OMB APPROVAL
OMB Number: 3235-0307
Expires: 05/31/00
Estimated average burden
hours per response: 212.95
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. 90 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
Amendment No. 73 [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: January 31, 2000
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on January 31, 2000 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
<PAGE>
[ ] 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 LOGO]
JANUS EQUITY FUNDS
PROSPECTUS
JANUS FUND
JANUS ENTERPRISE FUND
JANUS MERCURY FUND
JANUS OLYMPUS FUND
JANUS SPECIAL SITUATIONS FUND
JANUS STRATEGIC VALUE FUND
JANUS GROWTH AND INCOME FUND
JANUS BALANCED FUND
JANUS EQUITY INCOME FUND
JANUS WORLDWIDE FUND
JANUS GLOBAL LIFE SCIENCES FUND
JANUARY 31, 2000
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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Equity Funds................................. 2
Fees and expenses............................ 14
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Equity Funds................................. 16
General portfolio policies................... 25
Risks........................................ 28
SHAREHOLDER'S MANUAL
Minimum investments.......................... 37
Types of account ownership................... 37
To purchase shares........................... 40
To exchange shares........................... 41
To redeem shares............................. 41
Shareholder services and account policies.... 45
MANAGEMENT OF THE FUNDS
Investment adviser........................... 49
Investment personnel......................... 51
OTHER INFORMATION............... ............... 57
DISTRIBUTIONS AND TAXES
Distributions................................ 59
Taxes........................................ 61
FINANCIAL HIGHLIGHTS.............. ............. 63
GLOSSARY
Glossary of investment terms................. 74
</TABLE>
Janus Equity Funds prospectus 1
<PAGE>
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
EQUITY FUNDS
The Equity Funds are designed for long-term investors who seek
growth of capital and who can tolerate the greater risks
associated with common stock investments. Janus Balanced Fund,
Janus Equity Income Fund and Janus Growth and Income Fund are
designed for investors who primarily seek growth of capital with
varying degrees of emphasis on income. Janus Balanced Fund, Janus
Equity Income Fund and Janus Growth and Income Fund are not
designed for investors who desire a consistent level of income.
1. WHAT ARE THE INVESTMENT OBJECTIVES OF THE EQUITY FUNDS?
- --------------------------------------------------------------------------------
JANUS DOMESTIC EQUITY 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 STRATEGIC VALUE FUND seek long-term growth of
capital.
- JANUS SPECIAL SITUATIONS FUND seeks capital appreciation.
- JANUS GROWTH AND INCOME FUND seeks long-term capital growth
and current income.
- 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 GLOBAL/INTERNATIONAL EQUITY FUNDS
- JANUS WORLDWIDE FUND seeks long-term growth of capital in a
manner consistent with the preservation of capital.
- JANUS GLOBAL LIFE SCIENCES FUND seeks long-term growth of
capital.
2 Janus Equity Funds prospectus
<PAGE>
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 EQUITY FUNDS?
The portfolio managers apply a "bottom up" approach in choosing
investments. In other words, the Funds' portfolio managers look
for companies with earnings growth potential one at a time, and
in the case of Janus Strategic Value Fund, the Fund's portfolio
manager looks for undervalued companies one at a time. Janus
Balanced Fund's, Janus Equity Income Fund's and Janus Growth and
Income Fund's portfolio managers look mostly for equity and
income-producing securities that meet their investment criteria.
If a portfolio manager is unable to find such investments, a
significant portion of a Fund's assets may be in cash or similar
investments.
The Funds may invest without limit in foreign equity and debt
securities and less than 35% of its net assets in
high-yield/high-risk bonds.
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
Janus Equity Funds prospectus 3
<PAGE>
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 STRATEGIC VALUE FUND invests primarily in common stocks
with the potential for long-term growth of capital using a
"value" approach. The "value" approach emphasizes investments in
companies the portfolio manager believes are undervalued relative
to their intrinsic worth.
The portfolio manager measures value as a function of
price/earnings (P/E) ratios and price/free cash flow. A P/E ratio
is the relationship between the price of a stock and its earnings
per share. This figure is determined by dividing a stock's market
price by the company's earnings per share amount. Price/free cash
flow is the relationship between the price of a stock and the
company's available cash from operations minus capital
expenditures.
The portfolio manager will typically seek attractively valued
companies that are improving their free cash flow and improving
their returns on invested capital. These companies may also
include special situations companies that are experiencing
management changes and/or are temporarily out of favor.
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
4 Janus Equity Funds prospectus
<PAGE>
the portfolio manager believes they have potential for increasing
or commencing dividend payments.
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.
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 invested
assets in income-producing equity securities.
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.
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. 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. As a
fundamental 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 Equity Funds prospectus 5
<PAGE>
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE EQUITY 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
Equity 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 or, in the
case of Janus Special Situations Fund and Janus Strategic
Value Fund, if the portfolio manager's belief about a
company's intrinsic worth is incorrect. 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.
The income component of Janus Balanced Fund, Janus Equity
Income Fund and Janus Growth and Income Fund 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.
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.
JANUS GLOBAL LIFE SCIENCES FUND concentrates its investments
in related industry groups. Because of this, companies in its
6 Janus Equity Funds prospectus
<PAGE>
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.
JANUS GLOBAL LIFE SCIENCES 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.
JANUS ENTERPRISE FUND, JANUS OLYMPUS FUND, JANUS SPECIAL
SITUATIONS FUND, JANUS STRATEGIC VALUE FUND AND JANUS GLOBAL
LIFE SCIENCES 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.
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.
Janus Equity Funds prospectus 7
<PAGE>
The following information illustrates how each of the Equity
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.
JANUS FUND
A BAR CHART showing Annual Total Returns for Janus Fund from
1990 through 1999
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(0.74%) 42.80% 6.87% 10.92% (1.10%) 29.43% 19.61% 22.72% 38.89% 47.13%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (2/5/70)
<S> <C> <C> <C> <C>
Janus Fund 47.13% 31.16% 20.49% 18.49%
S&P 500 Index* 21.03% 28.54% 18.79% 14.03%
----------------------------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
8 Janus Equity Funds prospectus
<PAGE>
JANUS ENTERPRISE FUND
A BAR CHART showing Annual Total Returns for Janus Enterprise
Fund from 1993 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
15.64% 8.92% 27.25% 11.65% 10.82% 33.75% 121.90%
1993 1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 57.93% Worst Quarter: 3rd-1998 (14.63%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C>
Janus Enterprise Fund 121.90% 36.12% 31.95%
S&P MidCap 400 Index+ 14.72% 23.05% 18.69%
----------------------------------
</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.
JANUS MERCURY FUND
A BAR CHART showing Annual Total Returns for Janus Mercury Fund
from 1994 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C>
15.86% 33.01% 17.67% 11.88% 58.41% 96.23%
1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 42.72% Worst Quarter: 3rd-1998 (6.94%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/3/93)
<S> <C> <C> <C>
Janus Mercury Fund 96.23% 40.33% 35.46%
S&P 500 Index* 21.03% 28.54% 22.29%
----------------------------------
</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 Equity Funds prospectus 9
<PAGE>
JANUS OLYMPUS FUND
A BAR CHART showing Annual Total Returns for Janus Olympus Fund
from 1996 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
21.73% 26.73% 56.97% 100.12%
1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 51.67% Worst Quarter: 3rd-1998 (7.93%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/29/95)
<S> <C> <C>
Janus Olympus Fund 100.12% 48.29%
S&P 500 Index+ 21.03% 26.39%
------------------------
</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 SPECIAL SITUATIONS FUND
A BAR CHART showing Annual Total Returns for Janus Special
Situations Fund from 1997 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C>
46.04% 25.31% 52.46%
1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/31/96)
<S> <C> <C>
Janus Special Situations Fund 52.46% 40.78%
S&P 500 Index* 21.03% 27.56%
------------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
10 Janus Equity Funds prospectus
<PAGE>
Since Janus Strategic Value Fund did not commence operations
until January 31, 2000, there is no performance available as of
the date of this prospectus.
JANUS GROWTH AND INCOME FUND
A BAR CHART showing Annual Total Returns for Janus Growth and
Income Fund from 1992 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
5.35% 6.70% (4.87%) 36.35% 26.03% 34.66% 34.87% 51.18%
1992 1993 1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 29.20% Worst Quarter: 3rd-1998 (8.97%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/15/91)
<S> <C> <C> <C>
Janus Growth and Income Fund 51.18% 36.38% 25.12%
S&P 500 Index* 21.03% 28.54% 20.11%
----------------------------------
</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 Equity Funds prospectus 11
<PAGE>
JANUS BALANCED FUND
A BAR CHART showing Annual Total Returns for Janus Balanced
Fund from 1993 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10.56% 0.02% 27.31% 15.30% 21.81% 31.20% 23.51%
1993 1994 1995 1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C>
Janus Balanced Fund 23.51% 23.71% 19.12%
S&P 500 Index* 21.03% 28.54% 21.46%
Lehman Brothers Gov't/Corp Bond Index+ 2.15% 7.61% 5.44%
----------------------------------
</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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C>
31.08% 40.05% 38.50%
1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (6/28/96)
<S> <C> <C>
Janus Equity Income Fund 38.50% 35.96%
S&P 500 Index++ 21.03% 27.15%
------------------------
</TABLE>
++ The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
12 Janus Equity Funds prospectus
<PAGE>
JANUS WORLDWIDE FUND
A BAR CHART showing Annual Total Returns for Janus Worldwide
Fund from 1992 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
9.01% 28.41% 3.61% 21.90% 26.40% 20.48% 25.87% 64.37%
1992 1993 1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 42.11% Worst Quarter: 3rd-1998 (16.10%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/15/91)
<S> <C> <C> <C>
Janus Worldwide Fund 64.37% 30.88% 25.10%
Morgan Stanley International
Worldwide Index* 24.93% 19.76% 14.51%
----------------------------------
</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.
JANUS GLOBAL LIFE SCIENCES FUND
A BAR CHART showing Annual Total Return for Janus Global Life
Sciences Fund 1999:
Annual returns for periods ended 12/31
61.00%
1999
The percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 31.22% Worst Quarter: 1st-1999 4.20%
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
1 year and Since Inception
(12/31/98)
<S> <C>
Janus Global Life Sciences Fund 61.00%
S&P 500 Index* 21.03%
------------------
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
The Equity Funds' past performance does not necessarily indicate
how they will perform in the future.
Janus Equity Funds prospectus 13
<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.
14 Janus Equity Funds prospectus
<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). All of the fees and expenses shown were determined
based on net assets as of the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Management Other Total Annual Fund
Fee(1) Expenses Operating Expenses
<S> <C> <C> <C>
Janus Fund 0.65% 0.20% 0.85%
Janus Enterprise Fund 0.65% 0.29% 0.94%
Janus Mercury Fund 0.65% 0.27% 0.92%
Janus Olympus Fund 0.65% 0.28% 0.93%
Janus Special Situations Fund 0.65% 0.31% 0.96%
Janus Strategic Value Fund 0.65% 0.60%(2) 1.25%
Janus Growth and Income Fund 0.65% 0.26% 0.91%
Janus Balanced Fund 0.65% 0.25% 0.90%
Janus Equity Income Fund 0.65% 0.31% 0.96%
Janus Worldwide Fund 0.65% 0.24% 0.89%
Janus Global Life Sciences Fund 0.65% 0.46% 1.11%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Management Fee" information has been restated to reflect a new fee
schedule effective January 31, 2000.
(2) "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 $ 87 $271 $471 $1,049
Janus Enterprise Fund $ 96 $300 $520 $1,155
Janus Mercury Fund $ 94 $293 $509 $1,131
Janus Olympus Fund $ 95 $296 $515 $1,143
Janus Special Situations Fund $ 98 $306 $531 $1,178
Janus Strategic Value Fund $127 $397 N/A N/A
Janus Growth and Income Fund $ 93 $290 $504 $1,120
Janus Balanced Fund $ 92 $287 $498 $1,108
Janus Equity Income Fund $ 98 $306 $531 $1,178
Janus Worldwide Fund $ 91 $284 $493 $1,096
Janus Global Life Sciences Fund $113 $353 $612 $1,352
</TABLE>
Janus Equity Funds prospectus 15
<PAGE>
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENTS
STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
EQUITY FUNDS
This section takes a closer look at the investment objectives of
each of the Equity Funds, their principal investment strategies
and certain risks of investing in the Equity 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 28-32 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 DOMESTIC EQUITY 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 capitalization falls
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, 1999, they ranged from approximately
$170 million to $37 billion.
16 Janus Equity Funds prospectus
<PAGE>
JANUS MERCURY FUND
Janus Mercury 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 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 STRATEGIC VALUE FUND
Janus Strategic Value Fund seeks long-term growth of capital. It
pursues its objective by investing primarily in common stocks
with the potential for long-term growth of capital using a
"value" approach. The "value" approach the portfolio manager uses
emphasizes investments in companies he believes are undervalued
relative to their intrinsic worth.
The portfolio manager measures value as a function of
price/earnings (P/E) ratios and price/free cash flow. A P/E ratio
is the relationship between the price of a stock and its earnings
per
Janus Equity Funds prospectus 17
<PAGE>
share. This figure is determined by dividing a stock's market
price by the company's earnings per share amount. Price/free cash
flow is the relationship between the price of a stock and its
available cash from operations minus capital expenditures.
The portfolio manager will typically seek attractively valued
companies that are improving their free cash flow and improving
their returns on invested capital. These companies may also
include special situations companies that are experiencing
management changes and/or are temporarily out of favor.
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 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.
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 invested assets in income-producing
18 Janus Equity Funds prospectus
<PAGE>
equity securities including common and preferred stocks, warrants
and securities that are convertible to common or preferred
stocks.
JANUS GLOBAL/INTERNATIONAL EQUITY FUNDS
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.
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 least 25% of its
total assets, in the aggregate, in the following industry groups:
health care; pharmaceuticals; agriculture; cosmetics/personal
care; and biotechnology.
Janus Equity Funds prospectus 19
<PAGE>
The following questions and answers are designed to help you better understand
the Equity 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.
Except for the Janus Growth and Income Fund, Janus Balanced Fund
and Janus Equity Income Fund, realization of income is not a
significant consideration when choosing investments for the
Funds. Income realized on the Funds' investments may be
incidental to their objectives. In the case of Janus Growth and
Income Fund, Janus Balanced Fund and Janus Equity Income Fund, a
portfolio manager may consider dividend-paying characteristics to
a greater degree in selecting common stock.
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.
20 Janus Equity Funds prospectus
<PAGE>
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 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 Equity 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.
Janus Equity Funds prospectus 21
<PAGE>
5. HOW DOES JANUS STRATEGIC VALUE FUND'S PORTFOLIO MANAGER DETERMINE THAT A
COMPANY MAY BE UNDERVALUED?
A company may be undervalued when, in the opinion of the Fund's
portfolio manager, the company is selling for a price that is
below its intrinsic worth. A company may be undervalued due to
market or economic conditions, temporary earnings declines,
unfavorable developments affecting the company or other factors.
Such factors may provide buying opportunities at attractive
prices compared to historical or market price-earnings ratios,
price/free cash flow, book value, or return on equity. The
portfolio manager believes that buying these securities at a
price that is below its intrinsic worth may generate greater
returns for the Fund than those obtained by paying premium prices
for companies currently in favor in the market.
6. HOW DO JANUS GROWTH AND INCOME FUND, JANUS BALANCED FUND AND JANUS EQUITY
INCOME FUND 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 Janus
Balanced Fund or Janus Equity Income Fund. 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 less volatile than
Janus Growth and Income Fund and Janus Equity Income Fund.
7. 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
22 Janus Equity Funds prospectus
<PAGE>
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.
8. 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.
9. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF JANUS GROWTH AND
INCOME FUND'S, JANUS BALANCED FUND'S AND JANUS EQUITY INCOME FUND'S
PORTFOLIOS?
The growth component of these 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.
10. 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
Janus Equity Funds prospectus 23
<PAGE>
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.
11. 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 diagnostics, nuclear and biochemical
research and development and health care facilities ownership and
operation.
24 Janus Equity Funds prospectus
<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.
Janus Equity Funds prospectus 25
<PAGE>
OTHER TYPES OF INVESTMENTS
The Equity 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. Janus Growth and Income Fund, Janus Balanced Fund and
Janus Equity Income Fund 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 bonds (less than 35% of each Fund's
assets)
- options, futures, forwards, swaps 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
26 Janus Equity Funds prospectus
<PAGE>
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 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 Equity Funds prospectus 27
<PAGE>
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, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on
a fund with a small asset base. A fund may not experience similar
performance as its assets grow. Janus Global Life Sciences 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. HOW DOES THE NONDIVERSIFIED STATUS OF JANUS ENTERPRISE FUND, JANUS OLYMPUS
FUND, JANUS SPECIAL SITUATIONS FUND, JANUS STRATEGIC VALUE FUND AND JANUS
GLOBAL LIFE SCIENCES 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.
2. 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
28 Janus Equity Funds prospectus
<PAGE>
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 a 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.
3. WHAT ARE THE RISKS ASSOCIATED WITH VALUE INVESTING?
If the portfolio manager's perception of a company's worth is not
realized in the time frame he expects, the overall performance of
Janus Strategic Value Fund may suffer. In addition, if the market
value of a company declines Janus Strategic Value Fund's
performance could suffer. In general, the portfolio manager
believes these risks are mitigated by investing in companies that
are undervalued in the market in relation to earnings, dividends
and/or assets.
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 what impact, if any, the Year 2000 transition has
had on the company's operations when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
Janus Equity Funds prospectus 29
<PAGE>
transition status 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, 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.
30 Janus Equity Funds prospectus
<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.
6. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated
below investment grade by the primary rating agencies such as
Standard & Poor's and Moody's. The value of lower quality bonds
generally is more dependent on credit risk, or the ability of the
issuer to meet interest and principal payments, than investment
grade bonds. Issuers of high-yield bonds 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.
7. HOW DO THE FUNDS TRY TO REDUCE RISK?
The Funds may use futures, options, swaps 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.
Janus Equity Funds prospectus 31
<PAGE>
8. 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.
32 Janus Equity Funds prospectus
<PAGE>
This page intentionally left blank
Janus Equity Funds prospectus 33
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
Janus Equity Funds
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
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
36 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA, 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 37
<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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
38 Shareholder's manual
<PAGE>
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.
PLEASE REFER TO THE CHART ON THE FOLLOWING PAGES FOR INFORMATION
ON OPENING AN ACCOUNT AND CONDUCTING BUSINESS WITH JANUS. WITH
CERTAIN LIMITED EXCEPTIONS, THE FUNDS ARE AVAILABLE ONLY TO U.S.
CITIZENS OR RESIDENTS. WHEN YOU PURCHASE, EXCHANGE, OR REDEEM
SHARES, YOUR REQUEST WILL BE PROCESSED AT THE NEXT NAV CALCULATED
AFTER YOUR ORDER IS RECEIVED AND ACCEPTED.
Shareholder's manual 39
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
40 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM SHARES
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 44. Also for written requests on page 44.
refer to the exchange policies - Please see page 43 for information
listed on page 42 for more infor- about payment of redemption
mation. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 41
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Funds reserve the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
42 Shareholder's manual
<PAGE>
- - The Funds reserve the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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
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.
Shareholder's manual 43
<PAGE>
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 36
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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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-
44 Shareholder's manual
<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 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.
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
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 37 or
to close such accounts. This policy will apply to accounts
participating in the Automatic Monthly Investment Program only
Shareholder's manual 45
<PAGE>
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 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
46 Shareholder's manual
<PAGE>
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.
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 the shareholder(s) of record.
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.
Shareholder's manual 47
<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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our Web
site to discontinue delivery of your paper statements. In
addition, the Funds will send you an immediate transaction
confirmation statement after every non-systematic transaction.
Janus Growth and Income Fund, Janus Balanced Fund, and Janus
Equity Income Fund distribute dividend information quarterly. All
of the other Equity Funds distribute dividend information
annually.
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 requests.
48 Shareholder's manual
<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. Each Fund's advisory agreement spells out
the management fee and other expenses that the Funds must pay.
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. For the most recent fiscal year,
each
Janus Equity Funds prospectus 49
<PAGE>
Fund paid Janus Capital the following management fees based upon
each Fund's average net assets:
<TABLE>
<CAPTION>
Management Fee
(for the Fiscal Year Ended
October 31, 1999)(1)
<S> <C>
Janus Fund 0.65%
Janus Enterprise Fund 0.69%
Janus Mercury Fund 0.66%
Janus Olympus Fund 0.67%
Janus Special Situations Fund 0.69%
Janus Strategic Value Fund(2) 0.65%
Janus Growth and Income Fund 0.66%
Janus Balanced Fund 0.67%
Janus Equity Income Fund 0.71%
Janus Worldwide Fund 0.65%
Janus Global Life Sciences Fund(3) 0.75%
</TABLE>
(1) Effective January 31, 2000, each Fund's management fee has
been changed to 0.65% of average daily net assets.
(2) Janus Strategic Value Fund had not commenced operations as of
October 31, 1999. The fee shown is the management fee that
will be effective upon the Fund's commencement of operations
on February 29, 2000.
(3) For the period December 31, 1998 (commencement of operations)
to October 31, 1999.
50 Janus Equity Funds prospectus
<PAGE>
INVESTMENT PERSONNEL
PORTFOLIO MANAGERS
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of Janus
Worldwide Fund which he has co-managed since September
1999. He is also Executive Vice President and co-manager
of Janus Overseas Fund which he has co-managed since April
1998. Mr. Chang joined Janus Capital in 1993 as a research
analyst. He received an undergraduate degree with honors
in Religion with a concentration in Philosophy from
Dartmouth College and a Master's Degree in Political
Science from Stanford University. Mr. Chang is a Chartered
Financial Analyst.
DAVID J. CORKINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Growth and Income Fund which he has managed since August
1997. He is 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.
Janus Equity Funds prospectus 51
<PAGE>
DAVID C. DECKER
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Special Situations Fund and Janus Strategic Value Fund,
both of 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. 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 is a Chartered Financial Analyst.
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. Mr. Goff is a
Chartered Financial Analyst.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and co-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. Ms. Hayes is a Chartered Financial
Analyst.
52 Janus Equity Funds prospectus
<PAGE>
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 is a Chartered Financial Analyst.
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. Mr. Malley is a Chartered Financial Analyst.
KAREN L. REIDY
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Balanced Fund and Janus Equity Income Fund. She is also an
assistant portfolio manager of Janus Fund. Prior to
joining Janus Capital in 1995, she worked for Price
Waterhouse as a manager in both the Mergers and
Acquisitions and Audit business units. In this capacity,
Ms. Reidy performed due diligence work for corporate
clients and oversaw audit engagements. She received an
undergraduate degree in Accounting from the University of
Colorado in 1989 and passed the CPA exam in 1992. She is a
Chartered Financial Analyst.
Janus Equity Funds prospectus 53
<PAGE>
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of Janus
Fund. Mr. Rollins served as Executive Vice President and
portfolio manager of Janus Balanced Fund from January 1996
through December 1999, Executive Vice President and
portfolio manager of Janus Equity Income Fund from June
1996 through December 1999 and an assistant portfolio
manager of Janus Fund from January 1994 through December
1999. 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 is a Chartered Financial Analyst.
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. Ms. Young is a Chartered Financial Analyst.
54 Janus Equity Funds prospectus
<PAGE>
ASSISTANT PORTFOLIO MANAGERS
MATTHEW A. ANKRUM
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Janus Enterprise
Fund. Mr. Ankrum joined Janus Capital as an intern in June
1996, and became an equity research analyst in August
1997. Prior to joining Janus, Mr. Ankrum worked as a
corporate finance analyst at William Blair and Company
from 1993-1995. He was also a fixed-income research
analyst at Conseco Capital Management. Mr. Ankrum has an
undergraduate degree in Business Administration from the
University of Wisconsin and a Master of Business
Administration from the University of Chicago. Mr. Ankrum
is a Chartered Financial Analyst.
MIKE DUGAS
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Janus Mercury Fund.
Prior to joining Janus in 1993, Mr. Dugas was an Audit
Senior with Price Waterhouse for three years. Mr. Dugas
has an undergraduate degree in Spanish from Louisiana
State University and a Master's degree in professional
accounting from the University of Texas.
RON SACHS
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Janus Enterprise
Fund. Mr. Sachs joined Janus Capital in 1996 as a research
analyst. Prior to coming to Janus, he worked as a
consultant for Bain & Company and as an attorney for
Wilkie, Farr & Gallagher. Mr. Sachs graduated from
Princeton cum laude with an undergraduate degree in
Economics. He obtained his law degree from the University
of Michigan. Mr. Sachs is a Chartered Financial Analyst.
Janus Equity Funds prospectus 55
<PAGE>
JOHN H. SCHREIBER
- --------------------------------------------------------------------------------
is an assistant portfolio manager of Janus Fund. Mr.
Schreiber joined Janus Capital in 1997 as an equity
research analyst. Prior to joining Janus Capital, he was
an equity analyst with Fidelity Investments. Mr. Schreiber
holds a Bachelor of Science degree in Mechanical
Engineering from the University of Washington and a Master
of Business Administration from Harvard University. He is
a Chartered Financial Analyst.
56 Janus Equity Funds prospectus
<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 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
Janus Equity Funds prospectus 57
<PAGE>
DISTRIBUTION OF FUNDS
The Funds are distributed by Janus Distributors, Inc., a member
of the National Association of Securities Dealers, Inc. ("NASD").
To obtain information about NASD member firms and their
associated persons, you may contact NASD Regulation, Inc. at
www.nasdr.com, or the Public Disclosure Hotline at 800-289-9999.
An investor brochure containing information describing the Public
Disclosure Program is available from NASD Regulation, Inc.
58 Janus Equity Funds prospectus
<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>
Janus Growth and Income Normally declared Normally declared
Fund, Janus Balanced Fund and paid in March, and paid in
and Janus Equity Income Fund June, September and December
December
----------------------------------------------------------------------
All other Equity Funds Normally declared Normally declared
and paid in and paid in
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
Janus Equity Funds prospectus 59
<PAGE>
"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.
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 36 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.
60 Janus Equity Funds prospectus
<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.
Janus Equity Funds prospectus 61
<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.
62 Janus Equity Funds prospectus
<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 STRATEGIC VALUE
FUND BECAUSE THE FUND HAD NOT COMMENCED OPERATIONS AS OF OCTOBER
31, 1999.
