[Janus letterhead]
May 7, 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
1933 Act File No. 002-34393
1940 Act File No. 811-1879
Dear Mr. Greene:
On behalf of Janus Investment Fund (the "Registrant" or "JIF"), this letter is
to respond to your comments, and those of Cindy Rose, made by telephone on
Thursday, April 16, 2009 and Wednesday, April 22, 2009, with respect to the
preliminary registration statements on Form N-14 (the "Prospectus/Information
Statements") filed on March 17, 2009, relating to the registration of shares of
beneficial interest to be issued in connection with the reorganization of series
of Janus Adviser Series ("JAD"), with and into, corresponding series of JIF
(each, a "Reorganization" and together, the "Reorganizations").
For your convenience, each comment received from the Staff of the Securities and
Exchange Commission (the "Staff") is reflected in bold type and is followed by
the Registrant's response.
General Comments
1. Staff Comment: The Staff requested that the Registrant reflect in
writing all comments and responses and carry over comments, as
applicable, to the related Prospectus/Information Statements.
Response: The Registrant acknowledges the comment and confirms that it
has complied.
2. Staff Comment: Please explain the Registrant's rationale for not
seeking shareholder approval/consent of the Plan of Reorganization for
a Fund that has a fee table showing different management fee rates for
the acquired and acquiring fund post-Reorganization.
Response: The Registrant believes that the Plan of Reorganization for
each Fund does not require shareholder approval or consent (or an
exemptive order) because each Reorganization meets the conditions set
forth in Rule 17a-8(a)(3) under the Investment Company Act of 1940, as
amended (the "1940 Act") and is not required under applicable state law
or pursuant to the Funds' governing documents.
Sections 17(a)(1) and 17(a)(2) of the 1940 Act generally prohibit an
affiliated person, or an affiliated person of an affiliated person, of
a registered investment company from knowingly purchasing securities or
other property from, or selling securities or other property to, such
investment company, subject to certain exceptions. Section 2(a)(3) of
the 1940 Act defines an "affiliated person" of another person as, among
other things, any investment adviser of an investment company (if such
other person is an investment company), and "any person directly or
indirectly controlling, controlled by, or under common control with,
such other person." With respect to the Reorganizations, Janus Capital
Management LLC ("Janus Capital"), as the investment adviser for both
the JAD Funds (each, a "Target Fund" and together, the "Target Funds")
and the JIF Funds (each, an "Acquiring Fund" and together, the
"Acquiring Funds," and collectively with the Target Funds, the
"Funds"), is an affiliated person of the Funds and the Funds are
treated as affiliated persons (or affiliated persons of affiliated
persons) of one another. Thus, the Reorganizations would ordinarily be
prohibited by Section 17(a)(1) and Section 17(a)(2), absent an
exemption by rule or order. Rule 17a-8 under the 1940 Act provides
affiliated investment companies with an exemption from this general
prohibition under Section 17(a), and further permits affiliated fund
reorganizations without requiring shareholder approval, provided
certain conditions are met. Each of these conditions has been met with
respect to each Reorganization, as described further below.
Rule 17a-8 permits an affiliated fund reorganization without an
individual exemptive application and without approval of the target
fund shareholders, provided the reorganization satisfies four
conditions included in Rule 17a-8(a)(3):
i. No policy of the target fund that, under Section 13 of the 1940
Act, could not be changed without shareholder approval (a
"fundamental investment policy"), is "materially different" from a
fundamental policy of the target fund ("Condition 1");
ii. No advisory contract between the target fund and any investment
adviser thereof is "materially different" from an advisory
contract between the acquiring fund and any investment adviser
thereof, except for the identity of the investment companies as a
party to the contract ("Condition 2");
iii. Members of the Board of the target fund who are not "interested
persons" of the target fund ("Independent Trustees") and who were
elected by its shareholders, will comprise a majority of the
Independent Trustees of the acquiring fund ("Condition 3"); and
iv. Any distribution fees (as a percentage of the fund's average net
assets) authorized to be paid by the acquiring fund pursuant to a
plan adopted in accordance with Rule 12b-1 ("12b-1 fees") are no
greater than the 12b-1 fees (as a percentage of the fund's average
net assets) authorized to be paid by the target fund pursuant to
such a plan ("Condition 4").
