EXHIBIT 12
January 16, 2003
Janus Investment Trust
100 Fillmore Street
Denver, Colorado 80206
Re: Acquisition by Janus Fund, a series of Janus Investment Trust,
of assets of Janus Fund 2, also a series of Janus Investment
Trust
Ladies and Gentlemen:
We have acted as counsel to Janus Investment Trust (the "Trust") in
connection with the proposed acquisition of the assets of one series of the
Trust by another series of the Trust, pursuant to an Agreement and Plan of
Reorganization (the "Plan") described in the prospectus and proxy statement
relating to the Plan included as part of the Registration Statement on Form N-14
of the Trust filed on December 13, 2002 with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
as amended by Pre-Effective Amendment No. 1 filed January 16, 2003 (the
"Registration Statement"). You have requested our opinion as to certain federal
income tax consequences of the transactions contemplated by the Plan.
In rendering our opinions, we have reviewed such documents and
materials as we have considered necessary for the purpose of rendering the
opinions. We have made inquiry as to the underlying facts which we considered to
be relevant to the conclusions set forth in this letter. The opinions expressed
in this letter are based upon certain factual statements relating to the Trust
set forth in the Registration Statement and certain representations set forth
below that have been confirmed to us in representation letters from the Trust
dated as of the date hereof for our use in rendering the opinions set forth
herein. We have assumed that such statements, representations, and warranties
are true, correct, complete, and not breached and will continue to be so through
the Closing Date,(1) that no actions that are inconsistent with such statements,
representations, and warranties will be taken, and that all representations,
statements, and warranties made to "the best knowledge of" any person or with
similar qualification are and will be true, correct and complete as if made
without such qualification. We have also assumed (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us as originals,
(iii) the conformity to the original documents of all documents submitted to us
as copies, (iv) the authority and capacity of the individual or individuals who
executed any such documents on behalf of any person, (v) the conformity to the
final documents of all documents
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(1) Capitalized terms used herein and not otherwise defined shall
have the meanings given them in the Plan.
Janus Investment Trust
January 16, 2003
Page 2
submitted to us as drafts, and (vi) the accuracy and completeness of all records
made available to us. In addition, we have assumed that (i) the Reorganization
will be consummated in accordance with the Plan, (ii) the Trust will comply with
all reporting obligations with respect to the Reorganization required under the
Internal Revenue Code of 1986, as amended (the "Code"),(2) and the Treasury
Regulations promulgated thereunder, and (iv) the Plan is valid and binding in
accordance with its terms.
The discussion and conclusions set forth below are based upon the Code,
the Treasury Regulations and existing administrative and judicial
interpretations thereof, all of which are subject to change. No assurance can
therefore be given that the federal income tax consequences described below will
not be altered in the future, including on or before the Closing Date, and we do
not assume responsibility to provide notice or advice to any person or entity
regarding any such changes or altered tax consequences.
I. Background.
The Trust, a Massachusetts business trust, is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"). Janus Fund (the "Acquiring Fund") is a portfolio
series of the Trust. The Acquiring Fund intends to acquire the assets of Janus
Fund 2 (the "Acquired Fund"), another portfolio series of the Trust.
The investment objectives of the Acquiring Fund and the Acquired Fund
(each, a "Fund" and collectively, the "Funds") are substantially identical. Both
Funds seek long-term growth of capital in a manner consistent with the
preservation of capital. Both Funds apply a "bottom-up" approach in choosing
investments. In other words, their portfolio managers look at companies one at a
time to determine if a company is an attractive investment opportunity and
consistent with the Fund's investment policies. 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. Both Funds invest primarily in common stocks
selected for their growth potential. Although the Acquiring Fund can invest in
companies of any size, it generally invests in larger, more established
companies. The Acquired Fund may also invest in companies of any size, from
larger, well-established companies to smaller, emerging growth companies. Both
Funds have substantially the same risk factors and identical investment
restrictions.
II. The Plan of Reorganization.
Subject to the terms and conditions set forth in the Plan, the Trust,
on behalf of the Acquired Fund, shall transfer all of the assets of the Acquired
Fund and assign all Assumed
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(2) Unless otherwise indicated, all section references contained
herein are to the Code.
