in kind. If Shares are redeemed in kind, the redeeming
shareholder might incur brokerage costs in converting the assets
to cash. The method of valuing securities used to make
redemptions in kind will be the same as the method of valuing
portfolio securities described under "Determination of Net Asset
Value" and such valuation will be made as of the same time the
redemption price is determined.
The right to require the Funds to redeem Shares may be suspended,
or the date of payment may be postponed, whenever (1) trading on
the NYSE is restricted, as determined by the SEC, or the NYSE is
closed except for holidays and weekends, (2) the SEC permits such
suspension and so orders, or (3) an emergency exists as
determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
36
<PAGE>
Tax-deferred accounts
The Funds offer tax-deferred retirement plans for rollover
accounts in excess of $250,000. The Individual Retirement Account
may be used by individuals who meet the above requirement.
Contributions under Traditional and Roth IRAs, SEPs, Defined
Contribution Plans and Section 403(b)(7) Plans are subject to
specific contribution limitations. Generally, such contributions
may be invested at the direction of the participant. The
investment is then held by Investors Fiduciary Trust Company as
custodian.
Distributions from tax-deferred accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax
if withdrawn prior to age 59 1/2 or used for a nonqualifying
purpose. Additionally, shareholders generally must start
withdrawing retirement plan assets no later than April 1 of the
year after they reach age 70 1/2. Several exceptions to these
general rules may apply and several methods exist to determine
the amount and timing of the minimum annual distribution (if
any). Shareholders should consult with their tax adviser or legal
counsel prior to receiving any distribution from any tax-deferred
account, in order to determine the income tax impact of any such
distribution.
To receive additional information about IRAs along with the
necessary materials to establish an account, please call the
Funds at 1-800-525-3713 or write the Funds at P.O. Box 173375,
Denver, CO 80217-3375. No contribution to any IRA can be made
until the appropriate forms to establish any such plan have been
completed.
37
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts is set forth in the Prospectus. Applications to open
accounts may be obtained by calling the Funds at 1-800-29JANUS or
writing to the Funds at 100 Fillmore Street, Denver, Colorado
80206-4928, Attention: Institutional Services.
Dividends and tax status
Dividends representing substantially all of the net investment
income and any net realized gains on sales of securities are
declared daily, Saturdays, Sundays and holidays included, and
distributed on the last business day of each month. If a month
begins on a Saturday, Sunday or holiday, dividends for those days
are declared at the end of the preceding month and distributed on
the first business day of the month. A shareholder may receive
dividends via wire transfer or may choose to have dividends
automatically reinvested in a Fund's Shares. As described in the
Prospectus, Shares purchased by wire on a bank business day will
receive that day's dividend if the purchase is effected at or
prior to 3:00 p.m. (New York time) for Janus Money Market Fund,
5:00 p.m. for Janus Government Money Market Fund and 12:00 p.m.
for Janus Tax-Exempt Money Market Fund. Otherwise, such Shares
will begin to accrue dividends on the first bank business day
following receipt of the order. Requests for redemption of Shares
will be redeemed at the next determined net asset value.
Redemption requests made by wire that are received prior to 3:00
p.m. (New York time) for Janus Money Market Fund, 5:00 p.m. for
Janus Government Money Market Fund and 12:00 p.m. for Janus
Tax-Exempt Money Market Fund on a bank business day will result
in Shares being redeemed that day. Proceeds of such a redemption
will normally be sent to the predesignated bank account on that
day, but that day's dividend will not be received. Closing times
for purchase and redemption of Shares may be changed for days in
which the bond market or the NYSE close early.
38
<PAGE>
Distributions for all of the Funds (except Janus Tax-Exempt Money
Market Fund) are taxable income and are subject to federal income
tax (except for shareholders exempt from income tax), whether
such distributions are received via wire transfer or are
reinvested in additional Shares. Full information regarding the
tax status of income dividends and any capital gains
distributions will be mailed to shareholders for tax purposes on
or before January 31st of each year. As described in detail in
the Prospectus, Janus Tax-Exempt Money Market Fund anticipates
that substantially all income dividends it pays will be exempt
from federal income tax, although dividends attributable to
interest on taxable investments, together with distributions from
any net realized short- or long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by
satisfying certain requirements prescribed by Subchapter M of the
Code. Accordingly, a Fund will invest no more than 25% of its
total assets in a single issuer (other than U.S. government
securities).
Some money market securities employ a trust or other similar
structure to modify the maturity, price characteristics, or
quality of financial assets. For example, put features can be
used to modify the maturity of a security, or interest rate
adjustment features can be used to enhance price stability. If
the structure does not perform as intended, adverse tax or
investment consequences may result. Neither the Internal Revenue
Service nor any other regulatory authority has ruled definitively
on certain legal issues presented by structured securities.
Future tax or other regulatory determinations could adversely
affect the value, liquidity, or tax treatment of the income
received from these securities or the nature and timing of
distributions made by a Fund.
39
<PAGE>
Principal shareholders
As of January 20, 1999, the officers and Trustees as a group
owned less than 1% of the outstanding Shares.
As of January 20, 1999, the following shareholders owned more
than 5% of the Shares of Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -----------------------------------------------------------------------------------------
<S> <C>
Wells Fargo Institutional Trust 45 Fremont Street 10.49%
Co. San Francisco, CA 94105-2204
Capital Network Services One Bush Street, 11th Floor 5.08%
San Francisco, CA 94104-4425
Comerica Bank 411 West Lafayette 20.67%
Mail Code 3455
Detroit, MI 48226-3155
</TABLE>
As of January 20, 1999, the following shareholders owned more
than 5% of the Shares of Janus Government Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -----------------------------------------------------------------------------------------
<S> <C>
Janus Twenty Fund 100 Fillmore Street 61.13%
Denver, CO 80206-4928
Janus Worldwide Fund 100 Fillmore Street 23.32%
Denver, CO 80206-4928
</TABLE>
As of January 20, 1999, the following shareholder owned more than
5% of the Shares of Janus Tax-Exempt Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -----------------------------------------------------------------------------------------
<S> <C>
Janus Capital Corporation 100 Fillmore Street 64.67%
Denver, CO 80206-4928
</TABLE>
40
<PAGE>
Miscellaneous information
Each Fund is a series of the Trust, a Massachusetts Business
Trust that was created on February 11, 1986. The Trust is an
open-end management investment company registered under the 1940
Act. As of the date of this SAI, the Trust offers 21 separate
series, three of which currently offer three classes of Shares.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Funds, the Funds must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under
certain circumstances, be held liable for the obligations of
their Fund. However, the Agreement and Declaration of Trust (the
"Declaration of Trust") disclaims shareholder liability for acts
or obligations of the Funds and requires that notice of this
disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The
Declaration of Trust also provides for indemnification from the
assets of the Funds for all losses and expenses of any Fund
shareholder held liable for the obligations of their Fund. Thus,
the risk of a shareholder incurring a financial loss on account
of its liability as a shareholder of one of the Funds is limited
to circumstances in which their Fund would be unable to meet its
obligations. The possibility that these circumstances would occur
is remote. The Trustees intend to conduct the operations of the
Funds to avoid, to the extent possible, liability of shareholders
for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of each Fund are fully paid and
nonassessable when issued. All shares of a Fund participate
equally in dividends and other distributions by such Fund, and in
residual assets of that Fund in the event of liquidation. Shares
of each Fund have no preemptive, conversion or subscription
rights.
41
<PAGE>
The Trust is authorized to issue multiple classes of shares for
each Fund. Currently, Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt Money Market Fund each
offer three classes of shares by separate prospectuses. The
Shares discussed in this SAI are offered only to individual,
institutional and corporate clients and foundations and trusts
meeting certain minimum investment criteria. A second class of
shares, Service Shares, is offered through banks and other
financial institutions that meet minimum investment requirements
in connection with trust accounts, cash management programs and
similar programs. A third class of shares, Investor Shares, is
offered to the general public.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by each Fund only if a matter affects or requires the vote of
only that Fund or that Fund's interest in the matter differs from
the interest of other portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.
VOTING RIGHTS
The present Trustees were elected at a meeting of the Trust's
shareholders held on July 10, 1992, with the exception of Mr.
Craig and Mr. Rothe who were appointed by the Trustees as of June
30, 1995 and January 1, 1997, respectively. Under the Declaration
of Trust, each Trustee will continue in office until the
termination of the Trust or his earlier death, retirement,
resignation, bankruptcy, incapacity or removal. Vacancies will be
filled by a majority of the remaining Trustees, subject to the
1940 Act. Therefore, no annual or regular meetings of
shareholders normally will be held, unless otherwise required by
the Declaration of Trust or the 1940 Act. Subject to the
foregoing, shareholders have the power to vote to elect or remove
Trustees,
42
<PAGE>
to terminate or reorganize their Fund, to amend the Declaration
of Trust, to bring certain derivative actions and on any other
matters on which a shareholder vote is required by the 1940 Act,
the Declaration of Trust, the Trust's Bylaws or the Trustees.
As mentioned above in "Shareholder Meetings," each share of each
series of the Trust has one vote (and fractional votes for
fractional shares). Shares of all series of the Trust have
noncumulative voting rights, which means that the holders of more
than 50% of the shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they
choose to do so and, in such event, the holders of the remaining
shares will not be able to elect any Trustees. Each series or
class of the Trust will vote separately only with respect to
those matters that affect only that series or class or if the
interest of the series or class in the matter differs from the
interests of other series or classes of the Trust.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Funds,
audit the Funds' annual financial statements and prepare their
tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
43
<PAGE>
Financial statements
The following audited financial statements of the Funds for the
period ended October 31, 1998 are hereby incorporated into this
SAI by reference to the Funds' Annual Report dated October 31,
1998.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1998
Statements of Operations for the period ended October 31, 1998
Statements of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
44
<PAGE>
Appendix A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS. The two
highest ratings of Standard & Poor's Ratings Services for
municipal and corporate bonds are AAA and AA. Bonds rated AAA
have the highest rating assigned by S&P to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
a small degree. The AA rating may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within
that rating category.
The two highest ratings of Moody's Investors Service, Inc. for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are
judged by Moody's to be of the best quality. Bonds rated Aa are
judged to be of high quality by all standards. Together with the
Aaa group, they comprise what are generally known as high-grade
bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The
generic rating Aa may be modified by the addition of the numerals
1, 2 or 3. The modifier 1 indicates that the security ranks in
the higher end of the Aa rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT TERM MUNICIPAL LOANS. S&P's highest rating for short-term
municipal loans is SP-1. S&P states that short-term municipal
securities bearing the SP-1 designation have a strong capacity to
pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service
will be given a plus (+) designation. Issues rated SP-2 have
satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the
term of the notes.
Moody's highest rating for short-term municipal loans is MIG-1/
VMIG-1. Moody's states that short-term municipal securities rated
MIG-1/VMIG-1 are of the best quality, enjoying strong protection
45
<PAGE>
from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing,
or both. Loans bearing the MIG-2/VMIG-2 designation are of high
quality, with margins of protection ample although not so large
as in the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES. Prime-1 and Prime-2 are the two
highest ratings assigned by Moody's for other short-term debt
securities and commercial paper, and A-1 and A-2 are the two
highest ratings for commercial paper assigned by S&P. Moody's
uses the numbers 1, 2 and 3 to denote relative strength within
its highest classification of Prime, while S&P uses the numbers
1, 2 and 3 to denote relative strength within its highest
classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt
obligations and have many of the following characteristics:
leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset
protection, broad margins in earnings coverage of fixed financial
charges and high internal cash generation, and well established
access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 by Moody's have a
strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics
displayed by issuers rated Prime-1, but to a lesser degree.
Issuers rated A-1 by S&P carry a strong degree of safety
regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
(+) designation. Issuers rated A-2 by S&P carry a satisfactory
degree of safety regarding timely repayment.
46
<PAGE>
FITCH
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
F-1+........................ Exceptionally strong credit
quality. Issues assigned this
rating are regarded as having the
strongest degree of assurance for
timely payment.
F-1......................... Very strong credit quality. Issues
assigned this rating reflect an
assurance for timely payment only
slightly less in degree than issues
rated F-1+.
F-2......................... Good credit quality. Issues
assigned this rating have a
satisfactory degree of assurance
for timely payments, but the margin
of safety is not as great as the F-
1+ and F-1 ratings.
</TABLE>
DUFF & PHELPS INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Duff 1+..................... Highest certainty of timely
payment. Short-term liquidity,
including internal operating
factors and/or ready access to
alternative sources of funds, is
clearly outstanding, and safety is
just below risk-free U.S. Treasury
short-term obligations.
Duff 1...................... Very high certainty of timely
payment. Liquidity factors are
excellent and supported by good
fundamental protection factors.
Risk factors are minor.
Duff 1-..................... High certainty of timely payment.
Liquidity factors are strong and
supported by good fundamental
protection factors. Risk factors
are very small.
Duff 2...................... Good certainty of timely payment.
Liquidity factors and company
fundamentals are sound. Although
ongoing funding needs may enlarge
total financing requirements,
access to capital markets is good.
Risk factors are small.
</TABLE>
47
<PAGE>
THOMSON BANKWATCH, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
TBW-1....................... The highest category; indicates a
very high degree of likelihood that
principal and interest will be paid
on a timely basis.
TBW-2....................... The second highest category; while
the degree of safety regarding
timely repayment of principal and
interest is strong, the relative
degree of safety is not as high as
for issues rated TBW-1.
TBW-3....................... The lowest investment grade
category; indicates that while more
susceptible to adverse developments
(both internal and external) than
obligations with higher ratings,
capacity to service principal and
interest in a timely fashion is
considered adequate.
TBW-4....................... The lowest rating category; this
rating is regarded as
non-investment grade and therefore
speculative.
</TABLE>
IBCA, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
A1+......................... Obligations supported by the
highest capacity for timely
repayment. Where issues possess a
particularly strong credit feature,
a rating of A1+ is assigned.
A2.......................... Obligations supported by a good
capacity for timely repayment.
A3.......................... Obligations supported by a
satisfactory capacity for timely
repayment.
B........................... Obligations for which there is an
uncertainty as to the capacity to
ensure timely repayment.
C........................... Obligations for which there is a
high risk of default or which are
currently in default.
</TABLE>
48
<PAGE>
Appendix B
DESCRIPTION OF MUNICIPAL SECURITIES
MUNICIPAL NOTES generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. PROJECT NOTES, which carry a U.S. government guarantee, are
issued by public bodies (called "local issuing agencies") created
under the laws of a state, territory, or U.S. possession. They
have maturities that range up to one year from the date of
issuance. Project Notes are backed by an agreement between the
local issuing agency and the Federal Department of Housing and
Urban Development. These Notes provide financing for a wide range
of financial assistance programs for housing, redevelopment, and
related needs (such as low-income housing programs and renewal
programs).
2. TAX ANTICIPATION NOTES ARE issued to finance working capital
needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income,
sales, use and business taxes, and are payable from these
specific future taxes.
3. REVENUE ANTICIPATION NOTES are issued in expectation of
receipt of other types of revenues, such as Federal revenues
available under the Federal Revenue Sharing Programs.
4. BOND ANTICIPATION NOTES are issued to provide interim
financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the
repayment of the Notes.
5. CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration under the Federal National Mortgage Association
("Fannie Mae") or the Government National Mortgage Association
("Ginnie Mae").
6. TAX-EXEMPT COMMERCIAL PAPER is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
49
<PAGE>
MUNICIPAL BONDS, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. GENERAL OBLIGATION BONDS are issued by such entities as
states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of
public projects, including construction or improvement of
schools, highways and roads, and water and sewer systems. The
basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can be levied
for the payment of debt service may be limited or unlimited as to
the rate or amount of special assessments.
2. REVENUE BONDS in recent years have come to include an
increasingly wide variety of types of municipal obligations. As
with other kinds of municipal obligations, the issuers of revenue
bonds may consist of virtually any form of state or local
governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or
redevelopment authorities, and special districts, such as water,
sewer or sanitary districts. Generally, revenue bonds are secured
by the revenues or net revenues derived from a particular
facility, group of facilities, or, in some cases, the proceeds of
a special excise or other specific revenue source. Revenue bonds
are issued to finance a wide variety of capital projects
including electric, gas, water and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals. Many of these bonds provide
additional security in the form of a debt service reserve fund to
be used to make principal and interest payments. Various forms of
credit enhancement, such as a bank letter of credit or municipal
bond insurance, may also be employed in revenue bond issues.
Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or
other public projects. Some authorities provide further security
in the form of a state's ability (without
50
<PAGE>
obligation) to make up deficiencies in the debt service reserve
fund.
In recent years, revenue bonds have been issued in large volumes
for projects that are privately owned and operated (see 3 below).
3. PRIVATE ACTIVITY BONDS are considered municipal bonds if the
interest paid thereon is exempt from Federal income tax and are
issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and
manufacturing, housing and health. These bonds are also used to
finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such
bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While, at one time, the pertinent provisions of the Internal
Revenue Code permitted private activity bonds to bear tax-exempt
interest in connection with virtually any type of commercial or
industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying
projects under the Code have become increasingly limited,
particularly since the enactment of the Tax Reform Act of 1986.
Under current provisions of the Code, tax-exempt financing
remains available, under prescribed conditions, for certain
privately owned and operated rental multi-family housing
facilities, nonprofit hospital and nursing home projects,
airports, docks and wharves, mass commuting facilities and solid
waste disposal projects, among others, and for the refunding
(that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt
bonds. In future years, the types of projects qualifying under
the Code for tax-exempt financing are expected to become
increasingly limited.
Because of terminology formerly used in the Internal Revenue
Code, virtually any form of private activity bond may still be
referred to as an "industrial development bond," but more and
51
<PAGE>
more frequently revenue bonds have become classified according to
the particular type of facility being financed, such as hospital
revenue bonds, nursing home revenue bonds, multi-family housing
revenue bonds, single family housing revenue bonds, industrial
development revenue bonds, solid waste resource recovery revenue
bonds, and so on.
OTHER MUNICIPAL OBLIGATIONS, incurred for a variety of financing
purposes, include: municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract,
are issued by state and local governments and authorities to
acquire a wide variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications equipment and other
capital assets. Municipal leases frequently have special risks
not normally associated with general obligation or revenue bonds.
Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass
eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without
meeting the constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations of many state
constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease
or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
To reduce this risk, the Fund will only purchase municipal leases
subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by an unconditional
irrevocable letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the Prospectus.