The Registrant has met each of these conditions with respect to the
Reorganizations: (i) Condition 1: the fundamental investment policies
of each Target Fund are substantially identical to the fundamental
investment policies of the corresponding Acquiring Fund; (ii) Condition
2: the advisory contract between each Target Fund and Janus Capital is
substantially identical to the corresponding Acquiring Fund's advisory
contract with Janus Capital; (iii) Condition 3: the Funds share a
common Board of Trustees, all of whom are Independent Trustees; and
(iv) Condition 4: any 12b-1 fees payable with respect to a class of an
Acquiring Fund will be no greater (as a percentage of net assets) than
the corresponding class of the Target Fund. Based on this information,
each of Conditions 1-4 of Rule 17a-8 is satisfied. In addition to each
of the above factors, the services provided to shareholders of the
Target Funds are expected to remain the same after the Reorganization.
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The Registrant notes that Rule 17a-8 also requires a finding by the
Board of Trustees, including by a majority of the Independent Trustees
of the Target Fund, that: (1) participation in the Reorganization is in
the best interests of the Target Fund; and (ii) the interests of the
Target Fund's existing shareholders will not be diluted as a result of
the Reorganization. The Board of Trustees of the Funds, all of whom are
Independent Trustees, has made these findings with respect to each
Reorganization. The Registrant also notes that neither state law to
which it is subject, nor the governing documents of the Registrant,
require shareholder approval of the Plans of Reorganization.
In its comments to the Registrant, the Staff is not raising an issue
with respect to Conditions 1, 3 or 4 of Rule 17a-8, but is inquiring
about the differences in management fee rates shown in the fee table
for certain Funds, a matter that would be covered under Condition 2
since management fees are described in a Fund's investment advisory
contract. Since there are no material differences in the investment
advisory contracts of the Target Funds and their corresponding
Acquiring Funds, the requirement of Condition 2, that condition is
satisfied and shareholder approval of the Target Funds is not required.
These advisory contracts are discussed further below.
The Prospectus/Information Statements that show a difference in
management fee rates in the fee table involve Funds that have a
performance-based investment advisory fee structure. There are no
material differences in the structure of the performance-based
investment advisory fees of the Target Funds and their corresponding
Acquiring Funds. Each such Target Fund and its corresponding Acquiring
Fund have a performance-based investment advisory fee structure that
applies the same fixed base fee rate to the Fund's average daily net
assets during the previous month ("Base Fee"), plus or minus a
performance fee adjustment ("Performance Adjustment") calculated by
applying a variable rate of up to 0.15% (positive or negative) to the
Fund's average daily net assets during a measurement period. In
addition, each of the following factors that may impact the fee rate
are the same for a Target Fund and its corresponding Acquiring Fund:
(i) the benchmark index used for measuring the Funds' performance, (ii)
the hurdle rate for determining the steps at which the advisory fee
rate may adjust up or down based on a Fund's performance compared to
its benchmark index, (iii) the implementation date for the performance
fee structure and Performance Adjustment, (iv) the performance
measurement period, and (v) the share class used post-Reorganization
for measuring the Fund's performance relative to its benchmark is Class
A Shares (waiving the upfront sales charge) ("Load-Waived Class A
Shares").
The reason there is a difference in the management fee rates shown in
the fee table for a Target Fund and its corresponding Acquiring Fund is
two-fold: (1) differences in the fiscal year ends used for calculating
the fee, and (2) differences in assets and asset fluctuations. The
management fee rate shown for the Target Fund is calculated based on
the Fund's average net assets over the fiscal year ended July 31, 2008,
whereas the pro forma management fee rate for the Acquiring Fund is
based on average net assets over the fiscal year ended October 31,
2008. Given that the Target Funds and their corresponding Acquiring
Funds are managed in parallel and have nearly identical performance
(gross of fees and expenses), differences in advisory fee rates between
the Funds are attributed to fluctuations in net assets of a Fund rather
than differences in the performance fee structure or differences in the
investment advisory contracts. In particular, because the Base Fee is
calculated on current net assets, whereas the Performance Adjustment is
calculated based on net assets over the measuring period, fluctuations
in the current assets will have an immediate effect on the Performance
Adjustment. The only difference between the current investment advisory
contracts of the Target Funds that have a performance fee structure and
their corresponding Acquiring Funds is the share class used to measure
a Fund's performance compared to its benchmark index. The Acquiring
Funds use either their initial share class or Investor Shares (each of
which has the same fee structure with respect to other expenses),
depending on the Fund, and the Target Funds use Load-Waived Class A
Shares. The class specific expenses of the Acquiring Fund's initial
share class and Investor Shares and the Target Fund's Load-Waived Class
A Shares, the differences of which would determine the impact to a
Performance Adjustment, are not
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material to the calculation of the Performance Adjustment, and
therefore are not material to the management fee rate, for either Fund.