Janus Equity Funds prospectus 63
<PAGE>
<TABLE>
<CAPTION>
JANUS FUND
- ---------------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $27.97 $29.36 $26.65 $23.37 $19.62
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- (.02) 0.15 0.31 0.16
3. Net gains or (losses) on securities
(both realized and unrealized) 15.63 3.70 5.69 4.23 3.99
4. Total from investment operations 15.63 3.68 5.84 4.54 4.15
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- (0.23) (0.21) (0.13) (0.01)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) (0.82) (4.84) (2.92) (1.13) (0.39)
8. Total distributions (0.82) (5.07) (3.13) (1.26) (0.40)
9. NET ASSET VALUE, END OF PERIOD $42.78 $27.97 $29.36 $26.65 $23.37
10. Total return 56.75% 15.12% 24.18% 20.31% 21.62%
11. Net assets, end of period (in millions) $35,835 $20,721 $19,029 $15,313 $11,963
12. Average net assets for the period (in
millions) $28,993 $20,777 $17,515 $13,753 $10,560
13. Ratio of gross expenses to average net
assets 0.85% 0.87% 0.87% 0.86% 0.87%
14. Ratio of net expenses to average net
assets 0.84% 0.86% 0.86% 0.85% 0.86%
15. Ratio of net investment income/(loss) to
average net assets (0.14%) -- 0.85% 0.91% 1.25%
16. Portfolio turnover rate 63% 70% 132% 104% 118%
- --------------------------------------------------------------------------------------------------
</TABLE>
64 Janus Equity Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS ENTERPRISE FUND
- -------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $32.33 $30.86 $31.19 $27.14 $24.43
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- -- -- 0.52
3. Net gains or (losses) on securities (both
realized and unrealized) 30.61 3.43 0.95 5.85 3.09
4. Total from investment operations 30.61 3.43 0.95 5.85 3.61
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- -- -- (0.52)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) (4.30) (1.96) (1.28) (1.80) (0.38)
8. Total distributions (4.30) (1.96) (1.28) (1.80) (0.90)
9. NET ASSET VALUE, END OF PERIOD $58.64 $32.33 $30.86 $31.19 $27.14
10. Total return 104.09% 11.79% 3.31% 22.43% 15.46%
11. Net assets, end of period (in millions) $2,330 $559 $552 $732 $459
12. Average net assets for the period (in
millions) $1,127 $551 $614 $596 $408
13. Ratio of gross expenses to average net
assets 0.98% 1.08% 1.07% 1.14% 1.26%
14. Ratio of net expenses to average net
assets 0.95% 1.06% 1.04% 1.12% 1.23%
15. Ratio of net investment income/(loss) to
average net assets (0.67%) (0.67%) (0.61%) (0.78%) 0.02%
16. Portfolio turnover rate 98% 134% 111% 93% 194%
- -------------------------------------------------------------------------------------------
</TABLE>
Janus Equity Funds prospectus 65
<PAGE>
<TABLE>
<CAPTION>
JANUS MERCURY FUND
- -------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $20.77 $18.65 $18.20 $17.38 $14.12
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- (0.01) (0.01) 0.14 0.16
3. Net gains or (losses) on securities (both
realized and unrealized) 16.89 4.07 2.82 2.74 3.37
4. Total from investment operations 16.89 4.06 2.81 2.88 3.53
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) (2.01) (1.90) (2.28) (2.06) (0.11)
8. Total distributions (2.01) (1.94) (2.36) (2.06) (0.27)
9. NET ASSET VALUE, END OF PERIOD $35.65 $20.77 $18.65 $18.20 $17.38
10. Total return 86.02% 24.75% 17.07% 18.18% 25.53%
11. Net assets, end of period (in millions) $9,060 $2,368 $1,971 $2,002 $1,521
12. Average net assets for the period (in
millions) $5,258 $2,103 $2,046 $1,839 $1,116
13. Ratio of gross expenses to average net
assets 0.93% 0.97% 0.98% 1.02% 1.14%
14. Ratio of net expenses to average net
assets 0.91% 0.94% 0.96% 1.00% 1.12%
15. Ratio of net investment income/(loss) to
average net assets (0.39%) (0.33%) 0.21% 0.45% 0.50%
16. Portfolio turnover rate 89% 105% 157% 177% 201%
- -------------------------------------------------------------------------------------------
</TABLE>
66 Janus Equity Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS OLYMPUS FUND
- -----------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $21.70 $18.41 $14.86 $12.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.02 -- 0.04 0.13
3. Net gains or (losses) on securities (both
realized and unrealized) 19.15 4.05 3.64 2.73
4. Total from investment operations 19.17 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 $40.87 $21.70 $18.41 $14.86
10. Total return* 88.34% 23.10% 24.98% 23.83%
11. Net assets, end of period (in millions) $3,887 $947 $616 $432
12. Average net assets for the period (in
millions) $2,269 $774 $517 $276
13. Ratio of gross expenses to average net
assets** 0.95% 1.01% 1.06% 1.17%
14. Ratio of net expenses to average net
assets** 0.93% 0.98% 1.03% 1.15%
15. Ratio of net investment income/(loss) to
average net assets** 0.06% (0.21%) 0.26% 1.64%
16. Portfolio turnover rate** 91% 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.
Janus Equity Funds prospectus 67
<PAGE>
<TABLE>
<CAPTION>
JANUS SPECIAL SITUATIONS FUND
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $14.57 $14.08 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- -- --
3. Net gains or (losses) on securities (both
realized and unrealized) 8.22 1.15 4.08
4. Total from investment operations 8.22 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) (0.04) (0.66) --
8. Total distributions (0.04) (0.66) --
9. NET ASSET VALUE, END OF PERIOD $22.75 $14.57 $14.08
10. Total return* 56.54% 8.49% 40.80%
11. Net assets, end of period (in millions) $1,197 $786 $334
12. Average net assets for the period (in millions) $1,001 $716 $168
13. Ratio of gross expenses to average net assets** 1.00% 1.08% 1.20%
14. Ratio of net expenses to average net assets** 0.98% 1.05% 1.18%
15. Ratio of net investment income/(loss) to
average net assets** (0.76%) (0.49%) (0.08%)
16. Portfolio turnover rate** 104% 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.
68 Janus Equity Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $26.45 $25.07 $20.05 $18.13 $14.69
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.26 0.08 0.01 0.16 0.11
3. Net gains or (losses) on securities
(both realized and unrealized) 12.27 3.72 6.98 4.01 3.43
4. Total from investment operations 12.53 3.80 6.99 4.17 3.54
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.27) (0.04) (0.11) (0.08) (0.10)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (1.87) (2.38) (1.86) (2.17) --
8. Total distributions (2.14) (2.42) (1.97) (2.25) (0.10)
9. NET ASSET VALUE, END OF PERIOD $36.84 $26.45 $25.07 $20.05 $18.13
10. Total return 49.59% 16.73% 37.78% 25.56% 24.20%
11. Net assets, end of period (in
millions) $5,837 $2,819 $1,889 $1,033 $583
12. Average net assets for the period
(in millions) $4,375 $2,479 $1,416 $773 $498
13. Ratio of gross expenses to average
net assets 0.92% 0.96% 0.98% 1.05% 1.19%
14. Ratio of net expenses to average net
assets 0.90% 0.94% 0.96% 1.03% 1.17%
15. Ratio of net investment
income/(loss) to average net assets 0.37% 0.33% 0.30% 0.70% 1.11%
16. Portfolio turnover rate 43% 95% 127% 153% 195%
- ------------------------------------------------------------------------------------------
</TABLE>
Janus Equity Funds prospectus 69
<PAGE>
<TABLE>
<CAPTION>
JANUS BALANCED FUND
- ------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $17.22 $16.73 $15.20 $13.72 $12.17
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.42 0.33 0.36 0.33 0.61
3. Net gains or (losses) on securities
(both realized and unrealized) 4.69 2.00 2.88 2.22 1.52
4. Total from investment operations 5.11 2.33 3.24 2.55 2.13
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.43) (0.35) (0.36) (0.26) (0.58)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital gains) (0.11) (1.49) (1.35) (0.81) --
8. Total distributions (0.54) (1.84) (1.71) (1.07) (0.58)
9. NET ASSET VALUE, END OF PERIOD $21.79 $17.22 $16.73 $15.20 $13.72
10. Total return 29.89% 15.48% 23.38% 19.39% 18.26%
11. Net assets, end of period (in
millions) $2,930 $830 $360 $207 $125
12. Average net assets for the period
(in millions) $1,954 $537 $283 $159 $107
13. Ratio of gross expenses to average
net assets 0.92% 1.03% 1.12% 1.23% 1.35%
14. Ratio of net expenses to average net
assets 0.91% 1.01% 1.10% 1.21% 1.32%
15. Ratio of net investment
income/(loss) to average net assets 2.37% 2.34% 2.63% 2.35% 2.52%
16. Portfolio turnover rate 64% 73% 139% 151% 185%
- ------------------------------------------------------------------------------------------
</TABLE>
70 Janus Equity Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS EQUITY INCOME FUND
- ---------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $15.59 $13.98 $11.29 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.14 0.05 0.09 0.07
3. Net gains or (losses) on securities (both
realized and unrealized) 7.17 2.47 3.11 1.25
4. Total from investment operations 7.31 2.52 3.20 1.32
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.15) (0.03) (0.12) (0.03)
6. Dividends (in excess of net investment
income) -- -- -- --
7. Distributions (from capital gains) (0.18) (0.88) (0.39) --
8. Total distributions (0.33) (0.91) (0.51) (0.03)
9. NET ASSET VALUE, END OF PERIOD $22.57 $15.59 $13.98 $11.29
10. Total return* 47.22% 19.21% 29.46% 13.20%
11. Net assets, end of period (in millions) $781 $201 $74 $30
12. Average net assets for the period (in
millions) $571 $134 $46 $21
13. Ratio of gross expenses to average net
assets** 1.02% 1.21% 1.48% 1.79%
14. Ratio of net expenses to average net
assets** 1.01% 1.18% 1.45% 1.71%
15. Ratio of net investment income/(loss) to
average net assets** 0.81% 0.41% 0.62% 3.09%
16. Portfolio turnover rate** 81% 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.
Janus Equity Funds prospectus 71
<PAGE>
<TABLE>
<CAPTION>
JANUS WORLDWIDE FUND
- --------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $41.52 $40.05 $34.60 $27.65 $27.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.02 1.26 (0.08) 0.49 0.81
3. Net gains or (losses) on securities (both
realized and unrealized) 17.51 3.01 7.73 7.79 1.39
4. Total from investment operations 17.53 4.27 7.65 8.28 2.20
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.18) (1.35) (0.15) (0.26) (0.54)
6. Dividends (in excess of net investment
income) -- -- -- -- --
7. Distributions (from capital gains) -- (1.45) (2.05) (1.07) (1.01)
8. Total distributions (0.18) (2.80) (2.20) (1.33) (1.55)
9. NET ASSET VALUE, END OF PERIOD $58.87 $41.52 $40.05 $34.60 $27.65
10. Total return 42.33% 11.40% 23.34% 31.00% 8.89%
11. Net assets, end of period (in millions) $24,091 $13,932 $10,358 $4,467 $1,804
12. Average net assets for the period (in
millions) $18,893 $13,078 $7,784 $2,953 $1,622
13. Ratio of gross expenses to average net
assets 0.89% 0.92% 0.97% 1.02% 1.24%
14. Ratio of net expenses to average net
assets 0.88% 0.90% 0.95% 1.01% 1.23%
15. Ratio of net investment income/(loss) to
average net assets 0.07% 0.47% 0.65% 0.73% 0.99%
16. Portfolio turnover rate 68% 86% 79% 80% 142%
- --------------------------------------------------------------------------------------------
</TABLE>
72 Janus Equity Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS GLOBAL LIFE SCIENCES FUND
- -----------------------------------------------------------------------------
Period ending
October 31st
1999(1)
<S> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income --
3. Net gains or (losses) on securities (both realized and
unrealized) 1.97
4. Total from investment operations 1.97
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) --
6. Dividends (in excess of net investment income) --
7. Distributions (from capital gains) --
8. Total distributions --
9. NET ASSET VALUE, END OF PERIOD $11.97
10. Total return* 19.70%
11. Net assets, end of period (in millions) $344
12. Average net assets for the period (in millions) $228
13. Ratio of gross expenses to average net assets** 1.21%
14. Ratio of net expenses to average net assets** 1.19%
15. Ratio of net investment income/(loss) to average net
assets** (0.41%)
16. Portfolio turnover rate** 235%
- -----------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 31, 1998 (inception) to October 31, 1999.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Janus Equity Funds prospectus 73
<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
74 Janus Equity Funds prospectus
<PAGE>
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 BONDS are bonds 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 bonds 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
Janus Equity Funds prospectus 75
<PAGE>
various elections permitted by the tax laws. These elections
could require that the Funds 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 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
76 Janus Equity Funds prospectus
<PAGE>
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 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
Janus Equity Funds prospectus 77
<PAGE>
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.
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.
78 Janus Equity Funds prospectus
<PAGE>
This page intentionally left blank
79
<PAGE>
This page intentionally left blank
80
<PAGE>
This page intentionally left blank
81
<PAGE>
This page intentionally left blank
82
<PAGE>
This page intentionally left blank
83
<PAGE>
This page intentionally left blank
84
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4212
<PAGE>
[JANUS LOGO]
JANUS INCOME FUNDS
PROSPECTUS
JANUS FLEXIBLE INCOME FUND
JANUS FEDERAL TAX-EXEMPT FUND
JANUS HIGH-YIELD FUND
JANUS SHORT-TERM BOND FUND
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUARY 31, 2000
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>
- --------------------------------------------------------------------------------
<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
To purchase shares........................... 36
To exchange shares........................... 37
To redeem shares............................. 37
Shareholder services and account policies.... 42
MANAGEMENT OF THE FUNDS
Investment adviser........................... 46
Investment personnel......................... 47
OTHER INFORMATION............... ............... 51
DISTRIBUTIONS AND TAXES
Distributions................................ 53
Taxes........................................ 56
FINANCIAL HIGHLIGHTS.............. ............. 58
GLOSSARY
Glossary of investment terms................. 66
RATING CATEGORIES
Explanation of rating categories............. 74
</TABLE>
Janus Income Funds prospectus 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 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 HIGH-YIELD FUND seeks to obtain high current income.
Capital appreciation is a secondary objective when
consistent with its primary objective.
- 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,
2 Janus Income Funds prospectus
<PAGE>
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 bonds, so these bonds may be a big part
of the portfolio.
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 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 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 bonds. 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.
Janus Income Funds prospectus 3
<PAGE>
At times, JANUS FEDERAL TAX-EXEMPT FUND may invest more than 25%
of its assets in tax-exempt securities related in such a way 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
bonds, 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 bonds. Junk bonds may be sensitive
to economic changes, political changes, or adverse developments
specific to the company that issued the bond. These bonds
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.
Each of the Fixed-Income Funds may invest without limit in
foreign debt and equity securities.
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 prospectus
<PAGE>
JANUS FLEXIBLE INCOME FUND
A BAR CHART showing Annual Total Returns for Janus Flexible
Income Fund from 1990 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(4.62%) 25.98% 11.85% 15.70% (2.92%) 21.15% 6.88% 11.43% 8.84% 0.46%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (7/7/87)
<S> <C> <C> <C> <C>
Janus Flexible Income Fund 0.46 % 9.53% 9.06% 8.65%
Lehman Brothers Gov't/Corp
Bond Index* (2.15)% 7.61% 7.65% 8.08%
---------------------------------------------------
</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 FEDERAL TAX-EXEMPT FUND
A BAR CHART showing Annual Total Returns for Janus Federal
Tax-Exempt Fund from 1994 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C>
(7.77%) 15.84% 4.71% 8.98% 5.31% (4.39%)
1994 1995 1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/3/93)
<S> <C> <C> <C>
Janus Federal Tax-Exempt Fund (4.39)% 5.88% 4.28%
Lehman Brothers Municipal Bond
Index* (2.06)% 6.91% 5.39%
----------------------------------------
</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 Income Funds prospectus 5
<PAGE>
JANUS HIGH-YIELD FUND
A BAR CHART showing Annual Total Returns for Janus High-Yield
Fund from 1996 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
23.99% 15.47% 0.97% 5.54%
1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year (12/29/95)
<S> <C> <C>
Janus High-Yield Fund 5.54% 11.11%
Lehman Brothers High-Yield Bond Index+ 2.39% 6.98%
----------------------------
</TABLE>
+ Lehman Brothers High-Yield Bond Index is composed of
fixed-rate, publicly issued, noninvestment grade debt.
JANUS SHORT-TERM BOND FUND
A BAR CHART showing Annual Total Returns for Janus Short-Term
Bond Fund from 1993 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6.18% 0.35% 7.95% 6.19% 6.61% 6.77% 2.91%
1993 1994 1995 1996 1997 1998 1999
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%)
</TABLE>
Average annual total return for periods ending 12/31/99
-------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (9/1/92)
<S> <C> <C> <C>
Janus Short-Term Bond Fund 2.91% 6.06% 5.07%
Lehman Brothers Gov't/Corp 1-3 Year
Bond Index+ 3.15% 6.55% 5.44%
--------------------------------------
</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 prospectus
<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 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
Janus Income Funds prospectus 7
<PAGE>
federally taxable to the extent the portfolio manager cannot
locate investment opportunities with desirable risk/reward
characteristics.
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.
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 prospectus
<PAGE>
JANUS MONEY MARKET FUND - INVESTOR SHARES
A BAR CHART showing Annual Total Returns for Janus Money Market
Fund - Investor Shares from 1996 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
5.06% 5.25% 5.20% 4.77%
1996 1997 1998 1999
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: 1st-1999 1.07%
</TABLE>
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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
3.18% 3.22% 3.20% 2.89%
1996 1997 1998 1999
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-1999 0.61%
</TABLE>
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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
4.97% 5.11% 5.06% 4.66%
1996 1997 1998 1999
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-1999 1.04%
</TABLE>
The 7-day yield on December 31, 1999 was 4.94% for Janus Money
Market Fund - Investor Shares, 2.99% for Janus Tax-Exempt Money
Market Fund - Investor Shares; and 4.83% for Janus Government
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.
Janus Income Funds prospectus 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 prospectus
<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, 1999.
<TABLE>
<CAPTION>
Janus
Flexible Income Fund
<S> <C>
Management Fee 0.57%
Other Expenses 0.25%
Total Annual Fund Operating Expenses 0.82%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Janus Federal Janus Short-Term Janus
Tax-Exempt Fund Bond Fund High-Yield Fund
<S> <C> <C> <C>
Management Fee 0.60% 0.65% 0.75%
Other Expenses 0.41% 0.38% 0.30%
Total Annual Fund Operating
Expenses Without Waivers* 1.01% 1.03% 1.05%
Total Waivers (0.35)% (0.37)% (0.03)%
Total Annual Fund Operating
Expenses With Waivers* 0.66% 0.66% 1.02%
</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 (0.10)% (0.10)% (0.10)%
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 $ 84 $262 $455 $1,014
Janus Federal Tax-Exempt Fund $103 $322 $558 $1,236
Janus High-Yield Fund $107 $334 $579 $1,283
Janus Short-Term Bond Fund $105 $328 $569 $1,259
Janus Money Market Fund - Investor
Shares $ 72 $224 $390 $ 871
Janus Tax-Exempt Money Market Fund -
Investor Shares $ 72 $224 $390 $ 871
Janus Government Money Market Fund -
Investor Shares $ 72 $224 $390 $ 871
</TABLE>
Janus Income Funds prospectus 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 bonds, 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.
12 Janus Income Funds prospectus
<PAGE>
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 HIGH-YIELD FUND
Janus High-Yield Fund seeks to obtain high current income.
Capital appreciation is a secondary objective when consistent
with 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 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 bonds. 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.
Janus Income Funds prospectus 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 prospectus
<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 BOND?
A high-yield/high-risk bond (also called a "junk" bond) is a bond
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
Janus Income Funds prospectus 15
<PAGE>
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 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 and other fixed-income securities.
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% of assets for Janus Federal Tax-Exempt Fund and
Janus Short-Term Bond Fund)
- options, futures, forwards, swaps 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 prospectus
<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-
Janus Income Funds prospectus 17
<PAGE>
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.
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 prospectus
<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 Federal Tax-Exempt Fund Municipal Securities Low High
Janus High-Yield Fund Corporate Bonds Highest Moderate
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.
Janus Income Funds prospectus 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 74 for a description of rating
categories.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated
below investment grade by the primary rating agencies such as
Standard & Poor's and Moody's. The value of lower quality bonds
generally is more dependent on credit risk, or the ability of the
issuer to meet interest and principal payments, than investment
grade bonds. Issuers of high-yield/high-risk bonds 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 bonds, 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 74 for a description of rating categories.
5. HOW DO THE FUNDS TRY TO REDUCE RISK?
The Funds may use futures, options, swaps 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 prospectus
<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 considers what impact, if any, the Year 2000 transition
has had on the company's operations when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
transition status 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.
Janus Income Funds prospectus 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 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 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.
22 Janus Income Funds prospectus
<PAGE>
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.
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
Janus Income Funds prospectus 23
<PAGE>
DEBT OBLIGATIONS
The Fund may invest in U.S. dollar denominated debt obligations.
Debt obligations include:
- commercial paper
- notes and bonds
- 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
24 Janus Income Funds prospectus
<PAGE>
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.
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%
Janus Income Funds prospectus 25
<PAGE>
of its assets in industrial development bonds or participation
interests therein.
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.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
26 Janus Income Funds prospectus
<PAGE>
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.
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
Janus Income Funds prospectus 27
<PAGE>
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.
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 prospectus
<PAGE>
This page intentionally left blank
Janus Income Funds prospectus 29
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS Income FUNDS
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
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
32 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA, 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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
34 Shareholder's manual
<PAGE>
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.
PLEASE REFER TO THE CHART ON THE FOLLOWING PAGES FOR INFORMATION
ON OPENING AN ACCOUNT AND CONDUCTING BUSINESS WITH JANUS. WITH
CERTAIN LIMITED EXCEPTIONS, THE FUNDS ARE AVAILABLE ONLY TO U.S.
CITIZENS OR RESIDENTS. WHEN YOU PURCHASE, EXCHANGE, OR REDEEM
SHARES, YOUR REQUEST WILL BE PROCESSED AT THE NEXT NAV CALCULATED
AFTER YOUR ORDER IS RECEIVED AND ACCEPTED.
Shareholder's manual 35
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
36 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM SHARES
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 40. Also for written requests on page 40.
refer to the exchange policies - Please see page 39 for information
listed on page 38 for more infor- about payment of redemption
mation. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 37
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Funds reserve the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
38 Shareholder's manual
<PAGE>
- - The Funds reserve the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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
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.
Shareholder's manual 39
<PAGE>
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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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-
40 Shareholder's manual
<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 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, 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
Shareholder's manual 41
<PAGE>
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 Shares' 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 SERVICES AND ACCOUNT POLICIES
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
until the 15-day hold period has passed. All checks written on
the account must be signed by all account holders unless
otherwise
42 Shareholder's manual
<PAGE>
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 Processing Organization to
carry out its obligations to its customers. Certain Processing
Organizations may receive compen-
Shareholder's manual 43
<PAGE>
sation 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.
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.
44 Shareholder's manual
<PAGE>
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 the shareholder(s) of record.
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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our Web
site to discontinue delivery of your paper statements. 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 requests.
Shareholder's manual 45
<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.)
The Funds pay Janus Capital a management fee which is calculated
daily and paid monthly. Each Funds' advisory agreement spells out
the management fee and other expenses that the Funds must pay.
46 Janus Income Funds prospectus
<PAGE>
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. For the most recent fiscal year,
each Fund paid Janus Capital the following management fees (net
of any fee waivers) based upon each Fund's average net assets:
<TABLE>
<CAPTION>
Management Fee
(for Fiscal Year Ended
October 31, 1999)(1)
<S> <C>
Janus Flexible Income Fund 0.57%
Janus Federal Tax-Exempt Fund 0.25%
Janus Short-Term Bond Fund 0.28%
Janus High-Yield Fund 0.72%
Janus Money Market Fund - Investor Shares 0.10%
Janus Tax-Exempt Money Market Fund - Investor
Shares 0.10%
Janus Government Money Market Fund - Investor
Shares 0.10%
</TABLE>
(1) For each Fund except the Janus Flexible Income Fund, Janus
Capital has agreed to waive a portion of its management fee.
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 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 is a Chartered Financial Analyst.
Janus Income Funds prospectus 47
<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 is a Chartered Financial
Analyst.
In January 1997, Mr. Speaker settled an SEC administrative
action involving two personal trades made by him in
January of 1993. Without admitting or denying the
allegations, Mr. Speaker agreed to civil money penalty,
disgorgement, and interest payments totaling $37,199 and
to a 90-day suspension which ended on April 25, 1997.
48 Janus Income Funds prospectus
<PAGE>
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is Executive Vice President and 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 is a Chartered Financial Analyst.
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
KATHERINE J. BRADDOCK
- --------------------------------------------------------------------------------
is assistant portfolio manager of Janus Short-Term Bond
Fund. Prior to joining Janus' investment staff in 1992,
she worked at Eaton Vance on the Treasurer's staff. Kate
earned a bachelor's degree in economics from the
University of Vermont, and has six years of professional
investment experience.
Janus Income Funds prospectus 49
<PAGE>
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.
50 Janus Income Funds prospectus
<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 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and
Janus Income Funds prospectus 51
<PAGE>
economies. Nonetheless, Janus Capital will continue to monitor
the effect of the Year 2000 transition, and there can be no
absolute assurance that Year 2000 issues will not in the future
adversely affect the Funds' or Janus Capital's operations.
DISTRIBUTION OF FUNDS
The Funds are distributed by Janus Distributors, Inc., a member
of the National Association of Securities Dealers, Inc. ("NASD").
To obtain information about NASD member firms and their
associated persons, you may contact NASD Regulation, Inc. at
www.nasdr.com or the Public Disclosure Hotline at 800-289-9999.
An investor brochure containing information describing the Public
Disclosure Program is available from NASD Regulation, Inc.
52 Janus Income Funds prospectus
<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.
Janus Income Funds prospectus 53
<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.
54 Janus Income Funds prospectus
<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.
Janus Income Funds prospectus 55
<PAGE>
4. REDIRECT OPTION. You may direct your dividends or capital
gains distributions (dividends in the case of the Money Market
Funds) to purchase shares of another Janus fund.
The Funds reserve the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that
remain outstanding for six months in shares of the applicable
Fund at the NAV next computed after the check is cancelled.
Subsequent distributions may also be reinvested.
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 distributions
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.
56 Janus Income Funds prospectus
<PAGE>
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 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.
Janus Income Funds prospectus 57
<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.
58 Janus Income Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS FLEXIBLE INCOME FUND
- ---------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $9.91 $10.00 $9.65 $9.55 $8.96
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.63 0.67 0.69 0.73 0.72
3. Net gains or (losses) on securities
(both realized and unrealized) (0.45) 0.12 0.37 0.10 0.59
4. Total from investment operations 0.18 0.79 1.06 0.83 1.31
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.63) (0.67) (0.69) (0.73) (0.72)
6. Distributions (from capital gains) (0.11) (0.21) (0.02) -- --
7. Total distributions (0.74) (0.88) (0.71) (0.73) (0.72)
8. NET ASSET VALUE, END OF PERIOD $9.35 $9.91 $10.00 $9.65 $9.55
9. Total return 1.75% 8.14% 11.48% 9.01% 15.35%
10. Net assets, end of period (in
millions) $1,279 $1,104 $727 $604 $580
11. Average net assets for the period (in
millions) $1,266 $ 893 $656 $604 $450
12. Ratio of gross expenses to average net
assets 0.82% 0.84% 0.87% 0.88% 0.96%
13. Ratio of net expenses to average net
assets 0.81% 0.82% 0.86% 0.87% 0.96%
14. Ratio of net investment income to
average net assets 6.54% 6.68% 7.10% 7.60% 7.91%
15. Portfolio turnover rate 119% 148% 207% 214% 250%
- ---------------------------------------------------------------------------------------
</TABLE>
Janus Income Funds prospectus 59
<PAGE>
<TABLE>
<CAPTION>
JANUS FEDERAL TAX-EXEMPT FUND
- ---------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $7.27 $7.09 $6.92 $6.88 $6.45
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.34 0.34 0.35 0.36 0.36
3. Net gains or (losses) on securities
(both realized and unrealized) (0.61) 0.18 0.17 0.04 0.43
4. Total from investment operations (0.27) 0.52 0.52 0.40 0.79
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.34) (0.34) (0.35) (0.36) (0.36)
6. Distributions (from capital gains) -- -- -- -- --
7. Total distributions (0.34) (0.34) (0.35) (0.36) (0.36)
8. NET ASSET VALUE, END OF PERIOD $6.66 $7.27 $7.09 $6.92 $6.88
9. Total return (4.04%) 7.65% 7.72% 5.94% 12.60%
10. Net assets, end of period (in
millions) $96 $92 $62 $45 $33
11. Average net assets for the period (in
millions) $102 $74 $54 $36 $29
12. Ratio of gross expenses to average net
assets 0.66%(1) 0.67%(1) 0.66%(1) 0.68%(1) 0.70%(1)
13. Ratio of net expenses to average net
assets 0.65% 0.65% 0.65% 0.65% 0.65%
14. Ratio of net investment income to
average net assets 4.79% 4.76% 5.00% 5.18% 5.43%
15. Portfolio turnover rate 62% 227% 304% 225% 164%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 1.01% in 1999, 0.99% in 1998; 1.11% in 1997; 1.14% in 1996;
and 1.31% in 1995 before waiver of certain Fund expenses.
