[Janus letterhead]
August 6, 2009
VIA EDGAR
Mr. Larry Greene
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-0505
Re: JANUS INVESTMENT FUND (the "Registrant")
1933 Act File No. 002-34393
1940 Act File No. 811-01879
Post-Effective Amendment No. 124
Dear Mr. Greene:
On behalf of the Registrant and its funds or portfolios (each, a "Fund" and
collectively, the "Funds"), this letter is to respond to your comments made by
telephone on June 3, 2009 with respect to the Registrant's Post-Effective
Amendment No. 124 filed pursuant to Rule 485(a) under the Securities Act of
1933, as amended, on April 3, 2009. The Staff of the Securities and Exchange
Commission's (the "Staff") comments and the Registrant's responses to Staff
comments are as follows:
1. COMMENT: The Staff requested that the Registrant reflect in writing
all comments and responses and carry over comments, as applicable, to
the Registrant's other Prospectuses and Statements of Additional
Information ("SAIs").
RESPONSE: The Registrant acknowledges the comment and confirms that it
has complied.
Prospectus Comments
2. COMMENT: As a general comment, the Staff inquired whether the
Registrant had provided appropriate disclosure related to recent
market turmoil.
RESPONSE: Each Fund's Main Investment Risks section contains
disclosure related to market risk that provides information related to
the effects of deteriorating economic or market conditions including,
but not limited to, general declines in prices on the stock markets,
declines in the real estate markets, and declines in commodities
prices. Additional language has also been added regarding recent
events in the equity and fixed-
income markets which have resulted in a high degree of volatility,
both domestic and international.
3. COMMENT: The Staff noted that in the cases of Funds with "global,"
"international," or "worldwide" in their names, such Funds should each
invest in securities of at least ten countries and invest at least 40%
of their respective assets in securities of foreign countries,
excluding the United States.
RESPONSE: Consistent with investment policies and restrictions of
these Funds, the Registrant has previously added or revised disclosure
as appropriate to reflect that such Funds invest in several countries.
The Registrant believes these investment policies are consistent with
formal SEC guidance.
4. COMMENT: With respect to Janus Global Life Sciences Fund, the Staff
asked if there was a "test," whether by revenue or otherwise, to
ensure the Fund's compliance with its stated investment policy in life
sciences.
RESPONSE: The Fund's Principal Investment Strategies section currently
contains disclosure regarding investments that may be considered to
have a "life sciences" orientation. The disclosure is designed to
provide additional information regarding the types of companies that
could be held by the Fund and include companies engaged in research,
development, production, or distribution of products or services
related to health and personal care, medicine, or pharmaceuticals.
5. COMMENT: With respect to disclosure related to foreign exposure risk,
the Staff asked for a supplemental explanation as to why an update to
the percentage of emerging markets securities held by a Fund from the
previous fiscal year is not a material change that should be filed
under Rule 485(a) of the 1933 Act.
RESPONSE: Pursuant to prior discussions with the Staff, the Funds have
previously disclosed their level exposure to emerging markets and
associated risk, if applicable. The Funds update their percentage of
emerging market exposure in order to provide shareholders with the
most recent data available and include related disclosure that has
previously been reviewed by the Staff. Given that the disclosure has
been previously discussed with and reviewed by the Staff, it would not
require a 485(a) filing that serves the purpose of allowing for
advance review by the Staff. This change is considered non-material.
6. COMMENT: With respect to disclosure related to short positions, the
Staff asked for confirmation that appropriate disclosure is reflected
in the Expenses table.
RESPONSE: As discussed with the Staff, and as described in a footnote
to the Fees and Expenses table, "Other Expenses" will include
dividends or interest on short sales, as applicable.
7. COMMENT: The Staff indicated that the footnotes to the Fees and
Expenses table should follow the expense examples.
RESPONSE: As previously noted, the Registrant believes that the most
effective presentation of the information is reflected in the current
disclosure and is consistent with Item 3 of Form N-1A. Additionally,
General Instruction C.1(a) to Form N-1A provides that a fund should
use document design techniques that promote effective communication,
which the Registrant believes is consistent with its current
disclosure.
8. COMMENT: The Staff requested that the Registrant verify whether
applicable fee waiver agreements will be in effect for at least one
year from the effective date and that the agreements will be included
as exhibits to the filing.
RESPONSE: The Registrant confirms that the agreements will be in
effect for the specified period and that its practice, although not
required under Part C to Form N-1A, is to include the fee waiver
agreements that impact advisory fees as exhibits in a subsequent
post-effective amendment filing.