Tax-exempt bonds are also categorized according to whether the
interest is or is not includible in the calculation of
alternative minimum taxes imposed on individuals, according to
whether the costs of acquiring or carrying the bonds are or are
not deductible in part by banks and other financial institutions,
and according to other criteria relevant for Federal income tax
purposes. Due to the
52
<PAGE>
increasing complexity of Internal Revenue Code and related
requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required, as a condition to the issuance
of such bonds, but particularly for revenue bonds, an opinion of
nationally recognized bond counsel as to the tax-exempt status of
interest on the bonds.
53
<PAGE>
[JANUS LOGO]
1-800-29JANUS
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3174
<PAGE>
[JANUS LOGO]
Janus Investment Fund
Janus Money Market Fund
Janus Government Money Market Fund
Janus Tax-Exempt Money Market Fund
Service Shares
100 Fillmore Street
Denver, CO 80206-4928
(800) 29JANUS
Statement of Additional Information
February 17, 1999
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectus for the Service Shares (the "Shares") of Janus
Money Market Fund, Janus Government Money Market Fund and
Janus Tax-Exempt Money Market Fund. The Funds are each a
separate series of Janus Investment Fund, a Massachusetts
business trust.
This SAI is not a Prospectus and should be read in
conjunction with the Prospectus dated February 17, 1999,
which is incorporated by reference into this SAI and may
be obtained from the Trust at the above phone number or
address. This SAI contains additional and more detailed
information about the Funds' operations and activities
than the Prospectus. The Annual Report, which contains
important financial information about the Funds, is
incorporated by reference into this SAI and is also
available, without charge, at the above phone number or
address.
<PAGE>
[JANUS LOGO]
<PAGE>
Table of contents
<TABLE>
<S> <C>
Investment Restrictions and Investment
Strategies...................................... 2
Performance Data................................ 18
Investment Adviser and Administrator............ 22
Custodian, Transfer Agent and Certain
Affiliations.................................... 27
Portfolio Transactions and Brokerage............ 28
Trustees and Officers........................... 31
Purchase of Shares.............................. 36
Redemptions of Shares........................... 36
Shareholder Accounts............................ 38
Dividends and Tax Status........................ 38
Principal Shareholders.......................... 40
Miscellaneous Information....................... 41
Financial Statements............................ 44
Appendix A - Description of Securities Ratings.. 45
Appendix B - Description of Municipal
Securities...................................... 49
</TABLE>
1
<PAGE>
Investment restrictions and
investment strategies
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions
that cannot be changed without shareholder approval. Shareholder
approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund
or particular class of Shares if a matter affects just that Fund
or that class of Shares), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50%
of the outstanding voting securities of the Trust (or a
particular Fund or class of Shares) are present or represented by
proxy.
As used in the restrictions set forth below and as used elsewhere
in this SAI, the term "U.S. Government Securities" shall have the
meaning set forth in the 1940 Act. The 1940 Act defines U.S.
Government Securities as securities issued or guaranteed by the
United States government, its agencies or instrumentalities. U.S.
Government Securities may also include repurchase agreements
collateralized and municipal securities escrowed with or refunded
with escrowed U.S. government securities.
The Funds have adopted the following fundamental policies:
(1) With respect to 75% of its assets, a Fund may not purchase a
security other than a U.S. Government Security, if, as a result,
more than 5% of the Fund's total assets would be invested in the
securities of a single issuer or the Fund would own more than 10%
of the outstanding voting securities of any single issuer. (As
noted in the Prospectus, the Funds are also currently subject to
the greater diversification standards of Rule 2a-7, which are not
fundamental.)
(2) A Fund may not purchase securities if 25% or more of the
value of a Fund's total assets would be invested in the
securities of issuers conducting their principal business
activities in the same industry; provided that: (i) there is no
limit on investments in U.S. Government Securities or in
obligations of domestic commercial banks (including U.S. branches
of foreign banks subject to regulations under U.S. laws
applicable to domestic banks and, to the extent that its parent
is unconditionally liable
2
<PAGE>
for the obligation, foreign branches of U.S. banks); (ii) this
limitation shall not apply to a Fund's investments in municipal
securities; (iii) there is no limit on investments in issuers
domiciled in a single country; (iv) financial service companies
are classified according to the end users of their services (for
example, automobile finance, bank finance and diversified finance
are each considered to be a separate industry); and (v) utility
companies are classified according to their services (for
example, gas, gas transmission, electric, and telephone are each
considered to be a separate industry).
(3) A Fund may not act as an underwriter of securities issued by
others, except to the extent that a Fund may be deemed an
underwriter in connection with the disposition of portfolio
securities of such Fund.
(4) A Fund may not lend any security or make any other loan if,
as a result, more than 25% of a Fund's total assets would be lent
to other parties (but this limitation does not apply to purchases
of commercial paper, debt securities or repurchase agreements).
(5) A Fund may not purchase or sell real estate or any interest
therein, except that the Fund may invest in debt obligations
secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein.
(6) A Fund may borrow money for temporary or emergency purposes
(not for leveraging) in an amount not exceeding 25% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings). If borrowings exceed 25% of
the value of a Fund's total assets by reason of a decline in net
assets, the Fund will reduce its borrowings within three business
days to the extent necessary to comply with the 25% limitation.
Reverse repurchase agreements or the segregation of assets in
connection with such agreements shall not be considered borrowing
for the purposes of this limit.
(7) Each Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its
assets
3
<PAGE>
in the securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies and restrictions as that Fund.
Investment restriction (1) is intended to reflect the
requirements under Section 5(b)(1) of the 1940 Act for a
diversified fund. Rule 2a-7 provides that money market funds that
comply with the diversification limits of Rule 2a-7 are deemed to
comply with the diversification limits of Section 5(b)(1). Thus,
the Funds interpret restriction (1) in accordance with Rule 2a-7.
Accordingly, if securities are subject to a guarantee provided by
a non-controlled person, the Rule 2a-7 diversification tests
apply to the guarantor, and the diversification test in
restriction (1) does not apply to the issuer.
Each Fund has adopted the following nonfundamental investment
restrictions that may be changed by the Trustees without
shareholder approval:
(1) A Fund may not invest in securities or enter into repurchase
agreements with respect to any securities if, as a result, more
than 10% of the Fund's net assets would be invested in repurchase
agreements not entitling the holder to payment of principal
within seven days and in other securities that are not readily
marketable ("illiquid investments"). The Trustees, or the Fund's
investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists
for certain securities such as securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, or any
successor to such rule, Section 4(2) commercial paper and
municipal lease obligations. Accordingly, such securities may not
be subject to the foregoing limitation.
(2) A Fund may not purchase securities on margin, or make short
sales of securities, except for short sales against the box and
the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities.
4
<PAGE>
(3) A Fund may not pledge, mortgage, hypothecate or encumber any
of its assets except to secure permitted borrowings or in
connection with permitted short sales.
(4) A Fund may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the
Securities and Exchange Commission ("SEC"), each of the Funds may
borrow money from or lend money to other funds that permit such
transactions and for which Janus Capital serves as investment
adviser. All such borrowing and lending will be subject to the
above limits. A Fund will borrow money through the program only
when the costs are equal to or lower than the cost of bank loans.
Interfund loans and borrowings normally extend overnight, but can
have a maximum duration of seven days. A Fund will lend through
the program only when the returns are higher than those available
from other short-term instruments (such as repurchase
agreements). A Fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending Fund could result in a lost
investment opportunity or additional borrowing costs.
For the purposes of the Funds' policies on investing in
particular industries, the Funds will rely primarily on industry
or industry group classifications published by Bloomberg L.P. To
the extent that Bloomberg L.P. industry classifications are so
broad that the primary economic characteristics in a single
industry are materially different, the Funds may further classify
issuers in accordance with industry classifications as published
by the SEC.
5
<PAGE>
INVESTMENT STRATEGIES
Each of the Funds may invest only in "eligible securities" as
defined in Rule 2a-7 adopted under the 1940 Act. Generally, an
eligible security is a security that (i) is denominated in U.S.
dollars and has a remaining maturity of 397 days or less (as
calculated pursuant to Rule 2a-7); (ii) is rated, or is issued by
an issuer with short-term debt outstanding that is rated, in one
of the two highest rating categories by any two nationally
recognized statistical rating organizations ("NRSROs") or, if
only one NRSRO has issued a rating, by that NRSRO (the "Requisite
NRSROs") or is unrated and of comparable quality to a rated
security, as determined by Janus Capital; and (iii) has been
determined by Janus Capital to present minimal credit risks
pursuant to procedures approved by the Trustees. In addition, the
Funds will maintain a dollar-weighted average portfolio maturity
of 90 days or less. A description of the ratings of some NRSROs
appears in Appendix A.
Under Rule 2a-7, a Fund may not invest more than five percent of
its total assets in the securities of any one issuer other than
U.S. Government Securities, provided that in certain cases a Fund
may invest more than 5% of its assets in a single issuer for a
period of up to three business days. Investment in demand
features, guarantees and other types of instruments or features
are subject to the diversification limits under Rule 2a-7.
Pursuant to Rule 2a-7, each Fund (except Janus Tax-Exempt Money
Market Fund) will invest at least 95% of its total assets in
"first-tier" securities. First-tier securities are eligible
securities that are rated, or are issued by an issuer with
short-term debt outstanding that is rated, in the highest rating
category by the Requisite NRSROs or are unrated and of comparable
quality to a rated security. In addition, a Fund may invest in
"second-tier" securities which are eligible securities that are
not first-tier securities. However, a Fund (except for Janus
Tax-Exempt Money Market Fund, in certain cases) may not invest in
a second-tier security if immediately after the acquisition
thereof the Fund would have invested more than (i) the greater of
one percent of its total assets or one million dollars in
second-tier securities issued by that issuer, or (ii) five
percent of its total assets in second-tier securities.
6
<PAGE>
The following discussion of types of securities in which the
Funds may invest supplements and should be read in conjunction
with the Prospectus.
Participation Interests
Each Fund may purchase participation interests in loans or
securities in which the Funds may invest directly. Participation
interests are generally sponsored or issued by banks or other
financial institutions. A participation interest gives a Fund an
undivided interest in the underlying loans or securities in the
proportion that the Fund's interest bears to the total principal
amount of the underlying loans or securities. Participation
interests, which may have fixed, floating or variable rates, may
carry a demand feature backed by a letter of credit or guarantee
of a bank or institution permitting the holder to tender them
back to the bank or other institution. For certain participation
interests, a Fund will have the right to demand payment, on not
more than seven days' notice, for all or a part of the Fund's
participation interest. The Funds intend to exercise any demand
rights they may have upon default under the terms of the loan or
security, to provide liquidity or to maintain or improve the
quality of the Funds' investment portfolio. A Fund will only
purchase participation interests that Janus Capital determines
present minimal credit risks.
Variable and Floating Rate Notes
Janus Money Market Fund also may purchase variable and floating
rate demand notes of corporations and other entities, which are
unsecured obligations redeemable upon not more than 30 days'
notice. These obligations include master demand notes that permit
investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangements with the issuer of the
instrument. The issuer of these obligations often has the right,
after a given period, to prepay the outstanding principal amount
of the obligations upon a specified number of days' notice. These
obligations generally are not traded, nor generally is there an
established secondary market for these obligations. To the extent
a
7
<PAGE>
demand note does not have a seven day or shorter demand feature
and there is no readily available market for the obligation, it
is treated as an illiquid investment.
Securities with ultimate maturities of greater than 397 days may
be purchased only pursuant to Rule 2a-7. Under that Rule, only
those long-term instruments that have demand features which
comply with certain requirements and certain variable rate U.S.
Government Securities may be purchased. The rate of interest on
securities purchased by a Fund may be tied to short-term Treasury
or other government securities or indices on securities that are
permissible investments of the Funds, as well as other money
market rates of interest. The Funds will not purchase securities
whose values are tied to interest rates or indices that are not
appropriate for the duration and volatility standards of a money
market fund.
Mortgage- and Asset-Backed Securities
The Funds may invest in mortgage-backed securities, which
represent an interest in a pool of mortgages made by lenders such
as commercial banks, savings and loan institutions, mortgage
bankers, mortgage brokers and savings banks. Mortgage-backed
securities may be issued by governmental or government-related
entities or by non-governmental entities such as banks, savings
and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers.
Interests in pools of mortgage-backed securities differ from
other forms of debt securities which normally provide for
periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates. In contrast,
mortgage-backed securities provide periodic payments which
consist of interest and, in most cases, principal. In effect,
these payments are a "pass-through" of the periodic payments and
optional prepayments made by the individual borrowers on their
mortgage loans, net of any fees paid to the issuer or guarantor
of such securities. Additional payments to holders of
mortgage-backed securities are caused by prepayments resulting
from the sale of the underlying
8
<PAGE>
residential property, refinancing or foreclosure, net of fees or
costs which may be incurred.
As prepayment rates of individual pools of mortgage loans vary
widely, it is not possible to predict accurately the average life
of a particular security. Although mortgage-backed securities are
issued with stated maturities of up to forty years, unscheduled
or early payments of principal and interest on the underlying
mortgages may shorten considerably the effective maturities.
Mortgage-backed securities may have varying assumptions for
average life. The volume of prepayments of principal on a pool of
mortgages underlying a particular security will influence the
yield of that security, and the principal returned to a Fund may
be reinvested in instruments whose yield may be higher or lower
than that which might have been obtained had the prepayments not
occurred. When interest rates are declining, prepayments usually
increase, with the result that reinvestment of principal
prepayments will be at a lower rate than the rate applicable to
the original mortgage-backed security.
The Funds may invest in mortgage-backed securities that are
issued by agencies or instrumentalities of the U.S. government.
The Government National Mortgage Association ("GNMA") is the
principal federal government guarantor of mortgage-backed
securities. GNMA is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. GNMA
Certificates are debt securities which represent an interest in
one mortgage or a pool of mortgages which are insured by the
Federal Housing Administration or the Farmers Home Administration
or are guaranteed by the Veterans Administration. The Funds may
also invest in pools of conventional mortgages which are issued
or guaranteed by agencies of the U.S. government. GNMA
pass-through securities are considered to be riskless with
respect to default in that (i) the underlying mortgage loan
portfolio is comprised entirely of government-backed loans and
(ii) the timely payment of both principal and interest on the
securities is guaranteed by the full faith and credit of the U.S.
government, regardless of whether or not payments have been
9
<PAGE>
made on the underlying mortgages. GNMA pass-through securities
are, however, subject to the same market risk as comparable debt
securities. Therefore, the market value of a Fund's GNMA
securities can be expected to fluctuate in response to changes in
prevailing interest rate levels.
Residential mortgage loans are pooled also by the Federal Home
Loan Mortgage Corporation ("FHLMC"). FHLMC is a privately
managed, publicly chartered agency created by Congress in 1970
for the purpose of increasing the availability of mortgage credit
for residential housing. FHLMC issues participation certificates
("PCs") which represent interests in mortgages from FHLMC's
national portfolio. The mortgage loans in FHLMC's portfolio are
not U.S. government backed; rather, the loans are either
uninsured with loan-to-value ratios of 80% or less, or privately
insured if the loan-to-value ratio exceeds 80%. FHLMC guarantees
the timely payment of interest and ultimate collection of
principal on FHLMC PCs; the U.S. government does not guarantee
any aspect of FHLMC PCs.
The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private
shareholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. FNMA purchases
residential mortgages from a list of approved seller/servicers
which include savings and loan associations, savings banks,
commercial banks, credit unions and mortgage bankers. FNMA
guarantees the timely payment of principal and interest on the
pass-through securities issued by FNMA; the U.S. government does
not guarantee any aspect of the FNMA pass-through securities.
The Funds may also invest in privately-issued mortgage-backed
securities to the extent permitted by their investment
restrictions. Mortgage-backed securities offered by private
issuers include pass-through securities comprised of pools of
conventional residential mortgage loans; mortgage-backed bonds
which are considered to be debt obligations of the institution
issuing the bonds and which are collateralized by mortgage loans;
and collateralized mortgage obligations ("CMOs") which are
collateralized by mortgage-backed
10
<PAGE>
securities issued by GNMA, FHLMC or FNMA or by pools of
conventional mortgages.
Asset-backed securities represent direct or indirect
participations in, or are secured by and payable from, assets
other than mortgage-backed assets such as motor vehicle
installment sales contracts, installment loan contracts, leases
of various types of real and personal property and receivables
from revolving credit agreements (credit cards). Asset-backed
securities have yield characteristics similar to those of
mortgage-backed securities and, accordingly, are subject to many
of the same risks.
Reverse Repurchase Agreements
Reverse repurchase agreements are transactions in which a Fund
sells a security and simultaneously commits to repurchase that
security from the buyer at an agreed upon price on an agreed upon
future date. The resale price in a reverse repurchase agreement
reflects a market rate of interest that is not related to the
coupon rate or maturity of the sold security. For certain demand
agreements, there is no agreed upon repurchase date and interest
payments are calculated daily, often based upon the prevailing
overnight repurchase rate. The Funds will use the proceeds of
reverse repurchase agreements only to satisfy unusually heavy
redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities.
Generally, a reverse repurchase agreement enables the Fund to
recover for the term of the reverse repurchase agreement all or
most of the cash invested in the portfolio securities sold and to
keep the interest income associated with those portfolio
securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction
is less than the cost of obtaining the cash otherwise. In
addition, interest costs on the money received in a reverse
repurchase agreement may exceed the return received on the
investments made by a Fund with those monies.
11
<PAGE>
When-Issued and Delayed Delivery Securities
Each Fund may purchase securities on a when-issued or delayed
delivery basis. A Fund will enter into such transactions only
when it has the intention of actually acquiring the securities.
To facilitate such acquisitions, the Funds' custodian will
segregate cash or high quality liquid assets in an amount at
least equal to such commitments. On delivery dates for such
transactions, the Fund will meet its obligations from maturities,
sales of the segregated securities or from other available
sources of cash. If a Fund chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. At the time a
Fund makes the commitment to purchase securities on a when-issued
or delayed delivery basis, it will record the transaction as a
purchase and thereafter reflect the value of such securities in
determining its net asset value.
Investment Company Securities
From time to time, the Funds may invest in securities of other
investment companies. The Funds are subject to the provisions of
Section 12(d)(1) of the 1940 Act. Funds managed by Janus Capital
("Janus Funds") may invest in securities of the Funds and any
other money market funds managed by Janus Capital in excess of
the limitations of Section 12(d)(1) under the terms of an SEC
exemptive order obtained by Janus Capital and the Janus Funds.