Janus Investment Trust
January 16, 2003
Page 3
Liabilities (as hereinafter defined) to the Acquiring Fund and, on behalf of the
Acquiring Fund, shall acquire all such assets and shall assume all such Assumed
Liabilities upon delivery to the Trust, on behalf of the Acquired Fund, of
Acquiring Fund shares having a net asset value equal to the value of the net
assets of the Acquired Fund transferred (the "Acquiring Fund Shares"). "Assumed
Liabilities" shall mean all liabilities, including all expenses, costs, charges
and reserves, reflected in an unaudited statement of assets and liabilities of
the Acquired Fund prepared as of the close of business on the Valuation Date (as
hereinafter defined), determined in accordance with generally accepted
accounting principles consistently applied from the prior audited period. The
net asset value of the Acquiring Fund Shares and the value of the net assets of
the Acquired Fund to be transferred shall be determined immediately following
the close of regular trading on the New York Stock Exchange on the Closing Date
(the "Valuation Date") using the valuation procedures set forth in the
then-current prospectus and statement of additional information of the Acquiring
Fund. All Assumed Liabilities of the Acquired Fund, to the extent that they
exist at or after the Closing, shall after the Closing attach to the Acquiring
Fund and may be enforced against the Acquiring Fund to the same extent as if the
same had been incurred by the Acquiring Fund. In addition, at or prior to the
Closing, the Acquired Fund shall, if necessary, declare a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to the Acquired Fund's shareholders all of the Acquired Fund's
investment company taxable income for all taxable years ending at or prior to
the Closing (computed without regard to any deduction for dividends paid under
Section 852(b)(2)(D)) and all of its net capital gains realized (after reduction
for any capital loss carry-forward) in all taxable years ending at or prior to
the Closing.
Immediately after the Closing, the Acquired Fund will be liquidated and
the Acquiring Fund Shares that have been delivered to the Trust on behalf of the
Acquired Fund will be distributed to the shareholders of the Acquired Fund, each
shareholder to receive Acquiring Fund Shares of the corresponding class equal to
the pro rata portion of shares of beneficial interest of the Acquired Fund held
by such shareholder as of the close of business on the Valuation Date. Such
liquidation and distribution will be accompanied by the establishment of an open
account on the share records of the Acquiring Fund in the name of each
shareholder of the Acquired Fund and representing the respective pro rata number
of Acquiring Fund Shares due such shareholder. As of the Closing, each
outstanding certificate which, prior to the Closing, represented shares of the
Acquired Fund will be deemed for all purposes to evidence ownership of the
number of Acquiring Fund Shares issuable with respect thereto pursuant to the
Reorganization. The Acquiring Fund will not issue certificates representing
Acquiring Fund Shares issued in connection with the Reorganization. Ownership of
Acquiring Fund Shares will be shown on the books of the Trust's transfer agent.
The Board of Trustees of the Trust (the "Board"), including those
Trustees who are not "interested persons" of the Trust as defined in the
Securities Act, has determined that the interests of existing shareholders of
the Acquired Fund will not be diluted as a result of the transactions
contemplated by the Reorganization and that the Reorganization would be in the
best interests of the shareholders of the Acquired Fund. The Board has reached
similar
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January 16, 2003
Page 4
conclusions with respect to the Acquiring Fund and has also approved the
Reorganization with respect to the Acquiring Fund.
III. Representations.
The following representations have been made by the Trust, on behalf of
the Acquiring Fund and the Acquired Fund, with respect to the Reorganization:
(a) As of the Closing, the fair market value of the Acquiring Fund
Shares to which each shareholder of the Acquired Fund is entitled will
approximately equal the fair market value of the shares of the Acquired Fund
such shareholder will surrender.
(b) There are no dissenters' or appraisal rights, and the consideration
paid by the Acquiring Fund in connection with the Reorganization will consist
solely of Acquiring Fund Shares.
(c) There is no plan or intention by the Acquiring Fund or any person
related (as defined in Treasury Regulations Section 1.368-1(e)(3)) to the
Acquiring Fund to acquire or redeem, during the five-year period beginning on
the Closing Date, with consideration other than Acquiring Fund Shares, any of
the Acquiring Fund Shares issued in the Reorganization either directly or
through any transaction, agreement, or arrangement with any other person, other
than redemptions in the ordinary course of the Acquiring Fund's business as an
open-end investment company as required by section 22(e) of the 1940 Act.
(d) During the five-year period ending on the Closing Date, neither the
Acquired Fund nor any person related (as defined in Treasury Regulations Section
1.368-1(e)(3) determined without regard to Treasury Regulations Section
1.368-1(e)(3)(i)(A)) to the Acquired Fund will have directly or through any
transaction, agreement, or arrangement with any other person, (i) acquired
shares of the Acquired Fund with consideration other than Acquiring Fund Shares
or shares of the Acquired Fund, except for redemptions in the ordinary course of
the Acquired Fund's business as an open-end investment company as required by
section 22(e) of the 1940 Act or (ii) made distributions with respect to shares
of the Acquired Fund, except for (a) distributions described in sections 852 and
4982, and (b) additional distributions, to the extent such distributions do not
exceed fifty percent (50%) of the value (without giving effect to such
distributions) of the proprietary interest in the Acquired Fund as of the
Closing Date.
