[Federal Register Volume 60, Number 90 (Wednesday, May 10, 1995)]
[Notices]
[Pages 24955-24957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11519]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21042; 812-9564]


Janus Investment Fund, et al.; Notice of Application

May 4, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under the Investment 
Company Act of 1940 (the ``Act'').

-----------------------------------------------------------------------

APPLICANTS: Janus Investment Fund and Janus Aspen Series (collectively, 
the ``Trusts''), all existing and future series of the foregoing 
investment companies, Janus Capital Corporation (``Janus Capital''), 
and any other registered investment companies that now or in the future 
are advised by Janus Capital or an entity controlling, controlled by, 
or under common control with Janus Capital.\1\

    \1\All existing investment companies that presently intend to 
rely on the requested order are named as applicants.

RELEVANT ACT SECTIONS: Order requested under section 6(c) for an 
exemption from section 12(d)(1)(A)(ii), under sections 6(c) and 17(b) 
for an exemption from section 17(a), and under rule 17d-1 to permit 
---------------------------------------------------------------------------
certain transactions in accordance with section 17(d) and rule 17d-1.

SUMMARY OF APPLICATION: Applicants seek an order that would permit 
certain [[Page 24956]] money market funds to sell their shares to 
affiliated investment companies and the money market funds subsequently 
to redeem such shares.

FILING DATES: The application was filed on April 5, 1995 and amended on 
April 27, 1995.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on May 30, 1995 and 
should be accompanied by proof of service on the applicant, in the form 
of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, D.C. 
20549. Applicant, Janus Capital Corporation, 100 Fillmore Street, Suite 
300, Denver, Colorado 80206-4923.

FOR FURTHER INFORMATION CONTACT:
Marianne H. Khawly, Staff Attorney, at (202) 942-0562, or C. David 
Messman, Branch Chief, at (202) 942-0564 (Division of Investment 
Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch.

Applicant's Representations

    1. The Trusts are open-end management investment companies that 
currently offer twenty-four series (each a ``Fund''). Four of the Funds 
are money market funds subject to the requirements of rule 2a-7 under 
the Act (together with any future money market funds, the ``Money 
Market Funds''). The other twenty Funds are non-money market funds 
(together with any future non-money market funds, the ``Non-Money 
Market Funds'').
    2. Janus Capital serves as investment adviser and administrator for 
each of the Funds. Janus Distributors, Inc. serves as distributor for 
Janus Investment Fund. Shares of Janus Aspen Series are self-
distributed. United Missouri Bank, N.A. serves as custodian for each 
Money Market Fund. Investors Fiduciary Trust Company serves as 
custodian and transfer agent for each Non-Money Market Fund. Janus 
Service Corporation is the transfer agent for each Money Market Fund.
    3. The Money Market Funds seek current income, liquidity, and 
capital preservation by investing exclusively in short-term money 
market instruments, such as United States government securities, bank 
obligations, commercial paper, municipal obligations, or repurchase 
agreements secured by government securities. These short-term debt 
securities are valued at their amortized cost pursuant to rule 2a-7.
    4. The Non-Money Market Funds invest in a variety of debt and/or 
equity securities in accordance with their respective investment 
objectives and policies. Each of the Funds has, or may be expected to 
have, uninvested cash in an account with the custodian. This cash 
either may be invested directly in individual short-term money market 
instruments or may not be invested in any portfolio securities.
    5. Applicants seek an order that would permit (a) each of the Funds 
to utilize cash reserves that have not been invested in portfolio 
securities to purchase shares of one or more of the Money Market Funds 
(each such Fund, including Money Market Funds, purchasing shares of a 
Money Market Fund, is an ``Investing Fund'') and (b) each Money Market 
Fund to sell shares to, and redeem such shares from, an Investing Fund. 
By investing cash balances in the Money Market Funds as proposed, 
applicants believe that the Investing Funds will be able to combine 
their cash balances and thereby reduce their transaction costs, create 
more liquidity, enjoy greater returns, and further diversify their 
holdings. The policies of the Funds permit the Funds to purchase money 
market instruments, including shares of a money market fund.
    6. The shareholders of the Investing Funds would not be subject to 
the imposition of double management fees. Janus Capital and its 
respective affiliated persons will remit to the respective Investing 
Funds, or waive, an amount equal to the investment advisory fees Janus 
Capital and its affiliated persons earn as a result of the Investing 
Funds' investments in the Money Market Funds to the extent the fees are 
based upon the Investing Funds' assets invested in shares of the Money 
Market Funds (the ``Reduction Amount''). Further, no sales charge, 
contingent deferred sales charge, 12b-1 fee, or other underwriting or 
distribution fee will be charged by the Money Market Funds with respect 
to the purchase or redemption of their shares. If a Money Market Fund 
offers more than one class of shares, each Investing Fund will invest 
only in the class with the lowest expense ratio at the time of the 
investment.
    7. Several of the Funds have voluntary expense cap arrangements 
with Janus Capital for the purpose of keeping each Fund's total 
expenses below a certain predetermined percentage amount (an ``Expense 
Waiver''). To the extent actual expenses of the Funds exceed these 
caps, Janus Capital waives or reimburses a Fund in the amount of the 
excess. Any applicable Expense Waiver will not limit the advisory and 
administrative fee waiver or remittance discussed above.
    8. Applicants also request relief that would permit the Funds to 
invest uninvested cash in a Money Market Fund in excess of the 
percentage limitations set out in section 12(d)(1)(A)(ii) of the Act. 
Section 12(d)(1)(A)(ii) prohibits a registered investment company from 
acquiring the securities of another investment company if, immediately 
thereafter, the acquiring company would have more than 5% of its total 
assets invested in the securities of the selling company. Applicants 
propose that each Fund be permitted to invest in shares of a Money 
Market Fund so long as each Fund's aggregate investment in such Money 
Market Fund does not exceed the greater of 5% of such Fund's total net 
assets or $2.5 million. Applicants will comply with all other 
provisions of section 12(d)(1).