Debt Obligations
Janus Money Market Fund may invest in debt obligations of
domestic issuers. In general, sales of these securities may not
be made absent registration under the Securities Act of 1933 or
the availability of an appropriate exemption. Pursuant to Section
4(2) of the 1933 Act or Rule 144A adopted under the 1933 Act,
however, some of these securities are eligible for resale to
institutional investors, and accordingly, Janus Capital may
determine that a liquid market exists for such a security
pursuant to guidelines adopted by the Trustees.
12
<PAGE>
Obligations of Financial Institutions
Janus Money Market Fund may invest in obligations of financial
institutions. Examples of obligations in which the Fund may
invest include negotiable certificates of deposit, bankers'
acceptances, time deposits and other obligations of U.S. banks
(including savings and loan associations) having total assets in
excess of one billion dollars and U.S. branches of foreign banks
having total assets in excess of ten billion dollars. The Fund
may also invest in Eurodollar and Yankee bank obligations as
discussed below and other U.S. dollar-denominated obligations of
foreign banks having total assets in excess of ten billion
dollars that Janus Capital believes are of an investment quality
comparable to obligations of U.S. banks in which the Fund may
invest.
Certificates of deposit represent an institution's obligation to
repay funds deposited with it that earn a specified interest rate
over a given period. Bankers' acceptances are negotiable
obligations of a bank to pay a draft which has been drawn by a
customer and are usually backed by goods in international trade.
Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given
period. Fixed time deposits, which are payable at a stated
maturity date and bear a fixed rate of interest, generally may be
withdrawn on demand by the Fund but may be subject to early
withdrawal penalties and that could reduce the Fund's yield.
Unless there is a readily available market for them, time
deposits that are subject to early withdrawal penalties and that
mature in more than seven days will be treated as illiquid
securities.
Eurodollar bank obligations are dollar-denominated certificates
of deposit or time deposits issued outside the U.S. capital
markets by foreign branches of U.S. banks and by foreign banks.
Yankee bank obligations are dollar-denominated obligations issued
in the U.S. capital markets by foreign banks.
Foreign, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-
13
<PAGE>
denominated funds from flowing across its borders. Other risks
include: adverse political and economic developments in a foreign
country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign
withholding taxes; and exploration or nationalization of foreign
issuers.
U.S. Government Securities
Janus Government Money Market Fund and to a lesser extent, Janus
Money Market Fund, invest in U.S. Government Securities. U.S.
Government Securities shall have the meaning set forth in the
1940 Act. The 1940 Act defines U.S. Government Securities to
include securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities. U.S. Government Securities
may also include repurchase agreements collateralized by and
municipal securities escrowed with or refunded with U.S.
government securities. U.S. Government Securities in which the
Fund may invest include U.S. Treasury securities and obligations
issued or guaranteed by U.S. government agencies and
instrumentalities that are backed by the full faith and credit of
the U.S. government, such as those guaranteed by the Small
Business Administration or issued by the Government National
Mortgage Association. In addition, U.S. Government Securities in
which the Fund may invest include securities supported primarily
or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation and the Tennessee Valley
Authority. There is no guarantee that the U.S. government will
support securities not backed by its full faith and credit.
Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may
involve more risk than securities backed by the full faith and
credit of the U.S. government.
Municipal Securities
The municipal securities in which Janus Tax-Exempt Money Market
Fund may invest include municipal notes and short-term municipal
bonds. Municipal notes are generally used to provide for the
issuer's short-term capital needs and generally have
14
<PAGE>
maturities of 397 days or less. Examples include tax anticipation
and revenue anticipation notes, which generally are issued in
anticipation of various seasonal revenues, bond anticipation
notes, construction loan notes and tax-exempt commercial paper.
Short-term municipal bonds may include "general obligation
bonds," which are secured by the issuer's pledge of its faith,
credit and taxing power for payment of principal and interest;
"revenue bonds," which are generally paid from the revenues of a
particular facility or a specific excise tax or other source; and
"industrial development bonds," which are issued by or on behalf
of public authorities to provide funding for various privately
operated industrial and commercial facilities. The Fund may also
invest in high quality participation interests in municipal
securities. A more detailed description of various types of
municipal securities is contained in Appendix B.
When the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from
those of the government creating the issuing entity and a
security is backed only by the assets and revenues of the issuing
entity, that entity will be deemed to be the sole issuer of the
security. Similarly, in the case of an industrial development
bond backed only by the assets and revenues of the
non-governmental issuer, the non-governmental issuer will be
deemed to be the sole issuer of the bond.
Municipal Leases
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund
may invest in municipal leases. Municipal leases are municipal
securities which may take the form of a lease or an installment
purchase or conditional sales contract. Municipal leases are
issued by state and local governments and authorities to acquire
a wide variety of equipment and facilities. Municipal leases
frequently have special risks not normally associated with
general obligation or revenue bonds. Leases and installment
purchase or conditional sale contracts (which normally provide
for title to the leased asset to pass eventually to the
government issuer) have
15
<PAGE>
evolved as a means for governmental issuers to acquire property
and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance
limitations of many state constitutions and statutes are deemed
to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the
governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on a yearly or other
periodic basis. A Fund will only purchase municipal leases
subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by an unconditional
irrevocable letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the Prospectus under
"Taxable Investments."
In evaluating municipal lease obligations, Janus Capital will
consider such factors as it deems appropriate, including: (a)
whether the lease can be canceled; (b) the ability of the lease
obligee to direct the sale of the underlying assets; (c) the
general creditworthiness of the lease obligor; (d) the likelihood
that the municipality will discontinue appropriating funding for
the leased property in the event such property is no longer
considered essential by the municipality; (e) the legal recourse
of the lease obligee in the event of such a failure to
appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations
which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the
lease obligation. If a lease is backed by an unconditional letter
of credit or other unconditional credit enhancement, then Janus
Capital may determine that a lease is an eligible security solely
on the basis of its evaluation of the credit enhancement.
Municipal leases, like other municipal debt obligations, are
subject to the risk of non-payment. The ability of issuers of
municipal leases to make timely lease payments may be adversely
impacted in general economic downturns and as relative
governmental cost burdens are allocated and reallocated among
federal, state and local governmental units. Such non-payment
would result in a
16
<PAGE>
reduction of income to the Funds, and could result in a reduction
in the value of the municipal lease experiencing non-payment and
a potential decrease in the net asset value of a Fund.
17
<PAGE>
Performance data
A Fund may provide current annualized and effective annualized
yield quotations based on its daily dividends. These quotations
may from time to time be used in advertisements, shareholder
reports or other communications to shareholders. All performance
information supplied by the Funds in advertising is historical
and is not intended to indicate future returns.
In performance advertising, the Funds may compare their Shares'
performance information with data published by independent
evaluators such as Morningstar, Inc., Lipper Analytical Services,
Inc., or CDC/Wiesenberger, IBC/Donoghue's Money Fund Report or
other companies which track the investment performance of
investment companies ("Fund Tracking Companies"). The Funds may
also compare their Shares' performance information with the
performance of recognized stock, bond and other indices,
including but not limited to the Municipal Bond Buyers Indices,
the Salomon Brothers Bond Index, the Lehman Bond Index, the
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, U.S. Treasury bonds, bills or notes and
changes in the Consumer Price Index as published by the U.S.
Department of Commerce. The Funds may refer to general market
performance over past time periods such as those published by
Ibbotson Associates (for instance, its "Stocks, Bonds, Bills and
Inflation Yearbook"). The Funds may also refer in such materials
to mutual fund performance rankings and other data published by
Fund Tracking Companies. Performance advertising may also refer
to discussions of the Funds and comparative mutual fund data and
ratings reported in independent periodicals, such as newspapers
and financial magazines. The Funds may also compare the Shares'
yield to those of certain U.S. Treasury obligations or other
money market instruments.
Any current yield quotation of the Shares which is used in such a
manner as to be subject to the provisions of Rule 482(d) under
the Securities Act of 1933, as amended, shall consist of an
annualized historical yield, carried at least to the nearest
hundredth of one percent, based on a specific seven calendar day
period. Current yield shall be calculated by (a) determining the
net change during a seven calendar day period in the value of a
18
<PAGE>
hypothetical account having a balance of one Share at the
beginning of the period, (b) dividing the net change by the value
of the account at the beginning of the period to obtain a base
period return, and (c) multiplying the quotient by 365/7 (i.e.,
annualizing). For this purpose, the net change in account value
will reflect the value of additional Shares purchased with
dividends declared on the original Share and dividends declared
on both the original Share and any such additional Shares, but
will not reflect any realized gains or losses from the sale of
securities or any unrealized appreciation or depreciation on
portfolio securities. In addition, the Shares may advertise
effective yield quotations. Effective yield quotations are
calculated by adding 1 to the base period return, raising the sum
to a power equal to 365/7, and subtracting 1 from the result
(i.e., compounding).
Janus Tax-Exempt Money Market Fund's tax equivalent yield is the
rate an investor would have to earn from a fully taxable
investment in order to equal such Shares' yield after taxes. Tax
equivalent yields are calculated by dividing Janus Tax-Exempt
Money Market Fund's yield by one minus the stated federal or
combined federal and state tax rate. If only a portion of the
Shares' yield is tax-exempt, only that portion is adjusted in the
calculation.
The Shares' current yield and effective yield for the seven day
period ended October 31, 1998 is shown below.
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Service Shares 5.08% 5.21%
Janus Government Money Market Fund - Service Shares 4.90% 5.02%
Janus Tax-Exempt Money Market Fund - Service Shares* 3.24% 3.30%
</TABLE>
*Janus Tax-Exempt Money Market Fund - Service Shares tax equivalent yield for
the seven day period ended October 31, 1998 was 4.51%.
19
<PAGE>
Although published yield information is useful to investors in
reviewing a Fund's performance, investors should be aware that
the Fund's yield fluctuates from day to day and that the Fund's
yield for any given period is not an indication or representation
by the Fund of future yields or rates of return on the Shares.
Also, Financial Institutions may charge their customers direct
fees in connection with an investment in a Fund, which will have
the effect of reducing the Fund's net yield to those
shareholders. The yield on a class of Shares is not fixed or
guaranteed, and an investment in the Shares is not insured.
Accordingly, yield information may not necessarily be used to
compare Shares with investment alternatives which, like money
market instruments or bank accounts, may provide a fixed rate of
interest. In addition, because investments in the Funds are not
insured or guaranteed, yield on the Shares may not necessarily be
used to compare the Shares with investment alternatives which are
insured or guaranteed.
DETERMINATION OF NET ASSET VALUE
Pursuant to the rules of the SEC, the Trustees have established
procedures to stabilize each Fund's net asset value at $1.00 per
Share. These procedures include a review of the extent of any
deviation of net asset value per Share as a result of fluctuating
interest rates, based on available market rates, from the Fund's
$1.00 amortized cost price per Share. Should that deviation
exceed 1/2 of 1%, the Trustees will consider whether any action
should be initiated to eliminate or reduce material dilution or
other unfair results to shareholders. Such action may include
redemption of Shares in kind, selling portfolio securities prior
to maturity, reducing or withholding dividends and utilizing a
net asset value per Share as determined by using available market
quotations. Each Fund (i) will maintain a dollar-weighted average
portfolio maturity of 90 days or less; (ii) will not purchase any
instrument with a remaining maturity greater than 397 days or
subject to a repurchase agreement having a duration of greater
than 397 days; (iii) will limit portfolio investments, including
repurchase agreements, to those U.S. dollar-denominated
instruments that Janus Capital has determined present minimal
credit
20
<PAGE>
risks pursuant to procedures established by the Trustees; and
(iv) will comply with certain reporting and recordkeeping
procedures. The Trust has also established procedures to ensure
that portfolio securities meet the Funds' high quality criteria.
21
<PAGE>
Investment adviser and
administrator
As stated in the Prospectus, each Fund has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver,
Colorado 80206-4928. Each Advisory Agreement provides that Janus
Capital will furnish continuous advice and recommendations
concerning the Funds' investments. The Funds have each agreed to
compensate Janus Capital for its advisory services by the monthly
payment of an advisory fee at the annual rate of .20% of the
average daily net assets of each Fund. However, Janus Capital has
agreed to waive .10% of the value of each Fund's average daily
net assets of the advisory fee. Janus Capital has agreed to
continue such waivers until at least the next annual renewal of
the advisory agreements. In addition, the Funds pay brokerage
commissions or dealer spreads and other expenses in connection
with the execution of portfolio transactions.
On behalf of the Shares, each of the Funds has also entered into
an Administration Agreement with Janus Capital. Under the terms
of the Administration Agreements, each of the Funds has agreed to
compensate Janus Capital for administrative services at the
annual rate of .40% of the value of the average daily net assets
of the Shares for certain services, including custody, transfer
agent fees and expenses, legal fees not related to litigation,
accounting expenses, net asset value determination and fund
accounting, recordkeeping, and blue sky registration and
monitoring services, registration fees, expenses of shareholders'
meetings and reports to shareholders, costs of preparing,
printing and mailing the Shares' Prospectuses and Statements of
Additional Information to current shareholders, and other costs
of complying with applicable laws regulating the sale of Shares.
Each Fund will pay those expenses not assumed by Janus Capital,
including interest and taxes, fees and expenses of Trustees who
are not affiliated with Janus Capital, audit fees and expenses,
and extraordinary costs. Janus Capital has agreed to waive a
portion of the administration fee, and accordingly the effective
rate for calculating the administration fee payable by the Shares
will be .30%. Janus Capital has agreed to continue such waivers
until at least the next annual renewal of the advisory
agreements.
22
<PAGE>
Janus Capital may use all or a portion of its administration fee
to compensate Financial Institutions for providing administrative
services to their customers who invest in the Shares. The types
of services that the Financial Institutions would provide include
serving as the sole shareholder of record, shareholder
recordkeeping, processing and aggregating purchase and redemption
transactions, providing periodic statements, forwarding
shareholder reports and other materials, and providing other
similar services that the Funds would have to perform if they
were dealing directly with the beneficial owners, rather than the
Financial Institutions, as shareholders of record.
The following table summarizes the advisory fees paid by the
Funds for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------- ----------------------- -----------------------
Advisory Advisory Advisory Advisory Advisory Advisory
Fees Prior Fees After Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver to Waiver Waiver
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Money Market
Fund $9,548,370 $4,774,185 $6,858,596 $3,429,298 $3,101,530 $1,550,765
Janus Government Money
Market Fund $944,654 $472,327 $362,308 $181,154 $330,914 $165,457
Janus Tax-Exempt Money
Market Fund $226,264 $113,132 $158,812 $79,406 $140,898 $70,449
</TABLE>
(1) February 15, 1995 (inception of Funds) to October 31, 1995.
The following table summarizes the administration fees paid by
the Shares for the fiscal year ended October 31:
<TABLE>
<CAPTION>
1998 1997(1)
----------------------- -----------------------
Admin- Admin- Admin- Admin-
istration istration istration istration
Fees Prior Fees After Fees Prior Fees After
Fund Name to Waiver Waiver to Waiver Waiver
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Money Market Fund - Service Shares $117,287 $87,965 $3,432 $2,574
Janus Government Money Market Fund - Service Shares $2,554 $1,915 $4,565 $3,424
Janus Tax-Exempt Money Market Fund - Service Shares $12,859 $9,644 $35 $28
</TABLE>
(1) November 22, 1996 (inception of Shares) to October 31, 1997.
23
<PAGE>
Advisory fees are paid on the Fund level while administration
fees are paid on the class level.
The Advisory Agreements for each Fund were reexecuted on July 1,
1997 (without amendment other than effective dates) and will
continue in effect until July 1, 1999, and thereafter from year
to year so long as such continuance is approved annually by a
majority of the Trustees who are not parties to the Advisory
Agreements or interested persons of any such party, and by either
a majority of the Funds' outstanding voting shares or the
Trustees. Each Advisory Agreement (i) may be terminated without
the payment of any penalty by any Fund or Janus Capital on 60
days' written notice; (ii) terminates automatically in the event
of its assignment; and (iii) generally, may not be amended
without the approval of a majority of the Trustees of the
affected Fund, including the Trustees who are not interested
persons of that Fund or Janus Capital and, to the extent required
by the 1940 Act, the vote of a majority of the outstanding voting
securities of that Fund.
Janus Capital also acts as sub-adviser for a number of
private-label mutual funds and provides separate account advisory
services for institutional accounts. Investment decisions for
each account managed by Janus Capital, including the Funds, are
made independently from those for any other account that is or
may in the future become managed by Janus Capital or its
affiliates. If, however, a number of accounts managed by Janus
Capital are contemporaneously engaged in the purchase or sale of
the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely
affect the price paid or received by an account or the size of
the position obtained or liquidated for an account. Pursuant to
an exemptive order granted by the SEC, the Funds and other funds
advised by Janus Capital may also transfer daily uninvested cash
balances into one or more joint trading accounts. Assets in the
joint trading accounts are invested in money market instruments
and the proceeds are allocated to the participating funds on a
pro rata basis.
24
<PAGE>
Kansas City Southern Industries, Inc. ("KCSI") owns approximately
82% of the outstanding voting stock of Janus Capital, most of
which it acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Thomas H. Bailey,
President and Chairman of the Board of Janus Capital, owns
approximately 12% of its voting stock and, by agreement with
KCSI, selects a majority of Janus Capital's Board.
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI is currently studying
alternatives for completion of the separation that meet its
business objectives without risking adverse tax consequences.
KCSI expects completion of the separation to be contemplated in
1999.
Each account managed by Janus Capital has its own investment
objective and is managed in accordance with that objective by a
particular portfolio manager or team of portfolio managers. As a
result, from time to time two or more different managed accounts
may pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital does not permit portfolio managers to purchase and
sell securities for their own accounts except under the limited
exceptions contained in Janus Capital's policy regarding personal
investing by directors, officers and employees of Janus Capital
and the Funds. The policy requires investment personnel and
officers of Janus Capital, inside directors of Janus Capital and
the Funds and other designated persons deemed to have access to
current trading information to pre-clear all transactions in
securities not otherwise exempt under the policy. Requests for
trading authority will be denied when, among other reasons, the
proposed personal transaction would be contrary to the provisions
of the policy or would be deemed to adversely affect any
transaction then known to be under consideration for or to have
been effected on behalf of any client account, including the
Funds.