In addition, for periods after the Reorganization, the Acquiring Funds
will also be using Load-Waived Class A Shares to measure the Fund's
performance compared to its benchmark. Therefore, there is no material
difference in the advisory contracts of the Target Funds and their
corresponding Acquiring Funds for purposes of Rule 17a-8.
The Registrant notes that in footnote 23 of its adopting release on
Rule 17a-8 (See Investment Company Mergers, SEC Release No. IC-25666
(July 18, 2002) (the "Adopting Release")), the Securities and Exchange
Commission ("SEC" or "Commission") stated that "[i]f, after the merger,
the advisory fees payable by the acquiring fund will be greater than
the advisory fees of the acquired fund, we would consider the increase
in the advisory fee to be a material change requiring shareholder
approval." For funds with conventional fee arrangements, a higher
advisory fee is usually synonymous with a difference between the
contractual fee rates. The same is not true for funds with performance
fee arrangements. The Registrant notes that it is considering footnote
23 as addressing basis points of an advisory fee rate rather than the
dollar amount of the advisory fees since the dollar amount payable by a
combined fund after a merger will almost always be more than the dollar
amount paid by either of the two funds prior to the merger.
Even when the investment advisory contracts and performance of two
funds are identical, their advisory fees (in basis points) may be
different because of peculiarities of the performance fee calculation
under Section 205 of the Investment Advisers Act of 1940, as amended.
Fluctuations in a Fund's net assets due to subscriptions or redemptions
have an immediate effect on any Performance Adjustment and thus, upon
the Fund's advisory fee, in each case when expressed in basis points.
An increase or decrease in current net assets generally has little or
no immediate effect on the dollar amount of a Performance Adjustment,
because the Performance Adjustment is computed on the basis of the
average trailing net assets over the three-year performance period.
However, an increase or decrease in current net assets has an immediate
effect on the Performance Adjustment, expressed in basis points. While
the numerator in the calculation (the dollar amount of the performance
adjustment) shows little or no immediate change, the denominator in the
calculation (i.e., the current net assets of the fund) changes
immediately. As a result of this dynamic, the number of basis points
represented by the Performance Adjustment is magnified in a shrinking
fund and reduced in a growing fund. In the same vein, a merger will
cause the total net asset value of the acquiring fund to rise
immediately and, as a result, from the standpoint of acquiring fund
shareholders, the merger will have the effect of reducing the number of
basis points represented by the performance adjustment.
None of the above relates to the contractual terms of the advisory
contracts and none would impact the level of advisory fees (in basis
points) of funds with conventional fee arrangements. These anomalies
are unique to performance fee arrangements. The Adopting Release does
not include any references to performance fee arrangements. Footnote 23
and Rule 17a-8 itself focus on material changes to an advisory contract
and not on fee changes that are attributable to extraneous factors.
The Registrant also notes that applying footnote 23 to a conventional
fee arrangement would be consistent with the SEC staff's position in a
no-action letter to Gartmore Mutual Funds (pub. avail. Mar. 19, 2004)
(the "Gartmore Letter"). In the Gartmore Letter, the SEC staff took the
position that an advisory agreement could be amended to replace a fixed
fee arrangement (at 0.95%) with a base fee (at 0.85%) plus a
performance adjustment (of +/- 0.10%) arrangement without first
obtaining shareholder approval. In its analysis, the SEC did not
consider the impact of outside factors such as the effect of changing
asset levels on the basis point expression of the total advisory fee.
Rather, the SEC staff took comfort in the fact that the total
contractual fee rate under the performance adjustment arrangement would
be no higher than the total contractual fee rate under the fixed fee
arrangement.
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Given that the Target Funds have satisfied Conditions 1-4 of Rule
17a-8, shareholder approval of the Plan of Reorganization is not
required.
3. Staff Comment: Please explain the Registrant's rationale for
registering shares on Form N-14 when shareholder approval is not
required under Rule 17a-8 under the 1940 Act.
Response: The General Instructions to Form N-14 provide, among other
things, for use of the Form by management investment companies
registered under the 1940 Act to register under the Securities Act of
1933, as amended (the "Securities Act") securities to be issued in (1)
a transaction specified in Rule 145(a) under the Securities Act; and/or
(2) a merger in which a vote or consent of the target fund's
shareholders is not required pursuant to applicable state law. As
discussed, consent of the Target Funds' shareholders of the Plan of
Reorganization for their Fund is not required under applicable state
law. A discussion of Rule 145 follows below.