Applicants' Legal Analysis

    1. Sections 17(a) (1) and (2) make it unlawful for any affiliated 
person of a registered investment company, or an affiliated person of 
such affiliated person, acting as principal, to sell or purchase any 
security to or from such investment company. Because each fund may be 
deemed to be under common control with the other Funds, it may be an 
``affiliated person,'' as defined in section 2(a)(3), of the other 
Funds. Accordingly, the sale of shares of the Money Market Funds to the 
Investing Funds, and the redemption of such shares of the Money Market 
Funds from the Investing Funds, would be prohibited under section 
17(a).
    2. Section 17(b) authorizes the SEC to exempt a single transaction 
from section 17(a) if the terms of the proposed transaction, including 
the consideration to be paid or received, are reasonable and fair and 
do not involve overreaching on the part of any person concerned, the 
proposed transaction is consistent with the policy of each investment 
company concerned, and the proposed transaction is consistent with 
[[Page 24957]] the general purposes of the Act. Under section 6(c), the 
SEC may exempt a series of transactions from any provision of the Act 
or any rule or regulation thereunder if and to the extent that such 
exemption is necessary or appropriate in the public interest and 
consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of the Act. Thus, applicants 
request relief under sections 6(c) and 17(b) because they wish to 
engage in a series of transactions rather than a single transaction.
    3. The Investing Funds will retain their ability to invest their 
cash balances directly into money market instruments if they believe 
they can obtain a higher return. Each of the Money Market Funds has the 
right to discontinue selling shares to any of the Investing Funds if 
its board of trustees determines that such sales would adversely affect 
the portfolio management and operations of such Money Market Fund. 
Therefore, applicants believe that the proposal satisfies the standards 
for relief.
    4. Section 17(d) and rule 17d-1 prohibit an affiliated person of an 
investment company, acting as principal, from participating in or 
effecting any transaction in connection with any joint enterprise or 
joint arrangement in which the investment company participates. Each 
Investing Fund, Janus Capital, and each of the Money Market Funds could 
be participants in a joint enterprise or other joint arrangement within 
the meaning of section 17(d)(1) and rule 17d-1.
    5. Under rule 17d-1, the SEC may permit a proposed joint 
transaction if participation by a registered investment company is 
consistent with the provisions, policies, and purposes of the Act, and 
not on a basis different from or less advantageous than that of the 
other participants. Applicants believe that the proposal satisfies 
these standards.
    6. Section 12(d)(1), as noted above, sets certain limits on an 
investment company's ability to invest in the shares of another 
company. The perceived abuses section 12(d)(1) sought to address 
include undue influence by an acquiring fund over the management of an 
acquired fund, layering of fees, and complex structures. Applicants 
believe that none of these concerns are presented by the proposed 
transactions and that the proposed transactions meet the section 6(c) 
standards for relief.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Shares of the Money Market Funds sold to and redeemed from the 
Investing Funds will not be subject to a sales load, redemption fee, or 
distribution fee under a plan adopted in accordance with rule 12b-1.
    2. Applicants will cause Janus Capital and its affiliated persons 
to remit to the respective Investing Fund, or waive, an amount equal to 
the Reduction Amount. Any of these fees remitted or waived will not be 
subject to recoupment by Janus Capital or its affiliated persons at a 
later date.
    3. For the purpose of determining any amount to be waived and/or 
expenses to be borne to comply with any Expense Waiver, the adjusted 
fees for an Investing Fund (gross fees minus Expense Waiver) will be 
calculated without reference to the amounts waived or remitted pursuant 
to condition 2. Adjusted fees then will be reduced by the amount waived 
pursuant to condition 2. If the amount waived pursuant to condition 2 
exceeds adjusted fees, Janus Capital also will reimburse the Investing 
Fund in an amount equal to such excess.
    4. Each of the Investing Funds will be permitted to invest 
uninvested cash in, and hold shares of, a Money Market Fund only to the 
extent that the Investing Fund's aggregate investment in such Money 
Market Fund does not exceed the greater of 5% of the Investing Fund's 
total net assets or $2.5 million.
    5. Each Investing Fund will vote its shares of each Money Market 
Fund in the same proportion as the votes of all other shareholders of 
such Money Market Funds entitled to vote on the matter.
    6. As shareholders of a Money Market Fund, the Investing Funds will 
receive dividends and bear their proportionate share of expenses on the 
same basis as other shareholders of such Money Market Funds. A separate 
account will be established in the shareholder records of each of the 
Money Market Funds for each of the Investing Funds.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-11519 Filed 5-9-95; 8:45 am]
BILLING CODE 8010-01-M