In addition to the pre-clearance requirement described above, the
policy subjects investment personnel, officers and directors/
25
<PAGE>
Trustees of Janus Capital and the Funds to various trading
restrictions and reporting obligations. All reportable
transactions are required to be reviewed for compliance with
Janus Capital's policy. Those persons also may be required under
certain circumstances to forfeit their profits made from personal
trading.
The provisions of the policy are administered by and subject to
exceptions authorized by Janus Capital.
26
<PAGE>
Custodian, transfer agent and
certain affiliations
UMB Bank, N.A. ("UMB"), P.O. Box 419226, Kansas City, Missouri
64141-6226, is the Funds' current custodian. However, it is
expected that Citibank, N.A., 111 Wall Street 24th Floor, Zone 5,
New York, NY 10043, will replace UMB as custodian for the Funds
in the first quarter of 1999. The custodian holds the Funds'
assets in safekeeping and collects and remits the income thereon,
subject to the instructions of each Fund.
Janus Service Corporation, P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the
Funds' transfer agent. In addition, Janus Service provides
certain other administrative, recordkeeping and shareholder
relations services to the Funds. The Funds do not pay Janus
Service a fee.
Janus Distributors, Inc., 100 Fillmore Street, Denver, Colorado
80206-4928, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. Janus Distributors is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.
Janus Distributors acts as the agent of the Funds in connection
with the sale of their shares in all states in which the shares
are registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus
Distributors continuously offers the Funds' shares and accepts
orders at net asset value. No sales charges are paid by
investors. Promotional expenses in connection with offers and
sales of shares are paid by Janus Capital.
Janus Capital also may make payments to selected broker-dealer
firms or institutions which were instrumental in the acquisition
of shareholders for the Funds or which performed services with
respect to shareholder accounts. The minimum aggregate size
required for eligibility for such payments, and the factors in
selecting the broker-dealer firms and institutions to which they
will be made, are determined from time to time by Janus Capital.
27
<PAGE>
Portfolio transactions and brokerage
Decisions as to the assignment of portfolio business for the
Funds and negotiation of its commission rates are made by Janus
Capital, whose policy is to obtain the "best execution" (prompt
and reliable execution at the most favorable security price) of
all portfolio transactions.
In selecting brokers and dealers and in negotiating commissions,
Janus Capital considers a number of factors, including but not
limited to: Janus Capital's knowledge of currently available
negotiated commission rates or prices of securities currently
available and other current transaction costs; the nature of the
security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality; the quality of the execution, clearance and
settlement services; financial stability of the broker or dealer;
the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. In
recognition of the value of the foregoing factors, Janus Capital
may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for
effecting that transaction if Janus Capital determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research provided by such
broker or dealer viewed in terms of either that particular
transaction or of the overall responsibilities of Janus Capital.
These research and other services may include, but are not
limited to, general economic and security market reviews,
industry and company reviews, evaluations of securities,
recommendations as to the purchase and sale of securities and
access to third party publications, computer and electronic
equipment and software. Research received from brokers or dealers
is supplemental to Janus Capital's own research efforts.
For the fiscal year ended October 31, 1998, the Funds paid no
brokerage commissions to brokers and dealers in transactions
28
<PAGE>
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1998, October 31, 1997 and
October 31, 1996, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1998 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $4,851
Janus Government Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
</TABLE>
The Funds generally buy and sell securities in principal
transactions, in which no commissions are paid. However, the
Funds may engage an agent and pay commissions for such
transactions if Janus Capital believes that the net result of the
transaction to the respective Fund will be no less favorable than
that of contemporaneously available principal transactions.
Janus Capital may use research products and services in servicing
other accounts in addition to the Funds. If Janus Capital
determines that any research product or service has a mixed use,
such that it also serves functions that do not assist in the
investment decision-making process, Janus Capital may allocate
the costs of such service or product accordingly. Only that
portion of the product or service that Janus Capital determines
will assist it in the investment decision-making process may be
paid for in brokerage commission dollars. Such allocation may
create a conflict of interest for Janus Capital.
Janus Capital may consider sales of Shares by a broker-dealer or
the recommendation of a broker-dealer to its customers that they
purchase Shares as a factor in the selection of broker-dealers to
execute Fund portfolio transactions. Janus Capital may also
consider payments made by brokers effecting transactions for a
Fund (i) to the Fund or (ii) to other persons on behalf of the
Fund for services provided to the Fund for which it would be
obligated to pay. In placing portfolio business with such broker-
dealers, Janus Capital will seek the best execution of each
transaction.
29
<PAGE>
When the Funds purchase or sell a security in the over-the-
counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in
those circumstances where in the opinion of Janus Capital better
prices and executions will be achieved through the use of a
broker.
As of October 31, 1998, certain Funds owned securities of their
regular broker-dealers (or parents), as shown below:
<TABLE>
<CAPTION>
Name of Value of
Fund Name Broker-Dealer Securities Owned
- -------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund Banker's Trust Securities
Corp. $262,495,236
Merrill Lynch, Pierce, Fenner
& Smith, Inc. $139,999,803
Lehman Brothers, Inc $300,000,000
Goldman Sachs Group L.P. $300,000,000
Deutsche Morgan Grenfell, Inc. $150,000,000
Bear Stearns Co., Inc. $99,015,375
ABN AMRO Securities, Inc. $586,000,000
BT Alex Brown, Inc. $50,000,000
Salomon Smith Barney, Inc. $675,000,000
HSBC America, Inc. $73,435,489
CIT Group, Inc. $149,881,540
Barclay Capital, Inc. $250,000,000
Janus Government Money
Market Fund ABN AMRO Securities, Inc. $93,200,000
CS First Boston, Inc. $250,000,000
JP Morgan Securities, Inc. $25,100,000
Salomon Smith Barney, Inc. $125,000,000
</TABLE>
30
<PAGE>
Trustees and officers
The following are the names of the Trustees and officers of the
Trust, together with a brief description of their principal
occupations during the last five years.
Thomas H. Bailey, Age 61 - Trustee, Chairman and President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee, Chairman and President of Janus Aspen Series. Chairman,
Chief Executive Officer, Director and President of Janus Capital.
Director of Janus Distributors, Inc.
James P. Craig, III, Age 42 - Trustee*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Executive Vice President of Janus Aspen Series. Chief
Investment Officer, Vice Chairman and Director of Janus Capital.
Executive Vice President and Portfolio Manager of Janus Fund.
Executive Vice President and Co-Manager of Janus Venture Fund.
Gary O. Loo, Age 58 - Trustee#
102 N. Cascade Avenue, Suite 500
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President and Director of High
Valley Group, Inc., Colorado Springs, CO (investments).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
31
<PAGE>
Dennis B. Mullen, Age 55 - Trustee
7500 E. McCormick Parkway, #24
Scottsdale, AZ 85258
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Investor. Formerly (1997-
1998), Chief Financial Officer-Boston Market Concepts, Boston
Chicken, Inc., Golden, CO (restaurant chain); (1993-1997),
President and Chief Executive Officer of BC Northwest, L.P., a
franchise of Boston Chicken, Inc., Bellevue, WA (restaurant
chain).
James T. Rothe, Age 55 - Trustee
102 South Tejon Street, Suite 1100
Colorado Springs, CO 80903
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Professor of Business, University
of Colorado, Colorado Springs, CO. Principal, Phillips-Smith
Retail Group, Colorado Springs, CO (a venture capital firm).
Formerly (1986-1994), Dean of the College of Business, University
of Colorado, Colorado Springs, CO.
William D. Stewart, Age 54 - Trustee#
5330 Sterling Drive
Boulder, CO 80302
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. President of HPS Division of MKS
Instruments, Boulder, CO (manufacturer of vacuum fittings and
valves).
Martin H. Waldinger, Age 60 - Trustee
4940 Sandshore Court
San Diego, CA 92130
- --------------------------------------------------------------------------------
Trustee of Janus Aspen Series. Private Consultant. Formerly (1993
- 1996), Director of Run Technologies, Inc., a software
development firm, San Carlos, CA.
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
32
<PAGE>
Sharon S. Pichler, Age 49 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt Money Market
Fund. Portfolio Manager of Janus Money Market Fund and Janus
Tax-Exempt Money Market Fund. Formerly, Portfolio Manager of
Janus Government Money Market Fund (February 1995-February 1999).
Vice President of Janus Capital. Formerly, Assistant Vice
President and Portfolio Manager at USAA Investment Management Co.
(1990-1994).
Thomas A. Early, Age 44 - Vice President and General Counsel*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and General Counsel of Janus Aspen Series. Vice
President, General Counsel and Secretary of Janus Capital. Vice
President and General Counsel of Janus Service Corporation, Janus
Distributors, Inc. and Janus Capital International, Ltd. Director
of Janus World Funds Plc. Formerly (1997-1998), Executive Vice
President and General Counsel of Prudential Investments Fund
Management LLC, Newark, NJ. Formerly (1994-1997), Vice President
and General Counsel of Prudential Retirement Services, Newark,
NJ. Formerly (1988-1994), Associate General Counsel and Chief
Financial Services Counsel, Frank Russell Company, Tacoma, WA.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
33
<PAGE>
Steven R. Goodbarn, Age 41 - Vice President and Chief Financial Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Chief Financial Officer of Janus Aspen Series.
Vice President of Finance, Treasurer and Chief Financial Officer
of Janus Capital, Janus Service Corporation and Janus
Distributors, Inc. Director of Janus Service Corporation, Janus
Distributors, Inc. and Janus World Funds Plc. Director, Treasurer
and Vice President of Finance of Janus Capital International Ltd.
Formerly (May 1992-January 1996), Treasurer of Janus Investment
Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 33 - Assistant Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Director and President of Janus Distributors, Inc. Assistant Vice
President and Associate Counsel of Janus Capital. Formerly (1990-
1994), with The Boston Company Advisors, Inc., Boston, MA (mutual
fund administration services).
Glenn P. O'Flaherty, Age 40 - Treasurer and Chief Accounting Officer*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Treasurer and Chief Accounting Officer of Janus Aspen Series.
Vice President of Janus Capital. Formerly, (1991-1997) Director
of Fund Accounting, Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
34
<PAGE>
The Trustees are responsible for major decisions relating to each
Fund's objective, policies and techniques. The Trustees also
supervise the operation of the Funds by their officers and review
the investment decisions of the officers, although they do not
actively participate on a regular basis in making such decisions.
The Trust's Executive Committee shall have and may exercise all
the powers and authority of the Trustees except for matters
requiring action by all Trustees pursuant to the Trust's Bylaws
or Declaration of Trust, Massachusetts Law or the 1940 Act.
The Money Market Funds Committee, consisting of Messrs. Loo,
Mullen and Rothe, monitors the compliance with policies and
procedures adopted particularly for money market funds.
The following table shows the aggregate compensation earned by
and paid to each Trustee by the Funds described in this SAI and
all funds advised and sponsored by Janus Capital (collectively,
the "Janus Funds") for the periods indicated. None of the
Trustees receives any pension or retirement benefits from the
Funds or the Janus Funds.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 1998 December 31, 1998**
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and
Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $ 5,754 $82,000
Gary O. Loo, Trustee $13,896 $74,000
Dennis B. Mullen, Trustee $12,531 $82,000
Martin H. Waldinger, Trustee $ 5,517 $74,000
James T. Rothe, Trustee $11,913 $82,000
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1998, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
35
<PAGE>
Purchase of shares
Shares are sold at the net asset value per share as determined at
the close of the regular trading session of the New York Stock
Exchange (the "NYSE" or the "Exchange") next occurring after a
purchase order is received and accepted by a Fund (except net
asset value is determined at 5:00 p.m. (New York time) for Janus
Government Money Market Fund). A Fund's net asset value is
calculated each day that both the NYSE and the Federal Reserve
Banks are open ("bank business day"). As stated in the
Prospectus, the Funds each seek to maintain a stable net asset
value per share of $1.00. The Shareholder's Guide Section of the
Prospectus contains detailed information about the purchase of
Shares.
Redemptions of shares
Redemptions, like purchases, may only be effected through the
trust accounts, cash management programs and similar programs of
participating banks and financial institutions. Shares normally
will be redeemed for cash, although each Fund retains the right
to redeem its shares in kind under unusual circumstances, in
order to protect the interests of remaining shareholders, by
delivery of securities selected from its assets at its
discretion. However, the Funds are governed by Rule 18f-1 under
the 1940 Act, which requires each Fund to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the NAV of that Fund
during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, a Fund
will have the option of redeeming the excess in cash or in kind.
If shares are redeemed in kind, the redeeming shareholder
generally will incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make redemptions
in kind will be the same as the method of valuing portfolio
securities described under "Shares
36
<PAGE>
of the Trust" and such valuation will be made as of the same time
the redemption price is determined.
The right to require the Funds to redeem its shares may be
suspended, or the date of payment may be postponed, whenever (1)
trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed except for holidays and weekends, (2) the SEC
permits such suspension and so orders, or (3) an emergency exists
as determined by the SEC so that disposal of securities or
determination of NAV is not reasonably practicable.
37
<PAGE>
Shareholder accounts
Detailed information about the general procedures for shareholder
accounts is set forth in the Prospectus. Applications to open
accounts may be obtained by calling or writing your Financial
Institution.
Dividends and tax status
Dividends representing substantially all of the net investment
income and any net realized gains on sales of securities are
declared daily, Saturdays, Sundays and holidays included, and
distributed on the last business day of each month. If a month
begins on a Saturday, Sunday or holiday, dividends for those days
are declared at the end of the preceding month and distributed on
the first business day of the month. A shareholder may receive
dividends via wire transfer or may choose to have dividends
automatically reinvested in a Fund's Shares. As described in the
Prospectus, Shares purchased by wire on a bank business day will
receive that day's dividend if the purchase request is received
from a Financial Institution at or prior to 3:00 p.m. (New York
time) for Janus Money Market Fund, 5:00 p.m. for Janus Government
Money Market Fund and 12:00 p.m. for Janus Tax-Exempt Money
Market Fund. Otherwise, such Shares will begin to accrue
dividends on the first bank business day following receipt of the
order. Requests for redemption of Shares will be redeemed at the
next determined net asset value. Redemption requests made by wire
that are received from a Financial Institution prior to 3:00 p.m.
(New York time) for Janus Money Market Fund, 5:00 p.m. for Janus
Government Money Market Fund and 12:00 p.m. for Janus Tax-Exempt
Money Market Fund on a bank business day will result in Shares
being redeemed that day. Proceeds of such a redemption will
normally be sent to the
38
<PAGE>
predesignated bank account on that day, but that day's dividend
will not be received. Closing times for purchase and redemption
of Shares may be changed for days in which the bond market or the
NYSE close early.
Distributions for all of the Funds (except Janus Tax-Exempt Money
Market Fund) are taxable income and are subject to federal income
tax (except for shareholders exempt from income tax), whether
such distributions are received via wire transfer or are
reinvested in additional Shares. Full information regarding the
tax status of income dividends and any capital gains
distributions will be mailed to shareholders for tax purposes on
or before January 31st of each year. As described in detail in
the Prospectus, Janus Tax-Exempt Money Market Fund anticipates
that substantially all income dividends it pays will be exempt
from federal income tax, although dividends attributable to
interest on taxable investments, together with distributions from
any net realized short- or long-term capital gains, are taxable.
The Funds intend to qualify as regulated investment companies by
satisfying certain requirements prescribed by Subchapter M of the
Code. Accordingly, a Fund will invest no more than 25% of its
total assets in a single issuer (other than U.S. government
securities).
Some money market securities employ a trust or other similar
structure to modify the maturity, price characteristics, or
quality of financial assets. For example, put features can be
used to modify the maturity of a security, or interest rate
adjustment features can be used to enhance price stability. If
the structure does not perform as intended, adverse tax or
investment consequences may result. Neither the Internal Revenue
Service nor any other regulatory authority has ruled definitively
on certain legal issues presented by structured securities.
Future tax or other regulatory determinations could adversely
affect the value, liquidity, or tax treatment of the income
received from these securities or the nature and timing of
distributions made by a Fund.
39
<PAGE>
Principal shareholders
As of January 20, 1999, the officers and Trustees as a group
owned less than 1% of the outstanding Shares
As of January 20, 1999, the following shareholders owned more
than 5% of the Shares of the Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
UMB Bank P.O. Box 419232
Kansas City, MO 64141-6232 10.50%
Norwest Investment Services, Inc. 608 2nd Avenue, South
Minneapolis, MN 55402-1916 89.46%
</TABLE>
As of January 20, 1999, the following shareholder owned more than
5% of the Shares of Janus Government Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
EGAP & Co. Chittenden Trust Co. P.O. Box 820
Burlington, VT 05402-0820 98.71%
</TABLE>
As of January 20, 1999, the following shareholder owned more than
5% of the Shares of Janus Tax-Exempt Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- --------------------------------------------------------------------------------
<S> <C> <C>
Norwest Investment Services, Inc. 608 2nd Avenue, South
Minneapolis, MN 55402-1916 99.18%
</TABLE>
40
<PAGE>
Miscellaneous information
Each Fund is a series of the Trust, a Massachusetts Business
Trust that was created on February 11, 1986. The Trust is an
open-end management investment company registered under the 1940
Act. As of the date of this SAI, the Trust offers 21 separate
series, three of which currently offer three classes of Shares.
Janus Capital reserves the right to the name "Janus." In the
event that Janus Capital does not continue to provide investment
advice to the Funds, the Funds must cease to use the name "Janus"
as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under
certain circumstances, be held liable for the obligations of
their Fund. However, the Agreement and Declaration of Trust (the
"Declaration of Trust") disclaims shareholder liability for acts
or obligations of the Funds and requires that notice of this
disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Funds or the Trustees. The
Declaration of Trust also provides for indemnification from the
assets of the Funds for all losses and expenses of any Fund
shareholder held liable for the obligations of their Fund. Thus,
the risk of a shareholder incurring a financial loss on account
of its liability as a shareholder of one of the Funds is limited
to circumstances in which their Fund would be unable to meet its
obligations. The possibility that these circumstances would occur
is remote. The Trustees intend to conduct the operations of the
Funds to avoid, to the extent possible, liability of shareholders
for liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of one cent per share for
each series of the Trust. Shares of each Fund are fully paid and
nonassessable when issued. All shares of a Fund participate
equally in dividends and other distributions by such Fund, and in
residual assets of that Fund in the event of liquidation. Shares
of each Fund have no preemptive, conversion or subscription
rights.
