[Federal Register Volume 60, Number 183 (Thursday, September 21, 1995)]
[Notices]
[Pages 49035-49038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23379]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21361; 812-9630]
Janus Investment Fund, et al.; Notice of Application
September 14, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption Under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Janus Investment Fund, Janus Aspen Series, Janus Service
Corporation (``JSC''), and Janus Capital Corporation (``Janus
Capital'').
RELEVANT ACT SECTION: Order requested under section 17(d) of the Act
and rule 17d-1 thereunder.
SUMMARY OF APPLICATION: Applicants request an order to permit the
series of certain investment companies and certain private accounts to
deposit their uninvested cash balances in one or more joint accounts to
be used to enter into short-term investments.
[[Page 49036]]
FILING DATES: The application was filed on June 19, 1995, and amended
on August 31, 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 October 10,
1995, and should be accompanied by proof of service on 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 who wish to be
notified of a hearing may request notification by writing to the SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street, NW., Washington, DC 20549.
Applicants, 100 Fillmore Street, Suite 300, Denver, CO 80206-4923.
FOR FURTHER INFORMATION CONTACT:
James M. Curtis, Senior Counsel, at (202) 942-0563, or Robert A.
Robertson, Branch Chief, (202) 942-0564 (Office of Investment Company
Regulation, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicants' Representations
1. Janus Investment Fund and Janus Aspen Series are open-end
management investment companies comprised of multiple series. Janus
Investment Fund is organized as a Massachusetts business trust, and
Janus Aspen Series is organized as a Delaware business trust. Janus
Capital serves as investment adviser to each Fund and provides the
Funds with certain administrative services. JSC is a wholly-owned
subsidiary of Janus Capital and serves as shareholder servicing and
dividend paying agent of Janus Investment Fund and Janus Aspen Series.
2. Applicants request that any relief granted also apply to any
present or future registered investment companies that are advised by
Janus Capital, or any entity controlling, controlled by, or under
common control with Janus Capital (the ``Funds''); individual,
corporate, charitable, and retirement accounts for which Janus Capital
serves as investment adviser (the ``Private Accounts''); any entity
controlling, controlled by, or under common control with JSC that
serves as shareholder servicing agent or dividend paying agent for any
of the Funds; and any entity controlling, controlled by, or under
common control with Janus Capital that serves as investment adviser to
any of the Funds. All Funds that currently intend to rely on the
requested order are named as applicants.
3. At the end of each trading day, the Funds and Private Accounts
have uninvested cash balances in their accounts at their respective
custodian banks that would not otherwise be invested in portfolio
securities by Janus Capital. Generally such cash balances are invested
in short-term liquid assets such as commercial paper or U.S. Treasury
bills. Cash balances may also be invested in shares of the money market
series of Janus Investment Fund or Janus Aspen Series.\1\
\1\An SEC exemptive order permits Funds advised by Janus Capital
to invest their cash balances in shares of certain affiliated money
market series. See Janus Investment Fund, Investment Company Act
Release Nos. 21042 (May 4, 1995) (notice) and 21103 (May 31, 1995)
(order).
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4. JSC, in its capacity as shareholder servicing and dividend
paying agent, maintains certain accounts in its name on behalf of the
Funds at a variety of banks.
5. Applicants propose to deposit uninvested cash balances of the
Funds and Private Accounts that remain at the end of the trading day,
as well as cash for investment purposes, into one or more joint
accounts (the ``Joint Accounts'') and to invest the daily balance of
the Joint Accounts in: (a) Repurchase agreements collateralized by U.S.
government securities (as defined in the Act) or by First Tier
Securities (as defined in rule 2a-7 under the Act); (b) interest-
bearing or discounted commercial paper, including dollar denominated
commercial paper of foreign issuers; and (c) any other short-term money
market instruments, including variable rate demand notes and other tax-
exempt money market instruments, that constitute ``Eligible
Securities'' (as defined in rule 2a-7 under the Act) (collectively,
``Short-Term Investments''). JSC, in its capacity as shareholder
servicing and dividend paying agent, may also deposit cash in the Joint
Accounts. JSC, Funds, and Private Accounts that are eligible to
participate in a Joint Account and that elect to participate in such
Account are collectively referred to as ``Participants.''