60 Janus Income Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS HIGH-YIELD FUND
- -------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996(1)
<S> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $10.25 $11.83 $11.12 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.89 0.90 0.97 0.80
3. Net gains or (losses) on securities (both
realized and unrealized) (0.22) (1.02) 0.82 1.12
4. Total from investment operations 0.67 (0.12) 1.79 1.92
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.89) (0.90) (0.97) (0.80)
6. Distributions (from capital gains) -- (0.56) (0.11) --
7. Total distributions (0.89) (1.46) (1.08) (0.80)
8. NET ASSET VALUE, END OF PERIOD $10.03 $10.25 $11.83 $11.12
9. Total return* 6.34% (1.45%) 16.94% 19.71%
10. Net assets, end of period (in millions) $264 $268 $301 $211
11. Average net assets for the period (in
millions) $297 $381 $266 $ 88
12. Ratio of gross expenses to average net
assets** 1.02%(2) 0.99%(2) 1.03%(2) 1.01%(2)
13. Ratio of net expenses to average net
assets** 1.00% 0.96% 1.00% 1.00%
14. Ratio of net investment income to average
net assets** 8.48% 7.85% 8.45% 9.00%
15. Portfolio turnover rate** 310% 336% 404% 324%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 29, 1995 (inception) to October 31, 1996.
(2) The ratio was 1.05% in 1999, N/A in 1998, 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.
Janus Income Funds prospectus 61
<PAGE>
<TABLE>
<CAPTION>
JANUS SHORT-TERM BOND FUND
- ---------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $2.91 $2.90 $2.86 $2.84 $2.87
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.16 0.17 0.17 0.16 0.18
3. Net gains or (losses) on securities
(both realized and unrealized) (0.08) 0.01 0.04 0.02 (0.03)
4. Total from investment operations 0.08 0.18 0.21 0.18 0.15
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.16) (0.17) (0.17) (0.16) (0.18)
6. Distributions (from capital gains) -- -- -- -- --
7. Total distributions (0.16) (0.17) (0.17) (0.16) (0.18)
8. NET ASSET VALUE, END OF PERIOD $2.83 $2.91 $2.90 $2.86 $2.84
9. Total return 2.82% 6.49% 7.70% 6.49% 5.55%
10. Net assets, end of period (in
millions) $139 $141 $58 $41 $48
11. Average net assets for the period (in
millions) $136 $90 $48 $42 $47
12. Ratio of gross expenses to average net
assets 0.66%(1) 0.67%(1) 0.67%(1) 0.67%(1) 0.66%(1)
13. Ratio of net expenses to average net
assets 0.65% 0.65% 0.65% 0.65% 0.65%
14. Ratio of net investment income to
average net assets 5.59% 5.91% 6.03% 5.57% 6.67%
15. Portfolio turnover rate 101% 101% 133% 486% 337%
- ---------------------------------------------------------------------------------------
</TABLE>
(1) The ratio was 1.03% in 1999, 1.06% in 1998; 1.20% in 1997; 1.23% in 1996;
and 1.23% in 1995 before waiver of certain Fund expenses.
62 Janus Income Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS MONEY MARKET FUND - INVESTOR SHARES
- ----------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05 0.05 0.04
3. Total from investment operations 0.05 0.05 0.05 0.05 0.04
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment
income) (0.05) (0.05) (0.05) (0.05) (0.04)
5. Total dividends and distributions (0.05) (0.05) (0.05) (0.05) (0.04)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
7. Total return* 4.69% 5.25% 5.23% 5.13% 3.95%
8. Net assets, end of period (in
millions) $2,309 $1,492 $1,033 $774 $643
9. Average net assets for the period
(in millions) $1,809 $1,124 $883 $676 $461
10. Ratio of expenses to average net
assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
11. Ratio of net investment income to
average net assets** 4.61% 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 of
certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Janus Income Funds prospectus 63
<PAGE>
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - INVESTOR SHARES
- -----------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.03 0.03 0.03 0.03 0.02
3. Total from investment operations 0.03 0.03 0.03 0.03 0.02
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment income) (0.03) (0.03) (0.03) (0.03) (0.02)
5. Total dividends and distributions (0.03) (0.03) (0.03) (0.03) (0.02)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
7. Total return* 2.83% 3.23% 3.20% 3.27% 2.40%
8. Net assets, end of period (in millions) $147 $105 $81 $75 $67
9. Average net assets for the period (in
millions) $123 $ 91 $76 $69 $57
10. Ratio of expenses to average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
11. Ratio of net investment income to average
net assets** 2.80% 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 of
certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
64 Janus Income Funds prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND - INVESTOR SHARES
- -----------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.04 0.05 0.05 0.05 0.04
3. Total from investment operations 0.04 0.05 0.05 0.05 0.04
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment income) (0.04) (0.05) (0.05) (0.05) (0.04)
5. Distributions (from capital gains) -- -- -- -- --
6. Total dividends and distributions (0.04) (0.05) (0.05) (0.05) (0.04)
7. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
8. Total return* 4.56% 5.12% 5.11% 5.03% 3.90%
9. Net assets, end of period (in millions) $361 $213 $132 $117 $199
10. Average net assets for the period (in
millions) $231 $151 $113 $112 $88
11. Ratio of expenses to average net assets** 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2) 0.60%(2)
12. Ratio of net investment income to average
net assets** 4.50% 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 of
certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Janus Income Funds prospectus 65
<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.
66 Janus Income Funds prospectus
<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 BONDS are bonds 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-
Janus Income Funds prospectus 67
<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
68 Janus Income Funds prospectus
<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.
Janus Income Funds prospectus 69
<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.
70 Janus Income Funds prospectus
<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
Janus Income Funds prospectus 71
<PAGE>
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.
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).
72 Janus Income Funds prospectus
<PAGE>
INVERSE FLOATERS are debt instruments whose interest rate bears
an inverse relationship to the interest rate on another
instrument or index. For example, upon reset the interest rate
payable on a security may go down when the underlying index has
risen. Certain inverse floaters may have an interest rate reset
mechanism that multiplies the effects of change in the underlying
index. Such mechanism may increase the volatility of the
security's market value.
OPTIONS are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a
fixed date at a predetermined price. The Funds may purchase and
write put and call options on securities, securities indices and
foreign currencies.
Janus Income Funds prospectus 73
<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.
74 Janus Income Funds prospectus
<PAGE>
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>
Janus Income Funds prospectus 75
<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>
76 Janus Income Funds prospectus
<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, 1999, 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 10.0%
AA 8.0%
A 13.0%
BBB 27.0%
BB 7.0%
B 19.0%
CCC 1.0%
CC --
C --
Not Rated 4.0%
Preferred Stock 2.0%
Cash and Options 9.0%
TOTAL 100%
--------------------------------------------------------------------------
</TABLE>
Janus Income Funds prospectus 77
<PAGE>
<TABLE>
<CAPTION>
JANUS HIGH-YIELD FUND
--------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA --
AA --
A --
BBB --
BB 6%
B 65%
CCC 7%
CC --
C --
Not Rated 11%
Preferred Stock 1%
Cash and Options 10%
TOTAL 100%
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
JANUS SHORT-TERM BOND FUND
--------------------------------------------------------------------------
<S> <C>
BONDS-S&P RATING:
AAA --
AA 20%
A 43%
BBB 22%
BB 6%
B 5%
CCC 2%
CC --
C --
Preferred Stock --
Cash and Options 2%
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, 1999.
78 Janus Income Funds prospectus
<PAGE>
This page intentionally left blank
79
<PAGE>
This page intentionally left blank
80
<PAGE>
This page intentionally left blank
81
<PAGE>
This page intentionally left blank
82
<PAGE>
This page intentionally left blank
83
<PAGE>
This page intentionally left blank
84
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4213
<PAGE>
[JANUS LOGO]
JANUS MONEY MARKET
FUNDS
INSTITUTIONAL SHARES
PROSPECTUS
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUARY 31, 2000
Janus Money Market Fund, Janus Tax-Exempt Money Market
Fund, and Janus Government 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 Tax-Exempt Money
Market Fund and Janus Government 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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Money Market Fund...................... 2
Janus Tax-Exempt Money Market Fund........... 2
Janus Government 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.............. ............. 18
OTHER INFORMATION............... ............... 21
SHAREHOLDER'S GUIDE
How to open an account....................... 26
Purchasing shares............................ 27
How to exchange shares....................... 30
How to redeem shares......................... 30
Special shareholder services and other
information.................................. 32
</TABLE>
Janus Money Market Funds - Institutional Shares prospectus 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 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.
JANUS GOVERNMENT MONEY MARKET FUND invests exclusively in
obligations issued and/or guaranteed as to principal and interest
2 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
by the United States government or by its agencies and
instrumentalities and repurchase agreements secured by such
obligations.
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.
Janus Money Market Funds - Institutional Shares prospectus 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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
5.53% 5.72% 5.67% 5.24%
1996 1997 1998 1999
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-1999 1.18%
</TABLE>
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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
3.64% 3.68% 3.65% 3.35%
1996 1997 1998 1999
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-1999 0.72%
</TABLE>
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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C>
5.44% 5.59% 5.53% 5.13%
1996 1997 1998 1999
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-1999 1.15%
</TABLE>
The 7-day yield on December 31, 1999 was 5.42% for Janus Money
Market Fund - Institutional Shares; 3.44% for Janus Tax-Exempt
Money Market Fund - Institutional Shares; and 5.32% for Janus
Government 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 prospectus
<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, 1999.
<TABLE>
<CAPTION>
Janus Money Janus Tax-Exempt Janus Government
Institutional Shares Market Fund Money Market Fund Money Market Fund
<S> <C> <C> <C>
Management Fee 0.20% 0.20% 0.20%
Other Expenses 0.15% 0.15% 0.15%
Total Annual Fund
Operating Expenses
Without Waivers* 0.35% 0.35% 0.35%
Total Waivers (0.20)% (0.20)% (0.20)%
Total Annual Fund
Operating Expenses With
Waivers* 0.15% 0.15% 0.15%
</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 Tax-Exempt Money Market Fund $36 $113 $197 $443
Janus Government Money Market Fund $36 $113 $197 $443
</TABLE>
Janus Money Market Funds - Institutional Shares prospectus 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 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 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.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund seeks maximum current income
to the extent consistent with stability of capital. It pursues
6 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
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.
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 U.S. dollar denominated debt obligations.
Debt obligations include:
- commercial paper
- notes and bonds
Janus Money Market Funds - Institutional Shares prospectus 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 prospectus
<PAGE>
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.
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
Janus Money Market Funds - Institutional Shares prospectus 9
<PAGE>
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.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
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.
10 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
DEMAND FEATURES
Demand features give the Money Market Funds the right to resell
securities at specified periods prior to their maturity dates.
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
Janus Money Market Funds - Institutional Shares prospectus 11
<PAGE>
mortgage- and asset-backed securities including securities backed
by automobile loans, equipment leases or credit card receivables.
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 prospectus
<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 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 is a Chartered Financial Analyst.
Janus Money Market Funds - Institutional Shares prospectus 13
<PAGE>
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is Executive Vice President and 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 money market analyst. Prior to joining Janus
Capital, he was a senior analyst 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 is a Chartered Financial Analyst.
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 prospectus
<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.
Janus Money Market Funds - Institutional Shares prospectus 15
<PAGE>
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 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.
16 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
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.
Janus Money Market Funds - Institutional Shares prospectus 17
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights tables are intended to help you
understand the financial performance of the Fund's Shares for the
past 5 years through October 31st of each fiscal year shown.
Items 1 through 6 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
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
2. Net investment income 0.05 0.06 0.06 0.05 0.03
3. Total from investment
operations 0.05 0.06 0.06 0.05 0.03
LESS DIVIDENDS AND
DISTRIBUTIONS:
4. Dividends (from net investment
income) (0.05) (0.06) (0.06) (0.05) (0.03)
5. Total dividends and
distributions (0.05) (0.06) (0.06) (0.05) (0.03)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
7. Total return* 5.16% 5.72% 5.71% 5.61% 3.25%
8. Net assets, end of period (in
millions) $4,499 $4,974 $2,771 $1,706 $305
9. Average net assets for the
period (in millions) $5,445 $3,621 $2,545 $874 $202
10. Ratio of expenses to average
net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
11. Ratio of net investment income
to average net assets** 5.04% 5.58% 5.54% 5.41% 5.86%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from April 17, 1995 (inception of Shares) through October 31,
1995.
(2) The ratio was .35% before waiver of certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
18 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
** Annualized for periods of less than one full year.
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
2. Net investment income 0.03 0.04 0.04 0.04 0.02
3. Total from investment
operations 0.03 0.04 0.04 0.04 0.02
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment
income) (0.03) (0.04) (0.04) (0.04) (0.02)
5. Total dividends and
distributions (0.03) (0.04) (0.04) (0.04) (0.02)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
7. Total return* 3.29% 3.67% 3.67% 3.74% 2.09%
8. Net assets, end of period (in
millions) $139 $41 $4 $2 $11
9. Average net assets for the
period (millions) $92 $19 $3 $2 $1
10. Ratio of expenses to average
net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
11. Ratio of net investment income
to average net assets** 3.25% 3.60% 3.94% 3.82% 3.82%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from April 17, 1995 (inception of Shares) through October 31,
1995.
(2) The ratio was .35% before waiver of certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Janus Money Market Funds - Institutional Shares prospectus 19
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND -INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995(1)
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
2. Net investment income 0.05 0.05 0.05 0.05 0.03
3. Total from investment
operations 0.05 0.05 0.05 0.05 0.03
LESS DIVIDENDS AND
DISTRIBUTIONS:
4. Dividends (from net investment
income) (0.05) (0.05) (0.05) (0.05) (0.03)
5. Total dividends and
distributions (0.05) (0.05) (0.05) (0.05) (0.03)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
7. Total return* 5.03% 5.59% 5.58% 5.50% 3.20%
8. Net assets, end of period (in
millions) $761 $821 $36 $59 $44
9. Average net assets for the
period (in millions) $770 $321 $57 $53 $25
10. Ratio of expenses to average
net assets** 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2) 0.15%(2)
11. Ratio of net investment income
to average net assets** 4.94% 5.42% 6.04% 5.34% 5.75%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from April 17, 1995 (inception of Shares) through October 31,
1995.
(2) The ratio was .35% before waiver of certain fees incurred by the Fund.
* 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 - Institutional Shares prospectus
<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 7, 2000, 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>
Richard Laminack 4010 Inverness 35.83%
Houston, TX 77019
--------------------------------------------------
</TABLE>
As of January 7, 2000, the following shareholder owned more than
25% of the Shares of Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
--------------------------------------------------
<S> <C> <C>
Comerica Bank 411 W. Lafayette St. 32.76%
Mailcode 3455
Detroit, MI 48226
--------------------------------------------------
</TABLE>
Thus, these shareholders may have the power to control any vote
of the Shares of these Funds.
Janus Money Market Funds - Institutional Shares prospectus 21
<PAGE>
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
DISTRIBUTION OF FUNDS
The Funds are distributed by Janus Distributors, Inc., a member
of the National Association of Securities Dealers, Inc. ("NASD").
To obtain information about NASD member firms and their
associated persons, you may contact NASD Regulation, Inc. at
www.nasdr.com or the Public Disclosure Hotline at 800-289-9999.
An investor brochure containing information describing the Public
Disclosure Program is available from NASD Regulation, Inc.
22 Janus Money Market Funds - Institutional Shares prospectus
<PAGE>
This page intentionally left blank
Janus Money Market Funds - Institutional Shares prospectus 23
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS MONEY MARKET
FUNDS
INSTITUTIONAL SHARES
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
26 Shareholder's guide
<PAGE>
withholding for failing to report income to the IRS. If you are
subject to the 31% backup withholding or you did not certify your
taxpayer identification, the IRS requires the Funds to withhold
31% of any dividends paid and redemption or exchange proceeds. In
addition, to the 31% backup withholding, you may be subject to a
$50 fee to reimburse the Funds for any penalty that the IRS may
impose.
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
Shareholder's guide 27
<PAGE>
early. Purchase orders received after these times will receive
the dividend declared the following day.
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
28 Shareholder's guide
<PAGE>
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
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 29
<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
30 Shareholder's guide
<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
Shareholder's guide 31
<PAGE>
Janus Money Market Fund or 60 days for Janus Government 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
32 Shareholder's guide
<PAGE>
documentation, if applicable. Please call 1-800-29JANUS for
additional information.
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 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
Shareholder's guide 33
<PAGE>
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, may compensate certain Processing Organizations for
providing administrative, recordkeeping and similar services, as
well as distribution-related services.
34 Shareholder's guide
<PAGE>
This page intentionally left blank
35
<PAGE>
This page intentionally left blank
36
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4217
<PAGE>
[JANUS LOGO]
JANUS MONEY MARKET
FUNDS
SERVICE SHARES
PROSPECTUS
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
JANUARY 31, 2000
Janus Money Market Fund, Janus Tax-Exempt Money Market
Fund, and Janus Government 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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Money Market Fund...................... 2
Janus Tax-Exempt Money Market Fund........... 2
Janus Government 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................. 11
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>
Janus Money Market Funds - Service Shares prospectus 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 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.
JANUS GOVERNMENT MONEY MARKET FUND invests exclusively in
obligations issued and/or guaranteed as to principal and interest
2 Janus Money Market Funds - Service Shares prospectus
<PAGE>
by the United States government or by its agencies and
instrumentalities and repurchase agreements secured by such
obligations.
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.
Janus Money Market Funds - Service Shares prospectus 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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C>
5.46% 5.40% 4.98%
1997 1998 1999
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-1999 1.12%
</TABLE>
JANUS TAX-EXEMPT MONEY MARKET FUND - SERVICE SHARES
A BAR CHART showing Annual Total Returns for Janus Tax-Exempt
Money Market Fund - Service Shares from 1997 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C>
3.44% 3.41% 3.12%
1997 1998 1999
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-1999 0.66%
</TABLE>
JANUS GOVERNMENT MONEY MARKET FUND - SERVICE SHARES
A BAR CHART showing Annual Total Returns for Janus Government
Money Market Fund - Service Shares from 1997 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C>
5.33% 5.28% 4.87%
1997 1998 1999
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-1999 1.09%
</TABLE>
The 7-day yield on December 31, 1999 was 5.15% for Janus Money
Market Fund - Service Shares; 3.23% for Janus Tax-Exempt Money
Market Fund - Service Shares; and 5.11% for Janus Government
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 prospectus
<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, 1999.
<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 0.20% 0.20% 0.20%
Other Expenses 0.40% 0.40% 0.40%
Total Annual Fund Operating
Expenses Without Waivers* 0.60% 0.60% 0.60%
Total Waivers (0.20)% (0.20)% (0.20)%
Total Annual Fund Operating
Expenses With Waivers* 0.40% 0.40% 0.40%
</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 Tax-Exempt Money Market Fund $61 $192 $335 $750
Janus Government Money Market Fund $61 $192 $335 $750
</TABLE>
Janus Money Market Funds - Service Shares prospectus 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 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 - Service Shares prospectus
<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.
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.
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
Janus Money Market Funds - Service Shares prospectus 7
<PAGE>
DEBT OBLIGATIONS
The Fund may invest in U.S. dollar denominated debt obligations.
Debt obligations include:
- commercial paper
- notes and bonds
- 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-
8 Janus Money Market Funds - Service Shares prospectus
<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 expropriation or nationalization of
foreign issuers.
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.
Janus Money Market Funds - Service Shares prospectus 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.
JANUS GOVERNMENT MONEY MARKET FUND
Janus Government Money Market Fund invests exclusively in:
- U.S. Government Securities
- repurchase agreements secured by such obligations
10 Janus Money Market Funds - Service Shares prospectus
<PAGE>
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.
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
Janus Money Market Funds - Service Shares prospectus 11
<PAGE>
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.
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 prospectus
<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.
Janus Money Market Funds - Service Shares prospectus 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 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 is a Chartered Financial Analyst
designation.
J. ERIC THORDERSON
- --------------------------------------------------------------------------------
is Executive Vice President and 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 money market analyst. Prior to joining Janus
Capital, he was a senior analyst 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 is a Chartered Financial Analyst designation.
14 Janus Money Market Funds - Service Shares prospectus
<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.
Janus Money Market Funds - Service Shares prospectus 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 prospectus
<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.
Janus Money Market Funds - Service Shares prospectus 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 6
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
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05
3. Total from investment operations 0.05 0.05 0.05
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment income) (0.05) (0.05) (0.05)
5. Total dividends and distributions (0.05) (0.05) (0.05)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
7. Total return* 4.89% 5.45% 5.14%
8. Net assets, end of period (in thousands) $28,748 $42,520 $10,341
9. Average net assets for the period (in
thousands) $31,250 $29,322 $913
10. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2) 0.40%(2)
11. Ratio of net investment income to average net
assets** 4.82% 5.30% 5.02%
- ------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from November 22, 1996 (inception of Shares) to October 31,
1997.
(2) The ratio was .60% before waiver of certain fees incurred by the Fund.
* 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 prospectus
<PAGE>
<TABLE>
<CAPTION>
JANUS TAX-EXEMPT MONEY MARKET FUND - SERVICE SHARES
- ------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.03 0.03 0.03
3. Total from investment operations 0.03 0.03 0.03
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment income) (0.03) (0.03) (0.03)
5. Total dividends and distributions (0.03) (0.03) (0.03)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
7. Total return* 3.06% 3.44% 3.22%
8. Net assets, end of period (in thousands) $1,042 $17,696 $10
9. Average net assets for the period (in
thousands) $4,090 $3,215 $10
10. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2) 0.40%(2)
11. Ratio of net investment income to average net
assets** 3.10% 3.32% 3.17%
- ------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from November 22, 1996 (inception of Shares) to October 31,
1997.
(2) The ratio was .60% before waiver of certain fees incurred by the Fund.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
Janus Money Market Funds - Service Shares prospectus 19
<PAGE>
<TABLE>
<CAPTION>
JANUS GOVERNMENT MONEY MARKET FUND - SERVICE SHARES
- -------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997(1)
<S> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.05 0.05 0.05
3. Total from investment operations 0.05 0.05 0.05
LESS DIVIDENDS AND DISTRIBUTIONS:
4. Dividends (from net investment income) (0.05) (0.05) (0.05)
5. Total dividends and distributions (0.05) (0.05) (0.05)
6. NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
7. Total return* 4.77% 5.33% 5.01%
8. Net assets, end of period (in thousands) $51,343 $2,770 $628
9. Average net assets for the period (in thousands) $45,587 $639 $1,141
10. Ratio of expenses to average net assets** 0.40%(2) 0.40%(2) 0.40%(2)
11. Ratio of net investment income to average net
assets** 4.67% 5.15% 5.23%
- -------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from November 22, 1996 (inception of Shares) to October 31,
1997.
(2) The ratio was .60% before waiver of certain fees incurred by the Fund.
* 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 prospectus
<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 7, 2000, 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 Second Ave. South 99.62%
Minneapolis, MN 55402
</TABLE>
As of January 7, 2000, 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 Second Ave. South 98.61%
Minneapolis, MN 55402
- ------------------------------------------------------------------------------
</TABLE>
Janus Money Market Funds - Service Shares prospectus 21
<PAGE>
As of January 7, 2000, 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 99.12%
Burlington, VT 05402
</TABLE>
Thus, these shareholders may have the power to control any vote
of the Shares of these Funds.
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
22 Janus Money Market Funds - Service Shares prospectus
<PAGE>
DISTRIBUTION OF FUNDS
The Funds are distributed by Janus Distributors, Inc., a member
of the National Association of Securities Dealers, Inc. ("NASD").
To obtain information about NASD member firms and their
associated persons, you may contact NASD Regulation, Inc. at
www.nasdr.com or the Public Disclosure Hotline at 800-289-9999.
An investor brochure containing information describing the Public
Disclosure Program is available from NASD Regulation, Inc.
Janus Money Market Funds - Service Shares prospectus 23
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS MONEY MARKET
FUNDS
SERVICE SHARES
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 Shareholder's guide
<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 Shareholder's guide
<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
requests.
Shareholder's guide 29
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4218
<PAGE>
[JANUS LOGO]
JANUS VENTURE FUND
PROSPECTUS
JANUARY 31, 2000
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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Venture Fund........................... 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objective and principal investment
strategies................................... 6
General portfolio policies................... 7
Risks........................................ 10
SHAREHOLDER'S MANUAL
Minimum investments.......................... 17
Types of account ownership................... 17
To purchase shares........................... 20
To exchange shares........................... 21
To redeem shares............................. 21
Shareholder services and account policies.... 25
MANAGEMENT OF THE FUND
Investment adviser........................... 29
Portfolio managers........................... 30
OTHER INFORMATION............... ............... 31
DISTRIBUTIONS AND TAXES
Distributions................................ 33
Taxes........................................ 34
FINANCIAL HIGHLIGHTS.............. ............. 36
GLOSSARY
Glossary of investment terms................. 37
</TABLE>
Janus Venture Fund prospectus 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 Fund may invest without limit in foreign equity and debt
securities and less than 35% of its net assets in
high-yield/high-risk bonds.
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
2 Janus Venture Fund prospectus
<PAGE>
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 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.
Janus Venture Fund prospectus 3
<PAGE>
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 1990 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(0.40%) 47.82% 7.44% 9.08% 5.46% 26.46% 8.02% 12.62% 23.22% 140.71%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 82.76% Worst Quarter: 3rd-1999 (14.81%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (4/30/85)
<S> <C> <C> <C> <C>
Janus Venture Fund 140.71% 35.47% 23.57% 22.79%
Russell 2000(R) Index* 21.26% 16.69% 13.96% 12.65%
------------------------------------------------
</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.
4 Janus Venture Fund prospectus
<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). All
of the fees and expenses shown were determined based on net
assets as of the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Janus Venture Fund
<S> <C>
Management Fee(1) 0.65%
Other Expenses 0.25%
Total Annual Fund Operating Expenses 0.90%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Management Fee" information has been restated to reflect a new fee
schedule effective January 31, 2000.
- --------------------------------------------------------------------------------
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 $92 $287 $498 $1,108
</TABLE>
Janus Venture Fund prospectus 5
<PAGE>
INVESTMENT OBJECTIVES, 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 10-12 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 invest-
6 Janus Venture Fund prospectus
<PAGE>
ments for the Fund. Income realized on the Fund's investments
will be incidental to its objective.
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
Janus Venture Fund prospectus 7
<PAGE>
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 bonds (less than 35% of the Fund's assets)
- options, futures, forwards, swaps 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,
8 Janus Venture Fund prospectus
<PAGE>
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.
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
Janus Venture Fund prospectus 9
<PAGE>
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, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on
a fund with a small asset base. A fund may not experience similar
performance as its assets grow.
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
10 Janus Venture Fund prospectus
<PAGE>
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.
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, considers what impact, if any, the Year 2000 transition
has had on the company's operations when selecting portfolio
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
transition status 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
Janus Venture Fund prospectus 11
<PAGE>
These risks are described in the SAI.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (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
bonds 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, swaps 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.