(e) During the five-year period ending on the Closing Date, neither the
Acquiring Fund nor any person related (as defined in Treasury Regulations
Section 1.368-1(e)(3)) to the Acquiring Fund will have acquired directly or
through any transaction, agreement or arrangement with any other person, shares
of the Acquired Fund with consideration other than Acquiring Fund Shares.
(f) The Acquiring Fund will acquire at least ninety percent (90%) of
the fair market value of the net assets and at least seventy percent (70%) of
the fair market value of the gross
Janus Investment Trust
January 16, 2003
Page 5
assets held by the Acquired Fund immediately prior to the Reorganization. For
purposes of this representation, amounts, if any, paid by or on behalf of the
Acquired Fund for reorganization expenses, amounts, if any, paid by the Acquired
Fund to shareholders who receive cash or other property and all redemptions and
distributions made by the Acquired Fund immediately preceding or in
contemplation of the transfer will be included as assets of the Acquired Fund
immediately prior to the Reorganization. However, (i) regular distributions and
redemptions occurring in the ordinary course of the Acquired Fund's business as
an open-end management investment company and (ii) distributions made to
shareholders of the Acquired Fund prior to the Reorganization in order to pay
out all of the Acquired Fund's (a) investment company taxable income (before the
deduction for dividends paid under section 852(b)(2)(D)) and (b) net capital
gain (after reduction for any capital loss carryover) will be excluded.
(g) Immediately after the Closing, the Acquired Fund will, in pursuance
of the Plan, distribute the Acquiring Fund Shares it receives in the
Reorganization and its other assets, if any, and thereupon will cancel all of
its issued and outstanding shares.
(h) The Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the assets of the Acquired Fund acquired in the
Reorganization, except for dispositions made in the ordinary course of business.
(i) The Acquiring Fund will continue to use in its business at least
fifty percent (50%) of the historic portfolio securities of the Acquired Fund.
When such securities mature, are redeemed or are otherwise disposed of by the
Acquiring Fund, they will be replaced with similar securities (i.e., securities
that would have been permissible investments of the Acquired Fund under the
applicable investment objectives, policies, and restrictions of the Acquired
Fund in effect immediately before the Closing), taking into account and treating
for this purpose the fifty percent (50%) of the historic portfolio securities of
the Acquired Fund referred to in the first sentence of this representation as a
continuation of the Acquired Fund. For purposes of this representation,
portfolio securities disposed of by the Acquired Fund prior to and in
anticipation of the Reorganization will be treated as part of the historic
portfolio securities of the Acquired Fund.
(j) As of the Closing, there is no intercorporate indebtedness existing
between the Acquiring Fund and the Acquired Fund.
(k) Each of the Acquired Fund and the Acquiring Fund has qualified as a
separate association taxable as a corporation for federal income tax purposes
under section 851(g) in each taxable year and will qualify as such as of the
Closing. The Trust either (i) was in existence prior to January 1, 1997 or (ii)
has elected to be classified as an association taxable as a corporation,
effective on or before the Closing Date, pursuant to Treasury Regulations
Section 301.7701-3.
(l) The Acquiring Fund has elected to be treated as a regulated
investment company under section 851, has qualified as such for each taxable
year and will qualify as such as of the Closing. The Acquired Fund has elected
to be treated as a regulated investment company under
Janus Investment Trust
January 16, 2003
Page 6
section 851, has qualified as such for each taxable year and will qualify as
such as of the Closing. In order (i) to ensure continued qualification of the
Acquired Fund as a regulated investment company for federal income tax purposes
and (ii) to eliminate any tax liability of the Acquired Fund arising by reason
of undistributed investment company taxable income or net capital gain, the
Acquired Fund has declared or will declare and will pay to its shareholders of
record on or prior to the Closing a dividend or dividends that, together with
all previous such dividends, shall have the effect of distributing (i) all of
its investment company taxable income for the last full taxable year of the
Acquired Fund and any subsequent short taxable year ending on the Closing
(computed without regard to any deduction for dividends paid under Section
852(b)(2)(D)) and (ii) all of its net capital gain for the final full taxable
year of the Acquired Fund and any subsequent short taxable year ending on the
Closing (after reduction for any capital loss carryover).
(m) The expenses incurred in connection with entering into and carrying
out the provisions of the Plan, whether or not the Reorganization is
consummated, will be borne by Janus Capital Management LLC, the investment
adviser to the Acquiring Fund and the Acquired Fund. All such expenses will be
solely and directly related to the Reorganization. No cash will be transferred
from the Acquiring Fund to the Acquired Fund for the purpose of paying any
reorganization expenses of the Acquired Fund. The shareholders of the Acquired
Fund and the Acquiring Fund will pay their own expenses, if any, incurred in
connection with the Reorganization.