6. Janus Capital has discretion to purchase and sell securities for
the Private Accounts in accordance with each Private Account's
investment objectives, policies, and restrictions. At this time, no
Private Account has determined whether it will be able or willing to
participate in a Joint application.
7. A Participant's decision to use a Joint Account would be based
on the same factors as its decision to make any other short-term liquid
investment. The sole purpose of the Joint Accounts would be to provide
a convenient means of aggregating what otherwise would be one or more
daily transactions for some or all Participants necessary to manage
their respective daily account balances.
8. Janus Capital will be responsible for investing funds held by
the Joint Accounts, establishing accounting and control procedures, and
ensuring fair treatment of Participants. Janus Capital will manage
investments in the Joint Accounts in essentially the same manner as if
it had invested in such instruments on an individual basis for each
Fund or Private Account.
9. Any repurchase agreements entered into through the joint account
will comply with the terms of Investment Company Act Release No. 13005
(February 2, 1983). Applicants acknowledge that they have a continuing
obligation to monitor the SEC's published statements on repurchase
agreements, and represent that repurchase agreement transactions will
comply with future positions of the SEC to the extent that such
positions set forth different or additional requirements regarding
repurchase agreements. In the event that the SEC sets forth guidelines
with respect to other Short-Term Investments, all such investments made
through the Joint Account will comply with those guidelines.
Applicants' Legal Analysis
1. Section 17(d) of the Act and rule 17d-1 thereunder prohibit an
affiliated person of a registered investment company, or an affiliated
person of such a person, from participating in any joint enterprise or
arrangement in which such investment company is a participant, without
an SEC order.
2. The Participants, by participating in the proposed Joint
Account, and Janus Capital, by managing the proposed Joint Account,
could be deemed to be ``joint participants'' in a transaction within
the meaning or section 17(d) of the Act. In addition, the proposed
Joint Account could be deemed to be a ``joint enterprise or other joint
arrangement'' within the meaning of rule 17d-1.
3. Although Janus Capital will realize some benefits through
administrative convenience and some possible reduction in clerical
costs, the Participants will be the primary beneficiaries of the Joint
Accounts
[[Page 49037]]
because the account may result in higher returns and would be a more
efficient means of administering daily cash investments.
4. Applicants believe that no Participants will be in a less
favorable position as a result of the Joint Accounts. Each
Participant's investment in a Joint Account would not be subject to the
claims of creditors, whether brought in bankruptcy, insolvency, or
other legal proceeding, of any other Participant. Each Participant's
liability on any Short-Term Investment will be limited to its interest
in such investment; no Participant will be jointly liable for the
investments of any other Participant.
5. Participants may earn a higher rate of return on investments
through the Joint Accounts relative to the returns they could earn
individually. Under most market conditions, it is generally possible to
negotiate a rate of return on larger repurchase agreements and other
Short-Term Investments that is higher than the rate available on
smaller repurchase agreements and other Short-Term Investments. The
Joint Account also may increase the number of dealers and issuers
willing to enter into Short-Term Investments with such Participants and
may reduce the possibility that their cash balances remain uninvested.
6. The Joint Accounts may result in certain administrative
efficiencies and a reduction of the potential for errors by reducing
the number of trade tickets and cash wires that must be processed by
the sellers of Short-Term Investments, the Participants' custodians and
Janus Capital's accounting and trading departments. For the reasons set
forth above, applicants believe that granting the requested order is
consistent with the provisions, policies, and purposes of the Act and
the intention of rule 17d-1.
Applicants' Conditions
Applicants will comply with the following procedures as conditions
to any other granted by the SEC:
1. The Joint Accounts will not be distinguishable from any other
accounts maintained by Participants at their custodians except that
monies from Participants will be deposited in the Joint Account on a
commingled basis. The Joint Accounts will not have a separate existence
and will not have indicia of a separate legal entity. The sole function
of the Joint Accounts will be to provide a convenient way of
aggregating individual transactions which would otherwise require daily
management by Janus Capital of uninvested cash balances.
2. Cash in the Joint Accounts will be invested in one or more of
the following, as directed by Janus Capital: (a) Repurchase agreements
``collateralized fully'' as defined in rule 2a-7 under the Act; (b)
interest-bearing or discounted commercial paper, including dollar
denominated commercial paper of foreign issuers; and (c) any other
short-term money market instruments, including variable rate demand
notes and other tax-exempt money market instruments, that constitute
``Eligible Securities'' (as defined in rule 2a-7 under the Act). Short-
Term Investments that are repurchase agreements would have a remaining
maturity of 60 days or less and other Short-Term Investments would have
a remaining maturity of 90 days or less, each as calculated in
accordance with rule 2a-7 under the Act.