12 Janus Venture Fund prospectus
<PAGE>
This page intentionally left blank
Janus Venture Fund prospectus 13
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS VENTURE FUND
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 27.
HOW TO GET IN TOUCH WITH JANUS
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
16 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA is
$50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 16, 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA, 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 17
<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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
18 Shareholder's manual
<PAGE>
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.
IF YOU ARE A CURRENT FUND SHAREHOLDER, PLEASE REFER TO THE CHART
ON THE FOLLOWING PAGES FOR INFORMATION ON OPENING AN ACCOUNT AND
CONDUCTING BUSINESS WITH JANUS. WITH CERTAIN LIMITED EXCEPTIONS,
THE FUND IS AVAILABLE ONLY TO U.S. CITIZENS OR RESIDENTS. WHEN
YOU PURCHASE, EXCHANGE, OR REDEEM SHARES, YOUR REQUEST WILL BE
PROCESSED AT THE NEXT NAV CALCULATED AFTER YOUR ORDER IS RECEIVED
AND ACCEPTED.
Shareholder's manual 19
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
20 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM 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.
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 24. Also for written requests on page 24.
refer to the exchange policies - Please see page 23 for information
listed on page 22 for more about payment of redemption
information. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 21
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Fund reserves the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
22 Shareholder's manual
<PAGE>
- - The Fund reserves the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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.
Shareholder's manual 23
<PAGE>
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 16
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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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-
24 Shareholder's manual
<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
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 17 or
to close such accounts. This policy will apply to accounts
Shareholder's manual 25
<PAGE>
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 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 customers, 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
26 Shareholder's manual
<PAGE>
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.
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.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by the shareholder(s) of record.
Include the name of your 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.
Shareholder's manual 27
<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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our Web
site to discontinue delivery of your paper statements. 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 requests.
28 Shareholder's manual
<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. For the most recent fiscal year, the
Fund paid Janus Capital a management fee equal to 0.68% of
average daily net assets.
Janus Venture Fund prospectus 29
<PAGE>
PORTFOLIO MANAGERS
The Fund is co-managed by William H. Bales and Jonathan D.
Coleman, each of whom also serves as Executive Vice President of
the Fund. Both Mr. Bales and Mr. Coleman have been portfolio
managers for Janus Venture Fund since February 1, 1997. The
portfolio managers' other primary responsibilities and education
are set forth below.
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 is a Chartered Financial Analyst.
30 Janus Venture Fund prospectus
<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 16.
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
Janus Venture Fund prospectus 31
<PAGE>
DISTRIBUTION OF FUND
The Fund is distributed by Janus Distributors, Inc. a member of
the National Association of Securities Dealers, Inc. ("NASD"). To
obtain information about NASD member firms and their associated
persons, you may contact NASD Regulation, Inc. at www.nasdr.com
or the Public Disclosure Hotline at 800-289-9999. An investor
brochure containing information describing the Public Disclosure
Program is available from NASD Regulation, Inc.
32 Janus Venture Fund prospectus
<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
Janus Venture Fund prospectus 33
<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 16 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
34 Janus Venture Fund prospectus
<PAGE>
investing in the Fund. 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 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.
Janus Venture Fund prospectus 35
<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.
<TABLE>
<CAPTION>
JANUS VENTURE FUND
- -------------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $49.81 $58.84 $57.16 $59.53 $52.86
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- (0.09) 0.16 -- 0.05
3. Net gains or (losses) on securities (both
realized and unrealized) 44.31 0.43 6.80 5.09 9.49
4. Total from investment operations 44.31 0.34 6.96 5.09 9.54
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) -- -- -- (0.01) (0.03)
6. Distributions (in excess of net investment
income) -- (0.07) -- -- --
7. Distributions (from capital gains) (4.41) (9.30) (5.28) (7.45) (2.84)
8. Total distributions (4.41) (9.37) (5.28) (7.46) (2.87)
9. NET ASSET VALUE, END OF PERIOD $89.71 $49.81 $58.84 $57.16 $59.53
10. Total return 94.42% 1.07% 13.38% 9.28% 19.24%
11. Net assets, end of period (in millions) $1,860 $1,036 $1,252 $1,741 $1,753
12. Average net assets for the period (in
millions) $1,351 $1,174 $1,379 $1,823 $1,613
13. Ratio of gross expenses to average net
assets 0.93% 0.94% 0.94% 0.89% 0.92%
14. Ratio of net expenses to average net
assets 0.92% 0.93% 0.92% 0.88% 0.91%
15. Ratio of net investment income/(loss) to
average net assets (0.55%) (0.29%) 0.11% (0.33%) 0.29%
16. Portfolio turnover rate 104% 90% 146% 136% 113%
- -------------------------------------------------------------------------------------------
</TABLE>
36 Janus Venture Fund prospectus
<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 securities representing money borrowed that
must be repaid at a later date. Such securities have specific
Janus Venture Fund prospectus 37
<PAGE>
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 BONDS are bonds 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 bonds 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.
38 Janus Venture Fund prospectus
<PAGE>
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 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
Janus Venture Fund prospectus 39
<PAGE>
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.
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
40 Janus Venture Fund prospectus
<PAGE>
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 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.
Janus Venture Fund prospectus 41
<PAGE>
This page intentionally left blank
42
<PAGE>
This page intentionally left blank
43
<PAGE>
This page intentionally left blank
44
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4214
<PAGE>
[JANUS LOGO]
JANUS OVERSEAS FUND
PROSPECTUS
JANUARY 31, 2000
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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Overseas Fund.......................... 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objectives and principal
investment strategies........................ 6
General portfolio policies................... 7
Risks........................................ 9
SHAREHOLDER'S MANUAL
Minimum investments.......................... 17
Types of account ownership................... 17
To purchase shares........................... 20
To exchange shares........................... 21
To redeem shares............................. 21
Shareholder services and account policies.... 25
MANAGEMENT OF THE FUND
Investment adviser........................... 29
Portfolio managers........................... 30
OTHER INFORMATION............... ............... 31
DISTRIBUTIONS AND TAXES
Distributions................................ 33
Distribution options......................... 34
Taxes........................................ 34
FINANCIAL HIGHLIGHTS.............. ............. 36
GLOSSARY
Glossary of investment terms................. 37
</TABLE>
Janus Overseas Fund prospectus 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 Fund may invest without limit in foreign equity and debt
securities and less than 35% of its net assets in
high-yield/high-risk bonds.
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.
2 Janus Overseas Fund prospectus
<PAGE>
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. 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.
Janus Overseas Fund prospectus 3
<PAGE>
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 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C>
22.05% 28.83% 18.25% 16.03% 86.06%
1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 60.63% Worst Quarter: 3rd-1998 (19.58%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (5/2/94)
<S> <C> <C> <C>
Janus Overseas Fund 86.06% 32.04% 27.91%
Morgan Stanley Capital
International EAFE Index* 29.96% 12.83% 11.21%
---------------------------------------
</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.
4 Janus Overseas Fund prospectus
<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). All
of the fees and expenses shown were determined based on net
assets as of the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Janus Overseas Fund
<S> <C>
Management Fee(1) 0.65%
Other Expenses 0.26%
Total Annual Fund Operating Expenses 0.91%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Management Fee" information has been restated to reflect a new fee
schedule effective January 31, 2000.
- --------------------------------------------------------------------------------
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 $93 $290 $504 $1,120
</TABLE>
Janus Overseas Fund prospectus 5
<PAGE>
INVESTMENT OBJECTIVES, 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 9-12 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
6 Janus Overseas Fund prospectus
<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 bonds (less than 35% of the Fund's assets)
Janus Overseas Fund prospectus 7
<PAGE>
- options, futures, forwards, swaps 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
8 Janus Overseas Fund prospectus
<PAGE>
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
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, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on
a fund with a small asset base. A fund may not experience similar
performance as its assets grow.
Janus Overseas Fund prospectus 9
<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.
10 Janus Overseas Fund prospectus
<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, considers what impact, if any, the Year 2000 transition
has had on the company's operations when selecting portfolio
Janus Overseas Fund prospectus 11
<PAGE>
holdings. However, there is no guarantee that the information a
portfolio manager receives regarding a company's Year 2000
transition status 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
BONDS?
High-yield/high-risk bonds (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
bonds 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, swaps 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.
12 Janus Overseas Fund prospectus
<PAGE>
This page intentionally left blank
Janus Overseas Fund prospectus 13
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS OVERSEAS FUND
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 27.
HOW TO GET IN TOUCH WITH JANUS
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
16 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA is
$50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 16, 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA, 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 17
<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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
18 Shareholder's manual
<PAGE>
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.
IF YOU ARE A CURRENT FUND SHAREHOLDER, PLEASE REFER TO THE CHART
ON THE FOLLOWING PAGES FOR INFORMATION ON OPENING AN ACCOUNT AND
CONDUCTING BUSINESS WITH JANUS. WITH CERTAIN LIMITED EXCEPTIONS,
THE FUND IS AVAILABLE ONLY TO U.S. CITIZENS OR RESIDENTS. WHEN
YOU PURCHASE, EXCHANGE, OR REDEEM SHARES, YOUR REQUEST WILL BE
PROCESSED AT THE NEXT NAV CALCULATED AFTER YOUR ORDER IS RECEIVED
AND ACCEPTED.
Shareholder's manual 19
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
20 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM 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.
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 24. Also for written requests on page 24.
refer to the exchange policies - Please see page 23 for information
listed on page 22 for more about payment of redemption
information. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 21
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Fund reserves the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
22 Shareholder's manual
<PAGE>
- - The Fund reserves the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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.
Shareholder's manual 23
<PAGE>
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 16
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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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-
24 Shareholder's manual
<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
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 17 or
to close such accounts. This policy will apply to accounts
Shareholder's manual 25
<PAGE>
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 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 customers, 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
26 Shareholder's manual
<PAGE>
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.
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.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by the shareholder(s) of record.
Include the name of your 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.
Shareholder's manual 27
<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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our
website to discontinue delivery of your paper statements.
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 requests.
28 Shareholder's manual
<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. For the most recent fiscal year, the
Fund paid Janus Capital a management fee equal to 0.66% of
average daily net assets.
Janus Overseas Fund prospectus 29
<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. Ms. Hayes is a Chartered Financial Analyst.
LAURENCE J. CHANG
- --------------------------------------------------------------------------------
is Executive Vice President and co-manager of the Fund,
which he has co-managed since April 1998. He is also
Executive Vice President and co-manager of Janus Worldwide
Fund which he has co-managed since September 1999. Mr.
Chang joined Janus Capital in 1993 as a research analyst.
He received an undergraduate degree with honors in
Religion with a concentration in philosophy from Dartmouth
College and a Master's Degree in Political Science from
Stanford University. Mr. Chang is a Chartered Financial
Analyst.
30 Janus Overseas Fund prospectus
<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 16.
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
DISTRIBUTION OF FUND
The Fund is distributed by Janus Distributors, Inc., a member of
the National Association of Securities Dealers, Inc. ("NASD"). To
obtain information about NASD member firms and their associated
persons, you may contact NASD Regulation, Inc. at
Janus Overseas Fund prospectus 31
<PAGE>
www.nasdr.com or the Public Disclosure Hotline at 800-289-9999.
An investor brochure containing information describing the Public
Disclosure Program is available from NASD Regulation, Inc.
32 Janus Overseas Fund prospectus
<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
Janus Overseas Fund prospectus 33
<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 16 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
34 Janus Overseas Fund prospectus
<PAGE>
investing in the Fund. 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 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.
Janus Overseas Fund prospectus 35
<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
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $17.95 $17.94 $14.81 $11.58 $10.36
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income -- 0.08 0.04 0.10 0.12
3. Net gains or (losses) on securities
(both realized and unrealized) 7.49 0.54 3.39 3.34 1.10
4. Total from investment operations 7.49 0.62 3.43 3.44 1.22
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.08) (0.10) (0.04) (0.11) --
6. Dividends (in excess of net
investment income) (0.01) -- -- -- --
7. Distributions (from capital gains) -- (0.51) (0.26) (0.10) --
8. Total distributions (0.09) (0.61) (0.30) (0.21) --
9. NET ASSET VALUE, END OF PERIOD $25.35 $17.95 $17.94 $14.81 $11.58
10. Total return 41.77% 3.55% 23.56% 30.19% 11.78%
11. Net assets, end of period (in
millions) $5,640 $3,889 $3,205 $773 $111
12. Average net assets for the period
(in millions) $4,578 $3,949 $2,093 $335 $78
13. Ratio of gross expenses to average
net assets 0.92% 0.96% 1.03% 1.26% 1.76%
14. Ratio of net expenses to average
net assets 0.91% 0.94% 1.01% 1.23% 1.73%
15. Ratio of net investment
income/(loss) to average net assets (0.03%) 0.58% 0.81% 0.73% 0.36%
16. Portfolio turnover rate 92% 105% 72% 71% 188%
- -----------------------------------------------------------------------------------------
</TABLE>
36 Janus Overseas Fund prospectus
<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 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
Janus Overseas Fund prospectus 37
<PAGE>
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 BONDS are bonds 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 bonds 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
38 Janus Overseas Fund prospectus
<PAGE>
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
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
Janus Overseas Fund prospectus 39
<PAGE>
of the U.S. government to purchase the agency's obligations and
others are supported only by the credit of the sponsoring agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating
rates of interest and, under certain limited circumstances, may
have varying principal amounts. These securities pay interest at
rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or
market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred 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.
40 Janus Overseas Fund prospectus
<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 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.
Janus Overseas Fund prospectus 41
<PAGE>
This page intentionally left blank
42
<PAGE>
This page intentionally left blank
43
<PAGE>
This page intentionally left blank
44
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4216
<PAGE>
[JANUS LOGO]
JANUS TWENTY FUND
PROSPECTUS
JANUARY 31, 2000
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 the conditions described in the Shareholder's
Manual. 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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Twenty Fund............................ 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objective and principal investment
strategies................................... 6
General portfolio policies................... 7
Risks........................................ 9
SHAREHOLDER'S MANUAL
Minimum investments.......................... 17
Types of account ownership................... 17
To purchase shares........................... 20
To exchange shares........................... 21
To redeem shares............................. 21
Shareholder services and account policies.... 25
MANAGEMENT OF THE FUND
Investment adviser........................... 29
Portfolio manager............................ 30
OTHER INFORMATION............... ............... 31
DISTRIBUTIONS AND TAXES
Distributions................................ 33
Taxes........................................ 34
FINANCIAL HIGHLIGHTS.............. ............. 36
GLOSSARY
Glossary of investment terms................. 37
</TABLE>
Janus Twenty Fund prospectus 1
<PAGE>
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
JANUS TWENTY FUND
1. WHAT IS THE INVESTMENT OBJECTIVE OF JANUS TWENTY 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 TWENTY FUND?
The 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.
The Fund may invest without limit in foreign equity and debt
securities and less than 35% of its net assets in
high-yield/high-risk bonds.
The portfolio manager applies a "bottom up" approach in choosing
investments. In other words, he looks for companies with earnings
growth potential one at a time. If the portfolio manager is
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 TWENTY 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
2 Janus Twenty Fund prospectus
<PAGE>
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.
The Fund is nondiversified. In other words, it 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 the Fund's NAV and total
return. Since the Fund normally concentrates in a core portfolio
of 20-30 stocks, this risk may be increased.
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.
Janus Twenty Fund prospectus 3
<PAGE>
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 TWENTY FUND
A BAR CHART showing Annual Total Returns for Janus Twenty Fund
from 1990 through 1999:
Annual returns for periods ended 12/31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.59% 69.21% 1.97% 3.43% (6.73%) 36.22% 27.85% 29.70% 73.39% 64.90%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Each percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 38.35% Worst Quarter: 3rd-1990 (17.71%)
</TABLE>
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
Since Inception
1 year 5 years 10 years (4/30/85)
<S> <C> <C> <C> <C>
Janus Twenty Fund 64.90% 45.22% 26.88% 23.48%
S&P 500 Index* 21.03% 28.54% 18.19% 18.67%
--------------------------------------------------
</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 Fund's past performance does not necessarily indicate how it
will perform in the future.
4 Janus Twenty Fund prospectus
<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). All of the fees and expenses shown were determined
based on net assets as of the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Janus Twenty Fund
<S> <C>
Management Fee(1) 0.65%
Other Expenses 0.23%
Total Annual Fund Operating Expenses 0.88%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Management Fee" information has been restated to reflect a new fee
schedule effective January 31, 2000.
- --------------------------------------------------------------------------------
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 Twenty Fund $90 $281 $488 $1,084
</TABLE>
Janus Twenty Fund prospectus 5
<PAGE>
INVESTMENT OBJECTIVES, 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 9-12 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 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.
The Fund may invest substantially all of its assets in common
stocks if its portfolio manager believes that common stocks will
appreciate in value. The portfolio manager generally takes a
"bottom up" approach to selecting companies. In other words, he
seeks to identify individual companies with earnings growth
potential that may not be recognized by the market at large. He
makes 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
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
6 Janus Twenty Fund prospectus
<PAGE>
may invest and the Fund may at times have significant foreign
exposure.
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 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
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 manager has committed
available assets to desirable investment opportunities. However,
the portfolio manager 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 domestic and foreign 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
Janus Twenty Fund prospectus 7
<PAGE>
- high-yield/high-risk bonds (less than 35% of the Fund's assets)
- options, futures, forwards, swaps 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 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. The Fund's performance could suffer if the
anticipated development in
8 Janus Twenty Fund prospectus
<PAGE>
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 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
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, initial public offerings (IPOs), or companies with
relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on
a fund
Janus Twenty Fund prospectus 9
<PAGE>
with a small asset base. A fund may not experience similar
performance as its assets grow.
The following questions and answers are designed to help you better understand
some of the risks of investing in the Fund.
1. HOW DOES THE NONDIVERSIFIED STATUS OF THE FUND AFFECT ITS RISK?
Diversification is a way to reduce risk by investing in a broad
range of stocks or other securities. Since the Fund is
"nondiversified," it 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
Fund's 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
the Fund.
2. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options, swaps 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 manager's
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
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 manager carefully researches each potential
investment before making an investment decision and, among other
things, considers what impact, if any, the Year 2000 transition
has had on the company's operations when selecting portfolio
holdings. However, there is no guarantee that the information the
portfolio manager receives regarding a company's Year 2000
transition status is completely accurate. If a company has not
10 Janus Twenty Fund prospectus
<PAGE>
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
4. 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.
5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated
below investment grade by the primary rating agencies such as
Standard & Poor's and Moody's. The value of lower quality bonds
generally is more dependent on credit risk, or the ability of the
issuer to meet interest and principal payments, than investment
grade bonds. Issuers of high-yield bonds 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.
Janus Twenty Fund prospectus 11
<PAGE>
6. 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.
12 Janus Twenty Fund prospectus
<PAGE>
This page intentionally left blank
Janus Twenty Fund prospectus 13
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS TWENTY FUND
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 27.
HOW TO GET IN TOUCH WITH JANUS
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
16 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA is
$50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 16, 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA 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 17
<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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
18 Shareholder's manual
<PAGE>
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.
IF YOU ARE A CURRENT FUND SHAREHOLDER, PLEASE REFER TO THE CHART
ON THE FOLLOWING PAGES FOR INFORMATION ON OPENING AN ACCOUNT AND
CONDUCTING BUSINESS WITH JANUS. WITH CERTAIN LIMITED EXCEPTIONS,
THE FUND IS AVAILABLE ONLY TO U.S. CITIZENS OR RESIDENTS. WHEN
YOU PURCHASE, EXCHANGE, OR REDEEM SHARES, YOUR REQUEST WILL BE
PROCESSED AT THE NEXT NAV CALCULATED AFTER YOUR ORDER IS RECEIVED
AND ACCEPTED.
Shareholder's manual 19
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
20 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM 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.
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 24. Also for written requests on page 24.
refer to the exchange policies - Please see page 23 for information
listed on page 22 for more about payment of redemption
information. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 21
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Fund reserves the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
22 Shareholder's manual
<PAGE>
- - The Fund reserves the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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.
Shareholder's manual 23
<PAGE>
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 16
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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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-
24 Shareholder's manual
<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
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 17 or
to close such accounts. This policy will apply to accounts
Shareholder's manual 25
<PAGE>
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 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 customers, 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
26 Shareholder's manual
<PAGE>
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.
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.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by the shareholder(s) of record.
Include the name of your 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.
Shareholder's manual 27
<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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our Web
site to discontinue delivery of your paper statements. 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 requests.
28 Shareholder's manual
<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. For the most recent fiscal year, the
Fund paid Janus Capital a management fee equal to 0.65% of the
average daily net assets.
Janus Twenty Fund prospectus 29
<PAGE>
PORTFOLIO MANAGER
SCOTT W. SCHOELZEL
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of the
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
January 1994. He holds a Bachelor of Arts in Business from
Colorado College.
30 Janus Twenty Fund prospectus
<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 16.
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
Janus Twenty Fund prospectus 31
<PAGE>
DISTRIBUTION OF FUND
The Fund is distributed by Janus Distributors, Inc., a member of
the National Association of Securities Dealers, Inc. ("NASD"). To
obtain information about NASD member firms and their associated
persons, you may contact NASD Regulation, Inc. at www.nasdr.com
or the Public Disclosure Hotline at 800-289-9999. An investor
brochure containing information describing the Public Disclosure
Program is available from NASD Regulation, Inc.
32 Janus Twenty Fund prospectus
<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
Janus Twenty Fund prospectus 33
<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 16 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.
34 Janus Twenty Fund prospectus
<PAGE>
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
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.
Janus Twenty Fund prospectus 35
<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.
<TABLE>
<CAPTION>
JANUS TWENTY FUND
- ------------------------------------------------------------------------------------
Periods ending October 31st
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
1. NET ASSET VALUE, BEGINNING OF
PERIOD $42.98 $35.16 $31.90 $30.12 $24.24
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.21 0.12 (0.09) 0.37 0.01
3. Net gains or (losses) on
securities (both realized and
unrealized) 26.97 12.26 8.85 6.68 5.94
4. Total from investment operations 27.18 12.38 8.76 7.05 5.95
LESS DISTRIBUTIONS:
5. Dividends (from net investment
income) (0.14) (0.10) (0.18) -- (0.07)
6. Dividends (in excess of net
investment income) -- -- -- -- --
7. Distributions (from capital
gains) (0.30) (4.46) (5.32) (5.27) --
8. Total distributions (0.44) (4.56) (5.50) (5.27) (0.07)
9. NET ASSET VALUE, END OF PERIOD $69.72 $42.98 $35.16 $31.90 $30.12
10. Total return 63.51% 40.58% 31.65% 27.59% 24.67%
11. Net assets, end of period (in
millions) $28,793 $11,255 $5,871 $3,937 $2,996
12. Average net assets for the period
(in millions) $22,207 $8,025 $4,990 $3,386 $2,716
13. Ratio of gross expenses to
average net assets 0.88% 0.91% 0.93% 0.93% 1.00%
14. Ratio of net expenses to average
net assets 0.87% 0.90% 0.91% 0.92% 0.99%
15. Ratio of net investment
income/(loss) to average net
assets 0.40% 0.39% 0.33% 0.67% 0.62%
16. Portfolio turnover rate 40% 54% 123% 137% 147%
- ------------------------------------------------------------------------------------
</TABLE>
36 Janus Twenty Fund prospectus
<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 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
Janus Twenty Fund prospectus 37
<PAGE>
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 BONDS are bonds 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 bonds 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
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
38 Janus Twenty Fund prospectus
<PAGE>
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
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
Janus Twenty Fund prospectus 39
<PAGE>
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.
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
40 Janus Twenty Fund prospectus
<PAGE>
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.
Janus Twenty Fund prospectus 41
<PAGE>
This page intentionally left blank
42
<PAGE>
This page intentionally left blank
43
<PAGE>
This page intentionally left blank
44
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4215
<PAGE>
[JANUS LOGO]
JANUS GLOBAL
TECHNOLOGY FUND
PROSPECTUS
JANUARY 31, 2000
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 the conditions described in the Shareholder's
Manual. 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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RISK/RETURN SUMMARY
Janus Global Technology Fund................. 2
Fees and expenses............................ 5
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS
Investment objective and principal investment
strategies................................... 6
General portfolio policies................... 7
Risks........................................ 11
SHAREHOLDER'S MANUAL
Minimum investments.......................... 19
Types of account ownership................... 19
To purchase shares........................... 22
To exchange shares........................... 23
To redeem shares............................. 23
Shareholder services and account policies.... 27
MANAGEMENT OF THE FUND
Investment adviser........................... 31
Portfolio manager............................ 32
OTHER INFORMATION............... ............... 33
DISTRIBUTIONS AND TAXES
Distributions................................ 35
Taxes........................................ 36
FINANCIAL HIGHLIGHTS.............. ............. 38
GLOSSARY
Glossary of investment terms................. 39
</TABLE>
Janus Global Technology Fund prospectus 1
<PAGE>
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
JANUS GLOBAL TECHNOLOGY FUND
1. WHAT IS THE INVESTMENT OBJECTIVE OF JANUS GLOBAL TECHNOLOGY 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 GLOBAL TECHNOLOGY FUND?
The 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.
The Fund may invest without limit in foreign equity and debt
securities and less than 35% of its net assets in
high-yield/high-risk bonds.
The portfolio manager applies a "bottom up" approach in choosing
investments. In other words, he looks for companies with earnings
growth potential one at a time. If the portfolio manager is
unable to find such investments, 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 GLOBAL TECHNOLOGY 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
2 Janus Global Technology Fund prospectus
<PAGE>
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.
Although the 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.
The Fund may have significant exposure to foreign markets. As a
result, 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.
The Fund is nondiversified. In other words, it 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 the Fund's NAV and total
return.
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
performance from year-to-year during the period indicated. The
table compares the Fund's average annual returns for the periods
indicated to a broad-based securities market index.
Janus Global Technology Fund prospectus 3
<PAGE>
JANUS GLOBAL TECHNOLOGY FUND
A BAR CHART showing Annual Total Return for Janus Global
Technology Fund for 1999:
Annual returns for periods ended 12/31
211.55%
1999
The percentage is represented by a bar of proportionate size
with the actual total return printed above the bar.
Best Quarter: 4th-1999 73.95% Worst Quarter: 3rd-1999 13.57%
Average annual total return for periods ended 12/31/99
------------------------------------------------------
<TABLE>
<CAPTION>
1 year and Since Inception
(12/31/98)
<S> <C>
Janus Global Technology Fund 211.55%
S&P 500 Index+ 21.03%
----------
</TABLE>
+ The S&P 500 is the Standard & Poor's Composite Index of 500
Stocks, a widely recognized, unmanaged index of common stock
prices.
The Fund's past performance does not necessarily indicate how it
will perform in the future.
4 Janus Global Technology Fund prospectus
<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). All
of the fees and expenses shown were determined based on net
assets as of the fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
Janus Global Technology Fund
<S> <C>
Management Fee(1) 0.65%
Other Expenses 0.36%(2)
Total Annual Fund Operating Expenses 1.01%
</TABLE>
- --------------------------------------------------------------------------------
(1) "Management Fee" information has been restated to reflect a new fee
schedule effective January 31, 2000.
(2) For the fiscal period from December 31, 1998 (inception) to October
31, 1999.
- --------------------------------------------------------------------------------
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 Global Technology Fund $103 $322 $558 $1,236
</TABLE>
Janus Global Technology Fund prospectus 5
<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 11-14 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 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.
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 manager believes that common stocks will
appreciate in value. The portfolio manager generally takes a
"bottom up" approach to selecting companies. In other words, he
seeks to identify individual companies with earnings growth
potential that may not be recognized by the market at large. He
makes 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
6 Janus Global Technology Fund prospectus
<PAGE>
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.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio manager seeks companies that meet
his 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 IS JANUS GLOBAL TECHNOLOGY FUND'S INDUSTRY POLICY?