The Trust is authorized to issue multiple classes of shares for
each
41
<PAGE>
Fund. Currently, Janus Money Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money Market Fund each offer
three classes of shares by separate prospectuses. The Shares
discussed in this SAI are offered only through Financial
Institutions that meet minimum investment requirements in
connection with trust accounts, cash management programs and
similar programs provided to their customers. A second class of
shares, Institutional Shares, is offered to individual,
institutional and corporate clients and foundations and trusts
meeting certain minimum investment criteria. A third class of
shares, Investor Shares, is offered to the general public.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Fund or
for the Trust as a whole for purposes such as electing or
removing Trustees, terminating or reorganizing the Trust,
changing fundamental policies, or for any other purpose requiring
a shareholder vote under the 1940 Act. Separate votes are taken
by each Fund only if a matter affects or requires the vote of
only that Fund or that Fund's interest in the matter differs from
the interest of other portfolios of the Trust. As a shareholder,
you are entitled to one vote for each share that you own.
VOTING RIGHTS
The present Trustees were elected at a meeting of the Trust's
shareholders held on July 10, 1992, with the exception of Mr.
Craig and Mr. Rothe who were appointed by the Trustees as of June
30, 1995 and January 1, 1997, respectively. Under the Declaration
of Trust, each Trustee will continue in office until the
termination of the Trust or his earlier death, resignation,
bankruptcy, incapacity or removal. Vacancies will be filled by a
majority of the remaining Trustees, subject to the 1940 Act.
Therefore, no annual or regular meetings of shareholders normally
will be held, unless otherwise required by the Declaration of
Trust or the 1940 Act. Subject to the foregoing, shareholders
have the power to vote to elect or remove Trustees, to terminate
or reorganize their Fund, to amend the Declaration of Trust, to
bring
42
<PAGE>
certain derivative actions and on any other matters on which a
shareholder vote is required by the 1940 Act, the Declaration of
Trust, the Trust's Bylaws or the Trustees.
As mentioned above in "Shareholder Meetings," each share of each
series of the Trust has one vote (and fractional votes for
fractional shares). Shares of all series of the Trust have
noncumulative voting rights, which means that the holders of more
than 50% of the shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they
choose to do so and, in such event, the holders of the remaining
shares will not be able to elect any Trustees.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500,
Denver, Colorado 80202, independent accountants for the Funds,
audit the Funds' annual financial statements and prepare their
tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this SAI
relates. If further information is desired with respect to the
Funds or such securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
43
<PAGE>
Financial statements
The following audited financial statements of the Funds for the
period ended October 31, 1998 are hereby incorporated by
reference to the Funds' Annual Report dated October 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1998
Statements of Operations for the period ended October 31, 1998
Statements of Assets and Liabilities as of October 31, 1998
Statements of Changes in Net Assets for the periods ended October
31, 1998 and October 31, 1997
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of such Annual Report that are not specifically
listed above are not incorporated by reference into this SAI and
are not part of the Registration Statement.
44
<PAGE>
Appendix A
DESCRIPTION OF SECURITIES RATINGS
MOODY'S AND STANDARD & POOR'S
MUNICIPAL AND CORPORATE BONDS AND MUNICIPAL LOANS. The two
highest ratings of Standard & Poor's Ratings Services for
municipal and corporate bonds are AAA and AA. Bonds rated AAA
have the highest rating assigned by S&P to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
a small degree. The AA rating may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within
that rating category.
The two highest ratings of Moody's Investors Service, Inc. for
municipal and corporate bonds are Aaa and Aa. Bonds rated Aaa are
judged by Moody's to be of the best quality. Bonds rated Aa are
judged to be of high quality by all standards. Together with the
Aaa group, they comprise what are generally known as high-grade
bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection or other elements make
long-term risks appear somewhat larger than Aaa securities. The
generic rating Aa may be modified by the addition of the numerals
1, 2 or 3. The modifier 1 indicates that the security ranks in
the higher end of the Aa rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of such rating category.
SHORT TERM MUNICIPAL LOANS. S&P's highest rating for short-term
municipal loans is SP-1. S&P states that short-term municipal
securities bearing the SP-1 designation have a strong capacity to
pay principal and interest. Those issues rated SP-1 which are
determined to possess a very strong capacity to pay debt service
will be given a plus (+) designation. Issues rated SP-2 have
satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the
term of the notes.
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal securities
rated MIG-1/VMIG-1 are of the best quality, enjoying strong
45
<PAGE>
protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
OTHER SHORT-TERM DEBT SECURITIES. Prime-1 and Prime-2 are the two
highest ratings assigned by Moody's for other short-term debt
securities and commercial paper, and A-1 and A-2 are the two
highest ratings for commercial paper assigned by S&P. Moody's
uses the numbers 1, 2 and 3 to denote relative strength within
its highest classification of Prime, while S&P uses the numbers
1, 2 and 3 to denote relative strength within its highest
classification of A. Issuers rated Prime-1 by Moody's have a
superior ability for repayment of senior short-term debt
obligations and have many of the following characteristics:
leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset
protection, broad margins in earnings coverage of fixed financial
charges and high internal cash generation, and well established
access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 by Moody's have a
strong ability for repayment of senior short-term debt
obligations and display many of the same characteristics
displayed by issuers rated Prime-1, but to a lesser degree.
Issuers rated A-1 by S&P carry a strong degree of safety
regarding timely repayment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
(+) designation. Issuers rated A-2 by S&P carry a satisfactory
degree of safety regarding timely repayment.
46
<PAGE>
FITCH
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
F-1+........................ Exceptionally strong credit
quality. Issues assigned this
rating are regarded as having the
strongest degree of assurance for
timely payment.
F-1......................... Very strong credit quality. Issues
assigned this rating reflect an
assurance for timely payment only
slightly less in degree than issues
rated F-1+.
F-2......................... Good credit quality. Issues
assigned this rating have a
satisfactory degree of assurance
for timely payments, but the margin
of safety is not as great as the F-
1+ and F-1 ratings.
</TABLE>
DUFF & PHELPS INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
Duff 1+..................... Highest certainty of timely
payment. Short-term liquidity,
including internal operating
factors and/or ready access to
alternative sources of funds, is
clearly outstanding, and safety is
just below risk-free U.S. Treasury
short-term obligations.
Duff 1...................... Very high certainty of timely
payment. Liquidity factors are
excellent and supported by good
fundamental protection factors.
Risk factors are minor.
Duff 1...................... High certainty of timely payment.
Liquidity factors are strong and
supported by good fundamental
protection factors. Risk factors
are very small.
Duff 2...................... Good certainty of timely payment.
Liquidity factors and company
fundamentals are sound. Although
ongoing funding needs may enlarge
total financing requirements,
access to capital markets is good.
Risk factors are small.
</TABLE>
47
<PAGE>
THOMSON BANKWATCH, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
TBW-1....................... The highest category; indicates a
very high degree of likelihood that
principal and interest will be paid
on a timely basis.
TBW-2....................... The second highest category; while
the degree of safety regarding
timely repayment of principal and
interest is strong, the relative
degree of safety is not as high as
for issues rated TBW-1.
TBW-3....................... The lowest investment grade
category; indicates that while more
susceptible to adverse developments
(both internal and external) than
obligations with higher ratings,
capacity to service principal and
interest in a timely fashion is
considered adequate.
TBW-4....................... The lowest rating category; this
rating is regarded as
non-investment grade and therefore
speculative.
</TABLE>
IBCA, INC.
<TABLE>
<S> <C>
BOND RATING EXPLANATION
----------------------------------------------------------------
A1+......................... Obligations supported by the
highest capacity for timely
repayment. Where issues possess a
particularly strong credit feature,
a rating of A1+ is assigned.
A2.......................... Obligations supported by a good
capacity for timely repayment.
A3.......................... Obligations supported by a
satisfactory capacity for timely
repayment.
B........................... Obligations for which there is an
uncertainty as to the capacity to
ensure timely repayment.
C........................... Obligations for which there is a
high risk of default or which are
currently in default.
</TABLE>
48
<PAGE>
Appendix B
DESCRIPTION OF MUNICIPAL SECURITIES
MUNICIPAL NOTES generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. PROJECT NOTES, which carry a U.S. government guarantee, are
issued by public bodies (called "local issuing agencies") created
under the laws of a state, territory, or U.S. possession. They
have maturities that range up to one year from the date of
issuance. Project Notes are backed by an agreement between the
local issuing agency and the Federal Department of Housing and
Urban Development. These Notes provide financing for a wide range
of financial assistance programs for housing, redevelopment, and
related needs (such as low-income housing programs and renewal
programs).
2. TAX ANTICIPATION NOTES are issued to finance working capital
needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income,
sales, use and business taxes, and are payable from these
specific future taxes.
3. REVENUE ANTICIPATION NOTES are issued in expectation of
receipt of other types of revenues, such as Federal revenues
available under the Federal Revenue Sharing Programs.
4. BOND ANTICIPATION NOTES are issued to provide interim
financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the
repayment of the Notes.
5. CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration under the Federal National Mortgage Association
("Fannie Mae") or the Government National Mortgage Association
("Ginnie Mae").
6. TAX-EXEMPT COMMERCIAL PAPER is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
49
<PAGE>
MUNICIPAL BONDS, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. GENERAL OBLIGATION BONDS are issued by such entities as
states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of
public projects, including construction or improvement of
schools, highways and roads, and water and sewer systems. The
basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can be levied
for the payment of debt service may be limited or unlimited as to
the rate or amount of special assessments.
2. REVENUE BONDS in recent years have come to include an
increasingly wide variety of types of municipal obligations. As
with other kinds of municipal obligations, the issuers of revenue
bonds may consist of virtually any form of state or local
governmental entity, including states, state agencies, cities,
counties, authorities of various kinds, such as public housing or
redevelopment authorities, and special districts, such as water,
sewer or sanitary districts. Generally, revenue bonds are secured
by the revenues or net revenues derived from a particular
facility, group of facilities, or, in some cases, the proceeds of
a special excise or other specific revenue source. Revenue bonds
are issued to finance a wide variety of capital projects
including electric, gas, water and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals. Many of these bonds provide
additional security in the form of a debt service reserve fund to
be used to make principal and interest payments. Various forms of
credit enhancement, such as a bank letter of credit or municipal
bond insurance, may also be employed in revenue bond issues.
Housing authorities have a wide range of security, including
partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or
other public projects. Some authorities provide further security
in the form of a state's ability (without
50
<PAGE>
obligation) to make up deficiencies in the debt service reserve
fund.
In recent years, revenue bonds have been issued in large volumes
for projects that are privately owned and operated (see 3 below).
3. PRIVATE ACTIVITY BONDS are considered municipal bonds if the
interest paid thereon is exempt from Federal income tax and are
issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and
manufacturing, housing and health. These bonds are also used to
finance public facilities such as airports, mass transit systems
and ports. The payment of the principal and interest on such
bonds is dependent solely on the ability of the facility's user
to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.
While, at one time, the pertinent provisions of the Internal
Revenue Code permitted private activity bonds to bear tax-exempt
interest in connection with virtually any type of commercial or
industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume
restrictions, and other matters), the types of qualifying
projects under the Code have become increasingly limited,
particularly since the enactment of the Tax Reform Act of 1986.
Under current provisions of the Code, tax-exempt financing
remains available, under prescribed conditions, for certain
privately owned and operated rental multi-family housing
facilities, nonprofit hospital and nursing home projects,
airports, docks and wharves, mass commuting facilities and solid
waste disposal projects, among others, and for the refunding
(that is, the tax-exempt refinancing) of various kinds of other
private commercial projects originally financed with tax-exempt
bonds. In future years, the types of projects qualifying under
the Code for tax-exempt financing are expected to become
increasingly limited.
Because of terminology formerly used in the Internal Revenue
Code, virtually any form of private activity bond may still be
referred to as an "industrial development bond," but more and
51
<PAGE>
more frequently revenue bonds have become classified according to
the particular type of facility being financed, such as hospital
revenue bonds, nursing home revenue bonds, multi-family housing
revenue bonds, single family housing revenue bonds, industrial
development revenue bonds, solid waste resource recovery revenue
bonds, and so on.
OTHER MUNICIPAL OBLIGATIONS, incurred for a variety of financing
purposes, include: municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract,
are issued by state and local governments and authorities to
acquire a wide variety of equipment and facilities such as fire
and sanitation vehicles, telecommunications equipment and other
capital assets. Municipal leases frequently have special risks
not normally associated with general obligation or revenue bonds.
Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass
eventually to the government issuer) have evolved as a means for
governmental issuers to acquire property and equipment without
meeting the constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations of many state
constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease
or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
To reduce this risk, the Fund will only purchase municipal leases
subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by an unconditional
irrevocable letter of credit, or guarantee of a bank or other
entity that meets the criteria described in the Prospectus.
Tax-exempt bonds are also categorized according to whether the
interest is or is not includible in the calculation of
alternative minimum taxes imposed on individuals, according to
whether the costs of acquiring or carrying the bonds are or are
not deductible in part by banks and other financial institutions,
and according to other criteria relevant for Federal income tax
purposes. Due to the
52
<PAGE>
increasing complexity of Internal Revenue Code and related
requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required, as a condition to the issuance
of such bonds, but particularly for revenue bonds, an opinion of
nationally recognized bond counsel as to the tax-exempt status of
interest on the bonds.
53
<PAGE>
[JANUS LOGO]
1-800-29JANUS
P.O. Box 173375
Denver, Colorado 80217-3375
janus.com
3175
<PAGE>
JANUS INVESTMENT FUND
PART C - OTHER INFORMATION
ITEM 23. Exhibits
Exhibit 1 (a) Agreement and Declaration of Trust dated February
11, 1986, is incorporated herein by reference to
Exhibit 1(a) to Post-Effective Amendment No. 79.
(b) Certificate of Designation for Janus Growth and
Income Fund is incorporated herein by reference to
Exhibit 1(b) to Post-Effective Amendment No. 79.
(c) Certificate of Designation for Janus Worldwide Fund
is incorporated herein by reference to Exhibit 1(c)
to Post-Effective Amendment No. 79.
(d) Certificate of Designation for Janus Twenty Fund is
incorporate herein by reference to Exhibit 1(d) to
Post-Effective Amendment No. 80.
(e) Certificate of Designation for Janus Flexible Income
Fund is incorporated herein by reference to Exhibit
1(e) to Post-Effective Amendment No. 80.
(f) Certificate of Designation for Janus Intermediate
Government Securities Fund filed as Exhibit 1(f) to
Post-Effective Amendment No. 46 has been withdrawn.
(g) Certificate of Designation for Janus Venture Fund is
incorporated herein by reference to Exhibit 1(g) to
Post-Effective Amendment No. 80.
(h) Certificate of Designation for Janus Enterprise Fund
is incorporated herein by reference to Exhibit 1(h)
to Post-Effective Amendment No. 80.
(i) Certificate of Designation for Janus Balanced Fund is
incorporated herein by reference to Exhibit 1(i) to
Post-Effective Amendment No. 80.
(j) Certificate of Designation for Janus Short-Term Bond
Fund is incorporated herein by reference to Exhibit
1(j) to Post-Effective Amendment No. 80.
C-1
<PAGE>
(k) Certificate of Designation for Janus Federal Tax-
Exempt Fund is incorporated herein by reference to
Exhibit 1(k) to Post-Effective Amendment No. 81.
(l) Certificate of Designation for Janus Mercury Fund is
incorporated herein by reference to Exhibit 1(l) to
Post-Effective Amendment No. 81.
(m) Certificate of Designation for Janus Overseas Fund is
incorporated herein by reference to Exhibit 1(m) to
Post-Effective Amendment No. 81.
(n) Form of Amendment to the Registrant's Agreement and
Declaration of Trust is incorporated herein by
reference to Exhibit 1(n) to Post-Effective Amendment
No. 81.
(o) Form of Certificate of Designation for Janus Money
Market Fund, Janus Government Money Market Fund and
Janus Tax-Exempt Money Market Fund is incorporated
herein by reference to Exhibit 1(o) to Post-Effective
Amendment No. 81.
(p) Form of Certificate of Designation for Janus High-
Yield Fund and Janus Olympus Fund is incorporated
herein by reference to Exhibit 1(p) to Post-Effective
Amendment No. 68.
(q) Certificate of Designation for Janus Equity Income
Fund is incorporated herein by reference to Exhibit
1(q) to Post-Effective Amendment No. 72.
(r) Form of Certificate of Establishment and Designation
for Janus Special Situations Fund is incorporated
herein by reference to Exhibit 1(r) to Post-Effective
Amendment No. 75.
(s) Form of Amendment to Registrant's Agreement and
Declaration of Trust is incorporated herein by
reference to Exhibit 1(s) to Post-Effective Amendment
No. 75.
(t) Certificate of Establishment and Designation for
Janus Global Life Sciences Fund filed as Exhibit 1(t)
to Post-Effective Amendment No. 82 has been
withdrawn.
C-2
<PAGE>
(u) Certificate of Establishment and Designation for
Janus Global Life Sciences Fund is incorporated
herein by reference to Exhibit 1(u) to Post-Effective
Amendment No. 85.
(v) Form of Certificate of Establishment and Designation
for Janus Global Technology Fund is incorporated
herein by referenced to Exhibit 1(v) to Post-
Effective Amendment No. 85.
Exhibit 2 (a) Restated Bylaws are incorporated herein by reference
to Exhibit 2(a) to Post-Effective Amendment No. 71.
(b) First Amendment to the Bylaws is incorporated herein
by reference to Exhibit 2(b) to Post-Effective
Amendment No. 71.
Exhibit 3 (a) Specimen Stock Certificate for Janus Fund1 is
incorporated herein by reference to Exhibit 4(b) to
Post-Effective Amendment No. 79.
(b) Specimen Stock Certificate for Janus Growth and
Income Fund is incorporated herein by reference to
Exhibit 4(b) to Post-Effective Amendment No. 79.
(c) Specimen Stock Certificate for Janus Worldwide Fund
is incorporated herein by reference to Exhibit 4(c)
to Post-Effective Amendment No. 79.
(d) Specimen Stock Certificate for Janus Twenty Fund(1)
is incorporated herein by reference to Exhibit 4(d)
to Post-Effective Amendment No. 80.
(e) Specimen Stock Certificate for Janus Flexible Income
Fund(1) is incorporated herein by reference to
Exhibit 4(e) to Post-Effective Amendment No. 80.
(f) Specimen Stock Certificate for Janus Intermediate
Government Securities Fund(1) filed as Exhibit 4(f)
to Post-Effective Amendment No. 46 has been
withdrawn.