9. COMMENT: With respect to a footnote located in the Annual Fund
Operating Expenses table that states "Janus Capital may recover from
the Fund fees and expenses previously waived...," the Staff requested
that the Registrant explain why the Registrant believes Janus
Capital's waiver of fees should be classified as a waiver when the
waiver agreement includes a recoupment provision.
RESPONSE: The Registrant acknowledges the comment but believes that
despite the ability to recoup fees, Janus Capital's relinquishment of
its right to timely collect its fees constitutes a form of waiver.
Janus Capital may recover waived fees and expenses but there is no
guarantee that this will occur.
10. COMMENT: In a footnote to the Annual Fund Operating Expenses table,
the prospectus states "It is possible that the cumulative dollar
amount of additional compensation ultimately payable to Janus Capital
will, under some circumstances, exceed the cumulative dollar amount of
fees waived by Janus Capital." The Staff suggested that the Registrant
disclose information as to whether the adviser reimburses the Fund
under the above referenced circumstances.
RESPONSE: The Registrant respectfully declines to follow the Staff's
suggestion. The Registrant notes that there are numerous assumptions
that need to occur under extreme circumstances for this scenario to
arise, and even if it did arise, there is not necessarily a direct
correlation between the amounts waived and the revenue earned. A
waiver of advisory fees does not necessarily mean the adviser will
earn greater compensation. In circumstances where that may occur, the
Registrant's SAI currently discloses that: "The application of an
expense limit, if any, will have a positive effect upon the Fund's
performance and may result in an increase in the Performance
Adjustment."
The Registrant believes that the circumstance contemplated by the
footnote is only an extremely remote possibility, as illustrated by
the following.
The maximum Performance Adjustment (0.15% of average net assets during
the prior 36 months) will occur if a fund outperforms or underperforms
its benchmark index by 5.00% (may be higher or lower for each
applicable Janus fund) over the same period. The Performance
Adjustment is made in even increments for every 0.50% difference in
the investment performance of a fund's measuring class. Thus, the rate
used for the Performance Adjustment is 0.015% (1.5 basis points) for
outperformance of 0.50%; 0.030% (3 basis points) for outperformance of
1.00%, and so forth.
Assume that a fund had had $1 billion of net assets consistently over
the prior 36 months. In order to improve a fund's performance by
0.50%, Janus Capital would have to waive approximately $5 million of
fees. The effect of that would be to increase Janus Capital's fee by a
maximum of 1.5 basis points ($150,000 per year). (The actual fee
impact would be less to the extent that a fund's performance
outperforms or underperforms its benchmark index by more than 5.00%,
in which case the fee waiver might not have any impact on fees.) Thus,
under normal circumstances, Janus Capital's "cost" of improving
performance will vastly exceed the incremental performance fee
benefit.
The only time that the circumstance contemplated by the footnote might
occur is when:
(a) a fund has consistently been slightly over its expense limit (so
Janus Capital's fee waiver is a very small dollar amount); AND
(b) the effect of that small waiver has caused the fund's performance
to cross from one performance fee increment to another - for example
where a fund has outperformed the benchmark by 0.51% instead of 0.49%;
AND
(c) Janus Capital has recently stopped waiving fees. (If Janus Capital
is still waiving fee, the performance adjustment would be an
incremental expense to a fund that would itself be subject to the
expense waiver).
11. COMMENT: The Staff requested clarification regarding the term
"investment personnel" as it relates to the management of Janus Global
Research Fund, how the term is used throughout the documents, and
whether disclosure, as it relates to Item 5 of Form N-1A, is
appropriate.
RESPONSE: As discussed, the use of the term "investment personnel" is
intended as a reference to the team of equity research analysts
described in the Fund's Principal Investment Strategies section as the
group of professionals responsible for selecting investments for the
Fund. The "team" is overseen by the Director of Research, James Goff,
and disclosure reflects that Mr. Goff is "primarily" responsible for
the day-to-day operations of the Fund. The Registrant believes that
such disclosure is consistent with Item 5 of Form N-1A.
12. COMMENT: The Staff inquired whether the disclosure related to illiquid
investments captures the notion that securities which may have been
deemed to be liquid may become illiquid if there is no secondary
market for such securities.
RESPONSE: The Registrant has disclosed the following in its SAIs:
"Certain securities previously deemed liquid may become illiquid in
any subsequent assessment of the foregoing factors or other changes
affecting the security." The SAI lists the factors considered as part
of a liquidity determination, which includes the "nature of the
marketplace."
13. COMMENT: With respect to disclosure regarding Anti-Money Laundering
Program requirements under the USA PATRIOT Act, the Staff indicated
that the disclosure did not state that the Registrant had designated
an officer of the Funds for purposes of supervising the Registrant's
anti-money laundering program.