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.
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.
Janus Global Technology Fund prospectus 7
<PAGE>
CASH POSITION
When the 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
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 manager has committed
available assets to desirable investment opportunities. However,
the portfolio manager 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 domestic and foreign 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 bonds (less than 35% of the Fund's assets)
- options, futures, forwards, swaps 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
8 Janus Global Technology Fund prospectus
<PAGE>
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 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. 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
Janus Global Technology Fund prospectus 9
<PAGE>
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
manager believes such changes are desirable. Portfolio turnover
rates are generally not a factor in making buy and sell
decisions.
The Fund may invest in companies with relatively short product
cycles, for example, 6 to 9 months. Consequently, its portfolio
turnover may be frequent. 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.
10 Janus Global Technology Fund prospectus
<PAGE>
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, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other
investment techniques may have a magnified performance impact on
a fund with a small asset base. A fund may not experience similar
performance as its assets grow. The 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 Fund.
1. THE FUND 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.
Janus Global Technology Fund prospectus 11
<PAGE>
2. 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.
- 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
12 Janus Global Technology Fund prospectus
<PAGE>
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.
3. HOW DOES THE NONDIVERSIFIED STATUS OF THE FUND AFFECT ITS 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 the Fund.
4. 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
technology-related industries, competitive pressures may have a
significant effect on the performance of companies in which the
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.
Although Janus Global Technology Fund does not "concentrate" in a
specific group of industries, it may at times have significant
exposure to companies in a variety of technology-related
industries.
Janus Global Technology Fund prospectus 13
<PAGE>
5. 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 manager carefully researches each potential
investment before making an investment decision and, among other
things considers what impact, if any, the Year 2000 transition
has had on the company's operations when selecting portfolio
holdings. However, there is no guarantee that the information the
portfolio manager receives regarding a company's Year 2000
transition status is completely accurate. If a company has not
satisfactorily addressed Year 2000 issues, the Fund's performance
could suffer.
6. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated
below investment grade by the primary rating agencies such as
Standard & Poor's and Moody's. The value of lower quality bonds
generally is more dependent on credit risk, or the ability of the
issuer to meet interest and principal payments, than investment
grade bonds. Issuers of high-yield bonds 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.
7. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options, swaps 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 manager's
judgement proves incorrect. Risks associated with the use of
derivative instruments are described in the SAI.
14 Janus Global Technology Fund prospectus
<PAGE>
This page intentionally left blank
15
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
[JANUS LOGO]
JANUS GLOBAL
TECHNOLOGY FUND
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 29.
HOW TO GET IN TOUCH WITH JANUS
INVESTOR SERVICE CENTERS
100 Fillmore Street, Suite 100
Denver, CO 80206
3773 Cherry Creek North Drive, Suite 101
Denver, CO 80209
(Hours: Monday-Friday 7:00 a.m.-6:00 p.m., and Saturday 9:00 a.m.-1:00 p.m.,
Mountain time.)
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT CARRIER
Janus
Suite 101
3773 Cherry Creek Drive North
Denver, CO 80209-3821
INVESTOR SERVICE REPRESENTATIVES
If you have any questions while reading this Prospectus, please call one of our
Investor Service Representatives at 1-800-525-3713 Monday-Friday: 8:00 a.m.-8:00
p.m., and Saturday: 10:00 a.m.-4:00 p.m., New York time.
JANUS XPRESSLINE(TM)
1-888-979-7737
JANUS INTERNET ADDRESS
JANUS.COM
For 24-hour access to account and fund information, exchanges, purchases and
redemptions, automated daily quotes on fund share prices, yields and total
returns.
JANUS.COM SPECIALISTS
1-800-975-9932
TDD
1-800-525-0056
A telecommunications device for our hearing- and speech-impaired shareholders.
JANUS LITERATURE LINE
1-800-525-8983
To request a prospectus, shareholder reports or marketing materials 24 hours a
day.
18 Shareholder's manual
<PAGE>
MINIMUM INVESTMENTS*
<TABLE>
<S> <C>
To open a new regular
account $2,500
To open a new
retirement account,
education account or
UGMA/UTMA $ 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 a retirement account or UGMA/UTMA is
$50.
TYPES OF ACCOUNT OWNERSHIP
As discussed on page 18, 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.
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 is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA, 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 19
<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. Please refer to the Janus
retirement guide for more complete information regarding the
different types of IRAs, including 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.
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.
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.
20 Shareholder's manual
<PAGE>
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.
IF YOU ARE A CURRENT FUND SHAREHOLDER, PLEASE REFER TO THE CHART
ON THE FOLLOWING PAGES FOR INFORMATION ON OPENING AN ACCOUNT AND
CONDUCTING BUSINESS WITH JANUS. WITH CERTAIN LIMITED EXCEPTIONS,
THE FUND IS AVAILABLE ONLY TO U.S. CITIZENS OR RESIDENTS. WHEN
YOU PURCHASE, EXCHANGE, OR REDEEM SHARES, YOUR REQUEST WILL BE
PROCESSED AT THE NEXT NAV CALCULATED AFTER YOUR ORDER IS RECEIVED
AND ACCEPTED.
Shareholder's manual 21
<PAGE>
TO PURCHASE SHARES
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your account, complete and sign the appropriate application and make
your check payable to Janus.
- To purchase additional shares, complete the remittance slip attached at the
bottom of your confirmation statement. If you are making a purchase into a
retirement account, please indicate whether the purchase is a rollover or a
current or prior year contribution. Send your check and remittance slip or
written instructions to the address listed on the slip.
BY TELEPHONE
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to purchase additional
shares quickly and conveniently through an electronic transfer of money.
After establishing this option on your account, call an Investor Service
Representative during normal business hours or the Janus XpressLine for
access to this option 24 hours a day. Janus will automatically debit your
predesignated bank account.
- Purchases may also be made by wiring money from your bank account to your
Janus account. Call an Investor Service Representative for wiring
instructions.
BY INTERNET
------------------------------------------------------------------------------
- The "Telephone Purchase of Shares Option" allows you to make a purchase into
an existing account on our Web site at janus.com.
BY AUTOMATIC INVESTMENT
------------------------------------------------------------------------------
- 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.
- 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.
22 Shareholder's manual
<PAGE>
<TABLE>
<S> <C>
TO EXCHANGE SHARES TO REDEEM 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.
- --------------------------------------- ---------------------------------------
- To request an exchange in writing, - To request a redemption in writ-
please follow the instructions for ing, please follow the instructions
written requests on page 26. Also for written requests on page 26.
refer to the exchange policies - Please see page 25 for information
listed on page 24 for more about payment of redemption
information. proceeds.
- --------------------------------------- ---------------------------------------
- All accounts are automatically eli- - The telephone redemption option
gible to exchange shares by tele- enables you to request redemp-
phone. To exchange all or a portion tions daily from your account by
of your shares into any other calling an Investor Service Repre-
available Janus fund, call an sentative by the close of the
Investor Service Representative or regular trading session of the
the Janus XpressLine. NYSE, normally 4:00 p.m. New York
time. You may also use Janus
XpressLine for access to this
option 24 hours a day.
- --------------------------------------- ---------------------------------------
- Exchanges may be made on our Web - Redemptions may be made on our Web
site at janus.com. site at janus.com.
- --------------------------------------- ---------------------------------------
- Systematic Exchange - You deter- - Systematic Redemption - This option
mine the amount of money you would allows you to redeem a specific
like automatically exchanged from dollar amount from your account on
one Janus account to another on any a regular basis.
day of the month. You may establish
this program for as little as $100
per month on existing accounts. You
may establish a new account with a
$500 initial purchase and subse-
quent $100 systematic exchanges.
</TABLE>
Shareholder's manual 23
<PAGE>
PAYING FOR SHARES
Please note the following when purchasing shares:
- - Cash, credit cards, third party checks, travelers cheques, credit card checks
or money orders will not be accepted.
- - All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks.
- - We may make additional attempts to debit the bank account for ACH purchases.
- - The Fund reserves the right to reject any specific purchase request.
- - If all or a portion of a check is received for investment without a specific
fund designation, the undesignated amount will be invested in the Janus Money
Market Fund -- Investor Shares. Shares that are subsequently exchanged from
Janus Money Market Fund -- Investor Shares into the selected Fund will receive
the NAV next calculated after your order is received and accepted by the Fund.
- - 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.
EXCHANGE POLICIES
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Funds do not permit excessive trading or market timing. Excessive
purchases, redemptions, or exchanges of Fund shares disrupt portfolio management
and drive Fund expenses higher.
Please note the following when exchanging shares:
- - 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 Exchange). Exchanges in excess of this limit are considered
excessive trading and may be subject to an exchange fee or may result in
termination of the exchange privilege or the right to make future purchases of
Fund shares.
24 Shareholder's manual
<PAGE>
- - The Fund reserves the right to reject any purchase order or 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) or
whose trading has been or may be disruptive to a Fund.
- - 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 Janus prior to making any exchanges. Effective June 4,
1999, shares are no longer available in certificate form.
- - 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-retirement account.
- - 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.
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. During the 10 days following an address change, checks sent to a new
address require a signature guarantee.
- - 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. Wire redemptions are not available for
retirement accounts.
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.
Shareholder's manual 25
<PAGE>
WRITTEN INSTRUCTIONS
To redeem or exchange all or part of your shares in writing, your
request should be sent to one of the addresses listed on page 18
and must include the following information:
- 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 (see account
application for signature requirements)
- your daytime telephone number
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is
applicable:
- You request a redemption by check that exceeds $100,000.
- You would like a check made payable to anyone other than the
shareholder(s) of record.
- You would like a check mailed to an address which has been
changed within 10 days of the redemption request.
- You would like a 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.
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 Shareholder's manual
<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
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 19 or
to close such accounts. This policy will apply to accounts
Shareholder's manual 27
<PAGE>
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 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 customers, 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
28 Shareholder's manual
<PAGE>
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.
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.
ADDRESS CHANGES
To change the address on your account, call 1-800-525-3713 or
send a written request signed by the shareholder(s) of record.
Include the name of your 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.
Shareholder's manual 29
<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 further instructions, please call an
Investor Service Representative.
STATEMENTS AND REPORTS
Investors will receive quarterly confirmations of all
transactions. Quarterly statements for all investors are
available on our Web site. You may make an election on our Web
site to discontinue delivery of your paper statements. 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 requests.
30 Shareholder's manual
<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 pay 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. For the most recent fiscal year, the
Fund paid Janus Capital a management fee equal to 0.68% of the
average daily net assets.
Janus Global Technology Fund prospectus 31
<PAGE>
PORTFOLIO MANAGER
C. MIKE LU
- --------------------------------------------------------------------------------
is Executive Vice President and portfolio manager of the
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
is a Chartered Financial Analyst.
32 Janus Global Technology Fund prospectus
<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 18.
YEAR 2000
Preparing for Year 2000 has been a high priority for Janus
Capital. A dedicated group was established to address this issue.
Janus Capital devoted considerable internal resources and engaged
one of the foremost experts in the field to achieve Year 2000
readiness. Janus Capital successfully completed all five steps of
its Year 2000 preparedness plans including the upgrade and
replacement of all systems, as well as full-scale testing and
implementation of those systems. Janus Capital's detailed
contingency plans were also thoroughly tested. As of the date of
this prospectus, Janus Capital has not seen any adverse impact as
a result of the Year 2000 transition on any of its systems or
those of its vendors, or on the companies in which the Funds
invest or worldwide markets and economies. Nonetheless, Janus
Capital will continue to monitor the effect of the Year 2000
transition, and there can be no absolute assurance that Year 2000
issues will not in the future adversely affect the Funds' or
Janus Capital's operations.
Janus Global Technology Fund prospectus 33
<PAGE>
DISTRIBUTION OF THE FUND
The Fund is distributed by Janus Distributors, Inc., a member of
the National Association of Securities Dealers, Inc. ("NASD"). To
obtain information about NASD member firms and their associated
persons, you may contact NASD Regulation, Inc. at www.nasdr.com,
or the Public Disclosure Hotline at 800-289-9999. An investor
brochure containing information describing the Public Disclosure
Program is available from NASD Regulation, Inc.
34 Janus Global Technology Fund prospectus
<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
Janus Global Technology Fund prospectus 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 18 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
36 Janus Global Technology Fund prospectus
<PAGE>
investing in the Fund. 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 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
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.
Janus Global Technology Fund prospectus 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 Funds' financial statements, are included in the
Annual Reports, which are available upon request and incorporated by reference
into the SAI.
<TABLE>
<CAPTION>
JANUS GLOBAL TECHNOLOGY FUND
- -----------------------------------------------------------------------------
Period ending
October 31st
1999(1)
<S> <C>
1. NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income --
3. Net gains or (losses) on securities (both realized and
unrealized) 10.95
4. Total from investment operations 10.95
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) --
6. Dividends (in excess of net investment income) --
7. Distributions (from capital gains) --
8. Total distributions --
9. NET ASSET VALUE, END OF PERIOD $20.95
10. Total return* 109.40%
11. Net assets, end of period (in millions) $3,335
12. Average net assets for the period (in millions) $1,266
13. Ratio of gross expenses to average net assets** 1.04%
14. Ratio of net expenses to average net assets** 1.02%
15. Ratio of net investment income/(loss) to average net
assets** (0.11%)
16. Portfolio turnover rate** 31%
- -----------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from December 31, 1998 (inception) to October 31, 1999.
* Total return is not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
38 Janus Global Technology Fund prospectus
<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 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
Janus Global Technology Fund prospectus 39
<PAGE>
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 BONDS are bonds 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 bonds 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
40 Janus Global Technology Fund prospectus
<PAGE>
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
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
Janus Global Technology Fund prospectus 41
<PAGE>
of the U.S. government to purchase the agency's obligations and
others are supported only by the credit of the sponsoring agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating
rates of interest and, under certain limited circumstances, may
have varying principal amounts. These securities pay interest at
rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or
market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred 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.
42 Janus Global Technology Fund prospectus
<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 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.
Janus Global Technology Fund prospectus 43
<PAGE>
This page intentionally left blank
44
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
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
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4240
<PAGE>
DOMESTIC EQUITY FUNDS GLOBAL/INTERNATIONAL EQUITY FUNDS
JANUS FUND JANUS WORLDWIDE FUND
JANUS ENTERPRISE FUND JANUS GLOBAL LIFE SCIENCES FUND
JANUS MERCURY FUND
JANUS OLYMPUS FUND
JANUS SPECIAL SITUATIONS FUND FIXED-INCOME FUNDS
JANUS STRATEGIC VALUE FUND JANUS FLEXIBLE INCOME FUND
JANUS GROWTH AND INCOME FUND JANUS FEDERAL TAX-EXEMPT
FUND
JANUS BALANCED FUND JANUS HIGH-YIELD FUND
JANUS EQUITY INCOME FUND JANUS SHORT-TERM BOND FUND
[JANUS LOGO]
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 January 31,
2000, 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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Classification, Portfolio Turnover,
Investment Policies and Restrictions,
and Investment Strategies and Risks............. 2
Investment Adviser.............................. 43
Custodian, Transfer Agent
and Certain Affiliations........................ 49
Portfolio Transactions and Brokerage............ 51
Trustees and Officers........................... 58
Purchase of Shares.............................. 68
Net Asset Value Determination................ 68
Reinvestment of Dividends and Distributions.. 70
Redemption of Shares............................ 71
Shareholder Accounts............................ 72
Telephone and Web site Transactions.......... 72
Systematic Redemptions....................... 72
Tax-Deferred Accounts........................... 73
Income Dividends,
Capital Gains Distributions and Tax Status...... 75
Principal Shareholders.......................... 77
Miscellaneous Information....................... 79
Shares of the Trust.......................... 80
Shareholder Meetings......................... 80
Voting Rights................................ 81
Master/Feeder Option......................... 81
Independent Accountants...................... 82
Registration Statement....................... 82
Performance Information......................... 83
Financial Statements............................ 86
Appendix A...................................... 87
</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 Strategic Value Fund and Janus
Global Life Sciences 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 1999 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
Janus Fund.................................................. 63% 70%
Janus Enterprise Fund....................................... 98% 134%
Janus Mercury Fund.......................................... 89% 105%
Janus Olympus Fund.......................................... 91% 123%
Janus Special Situations Fund............................... 104% 117%
Janus Strategic Value Fund(1)............................... N/A N/A
Janus Growth and Income Fund................................ 43% 95%
Janus Balanced Fund......................................... 64% 73%
Janus Equity Income Fund.................................... 81% 101%
Janus Worldwide Fund........................................ 68% 86%
Janus Global Life Sciences Fund(2).......................... 235% N/A
Janus Flexible Income Fund.................................. 119% 148%
Janus Federal Tax-Exempt Fund............................... 62% 227%
Janus High-Yield Fund....................................... 310% 336%
Janus Short-Term Bond Fund.................................. 101% 101%
</TABLE>
(1) The Fund had not commenced operations as of October 31, 1999.
(2) The Fund had not commenced operations as of October 31, 1998.
For the year ended October 31, 1999, the high portfolio turnover
rate for Janus Global Life Sciences Fund is primarily
attributable to increased purchase and sales activity resulting
from increased assets. With respect to Janus Federal Tax-Exempt
Fund for the fiscal year ended October 31, 1999, the lower
portfolio turnover rate is primarily attributable to decreased
purchase and sales activity in the portfolio.
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
3
<PAGE>
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. 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).
4
<PAGE>
(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.
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
5
<PAGE>
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 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'
6
<PAGE>
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 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
7
<PAGE>
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 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 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
groups: health care; pharmaceuticals; agriculture;
cosmetics/personal care; and biotechnology.
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
8
<PAGE>
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 16).
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
9
<PAGE>
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.
Securities Lending
The Funds may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Funds may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Funds
will not have the right to vote on securities while they are
being lent, but it will generally call a loan in anticipation of
any important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral permitted by the SEC
and policies approved by the Trustees. Cash collateral may be
invested in money market funds advised by Janus to the extent
consistent with exemptive relief obtained from the SEC.
10
<PAGE>
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 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
11
<PAGE>
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
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
12
<PAGE>
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 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.
13
<PAGE>
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 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
14
<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 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.
15
<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 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
16
<PAGE>
securities of foreign companies. EDRs and GDRs are securities
that are typically issued by foreign banks or foreign trust
companies, although U.S. banks or U.S. trust companies may issue
them. EDRs and GDRs are structured similar to the arrangements 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.
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.
17
<PAGE>
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 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,
18
<PAGE>
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.
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
19
<PAGE>
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 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 Bonds
Janus Flexible Income Fund and Janus High-Yield Fund may invest
without limit in bonds that are rated below investment grade
(e.g., bonds 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 bonds. Lower rated bonds 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 bonds so
affected.
Any Fund may also invest in unrated bonds of foreign and domestic
issuers. Unrated bonds, while not necessarily of lower
20
<PAGE>
quality than rated bonds, 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 bond,
in determining whether to purchase unrated municipal bonds.
Unrated bonds will be included in the 35% limit of each Fund
unless its portfolio manager deems such securities to be the
equivalent of investment grade bonds.
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
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
21
<PAGE>
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 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
22
<PAGE>
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
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.
23
<PAGE>
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,
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 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 bonds in its
portfolio. If interest rates increase as anticipated, the value
of the 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
24
<PAGE>
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 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 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
25
<PAGE>
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 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
26
<PAGE>
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 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
27
<PAGE>
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 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
28
<PAGE>
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 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
29
<PAGE>
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 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
30
<PAGE>
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 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,
31
<PAGE>
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 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.
32
<PAGE>
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 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
33
<PAGE>
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 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
34
<PAGE>
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 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
35
<PAGE>
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 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
36
<PAGE>
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 price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and a Fund's
37
<PAGE>
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
38
<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
39
<PAGE>
contractually obligated to make. If the other party to an
interest 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
40
<PAGE>
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 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
41
<PAGE>
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.
42
<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.
Each of the Domestic and Global/International Equity Funds have
agreed to compensate Janus Capital for its services by the
monthly payment of a fee at the annual rate of 0.65% of the
average daily net assets of each Fund. This fee is the same as or
lower than the fee that each of the Domestic and
Global/International Equity
43
<PAGE>
Funds paid under its old agreement during its most recent fiscal
year.
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.
44
<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. The information presented in the table below
reflects the management fees in effect during each of the periods
shown. Effective January 31, 2000, the Domestic Equity Funds' and
Global/International Equity Funds' management fees were changed
to 0.65% of the average daily net assets of each Fund. This fee
is the same as or lower than the fee that each Fund paid under
its old agreement.
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ------------------------
Fund Name Advisory Fees Waiver Advisory Fees Waiver Advisory Fees Waiver
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Fund $188,515,455 - $135,223,467 - $114,245,282 -
Janus Enterprise Fund $ 7,724,455 - $ 3,982,454 - $ 4,438,870 -
Janus Mercury Fund $ 34,579,777 - $ 14,070,962 - $ 13,721,557 -
Janus Olympus Fund $ 15,147,815 - $ 5,433,827 - $ 3,801,421 -
Janus Special
Situations Fund $ 6,903,567 - $ 5,040,157 - $ 1,090,013(1) -
Janus Strategic Value
Fund(2) N/A - N/A - N/A -
Janus Growth and
Income Fund $ 28,839,302 - $ 16,512,709 - $ 9,650,498 -
Janus Balanced Fund $ 13,099,760 - $ 3,869,978 - $ 2,167,710 -
Janus Equity Income
Fund $ 4,084,064 - $ 1,002,095 - $ 394,962 -
Janus Worldwide Fund $122,952,544 - $ 85,269,327 - $ 51,015,512 -
Janus Global Life
Sciences Fund(3) $ 1,422,165(4) - N/A - N/A -
Janus Flexible Income
Fund $ 7,263,539 - $ 5,210,692 - $ 3,910,319 -
Janus Federal Tax-
Exempt Fund $ 614,197 352,448 $ 444,799 $236,058 $ 321,447 $236,762
Janus High-Yield Fund $ 2,217,408 75,922 $ 2,772,932 - $ 1,993,630 $ 18,746
Janus Short-Term Bond
Fund $ 883,230 504,515 $ 582,112 $354,262 $ 314,737 $258,118
</TABLE>
(1) December 31, 1996 (inception) to October 31, 1997.
(2) The Fund had not commenced operations as of October 31, 1999.
(3) The Fund had not commenced operations as of October 31, 1998.
(4) December 31, 1998 (inception) to October 31, 1999.
45
<PAGE>
The Advisory Agreement for each of the Funds is dated July 1,
1997 (except Janus Global Life Sciences Fund which is dated
September 14, 1998, and Janus Strategic Value Fund which is dated
September 14, 1999). The Domestic Equity Funds' and
Global/International Equity Funds' Advisory Agreements were each
amended effective January 31, 2000. Each Advisory Agreement will
continue in effect until July 1, 2000 (except Janus Strategic
Value Fund's agreement which will continue in effect until July
1, 2001), 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.
46
<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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Funds' portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Funds' Code of Ethics ("Code"). The
Funds' Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Funds, and employees
of Janus Capital and the Trust, and requires investment
personnel, inside Directors/Trustees of Janus Capital and the
Funds and certain other designated employees deemed to have
access to current trading information to pre-clear all
transactions in securities not otherwise exempt under the Code.
Requests for trading authorization will be denied when, among
other reasons, the proposed personal transaction would be
contrary to the provisions of the Code 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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may
47
<PAGE>
be required under certain circumstances to forfeit their profits
made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
48
<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 annual rate of $3.06
per shareholder account for the equity 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."
49
<PAGE>
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.
50
<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
51
<PAGE>
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 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, 1999, 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 $12,735,159 $13,856,863,342
Janus Enterprise Fund $ 407,006 $ 306,752,804
Janus Mercury Fund $ 4,322,612 $ 4,257,705,057
Janus Olympus Fund $ 1,392,557 $ 1,344,543,892
Janus Special Situations Fund $ 851,064 $ 510,347,940
Janus Growth and Income Fund $ 1,611,590 $ 1,554,067,438
Janus Balanced Fund $ 461,741 $ 423,610,744
Janus Equity Income Fund $ 231,426 $ 216,788,958
Janus Worldwide Fund $ 3,386,046 $ 3,317,636,878
Janus Global Life Sciences Fund(1) $ 281,300 $ 279,928,575
</TABLE>
(1) December 31, 1998 (inception) to October 31, 1999.
Note: Funds that are not included in the table did not pay any commissions
related to research for the stated period.
52
<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
53
<PAGE>
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 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.
54
<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 1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Fund $24,220,814 $28,468,686 $44,265,867
Janus Enterprise Fund $ 1,437,645 $ 1,281,067 $ 1,366,558
Janus Mercury Fund $ 7,635,143 $ 3,829,712 $ 5,379,505
Janus Olympus Fund $ 2,699,806 $ 1,285,709 $ 1,188,032
Janus Special Situations Fund $ 2,062,789 $ 2,183,339 $ 833,811(1)
Janus Growth and Income Fund $ 3,425,984 $ 3,923,528 $ 3,401,847
Janus Balanced Fund $ 1,046,051 $ 471,225 $ 642,234
Janus Equity Income Fund $ 493,786 $ 218,190 $ 179,800
Janus Worldwide Fund $34,428,451 $32,987,352 $26,537,096
Janus Global Life Sciences Fund(2) $ 669,916(3) N/A N/A
Janus Flexible Income Fund $ 5,000 $ 35,152 $ 35,674
Janus Federal Tax-Exempt Fund $ - $ 11,882 -
Janus High-Yield Fund $ 12,353 $ 101,250 $ 55,654
Janus Short-Term Bond Fund $ 1,411 $ 500 $ 3,092
</TABLE>
(1) December 31, 1996 (inception) to October 31, 1997.
(2) The Fund had not commenced operations as of October 31, 1998.
(3) December 31, 1998 (inception) to October 31, 1999.
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.
55
<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, 1999* Expenses* Commissions+ Transactions
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $460,621 $345,465 1.90% 1.30%
Janus Enterprise Fund $ 917 $ 688 0.06% 0.02%
Janus Mercury Fund $ 77,757 $ 58,318 1.02% 0.71%
Janus Olympus Fund $ 6,177 $ 4,633 0.23% 0.12%
Janus Special Situations Fund $ 24,048 $ 18,036 1.17% 0.76%
Janus Growth and Income Fund $ 33,857 $ 25,393 0.99% 0.76%
Janus Balanced Fund $ 3,274 $ 2,456 0.31% 0.42%
Janus Worldwide Fund $197,404 $148,053 0.57% 0.46%
</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, 1998* Expenses* October 31, 1997* of Expenses*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Fund $517,147 $387,860 $1,118,869 $839,152
Janus Enterprise Fund $ 9,121 $ 6,841 $ 33,551 $ 28,388
Janus Mercury Fund $ 17,664 $ 13,248 $ 95,033 $ 71,275
Janus Olympus Fund $ 12,268 $ 9,201 $ 5,922 $ 4,442
Janus Special Situations
Fund $ 21,682 $ 16,262 $ - $ -
Janus Growth and Income
Fund $ 70,167 $ 52,625 $ 76,575 $ 57,431
Janus Balanced Fund $ 9,864 $ 7,398 $ 2,636 $ 1,977
Janus Equity Income Fund $ 1,944 $ 1,458 $ 1,920 $ 1,440
Janus Worldwide Fund $ 54,582 $ 40,937 $ 177,943 $133,457
</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.
Note: Funds that did not execute trades with DSTS during the stated periods are
not included in the table.