(g) Specimen Stock Certificate for Janus Venture Fund(1)
is
- -------------------
(1) Outstanding certificates representing shares of predecessor entity to this
series of the Trust are deemed to represent shares of this series.
C-3
<PAGE>
incorporated herein by reference to Exhibit 4(g)
to Post-Effective Amendment No. 80.
(h) Specimen Stock Certificate for Janus Enterprise Fund
is incorporated herein by reference to Exhibit 4(h)
to Post-Effective Amendment No. 80.
(i) Specimen Stock Certificate for Janus Balanced Fund
is incorporated herein by reference to Exhibit 4(i)
to Post-Effective Amendment No. 80.
(j) Specimen Stock Certificate for Janus Short-Term Bond
Fund is incorporated herein by reference to Exhibit
4(j) to Post-Effective Amendment No. 80.
(k) Specimen Stock Certificate for Janus Federal Tax-
Exempt Fund is incorporated herein by reference to
Exhibit 4(k) to Post-Effective Amendment No. 81.
(l) Specimen Stock Certificate for Janus Mercury Fund is
incorporated herein by reference to Exhibit 4(l) to
Post-Effective Amendment No. 81.
(m) Specimen Stock Certificate for Janus Overseas Fund
is incorporated herein by reference to Exhibit 4(m)
to Post-Effective Amendment No. 81.
(n) Revised Specimen Stock Certificates for Janus High-
Yield Fund and Janus Olympus Fund are incorporated
herein by reference to Exhibit 4(n) to Post-
Effective Amendment No. 79.
(o) Revised Specimen Stock Certificate for Janus Equity
Income Fund is incorporated herein by reference to
Exhibit 4(o) to Post-Effective Amendment No. 79.
(p) Revised Specimen Stock Certificate for Janus Special
Situations Fund is incorporated herein by reference
to Exhibit 4(p) to Post-Effective Amendment No. 79.
(q) Specimen Stock Certificate for Janus Global Life
Sciences Fund filed as Exhibit 4(q) to Post-
Effective Amendment No. 82 has been withdrawn.
(r) Form of Specimen Stock Certificate for Janus Global
Life
C-4
<PAGE>
Sciences Fund is incorporated herein by
reference to Exhibit 3(r) to Post-Effective
Amendment No. 85.
(s) Form of Specimen Stock Certificate for Janus Global
Technology Fund is incorporated herein by reference
to Exhibit 3(s) to Post-Effective Amendment No. 85.
Exhibit 4 (a) Investment Advisory Agreement for Janus Fund dated
July 1, 1997, is incorporated herein by reference
to Exhibit 5(a) to Post-Effective Amendment No. 83.
(b) Investment Advisory Agreements for Janus Growth and
Income Fund and Janus Worldwide Fund dated July 1,
1997, are incorporated herein by reference to
Exhibit 5(b) to Post-Effective Amendment No. 83.
(c) Investment Advisory Agreements for Janus Twenty Fund
and Janus Venture Fund dated July 1, 1997, are
incorporated herein by reference to Exhibit 5(c) to
Post-Effective Amendment No. 83.
(d) Investment Advisory Agreement for Janus Flexible
Income Fund dated July 1, 1997, is incorporated
herein by reference to Exhibit 5(d) to Post-
Effective Amendment No. 83.
(e) Investment Advisory Agreements for Janus Enterprise
Fund, Janus Balanced Fund, and Janus Short-Term
Bond Fund dated July 1, 1997, are incorporated
herein by reference to Exhibit 5(e) to Post-
Effective Amendment No. 83.
(f) Investment Advisory Agreements for Janus Federal
Tax-Exempt Fund and Janus Mercury Fund dated July 1,
1997, are incorporated herein by reference to
Exhibit 5(f) to Post-Effective Amendment No. 83.
(g) Investment Advisory Agreement for Janus Overseas
Fund dated July 1, 1997, is incorporated herein by
reference to Exhibit 5(g) to Post-Effective
Amendment No. 83.
(h) Investment Advisory Agreements for Janus Money
Market Fund, Janus Government Money Market Fund, and
Janus Tax-Exempt Money Market Fund dated July 1,
1997, are incorporated herein by reference to
Exhibit 5(h) to Post-
C-5
<PAGE>
Effective Amendment No. 83.
(i) Investment Advisory Agreement for Janus High-Yield
Fund dated July 1, 1997, is incorporated herein by
reference to Exhibit 5(i) to Post-Effective
Amendment No. 83.
(j) Investment Advisory Agreement for Janus Olympus Fund
dated July 1, 1997, is incorporated herein by
reference to Exhibit 5(j) to Post-Effective
Amendment No. 83.
(k) Investment Advisory Agreement for Janus Equity
Income Fund dated July 1, 1997, is incorporated
herein by reference to Exhibit 5(k) to Post-
Effective Amendment No. 83.
(l) Investment Advisory Agreement for Janus Special
Situations Fund dated July 1, 1997, is incorporated
herein by reference to Exhibit 5(l) to Post-
Effective Amendment No. 83.
(m) Investment Advisory Agreement for Janus Global Life
Sciences Fund filed as Exhibit 5(m) to Post-
Effective Amendment No. 82 has been withdrawn.
(n) Form of Investment Advisory Agreement for Janus
Global Life Sciences Fund is incorporated herein by
reference to Exhibit 4(n) to Post-Effective
Amendment No. 85.
(o) Form of Investment Advisory Agreement for Janus
Global Technology Fund is incorporated herein by
reference to Exhibit 4(o) to Post-Effective
Amendment No. 85.
Exhibit 5 Distribution Agreement between Janus Investment Fund
incorporated herein by reference to Exhibit 6 to
Post-Effective Amendment No. 83.
Exhibit 6 Not Applicable.
Exhibit 7 (a) Custodian Contract between Janus Investment Fund and
State Street Bank and Trust Company is incorporated
herein by reference to Exhibit 8(a) to Post-
Effective Amendment No. 79.
C-6
<PAGE>
(b) Amendment dated April 25, 1990, of State Street
Custodian Contract is incorporated herein by
reference to Exhibit 8(b) to Post-Effective
Amendment No. 79.
(c) Letter Agreement dated February 1, 1991, regarding
State Street Custodian Contract is incorporated
herein by reference to Exhibit 8(c) to Post-
Effective Amendment No. 79.
(d) Custodian Contract between Janus Investment Fund and
Investors Fiduciary Trust Company filed as Exhibit
8(d) to Post-Effective Amendment No. 79 has been
withdrawn.
(e) Letter Agreement dated October 9, 1992, regarding
State Street Custodian Agreement is incorporated
herein by reference to Exhibit 8(e) to Post-
Effective Amendment No. 81.
(f) Letter Agreement dated April 28, 1993, regarding
State Street Custodian Agreement is incorporated
herein by reference to Exhibit 8(f) to Post-
Effective Amendment No. 81.
(g) Letter Agreement dated April 4, 1994, regarding
State Street Custodian Agreement is incorporated
herein by reference to Exhibit 8(g) to Post-
Effective Amendment No. 81.
(h) Form of Custody Agreement between Janus Investment
Fund, on behalf of Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt
Money Market Fund, and United Missouri Bank, N.A. is
incorporated herein by reference to Exhibit 8(h) to
Post-Effective Amendment No. 81.
(i) Letter Agreement dated December 12, 1995, regarding
State Street Custodian Contract is incorporated
herein by reference to Exhibit 8(i) to Post-
Effective Amendment No. 72.
(j) Amendment dated October 11, 1995, of State Street
Custodian Contract is incorporated herein by
reference to Exhibit 8(j) to Post-Effective
Amendment No. 71.
(k) Form of Amendment dated September 10, 1996, of State
C-7
<PAGE>
Street Custodian Contract is incorporated herein by
reference to Exhibit 8(k) to Post-Effective
Amendment No. 75.
(l) Letter Agreement dated September 10, 1996, regarding
State Street Custodian Contract is incorporated
herein by reference to Exhibit 8(l) to Post-
Effective Amendment No. 75.
(m) Form of Subcustodian Contract between United
Missouri Bank, N.A., and State Street Bank and Trust
Company is incorporated herein by reference to
Exhibit 8(m) to Post-Effective Amendment No. 75.
(n) Form of Letter Agreement dated September 9, 1997,
regarding State Street Custodian Contract is
incorporated herein by reference to Exhibit 8(n) to
Post-Effective Amendment No. 82.
(o) Form of Letter Agreement dated September 14, 1998,
regarding State Street Custodian Contract is
incorporated herein by reference to Exhibit 7(o) to
Post-Effective Amendment No. 85.
Exhibit 8 (a) Transfer Agency Agreement with Investors Fiduciary
Trust Company filed as Exhibit 9(a) to Post-
Effective Amendment No. 79 has been withdrawn.
(b) Subagency Agreement between Janus Service
Corporation and Investors Fiduciary Trust Company
filed as Exhibit 9(b) to Post-Effective Amendment
No. 79 has been withdrawn.
(c) Form of Administration Agreement with Janus Capital
Corporation for Janus Money Market Fund, Janus
Government Money Market Fund and Janus Tax-Exempt
Money Market Fund is incorporated herein by
reference to Exhibit 9(c) to Post-Effective
Amendment No. 81.
(d) Transfer Agency Agreement dated December 9, 1994,
with Janus Service Corporation for Janus Money
Market Fund, Janus Government Money Market Fund and
Janus Tax-Exempt Money Market Fund filed as Exhibit
9(d) to Post-Effective Amendment No. 64 has been
withdrawn.
C-8
<PAGE>
(e) Transfer Agency Agreement dated September 27, 1995,
with Janus Service Corporation for Janus Money
Market Fund, Janus Government Money Market Fund,
Janus Tax-Exempt Money Market Fund, Janus High-Yield
Fund and Janus Olympus Fund is incorporated herein
by reference to Exhibit 9(e) to Post-Effective
Amendment No. 70.
(f) Letter Agreement dated December 21, 1995, regarding
Janus Service Corporation Transfer Agency Agreement
is incorporated herein by reference to Exhibit 9(f)
to Post-Effective Amendment No. 72.
(g) Letter Agreement dated May 21, 1996, regarding Janus
Service Corporation Transfer Agency Agreement is
incorporated by reference to Exhibit 9(g) to Post-
Effective Amendment No. 73.
(h) Form of Amended Administration Agreement with Janus
Capital Corporation for Janus Money Market Fund,
Janus Government Money Market Fund, and Janus Tax-
Exempt Money Market Fund is incorporated by
reference to Exhibit 9(h) to Post-Effective
Amendment No. 77.
(i) Letter Agreement dated September 10, 1996, regarding
Janus Service Corporation Transfer Agency Agreement
is incorporated herein by reference to Exhibit 9(i)
to Post-Effective Amendment No. 76.
(j) Letter Agreement dated September 9,1997, regarding
Janus Service Corporation Transfer Agency Agreement
is incorporated herein by reference to Exhibit 9(j)
to Post-Effective Amendment No. 82.
(k) Form of Letter Agreement dated September 14, 1998,
regarding Janus Service Corporation Transfer Agency
Agreement is incorporated herein by reference to
Exhibit 8(k) to Post-Effective Amendment No. 85.
Exhibit 9 (a) Opinion and Consent of Messrs. Davis, Graham &
Stubbs with respect to shares of Janus Fund is
incorporated herein by reference to Exhibit 10 (a)
to Post-Effective Amendment No. 79.
(b) Opinion and Consent of Fund Counsel with respect to
shares of Janus Growth and Income Fund and Janus
C-9
<PAGE>
Worldwide Fund is incorporated herein by reference
to Exhibit 10(b) to Post-Effective Amendment No. 79.
(c) Opinion and Consent of Fund Counsel with respect to
shares of Janus Enterprise Fund, Janus Balanced Fund
and Janus Short-Term Bond Fund is incorporated
herein by reference to Exhibit 10(c) to Post-
Effective Amendment No. 80.
(d) Opinion and Consent of Messrs. Sullivan and
Worcester with respect to shares of Janus Twenty
Fund is incorporated herein by reference to Exhibit
10(d) to Post-Effective Amendment No. 81.
(e) Opinion and Consent of Messrs. Sullivan and
Worcester with respect to shares of Janus Venture
Fund is incorporated herein by reference to Exhibit
10(e) to Post-Effective Amendment No. 81.
(f) Opinion and Consent of Messrs. Sullivan and
Worcester with respect to shares of Janus Flexible
Income Fund is incorporated herein by reference to
Exhibit 10(f) to Post-Effective Amendment No. 81.
(g) Opinion and Consent of Messrs. Sullivan and
Worcester with respect to shares of Janus
Intermediate Government Securities Fund filed as
Exhibit 10(g) to Post-Effective Amendment No. 46 has
been withdrawn.
(h) Opinion and Consent of Fund Counsel with respect to
shares of Janus Federal Tax-Exempt Fund and Janus
Mercury Fund is incorporated herein by reference to
Exhibit 10(h) to Post-Effective Amendment No. 81.
(i) Opinion and Consent of Fund Counsel with respect to
shares of Janus Overseas Fund is incorporated herein
by reference to Exhibit 10(i) to Post-Effective
Amendment No. 81.
(j) Opinion and Consent of Fund Counsel with respect to
shares of Janus Money Market Fund, Janus Government
Money Market Fund and Janus Tax-Exempt Money Market
Fund is incorporated herein by reference to Exhibit
10(j) to Post-Effective Amendment No. 81.
C-10
<PAGE>
(k) Opinion and Consent of Fund Counsel with respect to
Institutional Shares of Janus Money Market Fund,
Janus Government Money Market Fund and Janus Tax-
Exempt Money Market Fund is incorporated herein b
reference to Exhibit 10(k) to Post-Effective
Amendment No. 81.
(l) Opinion and Consent of Fund Counsel with respect to
shares of Janus High-Yield Fund and Janus Olympus
Fund is incorporated herein by reference to Exhibit
10(l) to Post-Effective Amendment No. 68.
(m) Opinion and Consent of Fund Counsel with respect to
shares of Janus Equity Income Fund is incorporated
herein by reference to Exhibit 10(m) to Post-
Effective Amendment No. 72.
(n) Opinion and Consent of Fund Counsel with respect to
shares of Janus Special Situations Fund is
incorporated herein by reference to Exhibit 10(n) to
Post-Effective Amendment No. 75.
(o) Opinion and Consent of Fund Counsel with respect to
shares of Janus Money Market Fund, Janus Government
Money Market Fund, and Janus Tax-Exempt Money Market
Fund is incorporated herein by reference to Exhibit
10(o) to Post-Effective Amendment No. 76.
(p) Opinion and Consent of Fund Counsel with respect to
shares of Janus Global Life Sciences Fund filed as
Exhibit 10(p) to Post-Effective Amendment No. 82 has
been withdrawn.
(q) Opinion and Consent of Fund Counsel with respect to
shares of Janus Global Life Sciences Fund and Janus
Global Technology Fund is incorporated herein by
reference to Exhibit 9(q) to Post-Effective
Amendment No. 85.
Exhibit 10 Consent of PricewaterhouseCoopers LLP is filed
herein as Exhibit 10.
Exhibit 11 Not Applicable.
Exhibit 12 Not Applicable.
C-11
<PAGE>
Exhibit 13 Not Applicable.
Exhibit 14 Financial Data Schedules for all of the Funds (or
classes of shares thereof) (except Janus Global Life
Sciences Fund and Janus Global Technology Fund) are
filed herein as Exhibit 14:
Exhibit 15 (a) Form of plan entered into by Janus Money Market
Fund, Janus Government Money Market Fund and Janus
Tax-Exempt Money Market Fund pursuant to Rule 18f-3
setting forth the separate arrangement and expense
allocation of each class of such Funds filed as
Exhibit 18 to Post-Effective Amendment No. 66 has
been withdrawn.
(b) Restated form of Rule 18f-3 Plan entered into by
Janus Money Market Fund, Janus Government Money
Market Fund and Janus Tax-Exempt Money Market Fund
is incorporated herein by reference to Exhibit 18(b)
to Post-Effective Amendment No. 69.
(c) Amended and Restated form of Rule 18f-3 Plan entered
into by Janus Money Market Fund, Janus Government
Money Market Fund, and Janus Tax-Exempt Money Market
Fund is incorporated herein by reference to Exhibit
18(c) to Post-Effective Amendment No. 78.
ITEM 24. Persons Controlled by or Under Common Control with Fund
None
ITEM 25. Indemnification
Article VIII of Janus Investment Fund's Agreement and Declaration of
Trust provides for indemnification of certain persons acting on behalf of the
Funds. In general, Trustees and officers will be indemnified against liability
and against all expenses of litigation incurred by them in connection with any
claim, action, suit or proceeding (or settlement of the same) in which they
become involved by virtue of their Fund office, unless their conduct is
determined to constitute willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties, or unless it has been determined that they
have not acted in good faith in the reasonable belief that their actions were in
or not opposed to the best interests of the Funds. A determination that a person
covered by the indemnification provisions is entitled to indemnification may be
made by the court or other body before which the proceeding is brought, or by
either a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust nor parties to the proceeding or by an independent legal
counsel in a written opinion. The Funds also may
C-12
<PAGE>
advance money for these expenses, provided that the Trustee or officer
undertakes to repay the Funds if his conduct is later determined to preclude
indemnification, and that either he provide security for the undertaking, the
Trust be insured against losses resulting from lawful advances or a majority of
a quorum of disinterested Trustees, or independent counsel in a written opinion,
determines that he ultimately will be found to be entitled to indemnification.
The Trust also maintains a liability insurance policy covering its Trustees and
officers.
ITEM 26. Business and Other Connections of Investment Adviser
The only business of Janus Capital Corporation is to serve as the
investment adviser of the Fund and as investment adviser or subadviser to
several other mutual funds and private and retirement accounts. Business
backgrounds of the principal executive officers and directors of the adviser
that also hold positions with the Registrant are included under "Officers and
Trustees" in the currently effective Statements of Additional Information of the
Registrant. The remaining principal executive officers of the investment adviser
and their positions with the adviser and affiliated entities are: Mark B.