3. All assets held in the Joint Accounts would be valued on an
amortized cost basis to the extent permitted by applicable SEC
releases, rules, or orders.
4. Each Participant that is a registered investment company valuing
its net assets in reliance on rule 2a-7 under the Act will use the
average maturity of the instruments in the Joint Account in which such
Participant has an interest (determined on a dollar weighted basis) for
the purpose of computing its average portfolio maturity with respect to
its portion of the assets held in a Joint Account on that day.
5. In order to assure that there will be no opportunity for any
Participant to use any part of a balance of a Joint Account credited to
another Participant, no Participant will be allowed to create a
negative balance in any Joint Account for any reason, although each
Participant would be permitted to draw down its entire balance at any
time. Each Participant's decision to invest in a Joint Account would be
solely at its option, and no Participant will be obligated to invest in
the Joint Account or to maintain any minimum balance in the Joint
Account. In addition, each Participant will retain the sole rights of
ownership to any of its assets invested in the Joint Account, including
interest payable on such assets invested in the Joint Account.
6. Janus Capital will administer the investment of cash balances in
and operation of the Joint Accounts as part of its general duties under
its advisory agreements with Participants and will not collect any
additional or separate fees for advising any Joint Account.
7. The administration of the Joint Accounts would be within the
fidelity bond coverage required by section 17(g) of the Act and rule
17g-1 thereunder.
8. The Trustees of the Funds will adopt procedures pursuant to
which the Joint Accounts will operate, which will be reasonably
designed to provide that the requirements of the application will be
met. The Trustees will make and approve such changes as they deem
necessary to ensure that such procedures are followed. In addition, the
Trustees will determine, no less frequently than annually, that the
Joint Accounts have been operated in accordance with the proposed
procedures.
9. Any Short-Term Investments made through the Joint Accounts will
satisfy the investment criteria of all Participants in that investment.
10. Each Participant's investment in a Joint Account will be
documented daily on the books of each Participant and the books of its
custodian. Each Participant will maintain records (in conformity with
Section 31 of the Act and the rules thereunder) documenting for any
given day, its aggregate investment in a Joint Account and its pro rata
share of each Short-Term Investment made through such Joint Account.
Each Participant that is not a registered investment company or
registered investment adviser will make available to the SEC, upon
request, such books and records with respect to its participation in a
Joint Account.
11. Every Participant in the Joint Accounts will not necessarily
have its cash invested in every Short-Term Investment. However, to the
extent that a Participant's cash is applied to a particular Short-Term
Investment, the Participant will participate in and own its
proportionate share of such Short-Term Investment, and any income
earned or accrued thereon, based upon the percentage of such investment
purchased with monies contributed by the Participant.
12. Short-Term Investments held in a Joint Account generally will
not be sold prior to maturity except if: (a) Janus Capital believes the
investment no longer presents minimal credit risks; (b) the investment
no longer satisfies the investment criteria of all Participants in the
investment because of a downgrading or otherwise; or (c) in the case of
a repurchase agreement, the counterparty defaults. Janus Capital may,
however, sell any Short-Term Investment (or any fractional portion
thereof) on behalf of some or all Participants prior to the maturity of
the investment if the cost of such transactions will be borne solely by
the selling Participants and the transaction will not adversely affect
other
[[Page 49038]]
Participants. Each Participant in a Joint Account will be deemed to
have consented to such sale and partition of the investments in the
Joint Account.
13. Short-Term Investments held through a Joint Account with a
remaining maturity of more than seven days, as calculated pursuant to
rule 2a-7 under the Act, will be considered illiquid and, for any
Participant that is an open-end investment company registered under the
Act, subject to the restriction that the fund may not invest more than
15% (or such other percentage as set forth by the SEC from time to
time) of its net assets in illiquid securities, if Janus Capital cannot
sell the instrument, or the fund's fractional interest in such
instrument, pursuant to the preceding condition.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret M. McFarland,
Deputy Secretary.
[FR Doc. 95-23379 Filed 9-20-95; 8:45 am]
BILLING CODE 8010-01-M