56
<PAGE>
As of October 31, 1999, 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. $929,699,785
Janus Enterprise Fund Charles Schwab Corp. 24,660,521
Janus Olympus Fund Charles Schwab Corp. 36,601,250
Janus Growth and Income Fund Charles Schwab Corp. 58,406,250
Janus Balanced Fund Charles Schwab Corp. 48,690,565
Janus Equity Income Fund Charles Schwab Corp. 12,935,193
Janus Short-Term Bond Fund Merrill Lynch & Company, Inc. 3,721,875
Morgan Stanley Dean Witter & Co. 2,002,220
</TABLE>
57
<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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986-December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997-December 1999), Executive Vice President
and Co-Manager of Janus Venture Fund. Formerly (December 1993-
December 1995), Executive Vice President and Portfolio Manager of
Janus Balanced Fund.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
58
<PAGE>
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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.
59
<PAGE>
Martin H. Waldinger, Age 61 - 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.
Laurence J. Chang, Age 34 - Executive Vice President*
100 Fillmore Street
Denver, Co 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Co-Manager of Janus Worldwide Fund.
He is also Executive Vice President and Co-Manager of Janus
Overseas Fund. Formerly, an assistant portfolio manager at Janus
Capital (1998-1999). Formerly, a research analyst at Janus
Capital (1993-1998).
David J. Corkins, Age 33 - 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).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
++Mr. Corkins and Mr. Lammert are related by marriage.
60
<PAGE>
David C. Decker, Age 33 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Special
Situations Fund and Janus Strategic Value Fund. Assistant
Portfolio Manager of Janus Fund. Vice President of Janus Capital.
Formerly, research analyst at Janus Capital (1992-1996).
James P. Goff, Age 35 - 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 37 - Executive Vice President*+
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Co-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.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
+Ms. Hayes and Ms. Young are sisters.
61
<PAGE>
Warren B. Lammert, Age 38 - 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).
Thomas R. Malley, Age 31 - 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).
Karen L. Reidy, Age 32 - 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, equity analyst at Janus
Capital (1995-1999).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
++Mr. Lammert and Mr. Corkins are related by marriage.
62
<PAGE>
Blaine P. Rollins, Age 32 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly, Executive Vice President and Portfolio Manager of Janus
Balanced Fund (January 1996-December 1999). Formerly, Executive
Vice President and Portfolio Manager of Janus Equity Income Fund
(June 1996-December 1999). Formerly, Assistant Portfolio Manager
of Janus Fund (January 1994-December 1999). 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 34 - 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.
63
<PAGE>
Ronald V. Speaker, Age 35 - 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 36 - 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).
Claire Young, Age 34 - 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).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
+Ms. Young and Ms. Hayes are sisters.
64
<PAGE>
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
65
<PAGE>
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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.
66
<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, 1999 December 31, 1999**
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $58,267 $107,333
Gary O. Loo, Trustee $53,505 $107,333
Dennis B. Mullen, Trustee $49,911 $107,333
Martin H. Waldinger, Trustee $55,811 $107,333
James T. Rothe, Trustee $53,505 $107,333
</TABLE>
* An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
** As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
67
<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,
68
<PAGE>
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 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.
69
<PAGE>
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.
70
<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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest of the
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.
71
<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 AND WEB SITE TRANSACTIONS
As stated in the Prospectuses, shareholders may initiate a number
of transactions by telephone and via our Web site. The Funds,
their transfer agent and their distributor disclaim
responsibility for the authenticity of instructions received by
telephone and the Web site. Such entities will employ reasonable
procedures to confirm that instructions communicated by telephone
and the Web site are genuine. Such procedures may include, among
others, requiring personal identification prior to acting upon
telephone and Web site instructions, providing written
confirmation of telephone and Web site 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.
72
<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
73
<PAGE>
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 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.
74
<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 Strategic Value Fund, Janus Global
Life Sciences 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.
75
<PAGE>
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 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.
76
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, 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 7, 2000, 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.................................................. 14.22%
Janus Enterprise Fund....................................... 17.27%
Janus Mercury Fund.......................................... 16.25%
Janus Olympus Fund.......................................... 21.79%
Janus Special Situations Fund............................... 17.13%
Janus Growth and Income Fund................................ 18.26%
Janus Balanced Fund......................................... 22.41%
Janus Equity Income Fund.................................... 20.43%
Janus Worldwide Fund........................................ 23.22%
Janus Global Life Sciences Fund............................. 23.98%
Janus Flexible Income Fund.................................. 33.02%
Janus High-Yield Fund....................................... 29.63%
Janus Short-Term Bond Fund.................................. 11.92%
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fund Name Held by National Financial
- -----------------------------------------------------------------------------------
<S> <C>
Janus Enterprise Fund.................................. 8.72%
Janus Mercury Fund..................................... 9.46%
Janus Olympus Fund..................................... 12.88%
Janus Special Situations Fund.......................... 9.36%
Janus Growth and Income Fund........................... 9.50%
Janus Balanced Fund.................................... 8.70%
Janus Equity Income Fund............................... 13.01%
Janus Worldwide Fund................................... 10.29%
Janus Global Life Sciences Fund........................ 3.37%
Janus Flexible Income Fund............................. 11.08%
Janus High-Yield Fund.................................. 7.60%
- -----------------------------------------------------------------------------------
</TABLE>
77
<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 7, 2000, more than 5% of the
outstanding shares of the following Funds were owned of record by
the shareholders listed below:
<TABLE>
<CAPTION>
Shareholder and Percentage
Fund Address of Record Ownership
--------------------------------------------------------------
<S> <C> <C>
Janus Worldwide Fund FIIOC 7.47%
100 Magellan Way
Covington, KY 41015-1987
Janus Enterprise Fund FIIOC 5.50%
100 Magellan Way
Covington, KY 41015-1987
Merrill Lynch Trust Co. 5.72%
265 Davidson Ave. 4th Fl.
Somerset, NJ 08873-4120
Janus High-Yield Fund Donaldson Lufkin & Jenrette 8.15%
Securities Corp.
P.O. Box 2052
Jersey City, NJ 07303
--------------------------------------------------------------
</TABLE>
To the knowledge of the Funds, no other shareholder owned more
than 5% of the outstanding shares of any Fund as of January 7,
2000.
78
<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 22 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 the Janus Flexible
Income Fund series of Janus Income Series, a separate
Massachusetts business trust created on May 28, 1986.
Shareholders received shares of the series of the Trust equal
both in number and net asset value to their shares of the
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 all financial and other information about Janus
Flexible Income Fund prior to August 7, 1992, are to the
predecessor entity; 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. The Declaration of Trust also provides
for indemnification from
79
<PAGE>
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.
80
<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.
81
<PAGE>
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.
82
<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, 1999, is shown in the table below (with the exception
of Janus Strategic Value Fund, which had not commenced operations
as of October 31, 1999):
<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 2/5/70 357 56.75% 26.81% 19.13% 18.02%
Janus Enterprise Fund 9/1/92 86 104.09% 27.21% N/A 27.09%
Janus Mercury Fund 5/3/93 78 86.02% 32.15% N/A 30.69%
Janus Olympus Fund 12/29/95 46 88.34% N/A N/A 39.46%
Janus Special Situations Fund 12/31/96 34 56.54% N/A N/A 36.04%
Janus Growth and Income Fund 5/15/91 101.5 49.59% 30.27% N/A 23.10%
Janus Balanced Fund 9/1/92 86 29.89% 21.18% N/A 18.08%
Janus Equity Income Fund 6/28/96 40 47.22% N/A N/A 32.66%
Janus Worldwide Fund 5/15/91 101.5 42.33% 22.78% N/A 21.57%
Janus Global Life Sciences
Fund 12/31/98 10 N/A N/A N/A 19.70%(1)
Janus Flexible Income Fund 7/7/87 148 1.75% 9.05% 8.82% 8.66%
Janus Federal Tax-Exempt Fund 5/3/93 78 (4.04%) 5.82% N/A 4.34%
Janus High-Yield Fund 12/29/95 46 6.34% N/A N/A 10.47%
Janus Short-Term Bond Fund 9/1/92 86 2.82% 5.80% N/A 5.04%
</TABLE>
(1) Cumulative total return from December 31, 1998 (inception) to October 31,
1999.
83
<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:
6
YIELD = 2[(a - b + 1) - 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, 1999, for the
Fixed-Income Funds is shown below:
<TABLE>
<S> <C>
Janus Flexible Income Fund 7.48%
Janus Federal Tax-Exempt Fund 5.48%
Janus High-Yield Fund 9.76%
Janus Short-Term Bond Fund 6.32%
</TABLE>
84
<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.
85
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements for the period ended
October 31, 1999 are hereby incorporated into this SAI by
reference to the Funds' Annual Reports dated October 31, 1999
(with the exception of Janus Strategic Value Fund which had not
commenced operations as of October 31, 1999).
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS:
Schedules of Investments as of October 31, 1999
Statements of Operations for the period ended October 31, 1999
Statements of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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.
86
<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.
87
<PAGE>
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>
88
<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>
89
<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.
90
<PAGE>
This page intentionally left blank
91
<PAGE>
This page intentionally left blank
92
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4236
<PAGE>
MONEY MARKET FUNDS -- INVESTOR SHARES
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
[JANUS LOGO]
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 Tax-Exempt Money Market Fund and
Janus Government 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 January 31, 2000,
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>
- --------------------------------------------------------------------------------
<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
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
</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
2
<PAGE>
regulations under U.S. laws applicable to domestic banks and, to
the extent that its parent is unconditionally liable 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.
3
<PAGE>
(7) Each Fund may, notwithstanding any other investment policy or
restriction (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 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
4
<PAGE>
use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities.
(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
5
<PAGE>
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
6
<PAGE>
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 period, to prepay the outstanding principal amount
of the
7
<PAGE>
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
8
<PAGE>
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 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
9
<PAGE>
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 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.
10
<PAGE>
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.
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.
Securities Lending
The Funds may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Funds may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Funds
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral permitted by the
Securities and Exchange Commission and policies approved by the
Trustees. Cash collateral may be invested
11
<PAGE>
in money market funds advised by Janus to the extent consistent
with exemptive relief obtained from the SEC.
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.
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
12
<PAGE>
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 U.S. dollar denominated
debt obligations. 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.
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
13
<PAGE>
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-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.
14
<PAGE>
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 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,"
15
<PAGE>
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 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
16
<PAGE>
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 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.
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., 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
18
<PAGE>
period. The Fund's current yield shall be calculated by (a)
determining the net change during a seven calendar day period 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, 1999 is shown below:
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Investor Shares 4.94% 5.06%
Janus Tax-Exempt Money Market Fund - Investor Shares* 2.99% 3.03%
Janus Government Money Market Fund - Investor Shares 4.83% 4.95%
</TABLE>
*Janus Tax-Exempt Money Market Fund Investor Shares' tax equivalent yield for
the seven day period ended October 31, 1999 was 4.15%.
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
20
<PAGE>
repurchase agreements, to those U.S. dollar-denominated
instruments that Janus Capital has determined present minimal
credit 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>
1999 1998 1997
------------------------ ----------------------- -----------------------
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 $14,570,672 $7,285,336 $9,548,370 $4,774,185 $6,858,596 $3,429,298
Janus Tax-Exempt
Money Market Fund $437,746 $218,873 $226,264 $113,132 $158,812 $79,406
Janus Government
Money Market Fund $2,093,192 $1,046,596 $944,654 $472,327 $362,308 $181,154
</TABLE>
The following table summarizes the administration fees paid by
the Shares for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
Administration Administration Administration
Fund Name Fees Fees Fees
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund - Investor Shares $9,043,263 $5,619,954 $4,415,259
Janus Tax-Exempt Money Market Fund - Investor
Shares $614,729 $455,293 $379,650
Janus Government Money Market Fund - Investor
Shares $1,153,922 $752,625 $615,966
</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, 2000, 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
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
23
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
24
<PAGE>
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.
The Funds' portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Funds' Code of Ethics ("Code"). The
Funds' Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Funds and employees
of Janus Capital and the Trust, and requires investment
personnel, inside Directors/Trustees of Janus Capital and the
Funds and certain other designated employees deemed to have
access to current trading information to pre-clear all
transactions in securities not otherwise exempt under the Code.
Requests for trading authorization will be denied when, among
other reasons, the proposed personal transaction would be
contrary to the provisions of the Code 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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
25
<PAGE>
CUSTODIAN, TRANSFER AGENT AND
CERTAIN AFFILIATIONS
- --------------------------------------------------------------------------------
Citibank, N.A., 111 Wall Street 24th Floor, Zone 5, New York, NY
10043, is the Funds' custodian. 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.
27
<PAGE>
For the fiscal year ended October 31, 1999, the Funds paid no
brokerage commissions to brokers and dealers in transactions
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1999, October 31, 1998 and
October 31, 1997, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1999 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
Janus Government 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
28
<PAGE>
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
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, 1999, 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 Barclays Capital, Inc. $200,000,000
Bear Stearns Companies, Inc. 73,903,773
Deutsche Bank Securities,
Inc. 445,100,000
Goldman Sachs Group, L.P. 150,000,000
Lehman Brothers, Inc. 395,000,000
Morgan Stanley Company, Inc. 24,662,778
NationsBank Corp. 360,000,000
S.G. Cowen Securities Corp. 150,000,000
Janus Government Money Market
Fund ABN AMRO Securities, Inc. 107,800,000
Credit Suisse First Boston,
Inc. 150,000,000
Deutsche Bank Securities,
Inc. 215,900,000
</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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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 61 - 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 50 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus 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.
J. Eric Thorderson, Age 38 - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and portfolio manager of Janus
Government Money Market Fund. Assistant portfolio manager of
Janus Money Market Fund and Janus Tax Exempt Money Market Fund.
Formerly (1996-1999) a Janus money market analyst. Formerly
(1991-1996) a senior analyst for USAA Investment Management
Company.
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. Director of Janus World Funds Plc.
Formerly (1997-1998), Executive Vice President and General
Counsel of Prudential Investments Fund Management LLC,
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
32
<PAGE>
Newark, NJ. Formerly (1994-1997), Vice President and General
Counsel of Prudential Retirement Services, Newark, NJ.
Steven R. Goodbarn, Age 42 - 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
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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, 1999 December 31, 1999**
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $6,790 $107,333
Gary O. Loo, Trustee $14,181 $107,333
Dennis B. Mullen, Trustee $19,725 $107,333
Martin H. Waldinger, Trustee $6,488 $107,333
James T. Rothe, Trustee $14,181 $107,333
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1999, 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 some or all of the shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest of the
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.
37
<PAGE>
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
38
<PAGE>
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 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.
39
<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
40
<PAGE>
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.
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.
41
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, the officers and Trustees as a group owned
less than 1% of the outstanding Shares.
As of January 7, 2000, Janus Capital Corporation, 100 Fillmore
Street, Denver, CO 80206-4928, owned 21.35% of the Shares of
Janus Government Money Market Fund.
To the knowledge of the Funds, no other shareholder owned more
than 5% of the outstanding Shares of the Funds as of January 7,
2000.
42
<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 22 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.
43
<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 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
44
<PAGE>
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.
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.
45
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements of the Funds for the
period ended October 31, 1999 are hereby incorporated into this
SAI by reference to the Funds' Annual Report dated October 31,
1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1999
Statements of Operations for the period ended October 31, 1999
Statements of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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
<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.
47
<PAGE>
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 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.
48
<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>
49
<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>
50
<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
51
<PAGE>
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
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
52
<PAGE>
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 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
53
<PAGE>
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
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
54
<PAGE>
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 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.
55
<PAGE>
This page intentionally left blank
56
<PAGE>
This page intentionally left blank
57
<PAGE>
This page intentionally left blank
58
<PAGE>
This page intentionally left blank
59
<PAGE>
This page intentionally left blank
60
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4273
<PAGE>
MONEY MARKET FUNDS -- INSTITUTIONAL SHARES
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
[JANUS LOGO]
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 Tax-Exempt Money Market
Fund and Janus Government 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 January 31, 2000,
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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Restrictions and Investment
Strategies...................................... 2
Performance Data................................ 19
Investment Adviser and Administrator............ 23
Custodian, Transfer Agent and Certain
Affiliations.................................... 27
Portfolio Transactions and Brokerage............ 28
Trustees and Officers........................... 31
Purchase of Shares.............................. 37
Redemption of Shares............................ 38
Tax-Deferred Accounts........................... 39
Shareholder Accounts............................ 40
Dividends and Tax Status........................ 40
Principal Shareholders.......................... 42
Miscellaneous Information....................... 44
Financial Statements............................ 47
Appendix A - Description of Securities Ratings.. 48
Appendix B - Description of Municipal
Securities...................................... 52
</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
2
<PAGE>
regulations under U.S. laws applicable to domestic banks and, to
the extent that its parent is unconditionally liable 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.
3
<PAGE>
(7) Each Fund may, notwithstanding any other investment policy or
restriction (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 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
4
<PAGE>
use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities.
(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
6
<PAGE>
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.
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.
7
<PAGE>
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.
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,
8
<PAGE>
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 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
9
<PAGE>
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 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.
10
<PAGE>
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.
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.
Securities Lending
The Funds may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Funds may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Funds
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral
11
<PAGE>
permitted by the Securities and Exchange Commission and policies
approved by the Trustees. Cash collateral may be invested in
money market funds advised by Janus to the extent consistent with
exemptive relief obtained from the SEC.
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.
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
12
<PAGE>
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 U.S. dollar denominated
debt obligations. 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.
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'
accept-
13
<PAGE>
ances, 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-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
14
<PAGE>
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 maturities
of 397 days or less. Examples include tax anticipation and
revenue anticipation notes, which generally are issued in
15
<PAGE>
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 evolved as a means for governmental
issuers to acquire property and equipment without meeting the
constitutional and statutory
16
<PAGE>
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
17
<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.
18
<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
19
<PAGE>
period. Current yield shall be calculated by (a) determining the
net change during a seven calendar day period 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
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, 1999 is shown below:
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Institutional Shares 5.42% 5.57%
Janus Tax-Exempt Money Market Fund - Institutional Shares* 3.44% 3.49%
Janus Government Money Market Fund - Institutional Shares 5.32% 5.46%
</TABLE>
*Janus Tax-Exempt Money Market Fund Institutional Shares' tax-equivalent yield
for the seven-day period ended October 31, 1999 was 4.77%.
20
<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
21
<PAGE>
repurchase agreements, to those U.S. dollar-denominated
instruments that Janus Capital has determined present minimal
credit 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.
22
<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.
23
<PAGE>
The following table summarizes the advisory fees paid by the
Funds for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1999 1998 1997
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 $14,570,672 7,285,336 $9,548,370 $4,774,185 $6,858,596 $3,429,298
Janus Tax-Exempt
Money Market Fund $437,746 $218,873 $226,264 $113,132 $158,812 $79,406
Janus Government
Money Market Fund $2,093,192 $1,046,596 $944,654 $472,327 $362,308 $181,154
</TABLE>
The following table summarizes the administration fees paid by
the Shares for the fiscal years ended October 31:
<TABLE>
<CAPTION>
1999 1998 1997
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 $8,168,151 $2,722,717 $5,431,308 $1,810,436 $3,818,091 $1,272,697
Janus Tax-Exempt Money
Market Fund -
Institutional Shares $137,757 $45,919 $28,289 $9,430 $5,199 $1,733
Janus Government Money
Market Fund -
Institutional Shares $1,155,336 $385,112 $481,760 $160,587 $85,227 $28,409
</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, 2000, 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
24
<PAGE>
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.
25
<PAGE>
KCSI has announced its intention to separate its transportation
and financial services businesses. KCSI anticipates the
separation to be completed in the first quarter of 2000.
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.
The Funds' portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Funds' Code of Ethics ("Code"). The
Funds' Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Funds and employees
of Janus Capital and the Trust, and requires investment
personnel, inside Directors/Trustees of Janus Capital and the
Funds and certain other designated employees deemed to have
access to current trading information to pre-clear all
transactions in securities not otherwise exempt under the Code.
Requests for trading authorization will be denied when, among
other reasons, the proposed personal transaction would be
contrary to the provisions of the Code 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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
26
<PAGE>
CUSTODIAN, TRANSFER AGENT AND
CERTAIN AFFILIATIONS
- --------------------------------------------------------------------------------
Citibank, N.A., 111 Wall Street 24th Floor, Zone 5, New York, NY
10043, is the Funds' custodian. 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.
28
<PAGE>
For the fiscal year ended October 31, 1999, the Funds paid no
brokerage commissions to brokers and dealers in transactions
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1999, October 31, 1998 and
October 31, 1997, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1999 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
Janus Government 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
29
<PAGE>
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
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, 1999, 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 Barclays Capital, Inc. $200,000,000
Bear Stearns Companies, Inc. $ 73,903,773
Deutsche Bank Securities, Inc. $445,100,000
Goldman Sachs Group L.P. $150,000,000
Lehman Brothers, Inc. $395,000,000
Morgan Stanley Company, Inc. $ 24,662,778
Nationsbank Corp. $360,000,000
S.G. Cowen Securities Corp. $150,000,000
Janus Government Money Market
Fund ABN Amro Securities, Inc. $107,800,000
Credit Suisse First Boston,
Inc. $150,000,000
Deutsche Bank Securities, Inc. $215,900,000
</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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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 61 - 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 50 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus 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).
J. Eric Thorderson, Age 38 - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and Portfolio Manager of Janus
Government Money Market Fund. Assistant portfolio manager of
Janus Money Market Fund and Janus Tax-Exempt Money Market Fund.
Formerly (1996-1999) a Janus Money Market analyst. Formerly
(1991-1996) a senior analyst for USAA Investment Management
Company.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
33
<PAGE>
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Assistant Vice President and Secretary of Janus Aspen Series.
Vice President and Assistant General Counsel of Janus Capital.
Vice President of Janus Distributors, Inc. Assistant Vice
President of Janus Service Corporation.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
34
<PAGE>
Glenn P. O'Flaherty, Age 41 - 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.
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.
35
<PAGE>
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, 1999 December 31, 1999**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $6,790 $107,333
Gary O. Loo, Trustee $14,181 $107,333
Dennis B. Mullen, Trustee $19,725 $107,333
Martin H. Waldinger, Trustee $6,488 $107,333
James T. Rothe, Trustee $14,181 $107,333
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
36
<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.
37
<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 some or all of its Shares in kind under
unusual circumstances, in order to protect the interests of
remaining shareholders, or to accommodate a request by a
particular shareholder that does not adversely affect the
interest of the 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.
38
<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.
39
<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
40
<PAGE>
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.
41
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, the officers and Trustees as a group owned
less than 1% of the outstanding Shares.
As of January 7, 2000, the following shareholders owned more than
5% of the Shares of Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Comerica Bank 411 W. Lafayette St. 32.76%
Mailcode 3455
Detroit, MI 48226
Investors Bank and Trust P.O. Box 9130 5.89%
M/C TRD 18
Boston, MA 02117
</TABLE>
As of January 7, 2000, the following shareholders owned more than
5% of the Shares of Janus Tax-Exempt Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Judith Albaum 24 Spring Lane 7.76%
Great Neck, NY 11024
Sadie Decker 5910 So. University Blvd. 10.76%
Suite C18430
Littleton, CO 80121
Robert Krug 75 Spring Creek Rd. 7.30%
Barrington, IL 60010
Sunwood Development Cov. 3518 Travis Street 8.56%
Suite 200
Houston, TX 77002
Richard Laminack 4010 Inverness 35.83%
Houston, TX 77019
US Bank National Assoc. (combined P.O. Box 64010 11.05%
accts) Saint Paul, MN 55164
</TABLE>
42
<PAGE>
As of January 7, 2000, the following shareholders owned more than
5% of the Shares of Janus Government Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab (combined accts) 101 Montgomery St. 10.90%
San Francisco, CA 94104
American Cable TV/AT&T (combined 295 N. Maple Ave. RM 7134L2 7.88%
accts) Basking Ridge, NJ 07920
</TABLE>
To the knowledge of the Funds, no other shareholder owned more
than 5% of the outstanding Shares of the Funds as of January 7,
2000.
43
<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 22 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.
44
<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
45
<PAGE>
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. 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.
46
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements of the Funds for the
period ended October 31, 1999 are hereby incorporated into this
SAI by reference to the Funds' Annual Report dated October 31,
1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1999
Statements of Operations for the period ended October 31, 1999
Statements of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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.
47
<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.
48
<PAGE>
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
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.
49
<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>
50
<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>
51
<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
52
<PAGE>
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
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
53
<PAGE>
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 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
54
<PAGE>
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
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
55
<PAGE>
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 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.
56
<PAGE>
This page intentionally left blank
57
<PAGE>
This page intentionally left blank
58
<PAGE>
This page intentionally left blank
59
<PAGE>
This page intentionally left blank
60
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4274
<PAGE>
MONEY MARKET FUNDS -- SERVICE SHARES
JANUS MONEY MARKET FUND
JANUS TAX-EXEMPT MONEY MARKET FUND
JANUS GOVERNMENT MONEY MARKET FUND
[JANUS LOGO]
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 Tax-Exempt Money Market Fund and
Janus Government 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 January 31, 2000,
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>
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Restrictions and Investment
Strategies...................................... 2
Performance Data................................ 19
Investment Adviser and Administrator............ 23
Custodian, Transfer Agent and Certain
Affiliations.................................... 28
Portfolio Transactions and Brokerage............ 29
Trustees and Officers........................... 32
Purchase of Shares.............................. 38
Redemptions of Shares........................... 38
Shareholder Accounts............................ 40
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...................................... 52
</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
2
<PAGE>
regulations under U.S. laws applicable to domestic banks and, to
the extent that its parent is unconditionally liable 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.
3
<PAGE>
(7) Each Fund may, notwithstanding any other investment policy or
restriction (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 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
4
<PAGE>
use of short-term credit necessary for the clearance of purchases
and sales of portfolio securities.
(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
6
<PAGE>
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.
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.
7
<PAGE>
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.
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,
8
<PAGE>
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 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
9
<PAGE>
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 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.
10
<PAGE>
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.
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.
Securities Lending
The Funds may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Funds may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Funds
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral
11
<PAGE>
permitted by the Securities and Exchange Commission and policies
approved by the Trustees. Cash collateral may be invested in
money market funds advised by Janus to the extent consistent with
exemptive relief obtained from the SEC.
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.
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
12
<PAGE>
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 U.S. dollar denominated
debt obligations. 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.
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'
accept-
13
<PAGE>
ances, 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-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
14
<PAGE>
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 maturities
of 397 days or less. Examples include tax anticipation and
revenue anticipation notes, which generally are issued in
15
<PAGE>
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 evolved as a means for governmental
issuers to acquire property and equipment without meeting the
constitutional and statutory
16
<PAGE>
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
17
<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.
18
<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
19
<PAGE>
period. Current yield shall be calculated by (a) determining the
net change during a seven calendar day period 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
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.
20
<PAGE>
The Shares' current yield and effective yield for the seven day
period ended October 31, 1999 is shown below.
<TABLE>
<CAPTION>
Seven-day Effective
Fund Name Yield Seven-day Yield
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Janus Money Market Fund - Service Shares 5.15% 5.28%
Janus Tax-Exempt Money Market Fund - Service Shares* 3.23% 3.28%
Janus Government Money Market Fund - Service Shares 5.11% 5.24%
</TABLE>
*Janus Tax-Exempt Money Market Fund - Service Shares tax equivalent yield for
the seven day period ended October 31, 1999 was 4.48%.
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
21
<PAGE>
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 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.
22
<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
23
<PAGE>
continue such waivers until at least the next annual renewal of
the advisory agreements.