Whiston, Vice President and Chief Marketing Officer of Janus Capital
Corporation, Director and President of Janus Capital International Ltd.,
Director of Janus World Funds Plc; Marjorie G. Hurd, Vice President and Chief
Operations Officer of Janus Capital Corporation, Director and President of Janus
Service Corporation; and Stephen L. Stieneker, Assistant General Counsel, Chief
Compliance Officer and Vice President of Compliance of Janus Capital
Corporation. Mr. Michael E. Herman, a director of Janus Capital Corporation, is
Chairman of the Finance Committee (1990 to present) of Ewing Marion Kauffman
Foundation, 4900 Oak, Kansas City, Missouri 64112. Mr. Michael N. Stolper, a
director of Janus Capital Corporation, is President of Stolper & Company, Inc.,
600 West Broadway, Suite 1010, San Diego, California 92101, an investment
performance consultant. Mr. Thomas A. McDonnell, a director of Janus Capital
Corporation, is President, Chief Executive Officer and a Director of DST
Systems, Inc., 333 West 11th Street, 5th Floor, Kansas City, Missouri 64105,
provider of data processing and recordkeeping services for various mutual funds,
and is Executive Vice President and a director of Kansas City Southern
Industries, Inc., 114 W. 11th Street, Kansas City, Missouri 64105, a publicly
traded holding company whose primary subsidiaries are engaged in transportation,
information processing and financial services. Mr. Landon H. Rowland, a director
of Janus Capital Corporation, is President and Chief Executive Officer of Kansas
City Southern Industries, Inc.
ITEM 27. Principal Underwriters
(a) Janus Distributors, Inc. ("Janus Distributors")
serves as a principal underwriter for the Fund and
Janus Aspen Series.
(b) The principal business address, positions with Janus
Distributors and positions with Registrant of Thomas
E. Early, Kelley Abbott Howes, and Steven R.
Goodbarn, officers and directors of Janus
Distributors, are described under "Officers and
Trustees" in the Statements of Additional
C-13
<PAGE>
Information included in this Registration Statement.
The remaining principal executive officer of Janus
Distributors is Jennifer A. Davis, Secretary. Ms.
Davis does not hold any positions with the
Registrant. Ms. Davis's principal business address is
100 Fillmore Street, Denver, Colorado 80206-4928.
(c) Not applicable.
ITEM 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained by Janus Capital Corporation and Janus Service
Corporation, both of which are located at 100 Fillmore Street, Denver, Colorado
80206-4928, and by State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts 02101, and United Missouri Bank, P.O. Box 419226, Kansas City,
Missouri 64141-6226.
ITEM 29. Management Services
The Fund has no management-related service contract which is not
discussed in Part A or Part B of this form.
ITEM 30. Undertakings
Not applicable.
C-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and the Fund
has duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Denver, and
State of Colorado, on the 16th day of February, 1999.
JANUS INVESTMENT FUND
By: /s/ Thomas H. Bailey
Thomas H. Bailey, President
Janus Investment Fund is organized under an Agreement and Declaration
of Trust dated February 11, 1986, a copy of which is on file with the Secretary
of State of The Commonwealth of Massachusetts. The obligations of the Registrant
hereunder are not binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Registrant personally, but bind only the
trust property of the Registrant, as provided in the Agreement and Declaration
of Trust of the Registrant. The execution of this Amendment to the Registration
Statement has been authorized by the Trustees of the Registrant and this
Amendment to the Registration Statement has been signed by an authorized officer
of the Registrant, acting as such, and neither such authorization by such
Trustees nor such execution by such officer shall be deemed to have been made by
any of them personally, but shall bind only the trust property of the Registrant
as provided in its Declaration of Trust.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Thomas H. Bailey President February 16, 1999
Thomas H. Bailey (Principal Executive
Officer) and Trustee
/s/ Steven R. Goodbarn Vice President and February 16, 1999
Steven R. Goodbarn Chief Financial Officer
(Principal Financial
Officer)
<PAGE>
/s/ Glenn P. O'Flaherty Treasurer and Chief February 16, 1999
Glenn P. O'Flaherty Accounting Officer
(Principal Accounting
Officer)
/s/ James P. Craig, III Trustee February 16, 1999
James P. Craig, III
Gary O. Loo* Trustee February 16, 1999
Gary O. Loo
Dennis B. Mullen* Trustee February 16, 1999
Dennis B. Mullen
James T. Rothe* Trustee February 16, 1999
James T. Rothe
William D. Stewart* Trustee February 16, 1999
William D. Stewart
Martin H. Waldinger* Trustee February 16, 1999
Martin H. Waldinger
/s/ Steven R. Goodbarn
*By Steven R. Goodbarn
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
Exhibit 10 Consent of PricewaterhouseCoopers LLP
Exhibit 14 Financial Data Schedules
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 87 to the registration statement on N-1A (the "Registration
Statement") of our reports dated December 1, 1998, relating to the financial
statements and financial highlights appearing in the October 31, 1998 Annual
Reports to Shareholders of Janus Investment Fund, which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Financial Highlights" in the Prospectus and under the
heading "Independent Accountants" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
February 15, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> JANUS FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 15024990
<INVESTMENTS-AT-VALUE> 20635999
<RECEIVABLES> 143277
<ASSETS-OTHER> 3442
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20782718
<PAYABLE-FOR-SECURITIES> 16166
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45290
<TOTAL-LIABILITIES> 61456
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14546706
<SHARES-COMMON-STOCK> 740775
<SHARES-COMMON-PRIOR> 648151
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 579287
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5595269
<NET-ASSETS> 20721262
<DIVIDEND-INCOME> 130361
<INTEREST-INCOME> 46886
<OTHER-INCOME> 0
<EXPENSES-NET> 178072
<NET-INVESTMENT-INCOME> (825)
<REALIZED-GAINS-CURRENT> 589663
<APPREC-INCREASE-CURRENT> 2210595
<NET-CHANGE-FROM-OPS> 2799433
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (149577)
<DISTRIBUTIONS-OF-GAINS> (3125216)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113579
<NUMBER-OF-SHARES-REDEEMED> (151587)
<SHARES-REINVESTED> 130632
<NET-CHANGE-IN-ASSETS> 1691928
<ACCUMULATED-NII-PRIOR> 160515
<ACCUMULATED-GAINS-PRIOR> 3104409
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 135223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 181755
<AVERAGE-NET-ASSETS> 20777322
<PER-SHARE-NAV-BEGIN> 29.360
<PER-SHARE-NII> (0.020)
<PER-SHARE-GAIN-APPREC> 3.700
<PER-SHARE-DIVIDEND> (0.230)
<PER-SHARE-DISTRIBUTIONS> (4.840)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 27.970
<EXPENSE-RATIO> 0.870
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 004
<NAME> JANUS ENTERPRISE FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 455646
<INVESTMENTS-AT-VALUE> 576940
<RECEIVABLES> 10309
<ASSETS-OTHER> 1815
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 589064
<PAYABLE-FOR-SECURITIES> 23625
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6440
<TOTAL-LIABILITIES> 30065
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 361296
<SHARES-COMMON-STOCK> 17291
<SHARES-COMMON-PRIOR> 17881
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 76223
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 121480
<NET-ASSETS> 558999
<DIVIDEND-INCOME> 1684
<INTEREST-INCOME> 472
<OTHER-INCOME> 0
<EXPENSES-NET> 5825
<NET-INVESTMENT-INCOME> (3669)
<REALIZED-GAINS-CURRENT> 79005
<APPREC-INCREASE-CURRENT> (12029)
<NET-CHANGE-FROM-OPS> 63307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (34480)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16290
<NUMBER-OF-SHARES-REDEEMED> (18034)
<SHARES-REINVESTED> 1154
<NET-CHANGE-IN-ASSETS> 7171
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 35367
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5963
<AVERAGE-NET-ASSETS> 551467
<PER-SHARE-NAV-BEGIN> 30.860
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 3.430
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (1.960)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 32.330
<EXPENSE-RATIO> 1.080
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> JANUS MERCURY FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1857923
<INVESTMENTS-AT-VALUE> 2349455
<RECEIVABLES> 37126
<ASSETS-OTHER> 1731
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2388312
<PAYABLE-FOR-SECURITIES> 14262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5973
<TOTAL-LIABILITIES> 20235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1644255
<SHARES-COMMON-STOCK> 114002
<SHARES-COMMON-PRIOR> 105674
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 234405
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 489417
<NET-ASSETS> 2368077
<DIVIDEND-INCOME> 8451
<INTEREST-INCOME> 4544
<OTHER-INCOME> 0
<EXPENSES-NET> 19858
<NET-INVESTMENT-INCOME> (6863)
<REALIZED-GAINS-CURRENT> 243921
<APPREC-INCREASE-CURRENT> 204681
<NET-CHANGE-FROM-OPS> 441739
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4295)
<DISTRIBUTIONS-OF-GAINS> (196658)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 80428
<NUMBER-OF-SHARES-REDEEMED> (84267)
<SHARES-REINVESTED> 12167
<NET-CHANGE-IN-ASSETS> 397028
<ACCUMULATED-NII-PRIOR> 5512
<ACCUMULATED-GAINS-PRIOR> 192788
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14071
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20430
<AVERAGE-NET-ASSETS> 2103414
<PER-SHARE-NAV-BEGIN> 18.650
<PER-SHARE-NII> (0.010)
<PER-SHARE-GAIN-APPREC> 4.070
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> (1.900)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 20.770
<EXPENSE-RATIO> 0.970
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirely by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 018
<NAME> JANUS OLYMPUS FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 683632
<INVESTMENTS-AT-VALUE> 951517
<RECEIVABLES> 16163
<ASSETS-OTHER> 1074
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 968754
<PAYABLE-FOR-SECURITIES> 17617
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3643
<TOTAL-LIABILITIES> 21260
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 685433
<SHARES-COMMON-STOCK> 43666
<SHARES-COMMON-PRIOR> 33441
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5261)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 267322
<NET-ASSETS> 947494
<DIVIDEND-INCOME> 3174
<INTEREST-INCOME> 2771
<OTHER-INCOME> 0
<EXPENSES-NET> 7580
<NET-INVESTMENT-INCOME> (1635)
<REALIZED-GAINS-CURRENT> (4017)
<APPREC-INCREASE-CURRENT> 150137
<NET-CHANGE-FROM-OPS> 144485
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1358)
<DISTRIBUTIONS-OF-GAINS> (24652)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32029
<NUMBER-OF-SHARES-REDEEMED> (23295)
<SHARES-REINVESTED> 1491
<NET-CHANGE-IN-ASSETS> 331843
<ACCUMULATED-NII-PRIOR> 1267
<ACCUMULATED-GAINS-PRIOR> 23497
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5434
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7828
<AVERAGE-NET-ASSETS> 774434
<PER-SHARE-NAV-BEGIN> 18.410
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 4.050
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> (0.720)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 21.700
<EXPENSE-RATIO> 1.010
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 020
<NAME> JANUS SPECIAL SITUATIONS FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 747176
<INVESTMENTS-AT-VALUE> 789582
<RECEIVABLES> 8387
<ASSETS-OTHER> 555
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 798524
<PAYABLE-FOR-SECURITIES> 9884
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2323
<TOTAL-LIABILITIES> 12207
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 745046
<SHARES-COMMON-STOCK> 53972
<SHARES-COMMON-PRIOR> 23704
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1103)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 42374
<NET-ASSETS> 786317
<DIVIDEND-INCOME> 3267
<INTEREST-INCOME> 757
<OTHER-INCOME> 0
<EXPENSES-NET> 7511
<NET-INVESTMENT-INCOME> (3487)
<REALIZED-GAINS-CURRENT> (2070)
<APPREC-INCREASE-CURRENT> 9074
<NET-CHANGE-FROM-OPS> 3517
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (17012)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 59478
<NUMBER-OF-SHARES-REDEEMED> (30431)
<SHARES-REINVESTED> 1221
<NET-CHANGE-IN-ASSETS> 452540
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 17997
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5040
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7722
<AVERAGE-NET-ASSETS> 716123
<PER-SHARE-NAV-BEGIN> 14.080
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 1.150
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.660)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 14.570
<EXPENSE-RATIO> 1.080
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> JANUS TWENTY FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 7545618
<INVESTMENTS-AT-VALUE> 11123804
<RECEIVABLES> 156636
<ASSETS-OTHER> 1620
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11282060
<PAYABLE-FOR-SECURITIES> 9429
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17761
<TOTAL-LIABILITIES> 27190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7560146
<SHARES-COMMON-STOCK> 261874
<SHARES-COMMON-PRIOR> 167001
<ACCUMULATED-NII-CURRENT> 31035
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 86537
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3577152
<NET-ASSETS> 11254870
<DIVIDEND-INCOME> 39870
<INTEREST-INCOME> 63216
<OTHER-INCOME> 0
<EXPENSES-NET> 72034
<NET-INVESTMENT-INCOME> 31052
<REALIZED-GAINS-CURRENT> 84283
<APPREC-INCREASE-CURRENT> 2427694
<NET-CHANGE-FROM-OPS> 2543029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16587)
<DISTRIBUTIONS-OF-GAINS> (752195)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 137366
<NUMBER-OF-SHARES-REDEEMED> (67253)
<SHARES-REINVESTED> 24760
<NET-CHANGE-IN-ASSETS> 5383800
<ACCUMULATED-NII-PRIOR> 16568
<ACCUMULATED-GAINS-PRIOR> 754451
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 52477
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 73196
<AVERAGE-NET-ASSETS> 8025121
<PER-SHARE-NAV-BEGIN> 35.160
<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> 12.260
<PER-SHARE-DIVIDEND> (0.100)
<PER-SHARE-DISTRIBUTIONS> (4.460)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 42.980
<EXPENSE-RATIO> 0.910
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> JANUS WORLDWIDE FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 11347700
<INVESTMENTS-AT-VALUE> 13948548
<RECEIVABLES> 201338
<ASSETS-OTHER> 647
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14150533
<PAYABLE-FOR-SECURITIES> 113989
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 104554
<TOTAL-LIABILITIES> 218543
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11702483
<SHARES-COMMON-STOCK> 335568
<SHARES-COMMON-PRIOR> 258645
<ACCUMULATED-NII-CURRENT> 61968
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (359700)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2527239
<NET-ASSETS> 13931990
<DIVIDEND-INCOME> 133821
<INTEREST-INCOME> 45943
<OTHER-INCOME> 0
<EXPENSES-NET> 117830
<NET-INVESTMENT-INCOME> 61934
<REALIZED-GAINS-CURRENT> (331717)
<APPREC-INCREASE-CURRENT> 1260143
<NET-CHANGE-FROM-OPS> 990360
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (50801)
<DISTRIBUTIONS-OF-GAINS> (676334)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 204904
<NUMBER-OF-SHARES-REDEEMED> (146793)
<SHARES-REINVESTED> 18812
<NET-CHANGE-IN-ASSETS> 3573765
<ACCUMULATED-NII-PRIOR> 69045
<ACCUMULATED-GAINS-PRIOR> 630141
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 85269
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 120512
<AVERAGE-NET-ASSETS> 13078350
<PER-SHARE-NAV-BEGIN> 40.050
<PER-SHARE-NII> 1.260
<PER-SHARE-GAIN-APPREC> 3.010
<PER-SHARE-DIVIDEND> (1.350)
<PER-SHARE-DISTRIBUTIONS> (1.450)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 41.520
<EXPENSE-RATIO> 0.920
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31,1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 007
<NAME> JANUS BALANCED FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 740915
<INVESTMENTS-AT-VALUE> 822729
<RECEIVABLES> 20238
<ASSETS-OTHER> 560
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 843527
<PAYABLE-FOR-SECURITIES> 12029
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1449
<TOTAL-LIABILITIES> 13478
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 737933
<SHARES-COMMON-STOCK> 48209
<SHARES-COMMON-PRIOR> 21530
<ACCUMULATED-NII-CURRENT> 4165
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6135
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 81816
<NET-ASSETS> 830049
<DIVIDEND-INCOME> 4522
<INTEREST-INCOME> 13427
<OTHER-INCOME> 0
<EXPENSES-NET> 5410
<NET-INVESTMENT-INCOME> 12539
<REALIZED-GAINS-CURRENT> 5846
<APPREC-INCREASE-CURRENT> 49716
<NET-CHANGE-FROM-OPS> 68101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10977)
<DISTRIBUTIONS-OF-GAINS> (34067)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 37044
<NUMBER-OF-SHARES-REDEEMED> (13233)
<SHARES-REINVESTED> 2868
<NET-CHANGE-IN-ASSETS> 469890
<ACCUMULATED-NII-PRIOR> 2406
<ACCUMULATED-GAINS-PRIOR> 34553
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5512
<AVERAGE-NET-ASSETS> 536524
<PER-SHARE-NAV-BEGIN> 16.730
<PER-SHARE-NII> 0.330
<PER-SHARE-GAIN-APPREC> 2.000
<PER-SHARE-DIVIDEND> (0.350)
<PER-SHARE-DISTRIBUTIONS> (1.490)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.220
<EXPENSE-RATIO> 1.030
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 019
<NAME> JANUS EQUITY INCOME FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 177256
<INVESTMENTS-AT-VALUE> 198519
<RECEIVABLES> 4776
<ASSETS-OTHER> 671
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 203966
<PAYABLE-FOR-SECURITIES> 2238
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 946
<TOTAL-LIABILITIES> 3184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175807
<SHARES-COMMON-STOCK> 12875
<SHARES-COMMON-PRIOR> 5317
<ACCUMULATED-NII-CURRENT> 474
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3236
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21265
<NET-ASSETS> 200782
<DIVIDEND-INCOME> 1492
<INTEREST-INCOME> 633
<OTHER-INCOME> 0
<EXPENSES-NET> 1582
<NET-INVESTMENT-INCOME> 543
<REALIZED-GAINS-CURRENT> 3247
<APPREC-INCREASE-CURRENT> 13912
<NET-CHANGE-FROM-OPS> 17702
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (233)
<DISTRIBUTIONS-OF-GAINS> (5097)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15102
<NUMBER-OF-SHARES-REDEEMED> (7952)
<SHARES-REINVESTED> 408
<NET-CHANGE-IN-ASSETS> 126457
<ACCUMULATED-NII-PRIOR> 87
<ACCUMULATED-GAINS-PRIOR> 5163
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1002
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1615
<AVERAGE-NET-ASSETS> 133613
<PER-SHARE-NAV-BEGIN> 13.980
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 2.470
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> (0.880)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 15.590
<EXPENSE-RATIO> 1.210
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 006
<NAME> JANUS GROWTH AND INCOME FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 2331485
<INVESTMENTS-AT-VALUE> 2825721
<RECEIVABLES> 18100
<ASSETS-OTHER> 1103
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2844924
<PAYABLE-FOR-SECURITIES> 18678
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7167
<TOTAL-LIABILITIES> 25845
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2102737
<SHARES-COMMON-STOCK> 106584
<SHARES-COMMON-PRIOR> 75342
<ACCUMULATED-NII-CURRENT> 5513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 219309
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 491520
<NET-ASSETS> 2819079
<DIVIDEND-INCOME> 18143
<INTEREST-INCOME> 13361
<OTHER-INCOME> 0
<EXPENSES-NET> 23209
<NET-INVESTMENT-INCOME> 8295
<REALIZED-GAINS-CURRENT> 220260
<APPREC-INCREASE-CURRENT> 104949
<NET-CHANGE-FROM-OPS> 333504
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3592)
<DISTRIBUTIONS-OF-GAINS> (184658)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54594