(n) As of the Closing, the Acquiring Fund does not own, directly or
indirectly, nor has it owned during the past five years, directly or indirectly,
any shares of the Acquired Fund.
(o) The liabilities of the Acquired Fund to be assumed by the Acquiring
Fund and the liabilities to which the transferred assets of the Acquired Fund
will be subject, if any, have been incurred by the Acquired Fund in the ordinary
course of its business.
(p) The fair market value of the assets of the Acquired Fund to be
transferred to the Acquiring Fund equals or exceeds the sum of the liabilities
to be assumed by the Acquiring Fund plus the amount of liabilities, if any, to
which the transferred assets will be subject.
(q) As of the Closing, neither the Acquiring Fund nor the Acquired Fund
is under the jurisdiction of a court in a Title 11 or a similar case within the
meaning of section 368(a)(3)(A).
(r) The Acquired Fund has not distributed and will not distribute to
its shareholders in pursuance of the Plan any "appreciated property" within the
meaning of section 361(c)(2).
(s) Shareholders of the Acquired Fund will not be in control (within
the meaning of section 368(a)(2)(H) and section 304(c)) of the Acquiring Fund
after the Reorganization.
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January 16, 2003
Page 7
(t) At the time of the Closing, the Acquired Fund will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the Acquired Fund.
Any inaccuracy in, or breach of, any of the aforementioned statements,
representations, warranties and assumptions or any change after the date hereof
in applicable law could adversely affect our opinions. No ruling has been (or
will be) sought from the Internal Revenue Service as to the federal income tax
consequences of any aspect of the Reorganization.
IV. Opinions.
Based upon and subject to the foregoing, as well as the limitations set
forth below, it is our opinion with respect to the Reorganization that, under
presently applicable federal income tax law:
(i) The transfer of all or substantially all of the Acquired Fund's
assets solely in exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of the Assumed Liabilities of the Acquired Fund, and the
distribution of such shares to the shareholders of the Acquired Fund, will
constitute a "reorganization" within the meaning of section 368(a). The
Acquiring Fund and the Acquired Fund will each be a "party to a reorganization"
within the meaning of section 368(b).
(ii) No gain or loss will be recognized by the Acquired Fund on the
transfer of the assets of the Acquired Fund to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Assumed Liabilities of the Acquired Fund or upon the distribution of the
Acquiring Fund Shares to the Acquired Fund's shareholders in exchange for their
shares of the Acquired Fund.
(iii) The tax basis of the Acquired Fund's assets acquired by the
Acquiring Fund will be the same to the Acquiring Fund as the tax basis of such
assets to the Acquired Fund immediately prior to the Reorganization, and the
holding period of the assets of the Acquired Fund in the hands of the Acquiring
Fund will include the period during which those assets were held by the Acquired
Fund.
(iv) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of the Assumed Liabilities
of the Acquired Fund.
(v) No gain or loss will be recognized by shareholders of the Acquired
Fund upon the receipt of the Acquiring Fund Shares by such shareholders,
provided such shareholders receive solely Acquiring Fund Shares (including
fractional shares) in exchange for their Acquired Fund shares.
Janus Investment Trust
January 16, 2003
Page 8
(vi) The aggregate tax basis of the Acquiring Fund Shares, including
any fractional shares, received by each shareholder of the Acquired Fund
pursuant to the Reorganization will be the same as the aggregate tax basis of
the Acquired Fund shares held by such shareholder immediately prior to the
Reorganization, and the holding period of the Acquiring Fund Shares, including
fractional shares, to be received by each shareholder of the Acquired Fund will
include the period during which the Acquired Fund shares exchanged therefor were
held by such shareholder (provided that the Acquired Fund shares were held as a
capital asset on the date of the Reorganization).
* * *
No opinion is expressed as to any matter not specifically addressed
above. Also, no opinion is expressed as to the tax consequences of any of the
transactions under any foreign, state, or local tax law. Moreover, you should
recognize that our opinions are not binding on the Internal Revenue Service (the
"Service"), that the Service may disagree with the opinions expressed herein,
and that although we believe that our opinions would be sustained if challenged,
there can be no assurances to that effect.
This opinion letter has been issued to and may be relied upon solely by
the addressee hereof in connection with the consummation of the transactions
contemplated by the Plan and may not be relied upon by any other person or used
for any other purpose without our prior written consent.
Very truly yours,
/s/ GOODWIN PROCTER LLP
GOODWIN PROCTER LLP