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>
1999 1998 1997
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 $14,570,672 7,285,336 $9,548,370 $4,774,185 $6,858,596 $3,429,298
Janus Tax-Exempt
Money Market Fund $437,746 $218,873 $226,264 $113,132 $158,812 $79,406
Janus Government
Money Market Fund $2,093,192 $1,046,596 $944,654 $472,327 $362,308 $181,154
</TABLE>
24
<PAGE>
The following table summarizes the administration fees paid by
the Shares for the fiscal year ended October 31:
<TABLE>
<CAPTION>
1999 1998 1997(1)
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 - Service
Shares $124,999 $ 93,750 $117,287 $87,965 $3,432 $2,574
Janus Tax-Exempt Money Market
Fund - Service Shares $16,360 $12,270 $12,859 $9,644 $35 $28
Janus Government Money Market
Fund - Service Shares $182,349 $136,761 $2,554 $1,915 $4,565 $3,424
</TABLE>
(1) November 22, 1996 (inception of Shares) to October 31, 1997.
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, 2000, 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
25
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Funds' portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Funds' Code of Ethics ("Code"). The
Funds' Code of Ethics is on file with and available from the SEC
26
<PAGE>
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Funds and employees
of Janus Capital and the Trust, and requires investment
personnel, inside Directors/Trustees of Janus Capital and the
Funds and certain other designated employees deemed to have
access to current trading information to pre-clear all
transactions in securities not otherwise exempt under the Code.
Requests for trading authorization will be denied when, among
other reasons, the proposed personal transaction would be
contrary to the provisions of the Code 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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
27
<PAGE>
CUSTODIAN, TRANSFER AGENT AND
CERTAIN AFFILIATIONS
- --------------------------------------------------------------------------------
Citibank, N.A., 111 Wall Street 24th Floor, Zone 5, New York, NY
10043, is the Funds' custodian. 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.
28
<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.
29
<PAGE>
For the fiscal year ended October 31, 1999, the Funds paid no
brokerage commissions to brokers and dealers in transactions
identified for execution primarily on the basis of research and
other services provided to the Funds.
For the fiscal years ended October 31, 1999, October 31, 1998 and
October 31, 1997, the total brokerage commissions paid by the
Funds are summarized below:
<TABLE>
<CAPTION>
Fund Name 1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Janus Money Market Fund $0 $0 $0
Janus Tax-Exempt Money Market Fund $0 $0 $0
Janus Government 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
30
<PAGE>
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
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, 1999, 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 Barclays Capital, Inc. $200,000,000
Bear Stearns Companies, Inc. 73,903,773
Deutsche Bank Securities, Inc. 445,100,000
Goldman Sachs Group L.P. 150,000,000
Lehman Brothers, Inc. 395,000,000
Morgan Stanley Company, Inc. 24,662,778
NationsBank Corp. 360,000,000
S.G. Cowen Securities Corp. 150,000,000
Janus Government Money
Market Fund ABN AMRO Securities, Inc. 107,800,000
Credit Suisse First Boston,
Inc. 150,000,000
Deutsche Bank Securities, Inc. 215,900,000
</TABLE>
31
<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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
Gary O. Loo, Age 59 - 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.
32
<PAGE>
Dennis B. Mullen, Age 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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 61 - 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.
33
<PAGE>
Sharon S. Pichler, Age 50 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus 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.
J. Eric Thorderson, Age 38 - Executive Vice President
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President of Janus Government Money Market Fund.
Assistant portfolio manager of Janus Money Market Fund and Janus
Tax Exempt Money Market Fund. Formerly (1996-1999) a Janus money
market analyst. Formerly (1991-1996) a senior analyst for USAA
Investment Management Company.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
34
<PAGE>
Thomas A. Early, Age 45 - 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. and
Janus International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
35
<PAGE>
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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.
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.
36
<PAGE>
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, 1999 December 31, 1999**
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and
Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $6,790 $107,333
Gary O. Loo, Trustee $14,181 $107,333
Dennis B. Mullen, Trustee $19,725 $107,333
Martin H. Waldinger, Trustee $6,488 $107,333
James T. Rothe, Trustee $14,181 $107,333
</TABLE>
*An interested person of the Funds and of Janus Capital. Compensated by Janus
Capital and not the Funds.
**As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
37
<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.
REDEMPTION 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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest of the
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 of the Trust" and
such
38
<PAGE>
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.
39
<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 predesignated bank account on that day,
but that day's dividend will not be received. Closing times for
purchase and redemption
40
<PAGE>
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.
41
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, the officers and Trustees as a group owned
less than 1% of the outstanding Shares
As of January 7, 2000, the following shareholder owned more than
5% of the Shares of the Janus Money Market Fund:
<TABLE>
<CAPTION>
Percentage
Shareholders Address Ownership
- ------------------------------------------------------------------------------
<S> <C> <C>
Norwest Investment Services, Inc. 608 Second Ave. South 99.62%
Minneapolis, MN 55402
</TABLE>
As of January 7, 2000, 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 Second Ave. South 98.61%
Minneapolis, MN 55402
</TABLE>
As of January 7, 2000, 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 99.12%
Burlington, VT 05402
</TABLE>
To the knowledge of the Fund, no other shareholder owned more
than 5% of the outstanding shares of the Fund as of January 7,
2000.
42
<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 22 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.
43
<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 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
44
<PAGE>
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.
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.
45
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements of the Funds for the
period ended October 31, 1999 are hereby incorporated by
reference to the Funds' Annual Report dated October 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
Schedules of Investments as of October 31, 1999
Statements of Operations for the period ended October 31, 1999
Statements of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and October 31, 1998
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
<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.
47
<PAGE>
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 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.
48
<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>
49
<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>
50
<PAGE>
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>
51
<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
52
<PAGE>
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term
financing.
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
53
<PAGE>
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 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
54
<PAGE>
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
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
55
<PAGE>
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 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.
56
<PAGE>
This page intentionally left blank
57
<PAGE>
This page intentionally left blank
58
<PAGE>
This page intentionally left blank
59
<PAGE>
This page intentionally left blank
60
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4275
<PAGE>
JANUS VENTURE FUND
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
[JANUS LOGO]
JANUS INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
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 January 31, 2000, which is
incorporated by reference into this SAI and may be
obtained from the Trust at the below 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 below phone number or
address.
100 Fillmore Street JANUARY 31, 2000
Denver, CO 80206-4928
(800) 525-3713
<PAGE>
- --------------------------------------------------------------------------------
<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.................................... 44
Portfolio Transactions and Brokerage............ 46
Trustees and Officers........................... 50
Purchase of Shares.............................. 56
Net Asset Value Determination................ 56
Reinvestment of Dividends and Distributions.. 57
Redemption of Shares............................ 59
Shareholder Accounts............................ 60
Telephone and Web Site Transactions.......... 60
Systematic Redemptions....................... 60
Tax-Deferred Accounts........................... 61
Income Dividends, Capital Gains Distributions
and Tax Status.................................. 63
Principal Shareholders.......................... 64
Miscellaneous Information....................... 65
Shares of the Trust.......................... 66
Shareholder Meetings......................... 66
Voting Rights................................ 66
Master/Feeder Option......................... 67
Independent Accountants...................... 67
Registration Statement....................... 67
Performance Information......................... 68
Financial Statements............................ 70
Appendix A...................................... 71
</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, 1999
and October 31, 1998, were 104% and 90%, 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) Invest 25% or more of the value of its total assets in any
particular industry (other than U.S. government securities).
2
<PAGE>
(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
and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of
bona
3
<PAGE>
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 13).
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
6
<PAGE>
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 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.
Securities Lending
The Fund may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Fund may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Fund
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral permitted by the
Securities and Exchange Commission and
7
<PAGE>
policies approved by the Trustees. Cash collateral may be
invested in money market funds advised by Janus to the extent
consistent with exemptive relief obtained from the SEC.
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
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.
8
<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.
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 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
9
<PAGE>
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.
Pass-Through Securities
The Fund may invest in various types of pass-through securities,
such as mortgage-backed securities, asset-backed securities and
10
<PAGE>
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 timely payment
of principal and interest but it is not guaranteed by the full
faith and credit of the U.S. government.
11
<PAGE>
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.
Generally, the originating bank or credit provider is neither the
12
<PAGE>
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 securities of
foreign companies. EDRs and GDRs are securities that
13
<PAGE>
are typically issued by foreign banks or foreign trust companies,
although U.S. banks or U.S. trust companies may issue them. EDRs
and GDRs are similar to the arrangements 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:
14
<PAGE>
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.
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
15
<PAGE>
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 Bonds
The Fund intends to invest less than 35% of its net assets in
bonds that are rated below investment grade (e.g., bonds rated BB
or lower by Standard & Poor's Ratings Services or Ba or lower by
Moody's Investors Service, Inc.). Lower rated bonds 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 bonds so affected.
The Fund may also invest in unrated bonds of foreign and domestic
issuers. Unrated bonds, while not necessarily of lower quality
than rated bonds, 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 bond,
in
16
<PAGE>
determining whether to purchase unrated municipal bonds. Unrated
bonds will be included in the 35% limit unless the portfolio
managers deem such securities to be the equivalent of investment
grade bonds.
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.
17
<PAGE>
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
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
18
<PAGE>
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 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
19
<PAGE>
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 position
remains open, the Fund's return could be diminished due to the
opportunity losses of foregoing other potential investments.
20
<PAGE>
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 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 bonds in its portfolio. If
interest rates increase as anticipated, the value of the 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,
21
<PAGE>
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
22
<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 - 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 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
23
<PAGE>
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 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
24
<PAGE>
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 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
25
<PAGE>
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 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
26
<PAGE>
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").
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
27
<PAGE>
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
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,
28
<PAGE>
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
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.
29
<PAGE>
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.
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
30
<PAGE>
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 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
31
<PAGE>
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 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
32
<PAGE>
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
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
33
<PAGE>
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 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
34
<PAGE>
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.
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
35
<PAGE>
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 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
36
<PAGE>
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, 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
37
<PAGE>
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 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
38
<PAGE>
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.
39
<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 0.65% of
the Fund's average daily net assets. This fee is the same as the
fee that the Fund paid under its old agreement during its most
recent fiscal year.
For the fiscal year ended October 31, 1999, the investment
advisory fee was $9,179,171. For the fiscal years ended
40
<PAGE>
October 31, 1998 and October 31, 1997, the Fund incurred
investment advisory fees of $8,032,427 and $9,406,417,
respectively. Janus Capital did not waive any portion of its fee
in any of these years.
The Advisory Agreement is dated July 1, 1997, as amended January
31, 2000, and it 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 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
41
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Fund's portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Fund's Code of Ethics ("Code"). The
Fund's Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Fund, and employees
of Janus Capital and the Trust and requires investment personnel
and officers of Janus Capital, inside Directors/Trustees of Janus
Capital and the Fund and certain other designated employees
deemed to have access to current trading information to pre-clear
all transactions in securities not otherwise exempt under the
Code. Requests for trading authorization will be denied when,
among other reasons, the proposed personal transaction would be
contrary to the provisions of the Code or would be deemed to
adversely affect any transaction known to be under consideration
42
<PAGE>
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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
43
<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 annual 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
44
<PAGE>
member of the National Association of Securities Dealers, Inc.
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.
45
<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
46
<PAGE>
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 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, 1999, the Fund paid $395,624 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 $194,491,914. 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
47
<PAGE>
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 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.
48
<PAGE>
The total amount of brokerage commissions paid by the Fund during
the fiscal year ended October 31, 1999, was $1,376,841. For the
fiscal years ended October 31, 1998 and October 31, 1997, the
Fund paid brokerage commissions of $1,688,512 and $3,599,484,
respectively. Included in the brokerage commissions paid for the
fiscal year ended October 31, 1999, was $878 paid through DSTS,
which served to reduce by $659 certain out-of-pocket expenses
paid by the Fund. Included in brokerage commissions paid for the
fiscal years ended October 31, 1998 and October 31, 1997, was
$15,909 and $51,096, respectively, paid through DSTS which served
to reduce by $11,932 and $38,322, respectively, certain
out-of-pocket expenses. Brokerage commissions paid through DSTS
for the 1999 fiscal year represented 0.06% of the Fund's
aggregate brokerage commissions for such fiscal year, while 0.05%
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, 1999, the Fund did not own securities of
regular broker-dealers (or parents).
49
<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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
Gary O. Loo, Age 59 - 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.
50
<PAGE>
Dennis B. Mullen, Age 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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.
51
<PAGE>
Martin H. Waldinger, Age 61 - 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 31 - 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 28 - 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).
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
52
<PAGE>
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
53
<PAGE>
Glenn P. O'Flaherty, Age 41 - 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.
54
<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, 1999 December 31, 1999**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $1,193 $107,333
Gary O. Loo, Trustee $1,095 $107,333
Dennis B. Mullen, Trustee $1,020 $107,333
Martin H. Waldinger, Trustee $1,137 $107,333
James T. Rothe, Trustee $1,095 $107,333
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
55
<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
56
<PAGE>
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 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
57
<PAGE>
and distributions the record dates of which fall on or after the
date that the 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.
58
<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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest 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 - 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.
59
<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 AND WEB SITE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone and via our Web site. The Fund, its
transfer agent and its distributor disclaim responsibility for
the authenticity of instructions received by telephone and the
Web site. Such entities will employ reasonable procedures to
confirm that instructions communicated by telephone and the Web
site are genuine. Such procedures may include, among others,
requiring personal identification prior to acting upon telephone
and the Web site instructions, providing written confirmation of
telephone and Web site 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.
60
<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
61
<PAGE>
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 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.
62
<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 declares and
makes annual distributions of income (if any). 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.
The Fund 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 the
Fund which will reduce its investment company taxable income.
63
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, 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 7, 2000, Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104-4122, owned 9.22%
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.
To the knowledge of the Fund, no other shareholder owned more
than 5% of the outstanding shares of the Fund as of January 7,
2000.
64
<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 Fund. 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 22 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.
65
<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
66
<PAGE>
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.
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.
67
<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, 1999, for each of those
periods, are 94.42%, 23.75%, 18.78% and 19.51%, 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, the Dow Jones Industrial
Average 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
68
<PAGE>
techniques than the Fund and such other funds or market
indicators may be comprised of securities that differ
significantly from the Fund's investments.
69
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements for the period ended
October 31, 1999 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1999
Statement of Operations for the period ended October 31, 1999
Statement of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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.
70
<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>
71
<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>
72
<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.
73
<PAGE>
This page intentionally left blank
74
<PAGE>
This page intentionally left blank
75
<PAGE>
This page intentionally left blank
76
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4270
<PAGE>
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.
[JANUS LOGO]
JANUS INVESTMENT FUND
JANUS OVERSEAS FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 January 31, 2000, 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>
- --------------------------------------------------------------------------------
<PAGE>
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 and Web Site 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.......................... 63
Shareholder Meetings......................... 64
Voting Rights................................ 64
Master/Feeder Option......................... 65
Independent Accountants...................... 65
Registration Statement....................... 65
Performance Information......................... 66
Financial Statements............................ 68
Appendix A...................................... 69
</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, 1999
and October 31, 1998, were 92% and 105%, 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) Invest 25% or more of the value of its total assets in any
particular industry (other than U.S. government securities).
2
<PAGE>
(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
and premiums required to establish positions in futures contracts
and related options that do not fall within the definition of
bona
3
<PAGE>
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
6
<PAGE>
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 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.
Securities Lending
The Fund may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Fund may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Fund
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. government securities,
letters of credit and such other collateral permitted by the
Securities and Exchange Commission and
7
<PAGE>
policies approved by the Trustees. Cash collateral may be
invested in money market funds advised by Janus to the extent
consistent with exemptive relief obtained from the SEC.
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 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
8
<PAGE>
"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.
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
9
<PAGE>
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 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.
10
<PAGE>
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.
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
11
<PAGE>
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 securities of
foreign companies. EDRs and GDRs are securities that are
typically issued by foreign banks or foreign trust companies,
although U.S. banks or U.S. trust companies may issue them. EDRs
and GDRs are similar to the arrangements 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
12
<PAGE>
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
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
13
<PAGE>
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.
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.
14
<PAGE>
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 Bonds
The Fund intends to invest less than 35% of its net assets in
bonds that are rated below investment grade (e.g., bonds rated BB
or lower by Standard & Poor's Ratings Services or Ba or lower by
Moody's Investors Service, Inc.). Lower rated bonds 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 bonds so affected.
The Fund may also invest in unrated bonds of foreign and domestic
issuers. Unrated bond, while not necessarily of lower quality
than rated bonds, 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 bond,
in determining whether to purchase unrated municipal bonds.
Unrated bonds will be included in the 35% limit unless the
portfolio managers deem such securities to be the equivalent of
investment grade bonds.
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
15
<PAGE>
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.
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
16
<PAGE>
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 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
17
<PAGE>
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 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
18
<PAGE>
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 purchases. If an increase in the market
occurs that influences the stock index as anticipated, the value
of the futures contracts will
19
<PAGE>
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 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 bonds in its portfolio. If
interest rates increase as anticipated, the value of the 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
more quickly by using futures contracts as an investment tool to
reduce risk.
20
<PAGE>
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.
21
<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 - 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 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
22
<PAGE>
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
23
<PAGE>
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.
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
24
<PAGE>
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 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
25
<PAGE>
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
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,
26
<PAGE>
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, 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
27
<PAGE>
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 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
28
<PAGE>
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 price to the market price and the volatility of the
underlying security, the remaining term of the option, supply and
demand and interest rates.
29
<PAGE>
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 exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is
exercised, the writer
30
<PAGE>
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 writing the option or the price received from a
sale transaction is less than the premium paid to buy the option.
Because increases
31
<PAGE>
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
32
<PAGE>
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
33
<PAGE>
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.
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
34
<PAGE>
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 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
35
<PAGE>
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-
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
36
<PAGE>
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 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 0.65% of
the Fund's average daily net assets. This fee is lower than the
fee that the Fund paid under its old agreement during its most
recent fiscal year.
For the fiscal year ended October 31, 1999, the investment
advisory fee was $30,154,085. For the fiscal years ended
38
<PAGE>
October 31, 1998 and October 31, 1997, the Fund incurred
investment advisory fees of $26,060,535 and $14,049,919,
respectively. Janus Capital did not waive any portion of its fee
in any of these years.
The Advisory Agreement is dated July 1, 1997, as amended January
31, 2000, and it 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 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
39
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Fund's portfolio managers are not permitted to purchase and
sell securities for their own accounts except under the limited
exceptions contained in the Fund's Code of Ethics ("Code"). The
Fund's Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Fund, and employees
of Janus Capital and the Trust and requires investment personnel,
inside Directors/Trustees of Janus Capital and the Fund and
certain other designated employees deemed to have access to
current trading information to pre-clear all transactions in
securities not otherwise exempt under the Code. Requests for
trading authorization will be denied when, among other reasons,
the proposed personal transaction would be contrary to the
provisions of the Code or would be deemed to adversely affect
40
<PAGE>
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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code 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 annual 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
42
<PAGE>
member of the National Association of Securities Dealers, Inc.
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.
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
44
<PAGE>
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 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, 1999, the Fund paid $864,019 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 $598,229,080. 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
45
<PAGE>
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 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.
46
<PAGE>
The total amount of brokerage commissions paid by the Fund during
the fiscal year ended October 31, 1999, was $12,656,978. For the
fiscal years ended October 31, 1998 and October 31, 1997, the
Fund paid brokerage commissions of $13,649,799 and $9,508,507,
respectively. Included in the brokerage commissions paid for the
fiscal year ended October 31, 1999, was $5,354 paid through DSTS,
which served to reduce by $4,015 certain out-of-pocket expenses
paid by the Fund. Included in brokerage commissions paid for the
fiscal years ended October 31, 1998 and October 31, 1997, was
$4,968 and $15,169, respectively, paid through DSTS which served
to reduce by $3,726 and $11,377, respectively, certain
out-of-pocket expenses. Brokerage commissions paid through DSTS
for the 1999 fiscal year represented 0.04% of the Fund's
aggregate brokerage commissions for such fiscal year, while 0.03%
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, 1999, 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.
Thomas H. Bailey, Age 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
William D. Stewart, Age 55 - 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 61 - 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.
Laurence J. Chang, Age 34 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and co-manager of Janus Overseas Fund.
Executive Vice President and co-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 37 - Executive Vice President*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Executive Vice President and co-manager of Janus Overseas Fund.
Executive Vice President and co-manager of Janus Worldwide Fund.
Executive Vice President of Janus Aspen Series. Vice President of
Janus Capital.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
50
<PAGE>
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
51
<PAGE>
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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, 1999 December 31, 1999**
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and
Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $3,938 $107,333
Gary O. Loo, Trustee $3,612 $107,333
Dennis B. Mullen, Trustee $3,366 $107,333
Martin H. Waldinger, Trustee $3,743 $107,333
James T. Rothe, Trustee $3,612 $107,333
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1999, 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
54
<PAGE>
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 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
55
<PAGE>
and distributions the record dates of which fall on or after the
date that the 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.
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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest of the
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 - 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 AND WEB SITE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone and via our Web site. The Fund, its
transfer agent and its distributor disclaim responsibility for
the authenticity of instructions received by telephone and the
Web site. Such entities will employ reasonable procedures to
confirm that instructions communicated by telephone and the Web
site are genuine. Such procedures may include, among others,
requiring personal identification prior to acting upon telephone
and the Web site instructions, providing written confirmation of
telephone and Web site 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,
59
<PAGE>
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 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 declares and
makes annual distributions of income (if any). 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.
The Fund 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 the
Fund which will reduce its investment company taxable income.
61
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, 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 7, 2000, the following shareholders
owned more than 5% of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co., Inc. 101 Montgomery Street 30.75%
San Francisco, CA 94101-4122
National Financial Services Co. P.O. Box 3908 11.77%
Church Street Station
New York, NY 10008-3908
</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.
To the knowledge of the Fund, no other shareholder owned more
than 5% of the outstanding shares of the Fund as of January 7,
2000.
62
<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 22 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
63
<PAGE>
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 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
64
<PAGE>
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 May 2, 1994. The
one year, five year and lifetime average annual total returns,
computed as of October 31, 1999, for each of those periods, are
41.77%, 21.43% and 20.08%, 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), the Dow Jones Industrial
Average 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
66
<PAGE>
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.
67
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements for the period ended
October 31, 1999 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1999
Statement of Operations for the period ended October 31, 1999
Statement of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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.
68
<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>
69
<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>
70
<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.
71
<PAGE>
This page intentionally left blank
72
<PAGE>
This page intentionally left blank
73
<PAGE>
This page intentionally left blank
74
<PAGE>
This page intentionally left blank
75
<PAGE>
This page intentionally left blank
76
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4272
<PAGE>
Janus Twenty Fund is a no-load, nondiversified mutual fund
that seeks long-term growth of capital. It invests
primarily in common stocks selected for their growth
potential. The Fund normally concentrates its investments
in a core group of 20-30 stocks.
[JANUS LOGO]
JANUS INVESTMENT FUND
JANUS TWENTY FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 January 31, 2000, 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>
- --------------------------------------------------------------------------------
<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.................................... 44
Portfolio Transactions and Brokerage............ 46
Trustees and Officers........................... 50
Purchase of Shares.............................. 56
Net Asset Value Determination................ 56
Reinvestment of Dividends and Distributions.. 57
Redemption of Shares............................ 59
Shareholder Accounts............................ 60
Telephone and Web Site Transactions.......... 60
Systematic Redemptions....................... 60
Tax-Deferred Accounts........................... 61
Income Dividends, Capital Gains Distributions
and Tax Status.................................. 63
Principal Shareholders.......................... 64
Miscellaneous Information....................... 65
Shares of the Trust.......................... 66
Shareholder Meetings......................... 66
Voting Rights................................ 66
Master/Feeder Option......................... 67
Independent Accountants...................... 67
Registration Statement....................... 68
Performance Information......................... 69
Financial Statements............................ 71
Appendix A...................................... 72
</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 nondiversified fund. The Fund
reserves the right to become a diversified fund by limiting the
investments in which more than 5% of its total assets are
invested.
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, 1999
and October 31, 1998, were 40% and 54%, 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 fifty percent (50%) 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. With
respect to the other 50% of the value of its total assets, the
Fund may invest in the securities of as few as two issuers.
2
<PAGE>
(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
3
<PAGE>
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
4
<PAGE>
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 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
5
<PAGE>
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 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 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 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 13).
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
6
<PAGE>
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 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
manager 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.
Securities Lending
The Fund may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Fund may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the
benefit from granting such loans justifies the risk. The Fund
will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any
important vote. All loans will be continuously secured by
collateral which consists of cash, U.S. govern-
7
<PAGE>
ment securities, letters of credit and such other collateral
permitted by the Securities and Exchange Commission and policies
approved by the Trustees. Cash collateral may be invested in
money market funds advised by Janus to the extent consistent with
exemptive relief obtained from the SEC.
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
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
8
<PAGE>
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.
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
9
<PAGE>
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.
10
<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
11
<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
manager 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
12
<PAGE>
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 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
13
<PAGE>
Receipts ("GDRs") and in other similar instruments representing
securities of foreign companies. EDRs and GDRs are securities
that are typically issued by foreign banks or foreign trust
companies, although U.S. banks or U.S. trust companies may issue
them. EDRs and GDRs are similar to the arrangements 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.
14
<PAGE>
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
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, 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.
15
<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 Bonds
The Fund intends to invest less than 35% of its net assets in
bonds that are rated below investment grade (e.g., bonds rated BB
or lower by Standard & Poor's Ratings Services or Ba or lower by
Moody's Investors Service, Inc.). Lower rated bonds 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 bonds so affected.
The Fund may also invest in unrated debt bonds of foreign and
domestic issuers. Unrated bonds, while not necessarily of lower
quality than rated bonds, 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
16
<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 manager will analyze the
creditworthiness of the issuer, as well as any financial
institution or other party responsible for payments on the bond,
in determining whether to purchase unrated municipal bonds.
Unrated bonds will be included in the 35% limit unless the
portfolio manager deems such securities to be the equivalent of
investment grade bonds.
Subject to the above limits, the 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
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 the Fund generally
will purchase securities for which its portfolio manager expects
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
17
<PAGE>
to amounts that the portfolio manager believes 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
18
<PAGE>
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 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
19
<PAGE>
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 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
20
<PAGE>
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 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 bonds and the portfolio manager expects 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 bonds in its portfolio. If
21
<PAGE>
interest rates increase as anticipated, the value of the 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 manager expects 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 manager still may not
result in a successful use of futures.
22
<PAGE>
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 manager's 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.
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 - 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 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
23
<PAGE>
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 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
24
<PAGE>
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 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.
25
<PAGE>
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 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
26
<PAGE>
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 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 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 manager's
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.
27
<PAGE>
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
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
28
<PAGE>
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
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
29
<PAGE>
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.
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
30
<PAGE>
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 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
31
<PAGE>
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 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
32
<PAGE>
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
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
33
<PAGE>
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 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.
34
<PAGE>
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.
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
35
<PAGE>
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 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
36
<PAGE>
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, 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.
37
<PAGE>
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 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
38
<PAGE>
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.
39
<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 0.65% of
the Fund's average daily net assets. This fee is the same as the
fee that the Fund paid under its old agreement during its most
recent fiscal year.
For the fiscal year ended October 31, 1999, the investment
advisory fee was $144,062,829. For the fiscal years ended
40
<PAGE>
October 31, 1998 and October 31, 1997, the Fund incurred
investment advisory fees of $52,476,576 and $32,875,794,
respectively. Janus Capital did not waive any portion of its fee
in any of these years.
The Advisory Agreement is dated July 1, 1997, as amended January
31, 2000, and it 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 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
41
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Fund's portfolio manager is not permitted to purchase and
sell securities for his own accounts except under the limited
exceptions contained in the Fund's Code of Ethics ("Code"). The
Fund's Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Fund, and employees
of Janus Capital and the Trust and requires investment personnel
and officers of Janus Capital, inside Directors/Trustees of Janus
Capital and the Fund and certain other designated employees
deemed to have access to current trading information to pre-clear
all transactions in securities not otherwise exempt under the
Code. Requests for trading authorization will be denied when,
among other reasons, the proposed personal transaction would be
contrary to the provisions of the Code or would be deemed to
adversely affect any transaction known to be under consideration
42
<PAGE>
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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
43
<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 and, in addition
$4 per open shareholder account. In addition, the Fund pays DST
Systems, Inc. ("DST"), a subsidiary of KCSI, license fees at the
annual 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
44
<PAGE>
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
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.