<NUMBER-OF-SHARES-REDEEMED> (31457)
<SHARES-REINVESTED> 8105
<NET-CHANGE-IN-ASSETS> 930080
<ACCUMULATED-NII-PRIOR> 823
<ACCUMULATED-GAINS-PRIOR> 183694
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16513
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23782
<AVERAGE-NET-ASSETS> 2478899
<PER-SHARE-NAV-BEGIN> 25.070
<PER-SHARE-NII> 0.080
<PER-SHARE-GAIN-APPREC> 3.720
<PER-SHARE-DIVIDEND> (0.040)
<PER-SHARE-DISTRIBUTIONS> (2.380)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 26.450
<EXPENSE-RATIO> 0.960
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirely by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 003
<NAME> JANUS VENTURE FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 814361
<INVESTMENTS-AT-VALUE> 1040256
<RECEIVABLES> 426
<ASSETS-OTHER> 1752
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1042434
<PAYABLE-FOR-SECURITIES> 5014
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1552
<TOTAL-LIABILITIES> 6566
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 720685
<SHARES-COMMON-STOCK> 20797
<SHARES-COMMON-PRIOR> 21284
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 89289
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 225894
<NET-ASSETS> 1035868
<DIVIDEND-INCOME> 2827
<INTEREST-INCOME> 4665
<OTHER-INCOME> 0
<EXPENSES-NET> 10872
<NET-INVESTMENT-INCOME> (3380)
<REALIZED-GAINS-CURRENT> 88939
<APPREC-INCREASE-CURRENT> (64755)
<NET-CHANGE-FROM-OPS> 20804
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1510)
<DISTRIBUTIONS-OF-GAINS> (193117)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3296
<NUMBER-OF-SHARES-REDEEMED> (7687)
<SHARES-REINVESTED> 3904
<NET-CHANGE-IN-ASSETS> (216473)
<ACCUMULATED-NII-PRIOR> 3432
<ACCUMULATED-GAINS-PRIOR> 191545
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8032
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11045
<AVERAGE-NET-ASSETS> 1174220
<PER-SHARE-NAV-BEGIN> 58.840
<PER-SHARE-NII> (0.090)
<PER-SHARE-GAIN-APPREC> 0.430
<PER-SHARE-DIVIDEND> (0.070)
<PER-SHARE-DISTRIBUTIONS> (9.300)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 49.810
<EXPENSE-RATIO> 0.940
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31,1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> JANUS OVERSEAS FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 3385944
<INVESTMENTS-AT-VALUE> 3921704
<RECEIVABLES> 63376
<ASSETS-OTHER> 1081
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3986161
<PAYABLE-FOR-SECURITIES> 43390
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53673
<TOTAL-LIABILITIES> 97063
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3548643
<SHARES-COMMON-STOCK> 216615
<SHARES-COMMON-PRIOR> 178699
<ACCUMULATED-NII-CURRENT> 19959
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (175453)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 495949
<NET-ASSETS> 3889098
<DIVIDEND-INCOME> 45935
<INTEREST-INCOME> 13965
<OTHER-INCOME> 0
<EXPENSES-NET> 37156
<NET-INVESTMENT-INCOME> 22744
<REALIZED-GAINS-CURRENT> (174093)
<APPREC-INCREASE-CURRENT> 200570
<NET-CHANGE-FROM-OPS> 49221
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16883)
<DISTRIBUTIONS-OF-GAINS> (89374)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 220566
<NUMBER-OF-SHARES-REDEEMED> (188605)
<SHARES-REINVESTED> 5955
<NET-CHANGE-IN-ASSETS> 683901
<ACCUMULATED-NII-PRIOR> 19546
<ACCUMULATED-GAINS-PRIOR> 82566
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26061
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 37810
<AVERAGE-NET-ASSETS> 3948710
<PER-SHARE-NAV-BEGIN> 17.940
<PER-SHARE-NII> 0.080
<PER-SHARE-GAIN-APPREC> 0.540
<PER-SHARE-DIVIDEND> (0.100)
<PER-SHARE-DISTRIBUTIONS> (0.510)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.950
<EXPENSE-RATIO> 0.960
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 008
<NAME> JANUS FLEXIBLE INCOME FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1102565
<INVESTMENTS-AT-VALUE> 1118112
<RECEIVABLES> 24613
<ASSETS-OTHER> 217
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1142942
<PAYABLE-FOR-SECURITIES> 34947
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4404
<TOTAL-LIABILITIES> 39351
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1075251
<SHARES-COMMON-STOCK> 111320
<SHARES-COMMON-PRIOR> 72706
<ACCUMULATED-NII-CURRENT> 708
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12577
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15055
<NET-ASSETS> 1103591
<DIVIDEND-INCOME> 1177
<INTEREST-INCOME> 65763
<OTHER-INCOME> 0
<EXPENSES-NET> 7315
<NET-INVESTMENT-INCOME> 59625
<REALIZED-GAINS-CURRENT> 13197
<APPREC-INCREASE-CURRENT> (8610)
<NET-CHANGE-FROM-OPS> 64212
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (59616)
<DISTRIBUTIONS-OF-GAINS> (15666)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69152
<NUMBER-OF-SHARES-REDEEMED> (37113)
<SHARES-REINVESTED> 6575
<NET-CHANGE-IN-ASSETS> 376490
<ACCUMULATED-NII-PRIOR> 610
<ACCUMULATED-GAINS-PRIOR> 15135
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5211
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7545
<AVERAGE-NET-ASSETS> 892853
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.670
<PER-SHARE-GAIN-APPREC> 0.120
<PER-SHARE-DIVIDEND> (0.670)
<PER-SHARE-DISTRIBUTIONS> (0.210)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.910
<EXPENSE-RATIO> 0.840
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 017
<NAME> JANUS HIGH-YIELD FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 292300
<INVESTMENTS-AT-VALUE> 270339
<RECEIVABLES> 13946
<ASSETS-OTHER> 365
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 284650
<PAYABLE-FOR-SECURITIES> 15067
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1366
<TOTAL-LIABILITIES> 16433
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 291286
<SHARES-COMMON-STOCK> 26156
<SHARES-COMMON-PRIOR> 25471
<ACCUMULATED-NII-CURRENT> (6)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1101)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21962)
<NET-ASSETS> 268217
<DIVIDEND-INCOME> 252
<INTEREST-INCOME> 33298
<OTHER-INCOME> 0
<EXPENSES-NET> 3662
<NET-INVESTMENT-INCOME> 29888
<REALIZED-GAINS-CURRENT> (1034)
<APPREC-INCREASE-CURRENT> (28168)
<NET-CHANGE-FROM-OPS> 686
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (29888)
<DISTRIBUTIONS-OF-GAINS> (16609)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43131
<NUMBER-OF-SHARES-REDEEMED> (46003)
<SHARES-REINVESTED> 3557
<NET-CHANGE-IN-ASSETS> (33205)
<ACCUMULATED-NII-PRIOR> 142
<ACCUMULATED-GAINS-PRIOR> 16395
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2773
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3783
<AVERAGE-NET-ASSETS> 380942
<PER-SHARE-NAV-BEGIN> 11.830
<PER-SHARE-NII> 0.900
<PER-SHARE-GAIN-APPREC> (1.020)
<PER-SHARE-DIVIDEND> (0.900)
<PER-SHARE-DISTRIBUTIONS> (0.560)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.250
<EXPENSE-RATIO> 0.990
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> JANUS FEDERAL TAX - EXEMPT FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 91775
<INVESTMENTS-AT-VALUE> 93941
<RECEIVABLES> 4811
<ASSETS-OTHER> 140
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98892
<PAYABLE-FOR-SECURITIES> 6924
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 343
<TOTAL-LIABILITIES> 7267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89965
<SHARES-COMMON-STOCK> 12595
<SHARES-COMMON-PRIOR> 8755
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (506)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2166
<NET-ASSETS> 91625
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4012
<OTHER-INCOME> 0
<EXPENSES-NET> 482
<NET-INVESTMENT-INCOME> 3530
<REALIZED-GAINS-CURRENT> 945
<APPREC-INCREASE-CURRENT> 701
<NET-CHANGE-FROM-OPS> 5176
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3530)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9960
<NUMBER-OF-SHARES-REDEEMED> (6525)
<SHARES-REINVESTED> 405
<NET-CHANGE-IN-ASSETS> 29570
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1451)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 445
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 735
<AVERAGE-NET-ASSETS> 74133
<PER-SHARE-NAV-BEGIN> 7.090
<PER-SHARE-NII> 0.340
<PER-SHARE-GAIN-APPREC> 0.180
<PER-SHARE-DIVIDEND> (0.340)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 7.270
<EXPENSE-RATIO> 0.670
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> JANUS SHORT TERM BOND FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 138098
<INVESTMENTS-AT-VALUE> 138931
<RECEIVABLES> 3174
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 142146
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1240
<TOTAL-LIABILITIES> 1240
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 142939
<SHARES-COMMON-STOCK> 48497
<SHARES-COMMON-PRIOR> 19980
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2428)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 394
<NET-ASSETS> 140906
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5879
<OTHER-INCOME> 0
<EXPENSES-NET> 582
<NET-INVESTMENT-INCOME> 5297
<REALIZED-GAINS-CURRENT> 401
<APPREC-INCREASE-CURRENT> (14)
<NET-CHANGE-FROM-OPS> 5684
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5297)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 60319
<NUMBER-OF-SHARES-REDEEMED> (33460)
<SHARES-REINVESTED> 1658
<NET-CHANGE-IN-ASSETS> 82998
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> (2829)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 582
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 950
<AVERAGE-NET-ASSETS> 89556
<PER-SHARE-NAV-BEGIN> 2.900
<PER-SHARE-NII> 0.170
<PER-SHARE-GAIN-APPREC> 0.010
<PER-SHARE-DIVIDEND> (0.170)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 2.910
<EXPENSE-RATIO> 0.670
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 141
<NAME> JANUS MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 6672769
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 40546
<ASSETS-OTHER> 173
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6713488
<PAYABLE-FOR-SECURITIES> 177403
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27633
<TOTAL-LIABILITIES> 205036
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6508452
<SHARES-COMMON-STOCK> 1492023
<SHARES-COMMON-PRIOR> 1032647
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1492023
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 273633
<OTHER-INCOME> 0
<EXPENSES-NET> 12377
<NET-INVESTMENT-INCOME> 261256
<REALIZED-GAINS-CURRENT> 161
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 261417
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (57683)
<DISTRIBUTIONS-OF-GAINS> (42)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5447777
<NUMBER-OF-SHARES-REDEEMED> (5042859)
<SHARES-REINVESTED> 54458
<NET-CHANGE-IN-ASSETS> 459376
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1124
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6828
<AVERAGE-NET-ASSETS> 1123991
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 142
<NAME> JANUS MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 6672769
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 40546
<ASSETS-OTHER> 173
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6713488
<PAYABLE-FOR-SECURITIES> 177403
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27633
<TOTAL-LIABILITIES> 205036
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6508452
<SHARES-COMMON-STOCK> 4973909
<SHARES-COMMON-PRIOR> 2770961
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4973909
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 273633
<OTHER-INCOME> 0
<EXPENSES-NET> 12377
<NET-INVESTMENT-INCOME> 261256
<REALIZED-GAINS-CURRENT> 161
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 261417
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (202020)
<DISTRIBUTIONS-OF-GAINS> (118)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89394668
<NUMBER-OF-SHARES-REDEEMED> (87252582)
<SHARES-REINVESTED> 60862
<NET-CHANGE-IN-ASSETS> 2202948
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3621
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5515
<AVERAGE-NET-ASSETS> 3620872
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (0.060)
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.060
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 143
<NAME> JANUS MONEY MARKET FUND - SERVICE SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 6672769
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 40546
<ASSETS-OTHER> 173
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6713488
<PAYABLE-FOR-SECURITIES> 177403
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27633
<TOTAL-LIABILITIES> 205036
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6508452
<SHARES-COMMON-STOCK> 42520
<SHARES-COMMON-PRIOR> 10341
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 42520
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 273633
<OTHER-INCOME> 0
<EXPENSES-NET> 12377
<NET-INVESTMENT-INCOME> 261256
<REALIZED-GAINS-CURRENT> 161
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 261417
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1553)
<DISTRIBUTIONS-OF-GAINS> (1)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323786
<NUMBER-OF-SHARES-REDEEMED> (293167)
<SHARES-REINVESTED> 1560
<NET-CHANGE-IN-ASSETS> 32179
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 202
<AVERAGE-NET-ASSETS> 29322
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.400
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31,1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 151
<NAME> JANUS GOVT MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1038994
<INVESTMENTS-AT-VALUE> 1038994
<RECEIVABLES> 1634
<ASSETS-OTHER> 93
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1040721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4042
<TOTAL-LIABILITIES> 4042
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1036679
<SHARES-COMMON-STOCK> 213239
<SHARES-COMMON-PRIOR> 132134
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 213239
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26376
<OTHER-INCOME> 0
<EXPENSES-NET> 1400
<NET-INVESTMENT-INCOME> 24976
<REALIZED-GAINS-CURRENT> 10
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24986
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7537)
<DISTRIBUTIONS-OF-GAINS> (5)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 384359
<NUMBER-OF-SHARES-REDEEMED> (310430)
<SHARES-REINVESTED> 7176
<NET-CHANGE-IN-ASSETS> 81105
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 151
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 915
<AVERAGE-NET-ASSETS> 150525
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31,1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 152
<NAME> JANUS GOVT MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1038994
<INVESTMENTS-AT-VALUE> 1038994
<RECEIVABLES> 1634
<ASSETS-OTHER> 93
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1040721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4042
<TOTAL-LIABILITIES> 4042
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1036679
<SHARES-COMMON-STOCK> 820670
<SHARES-COMMON-PRIOR> 35775
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 820670
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26376
<OTHER-INCOME> 0
<EXPENSES-NET> 1400
<NET-INVESTMENT-INCOME> 24976
<REALIZED-GAINS-CURRENT> 10
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24986
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17406)
<DISTRIBUTIONS-OF-GAINS> (5)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2152976
<NUMBER-OF-SHARES-REDEEMED> (1371965)
<SHARES-REINVESTED> 3884
<NET-CHANGE-IN-ASSETS> 784895
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 321
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 493
<AVERAGE-NET-ASSETS> 321174
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31,1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 153
<NAME> JANUS GOVT MONEY MARKET FUND - SERVICE SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 1038994
<INVESTMENTS-AT-VALUE> 1038994
<RECEIVABLES> 1634
<ASSETS-OTHER> 93
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1040721
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4042
<TOTAL-LIABILITIES> 4042
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1036679
<SHARES-COMMON-STOCK> 2770
<SHARES-COMMON-PRIOR> 628
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26376
<OTHER-INCOME> 0
<EXPENSES-NET> 1400
<NET-INVESTMENT-INCOME> 24976
<REALIZED-GAINS-CURRENT> 10
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24986
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (33)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2772
<NUMBER-OF-SHARES-REDEEMED> (658)
<SHARES-REINVESTED> 28
<NET-CHANGE-IN-ASSETS> 2142
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14
<AVERAGE-NET-ASSETS> 639
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.050)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.400
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 161
<NAME> JANUS TAX EXEMPT MONEY MARKET FUND - INVESTOR SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 165882
<INVESTMENTS-AT-VALUE> 165882
<RECEIVABLES> 8451
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 174333
<PAYABLE-FOR-SECURITIES> 9701
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 606
<TOTAL-LIABILITIES> 10307
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164026
<SHARES-COMMON-STOCK> 105011
<SHARES-COMMON-PRIOR> 81269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 105011
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4261
<OTHER-INCOME> 0
<EXPENSES-NET> 597
<NET-INVESTMENT-INCOME> 3664
<REALIZED-GAINS-CURRENT> 26
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3690
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2879)
<DISTRIBUTIONS-OF-GAINS> (21)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 330543
<NUMBER-OF-SHARES-REDEEMED> (309566)
<SHARES-REINVESTED> 2765
<NET-CHANGE-IN-ASSETS> 23742
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 555
<AVERAGE-NET-ASSETS> 91058
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 162
<NAME> JANUS TAX EXEMPT MONEY MARKET FUND - INSTITUTIONAL SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 165882
<INVESTMENTS-AT-VALUE> 165882
<RECEIVABLES> 8451
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 174333
<PAYABLE-FOR-SECURITIES> 9701
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 606
<TOTAL-LIABILITIES> 10307
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164026
<SHARES-COMMON-STOCK> 41319
<SHARES-COMMON-PRIOR> 3559
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 41319
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4261
<OTHER-INCOME> 0
<EXPENSES-NET> 597
<NET-INVESTMENT-INCOME> 3664
<REALIZED-GAINS-CURRENT> 26
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3690
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (678)
<DISTRIBUTIONS-OF-GAINS> (3)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 211444
<NUMBER-OF-SHARES-REDEEMED> (174273)
<SHARES-REINVESTED> 589
<NET-CHANGE-IN-ASSETS> 37760
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38
<AVERAGE-NET-ASSETS> 18859
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (0.040)
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from financial
statements dated October 31, 1998 included in the Fund's Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 163
<NAME> JANUS TAX EXEMPT MONEY MARKET FUND - SERVICE SHARES
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 165882
<INVESTMENTS-AT-VALUE> 165882
<RECEIVABLES> 8451
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 174333
<PAYABLE-FOR-SECURITIES> 9701
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 606
<TOTAL-LIABILITIES> 10307
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164026
<SHARES-COMMON-STOCK> 17696
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 17696
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4261
<OTHER-INCOME> 0
<EXPENSES-NET> 597
<NET-INVESTMENT-INCOME> 3664
<REALIZED-GAINS-CURRENT> 26
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3690
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (107)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38120
<NUMBER-OF-SHARES-REDEEMED> (20544)
<SHARES-REINVESTED> 110
<NET-CHANGE-IN-ASSETS> 17686
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22
<AVERAGE-NET-ASSETS> 3215
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.400
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