RESPONSE: As discussed during the call, the Trustees of the Registrant
have designated an officer to supervise the anti-money laundering
program, and the Registrant has noted the designated officer in the
Trustees and Officers table of the SAI.
14. COMMENT: With respect to the glossary definition provided for Industry
concentration, the Staff noted that concentration is defined as "the
investment of 25% or more" of fund's asset in a particular industry.
The Staff requested that the disclosure relating to "concentration" be
amended to reflect this definition.
RESPONSE: The Registrant acknowledges the comment and has updated the
disclosure as appropriate.
15. COMMENT: With respect to Janus Long/Short Fund and strategy disclosure
indicating that the Fund may take long and short positions in
instruments that provide exposure to the equity markets, including
exchange-traded funds, options, futures, and other index-based
instruments, the Staff asked if the "other index-based instruments"
could include hedge funds.
RESPONSE: To the extent permissible by securities laws, the
Registrant's investment in "other index-based instruments" could
include hedge funds. However, the Registrant does not currently
contemplate investing in hedge funds.
16. COMMENT: With respect to the disclosure pertaining to the risks
associated with short sales in the Alternative Funds' prospectus, the
Staff asked whether similar disclosure was also reflected in other
Fund prospectuses.
RESPONSE: Consistent with the investment strategies and risks of each
Fund, the Registrant includes the referenced disclosure as
appropriate.
Statements of Additional Information Comments
17. COMMENT: In the section entitled "Investment Policies and Restrictions
Applicable to All Funds," with respect to Janus Global Real Estate
Fund, the policies state that the Fund may invest 25% or more of its
assets it real estate. The Staff indicated that since this is an
industry concentration policy, the word "may" should be replaced with
"will."
RESPONSE: The Registrant acknowledges the comment and has updated the
disclosure.
18. COMMENT: With respect to Janus Modular Portfolio Construction Fund,
the Staff questioned whether or not the Fund's ability to invest
directly in individual securities in addition to other Janus mutual
funds was allowed under Section 12(d)(1)(G) of the Investment Company
Act of 1940, as amended, (the "1940 Act") or if the Registrant is
relying on an exemptive order. Additionally, the Staff requested a
supplemental explanation as to why underlying funds cannot acquire
securities in excess of the limits of Section 12(d)(1) of the 1940
Act.
RESPONSE: The Registrant believes that the Fund's strategies are
consistent with and allowed under Rule 12d1-2 (one of the new "fund of
funds rules"). The rule allows investment companies that rely on
Section 12(d)(1)(G) to not only invest in affiliated investment
companies in addition to Government securities and short-term paper,
but to also invest in securities issued by other unaffiliated
investment companies and securities other than those issued by an
investment company.
The underlying funds may not purchase above the limits of Section
12(d)(1) because of the Fund's reliance on Section 12(d)(1)(G). In
Section 12(d)(1)(G)(IV), the Fund's purchase of an underlying fund is
not subject to the limits of Section 12(d)(1) if the underlying fund
has a policy that prohibits it from acquiring securities of other
mutual funds in reliance on Section 12(d)(1)(F) of Section
12(d)(1)(G).
19. COMMENT: The Staff requested that the Registrant provide additional
disclosure regarding the difference between "funded" or "unfunded"
credit default swaps.
RESPONSE: The Registrant acknowledges the comment and has added
additional disclosure as appropriate.
20. COMMENT: The Staff stated that any benchmark related to portfolio
manager compensation should be disclosed.
RESPONSE: The Registrant's disclosure provides that compensation is
based on individual performance as determined by Janus Capital. The
factors that are taken into account are operating margin, asset flows
in Janus funds, product line and distribution expansion, brand
reinforcement, and specific employee goals. In compensation
arrangements that involve peer group comparisons, the Lipper Peer
Group has been disclosed. The overall assessment of the factors is
based on management's judgment.
21. COMMENT: The Staff requested that the Registrant provide a Tandy
representation in a response letter to be filed as correspondence
separate from the filing.
RESPONSE: The Registrant provides its response below.
The Registrant acknowledges responsibility for the adequacy and accuracy of the
disclosure in the filings. In addition, the Registrant acknowledges that Staff
comments, or changes to disclosure in response to Staff comments in the filings
reviewed by the Staff, do not foreclose the Commission from taking any action
with respect to the filing.
If you have any concerns regarding the above responses, please call me at (303)
336-4562. Thank you for your assistance in this matter.
Regards,
/s/ Rodney DeWalt
Rodney DeWalt
Legal Counsel
cc: Stephanie Grauerholz-Lofton, Esq.
Robin Nesbitt, Esq.
Donna Brungardt