45
<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
46
<PAGE>
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 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, 1999, the Fund paid $4,564,910 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 $6,275,107,107. 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
47
<PAGE>
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 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.
48
<PAGE>
The total amount of brokerage commissions paid by the Fund during
the fiscal year ended October 31, 1999, was $9,102,214. For the
fiscal years ended October 31, 1998 and October 31, 1997, the
Fund paid brokerage commissions of $6,924,862 and $8,145,093,
respectively. Included in the brokerage commissions paid for the
fiscal year ended October 31, 1999, was $58,260 paid through
DSTS, which served to reduce by $43,695 certain out-of-pocket
expenses paid by the Fund. Included in brokerage commissions paid
for the fiscal years ended October 31, 1998 and October 31, 1997,
was $45,075 and $177,408, respectively, paid through DSTS which
served to reduce by $33,807 and $133,056, respectively, certain
out-of-pocket expenses. Brokerage commissions paid through DSTS
for the 1999 fiscal year represented 0.64% of the Fund's
aggregate brokerage commissions for such fiscal year, while 0.50%
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, 1999, the Fund did not own securities of
regular broker-dealers (or parents).
49
<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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
50
<PAGE>
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
51
<PAGE>
William D. Stewart, Age 55 - 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 61 - 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.
Scott W. Schoelzel, Age 41 - 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.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
52
<PAGE>
Thomas A. Early, Age 45 - 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., Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
53
<PAGE>
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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.
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.
54
<PAGE>
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, 1999 December 31, 1999**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $19,629 $107,333
Gary O. Loo, Trustee $18,025 $107,333
Dennis B. Mullen, Trustee $16,864 $107,333
Martin H. Waldinger, Trustee $18,918 $107,333
James T. Rothe, Trustee $18,025 $107,333
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
55
<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
56
<PAGE>
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 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
57
<PAGE>
and distributions the record dates of which fall on or after the
date that the 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.
58
<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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest 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 - 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.
59
<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 AND WEB SITE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone and via our Web site. The Fund, its
transfer agent and its distributor disclaim responsibility for
the authenticity of instructions received by telephone and the
Web site. Such entities will employ reasonable procedures to
confirm that instructions communicated by telephone and the Web
site are genuine. Such procedures may include, among others,
requiring personal identification prior to acting upon telephone
and Web site instructions, providing written confirmation of
telephone and Web site 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.
60
<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
61
<PAGE>
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 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.
62
<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 declares and
makes annual distributions of income (if any). 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.
The Fund 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 the
Fund which will reduce its investment company taxable income.
63
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, 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 7, 2000, the following shareholders
owned more than 5% of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co., Inc. 101 Montgomery Street 13.42%
San Francisco, CA 94101-4122
National Financial Services Co. P.O. Box 3908 8.20%
Church Street Station
New York, NY 10008-3908
</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.
To the knowledge of the Fund, no other shareholder owned more
than 5% of the outstanding shares of the Fund as of January 7,
2000.
64
<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 22 separate series,
three of which currently offer three classes of shares. The Fund
was originally organized in 1984 as Janus Value Fund, Inc. a
Maryland corporation. On May 15, 1989 the name was changed to
Janus Twenty Fund, Inc. On August 7, 1992, the Fund was
reorganized from a Maryland corporation into Janus Twenty Fund, a
separate series of the Trust. Pursuant to this reorganization,
the Trust assumed all assets and liabilities of Janus Twenty
Fund, Inc., and shareholders received shares of Janus Twenty Fund
series of the Trust equal both in number and net asset value to
their shares of Janus Twenty 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 Twenty
Fund, Inc.; all references after August 7, 1992, are to the Fund.
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
65
<PAGE>
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.
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
66
<PAGE>
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.
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.
67
<PAGE>
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.
68
<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, 1999, for each of those
periods, are 63.51%, 36.93%, 24.33% and 21.82%, 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 S&P 500 Index, the Dow Jones Industrial
Average 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
69
<PAGE>
techniques than the Fund and such other funds or market
indicators may be comprised of securities that differ
significantly from the Fund's investments.
70
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements for the period ended
October 31, 1999 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1999
Statement of Operations for the period ended October 31, 1999
Statement of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999 and 1998
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.
71
<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.
72
<PAGE>
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>
73
<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>
74
<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless the portfolio manager determines that such
securities are the equivalent of investment grade securities.
Securities that have received ratings from more than one agency
are considered investment grade if at least one agency has rated
the security investment grade.
75
<PAGE>
This page intentionally left blank
76
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4271
<PAGE>
Janus Global Technology Fund is a no-load, nondiversified
mutual fund that seeks long-term growth of capital. It
invests primarily in equity securities of U.S. and foreign
companies selected for their growth potential. The Fund
normally 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 LOGO]
JANUS INVESTMENT FUND
JANUS GLOBAL TECHNOLOGY FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
100 Fillmore Street
Denver, CO 80206-4928
(800) 525-3713
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 January 31, 2000, 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>
- --------------------------------------------------------------------------------
<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.................................... 44
Portfolio Transactions and Brokerage............ 46
Trustees and Officers........................... 50
Purchase of Shares.............................. 56
Net Asset Value Determination................ 56
Reinvestment of Dividends and Distributions.. 57
Redemption of Shares............................ 59
Shareholder Accounts............................ 60
Telephone and Web Site Transactions.......... 60
Systematic Redemptions....................... 60
Tax-Deferred Accounts........................... 61
Income Dividends, Capital Gains Distributions
and Tax Status.................................. 63
Principal Shareholders.......................... 64
Miscellaneous Information....................... 65
Shares of the Trust.......................... 65
Shareholder Meetings......................... 66
Voting Rights................................ 66
Master/Feeder Option......................... 67
Independent Accountants...................... 67
Registration Statement....................... 67
Performance Information......................... 68
Financial Statements............................ 70
Appendix A...................................... 71
</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 nondiversified fund. The Fund
reserves the right to become a diversified fund by limiting the
investments in which more than 5% of its total assets are
invested.
PORTFOLIO TURNOVER
The Prospectus includes a discussion of portfolio turnover
policies. The Fund's portfolio turnover rate (total purchases or
sales, whichever is less, compared to average monthly value of
portfolio securities) for the fiscal year ended October 31, 1999,
was 31%. The Fund did not commence operations until December 31,
1998. Consequently, portfolio turnover information for the fiscal
year ended October 31, 1998 is not shown.
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 fifty percent (50%) 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. With
respect to the
2
<PAGE>
other 50% of the value of its total assets, the Fund 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).
(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
3
<PAGE>
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
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.
4
<PAGE>
(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 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
5
<PAGE>
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.
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 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 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 13).
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
6
<PAGE>
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 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
manager 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.
Securities Lending
The Fund may lend securities to qualified parties (typically
brokers or other financial institutions) who need to borrow
securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities or
completing arbitrage activities. The Fund may seek to earn
additional income through securities lending. Since there is the
risk of delay in recovering a loaned security or the risk of loss
in collateral rights if the borrower fails financially,
securities lending will only be made to parties that Janus
Capital deems
7
<PAGE>
creditworthy and in good standing. In addition, such loans will
only be made if Janus Capital believes the benefit from granting
such loans justifies the risk. The Fund will not have the right
to vote on securities while they are being lent, but it will call
a loan in anticipation of any important vote. All loans will be
continuously secured by collateral which consists of cash, U.S.
government securities, letters of credit and such other
collateral permitted by the Securities and Exchange Commission
and policies approved by the Trustees. Cash collateral may be
invested in money market funds advised by Janus to the extent
consistent with exemptive relief obtained from the SEC.
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
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
8
<PAGE>
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.
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
9
<PAGE>
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 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
10
<PAGE>
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 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
11
<PAGE>
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
manager 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
12
<PAGE>
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 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
13
<PAGE>
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 and GDRs are securities
that are typically issued by foreign banks or foreign trust
companies, although U.S. banks or U.S. trust companies may issue
them. EDRs and GDRs are similar to the arrangements 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.
14
<PAGE>
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
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, 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.
15
<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 Bonds
The Fund intends to invest less than 35% of its net assets in
bonds that are rated below investment grade (e.g., bonds rated BB
or lower by Standard & Poor's Ratings Services or Ba or lower by
Moody's Investors Service, Inc.). Lower rated bonds 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 bonds so affected.
The Fund may also invest in unrated bonds of foreign and domestic
issuers. Unrated bonds, while not necessarily of lower quality
than rated bonds, 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
16
<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 manager will analyze the
creditworthiness of the issuer, as well as any financial
institution or other party responsible for payments on the bond,
in determining whether to purchase unrated municipal bonds.
Unrated bonds will be included in the 35% limit unless the
portfolio manager deems such securities to be the equivalent of
investment grade bonds.
Subject to the above limits, the 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
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 the Fund generally
will purchase securities for which its portfolio manager expects
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
17
<PAGE>
to amounts that the portfolio manager believes 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
18
<PAGE>
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 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
19
<PAGE>
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 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
20
<PAGE>
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 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 bonds and the portfolio manager expects 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 bonds in its portfolio. If
21
<PAGE>
interest rates increase as anticipated, the value of the 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 manager expects 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 manager still may not
result in a successful use of futures.
22
<PAGE>
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 manager's 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.
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 - 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 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
23
<PAGE>
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 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
24
<PAGE>
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 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.
25
<PAGE>
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 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
26
<PAGE>
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 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 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 manager's
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.
27
<PAGE>
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
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
28
<PAGE>
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
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
29
<PAGE>
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.
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
30
<PAGE>
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 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
31
<PAGE>
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 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
32
<PAGE>
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
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
33
<PAGE>
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 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.
34
<PAGE>
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.
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
35
<PAGE>
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 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
36
<PAGE>
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, 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.
37
<PAGE>
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 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
38
<PAGE>
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.
39
<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 0.65% of
the Fund's average daily net assets. This fee is lower than the
fee that the Fund paid under its old agreement during its most
recent fiscal year.
For the fiscal year ended October 31, 1999, the investment
advisory fee was $7,158,824. The Fund did not commence
40
<PAGE>
operations until December 31, 1998. Consequently, investment
advisory fee information for the fiscal years ended October 31,
1998 and October 31, 1997 is not shown.
The Advisory Agreement is dated July 1, 1997, as amended January
31, 2000, and it 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 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
41
<PAGE>
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 anticipates the
separation to be completed in the first quarter of 2000.
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.
The Fund's portfolio manager is not permitted to purchase and
sell securities for his own accounts except under the limited
exceptions contained in the Fund's Code of Ethics ("Code"). The
Fund's Code of Ethics is on file with and available from the SEC
through the SEC Web site at www.sec.gov. The Code applies to
Directors/Trustees of Janus Capital and the Fund, and employees
of Janus Capital and the Trust and requires investment personnel
and officers of Janus Capital, inside Directors/Trustees of Janus
Capital and the Fund and certain other designated employees
deemed to have access to current trading information to pre-clear
all transactions in securities not otherwise exempt under the
Code. Requests for trading authorization will be denied when,
among other reasons, the proposed personal transaction would be
contrary to the provisions of the Code or would be deemed to
adversely affect any transaction known to be under consideration
42
<PAGE>
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
Code subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required
to be reviewed for compliance with the Code. Those persons also
may be required under certain circumstances to forfeit their
profits made from personal trading.
The provisions of the Code are administered by and subject to
exceptions authorized by Janus Capital.
43
<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 and, in addition
$4 per open shareholder account. In addition, the Fund pays DST
Systems, Inc. ("DST"), a subsidiary of KCSI, license fees at the
annual 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
44
<PAGE>
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
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.
45
<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
46
<PAGE>
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 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 fiscal period ended
October 31, 1999 (December 31, 1998 (inception) through October
31, 1999), the Fund paid $283,529 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 $282,589,134. 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.
47
<PAGE>
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 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
48
<PAGE>
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 period ended October 31, 1999 (December 31, 1998
(inception) to October 31, 1999), was $1,303,894.
As of October 31, 1999, the Fund did not own securities of
regular broker-dealers (or parents).
49
<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 62 - 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 43 - Trustee and Vice President*#
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Trustee and Vice President of Janus Aspen Series. Chief
Investment Officer, Director of Research, Vice Chairman and
Director of Janus Capital. Formerly (June 1986 - December 1999),
Executive Vice President and Portfolio Manager of Janus Fund.
Formerly (February 1997 - December 1999), Executive Vice
President and Co-Manager of Janus Venture Fund. Formerly
(December 1993 - December 1995), Executive Vice President and
Portfolio Manager of Janus Balanced Fund.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
#Member of the Trust's Executive Committee.
50
<PAGE>
Gary O. Loo, Age 59 - 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 56 - 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 56 - 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).
- --------------------------------------------------------------------------------
#Member of the Trust's Executive Committee.
51
<PAGE>
William D. Stewart, Age 55 - 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 61 - 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.
C. Mike Lu, Age 30 - 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.
52
<PAGE>
Thomas A. Early, Age 45 - 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. Janus Capital International, Ltd. and Janus
International (UK) Limited. 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.
Steven R. Goodbarn, Age 42 - 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.
and Janus International (UK) Limited. Formerly (May 1992-January
1996), Treasurer of Janus Investment Fund and Janus Aspen Series.
- --------------------------------------------------------------------------------
*Interested person of the Trust and of Janus Capital.
53
<PAGE>
Kelley Abbott Howes, Age 34 - Vice President and Secretary*
100 Fillmore Street
Denver, CO 80206-4928
- --------------------------------------------------------------------------------
Vice President and Secretary of Janus Aspen Series. Vice
President and Assistant General Counsel of Janus Capital. Vice
President of Janus Distributors, Inc. Assistant Vice President of
Janus Service Corporation.
Glenn P. O'Flaherty, Age 41 - 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.
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
54
<PAGE>
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, 1999 December 31, 1999**
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas H. Bailey, Chairman and Trustee* $0 $0
James P. Craig, Trustee* $0 $0
William D. Stewart, Trustee $946 $107,333
Gary O. Loo, Trustee $879 $107,333
Dennis B. Mullen, Trustee $821 $107,333
Martin H. Waldinger, Trustee $946 $107,333
James T. Rothe, Trustee $879 $107,333
</TABLE>
*An interested person of the Fund and of Janus Capital. Compensated by Janus
Capital and not the Fund.
**As of December 31, 1999, Janus Funds consisted of two registered investment
companies comprised of a total of 32 funds.
55
<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
56
<PAGE>
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 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
57
<PAGE>
and distributions the record dates of which fall on or after the
date that the 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.
58
<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 some or all of its shares in kind under unusual
circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular
shareholder that does not adversely affect the interest of the
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 - 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.
59
<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 AND WEB SITE TRANSACTIONS
As stated in the Prospectus, shareholders may initiate a number
of transactions by telephone and via our Web site. The Fund, its
transfer agent and its distributor disclaim responsibility for
the authenticity of instructions received by telephone and the
Web site. Such entities will employ reasonable procedures to
confirm that instructions communicated by telephone and the Web
site are genuine. Such procedures may include, among others,
requiring personal identification prior to acting upon telephone
and Web site instructions, providing written confirmation of
telephone and Web site 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.
60
<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
61
<PAGE>
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 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.
62
<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 declares and
makes annual distributions of income (if any). 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.
The Fund 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 the
Fund which will reduce its investment company taxable income.
63
<PAGE>
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 7, 2000, 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 7, 2000, the following shareholders
owned more than 5% of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
Percentage
Shareholder Address Ownership
- -------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co., Inc. 101 Montgomery Street 19.96%
San Francisco, CA 94101-4122
National Financial Services Co. P.O. Box 3908 13.13%
Church Street Station
New York, NY 10008-3908
</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.
To the knowledge of the Fund, no other shareholder owned more
than 5% of the outstanding shares of the Fund as of January 7,
2000.
64
<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 22 separate series,
three of which currently offer three classes of shares. The Fund
became a series of the Trust on November 24, 1998.
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.
65
<PAGE>
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 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
66
<PAGE>
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.
67
<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 December 31, 1998.
The cumulative total return from December 31, 1998 (inception) to
October 31, 1999 computed as of October 31, 1999, for this period
was 109.40%
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 S&P 500 Index, the Dow Jones Industrial
Average 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
68
<PAGE>
techniques than the Fund and such other funds or market
indicators may be comprised of securities that differ
significantly from the Fund's investments.
69
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements for the period ended
October 31, 1999 are hereby incorporated into this SAI by
reference to the Fund's Annual Report dated October 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT:
Schedule of Investments as of October 31, 1999
Statement of Operations for the period ended October 31, 1999
Statement of Assets and Liabilities as of October 31, 1999
Statements of Changes in Net Assets for the periods ended October
31, 1999
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.
70
<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>
71
<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>
72
<PAGE>
Unrated securities will be treated as noninvestment grade
securities unless the portfolio manager determines that such
securities are the equivalent of investment grade securities.
Securities that have received ratings from more than one agency
are considered investment grade if at least one agency has rated
the security investment grade.
73
<PAGE>
This page intentionally left blank
74
<PAGE>
This page intentionally left blank
75
<PAGE>
This page intentionally left blank
76
<PAGE>
This page intentionally left blank
<PAGE>
[JANUS LOGO]
1-800-525-3713
PO Box 173375 Denver, CO 80217-3375
janus.com
4396
<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 incorporated hereinby 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 reference to Exhibit 1(v)
to Post-Effective Amendment No. 85.
(w) Certificate of Establishment and Designation for
Janus Strategic Value Fund is incorporated herein
by reference to Exhibit 1(w) to Post-Effective
Amendment No. 88.
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 Fund(1) 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.
C-3
<PAGE>
(g) Specimen Stock Certificate for Janus Venture
Fund(1) is 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.
C-4
<PAGE>
(r) Form of Specimen Stock Certificate for Janus
Global Life 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
C-5
<PAGE>
incorporated herein by reference
to Exhibit 5(h) to Post-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.
(p) Investment Advisory Agreement for Janus Strategic
Value Fund is incorporated herein by reference to
Exhibit 4(p) to Post-Effective Amendment No. 88.
(q) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Fund dated July 1,
1997, is filed herein as Exhibit 4(q).
(r) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Growth and Income
Fund dated July 1, 1997, is filed herein as
Exhibit 4(r).
C-6
<PAGE>
(s) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Twenty Fund dated
July 1, 1997, is filed herein as Exhibit 4(s).
(t) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Enterprise Fund dated
July 1, 1997, is filed herein as Exhibit 4(t).
(u) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Balanced Fund dated
July 1, 1997, is filed herein as Exhibit 4(u).
(v) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Overseas Fund dated
July 1, 1997, is filed herein as Exhibit 4(v).
(w) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Equity Income Fund
dated July 1, 1997, is filed herein as Exhibit
4(w).
(x) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Global Life Sciences
Fund dated September 14, 1998, is filed herein as
Exhibit 4(x).
(y) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Global Technology
Fund dated September 14, 1998, is filed herein as
Exhibit 4(y).
(z) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Mercury Fund dated
July 1, 197, is filed herein as Exhibit 4(z).
(aa) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Olympus Fund dated
July 1, 1997, is filed herein as Exhibit 4(aa).
(bb) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Special Situations
Fund dated July 1, 1997, is filed herein as
Exhibit 4(bb).
(cc) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Strategic Value Fund
dated September 14, 1999, is filed herein as
Exhibit 4(cc).
(dd) Amendment dated January 31, 2000 to the Investment
C-7
<PAGE>
Advisory Agreement for Janus Venture Fund dated
July 1, 1997, is filed herein as Exhibit 4(ee).
(ee) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Worldwide Fund dated
July 1, 1997, is filed herein as Exhibit 4(ff).
Exhibit 5 Distribution Agreement between Janus Investment
Fund and Janus Distributors, Inc., dated July 1,
1997, is 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.
(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.
C-8
<PAGE>
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.
filed as Exhibit 8(h) to Post-Effective Amendment
No. 81 has been withdrawn.
(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 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.
(p) Letter Agreement dated September 14, 1999,
regarding State Street Custodian Contract is
incorporated herein by
C-9
<PAGE>
reference to Exhibit 7(p) to Post-Effective
Amendment No. 88.
(q) Global Custody Services 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 Citibank, N.A.
dated March 15, 1999 is incorporated herein by
reference to Exhibit 7(q) to Post-Effective
Amendment No. 88.
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.
(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
C-10
<PAGE>
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.
(l) Letter agreement dated September 14, 1999,
regarding Janus Service Corporation Transfer
Agency Agreement is incorporated herein by
reference to Exhibit 8(l) to Post-Effective
Amendment No. 88.
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 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.
C-11
<PAGE>
(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.
(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 by 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-
C-12
<PAGE>
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.
(ff) 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.
(gg) Opinion and Consent of Fund Counsel with respect
to shares of Janus Strategic Value Fund is
incorporated herein by reference to Exhibit 9(r)
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.
Exhibit 13 Not Applicable.
Exhibit 14 Not Applicable.
C-13
<PAGE>
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.
Exhibit 16 Powers of Attorney dated as of May 20, 1997 are
incorporated herein by reference to Exhibit 16 to
Post-Effective Amendment No. 81.
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 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
C-14
<PAGE>
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, Vice President, Public Affairs
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 Information included in this Registration Statement. The
remaining principal executive officer of Janus Distributors is
Marjorie G. Hurd, Director and President. Ms. Hurd does not hold any
positions with the
C-15
<PAGE>
Registrant. Ms. Hurd'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 Citibank, N.A., 111 Wall Street, New York, New York
10043.
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-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, 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 31st day
of January, 2000.
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 January 31, 2000
Thomas H. Bailey (Principal Executive
Officer) and Trustee
/s/ Steven R. Goodbarn Vice President and January 31, 2000
Steven R. Goodbarn Chief Financial Officer
(Principal Financial
Officer)
<PAGE>
/s/ Glenn P. O'Flaherty Treasurer and Chief January 31, 2000
Glenn P. O'Flaherty Accounting Officer
(Principal Accounting
Officer)
/s/ James P. Craig, III Trustee January 31, 2000
James P. Craig, III
Gary O. Loo* Trustee January 31, 2000
Gary O. Loo
Dennis B. Mullen* Trustee January 31, 2000
Dennis B. Mullen
James T. Rothe* Trustee January 31, 2000
James T. Rothe
William D. Stewart* Trustee January 31, 2000
William D. Stewart
Martin H. Waldinger* Trustee January 31, 2000
Martin H. Waldinger
/s/ Steven R. Goodbarn
*By Steven R. Goodbarn
Attorney-in-Fact
<PAGE>
INDEX OF EXHIBITS
Exhibit 4 (q) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Fund dated July 1, 1997
(r) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Growth and Income Fund
dated July 1, 1997
(s) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Twenty Fund dated July 1,
1997
(t) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Enterprise Fund dated July
1, 1997
(u) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Balanced Fund dated July
1, 1997
(v) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Overseas Fund dated July
1, 1997
(w) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Equity Income Fund dated
July 1, 1997
(x) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Global Life Sciences
Fund dated September 14, 1998
(y) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Global Technology Fund
dated September 14, 1998
(z) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Mercury Fund dated July 1,
1997
(aa) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Olympus Fund dated July
1, 1997
<PAGE>
(bb) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Special Situations Fund
dated July 1, 1997
(cc) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Strategic Value Fund dated
September 14, 1999
(dd) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Venture Fund dated July
1, 1997
(ee) Amendment dated January 31, 2000 to the Investment
Advisory Agreement for Janus Worldwide Fund dated
July 1, 1997
Exhibit 10 Consent of PricewaterhouseCoopers LLP
EXHIBIT 4(q)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Fund (the "Fund"), and Janus Capital Corporation, a Colorado corporation
("JCC"). The Trust and JCC are collectively referred to herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(r)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Growth and Income Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(s)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Twenty Fund (the "Fund"), and Janus Capital Corporation, a Colorado corporation
("JCC"). The Trust and JCC are collectively referred to herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(t)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Enterprise Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(u)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Balanced Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(v)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Overseas Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(w)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Equity Income Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(x)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Global Life Sciences Fund (the "Fund"), and Janus Capital Corporation, a
Colorado corporation ("JCC"). The Trust and JCC are collectively referred to
herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(y)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Global Technology Fund (the "Fund"), and Janus Capital Corporation, a
Colorado corporation ("JCC"). The Trust and JCC are collectively referred to
herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(z)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Mercury Fund (the "Fund"), and Janus Capital Corporation, a Colorado corporation
("JCC"). The Trust and JCC are collectively referred to herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(aa)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Olympus Fund (the "Fund"), and Janus Capital Corporation, a Colorado corporation
("JCC"). The Trust and JCC are collectively referred to herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(bb)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Special Situations Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(cc)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Strategic Value Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(dd)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Venture Fund (the "Fund"), and Janus Capital Corporation, a Colorado corporation
("JCC"). The Trust and JCC are collectively referred to herein as the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
EXHIBIT 4(ee)
AMENDMENT
This Amendment is made as of January 31, 2000, by and between Janus
Investment Fund, a Massachusetts business trust (the "Trust") on behalf of Janus
Worldwide Fund (the "Fund"), and Janus Capital Corporation, a Colorado
corporation ("JCC"). The Trust and JCC are collectively referred to herein as
the "Parties."
WHEREAS, the Trust and JCC are parties to an Investment Advisory Agreemen
dated July 1, 1997 (hereinafter referred to as the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth in greater
detail below; and
WHEREAS, pursuant to Section 12 of the Agreement, any amendment to the
Agreement is subject to the approval by (i) a majority of the Trustees,
including a majority of the Trustees who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act) of JCC and, if required
by applicable law, (ii) by the affirmative vote of a majority of the outstanding
voting securities of the Fund (as that phrase is defined in Section 2(a)(42) of
the 1940 Act);
WHEREAS, the Parties have obtained Trustee approval as set forth above and
the Parties agree that a shareholder vote is not required to amend the
Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth below, the Parties agree to amend the Agreement as follows:
1. Section 4 of the Agreement is hereby deleted and replaced in its
entirety by the following:
"4. Compensation. The Trust shall pay to JCC for its investment
advisory services a fee, calculated and payable for each day that
this Agreement is in effect, of 1/365 of 0.65% of the daily
closing net asset value of the Fund (1/366 of 0.65% of the daily
closing net asset value of the Fund in a leap year). The fee shall
be paid monthly."
2. The Parties acknowledge that the Agreement, as amended, remains in
full force and effect as of the date of this Amendment, and that this
Amendment, together with the Agreement, contain the entire
understanding and the full and complete agreement of the Parties and
supercedes and replaces any prior understandings and agreements among
the Parties respecting the subject matter hereof.
3. This Amendment to the Agreement may be contemporaneously executed in
one or more counterparts, each of which shall be deemed an original
but all of which together
<PAGE>
shall constitute one and the same instrument.
4. Each of the undersigned is duly authorized to sign this Amendment on
behalf of the respective Parties.
IN WITNESS WHEREOF, the Parties have executed this Amendment to the
Agreement as of the date first above written.
JANUS CAPITAL CORPORATION
BY: /s/ Steven R. Goodbarn
NAME: STEVEN R. GOODBARN
TITLE: VICE PRESIDENT
JANUS INVESTMENT FUND
BY : /s/ Thomas H. Bailey
NAME: THOMAS H. BAILEY
TITLE: PRESIDENT
Exhibit 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our reports dated November 2, 1999, relating to the
financial statements and financial highlights which appear in the October 31,
1999 Annual Reports to Shareholders of the Janus Investment Fund, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Independent
Accountants" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
January 28, 2000