Rule 145 generally provides that transactions involving mergers or
consolidations, or the transfer of assets in consideration of the
issuance of securities, involve a "sale" or "offer to sell securities"
that must be registered under the 1933 Act. The preliminary note to
Rule 145 indicates that an "offer to sell" occurs when shareholders are
submitted a plan or agreement for approval to accept a new or different
security in exchange for their existing security. The preliminary note
also indicates that securities issued in transactions such as mergers
or consolidations may be registered on Form N-14. Rule 145(a)(2)
provides an exemption to registration with respect to mergers or
consolidations if "the sole purpose of the transaction is to change an
issuer's domicile solely with the United States."
In 1972, when Rule 145 under the Securities Act was adopted, the SEC
addressed whether registration would be required in the context of
"short-form" mergers (i.e., a merger where minority shareholders have
appraisal rights under applicable state law but their approval is not
required to consummate the merger). The adopting release to Rule 145
(see 1940 Act Release No. 7405 (Oct. 6, 1972) (the "1933 Act Release"))
stated as follows:
"Several commentators suggested that the applicability of Rule 145
to short-form mergers should be clarified. In certain instances,
state law allows a merger of a parent and its 85 to 90 percent
owned subsidiary to be consummated without shareholder approval.
Because Rule 145(a) is couched in terms of offers arising in
connection with a submission for the vote or consent of security
holders, short-form mergers not requiring such vote or consent are
not within the scope of the Rule. However, if a security is to be
issued in such short-form mergers, the Commission is of the
opinion that the transaction involves an "offer", "offer to sell",
"offer for sale", or "sale", within the meaning of Section 2(3) of
the Act, and accordingly such transactions are subject to the
registration provisions of the 1933 Act unless an exemption is
available."
Essentially, registration may be required even in a situation where
shareholders are not being asked to consent or vote. The Registrant has
broadly interpreted the 1933 Act Release to mean that, absent an
exemption such as Rule 145(a)(2)-mergers solely for the purpose of
changing the issuers U.S. domicile, registration is required even in a
situation where shareholders are not being asked to vote.
In adopting Rule 145, the Commission's primary purpose was to require
registrants to provide full and fair disclosure by giving a shareholder
who was offered a new security in a Rule 145 business combination the
material facts about the transaction so that the shareholder would be
in a position to make an informed investment judgment. The Registrant
believes that its registration of shares on Form N-14 meets the purpose
of Rule 145.
5
4. Staff Comment: Please indicate whether the registration statements of
the Target Funds have disclosure regarding (1) the possibility that
their Fund could be reorganized into another fund without shareholder
approval/consent; and (2) shareholder rights in the event of such
merger.
Registrant's Response: Disclosure regarding the reorganizations without
shareholder approval and a summary of rights of shareholders is
included in the Prospectus/Information Statement filed on Form N-14
that is being mailed to Target Fund shareholders. The
Prospectus/Information Statement also outlines the various findings of
the Board relating to Rule 17a-8. Each Prospectus/Information Statement
will be provided to Target Fund shareholders in advance of the closing
date of the Reorganization, outlining the options available to a
shareholder should they decide that they prefer not to participate in
the reorganization applicable to their Fund, including redeeming their
shares. The Fund's governing documents that describe the circumstances
upon which Trustees can take action without shareholder approval, such
as action taken by the Trustees regarding the Reorganizations, are
publicly filed documents available to shareholders. The Registrant
notes that Form N-1A does not require disclosure regarding the ability
to merge affiliated funds without shareholder approval.
5. Staff Comment: With respect to the six Funds that included pro forma
financial statements as part of their statement of additional
information for which the Registrant has indicated have been updated
since the initial filing, please re-file those pro forma financial
statements as pre-effective amendments.
Response: Registrant has complied and filed pre-effective amendments to
update the pro forma financial statements for the following Funds: (1)
JIF Balanced Fund; (2) JIF Enterprise Fund; (3) JIF Flexible Bond Fund;
(4) JIF INTECH Risk-Managed Core Fund; (5) JIF Overseas Fund; and (6)
JIF Perkins Mid Cap Value Fund. The pre-effective amendments were filed
on April 21, 2009 and on April 22, 2009, the Registrant was informed by
the Staff accountant that there were no pending issues with respect to
these updated pro forma financial statements.
6. Staff Comment: With respect to the "Annual Fund Operating Expense"
table contained in each Prospectus/Information Statement, please
confirm that the "current" and "pro forma" information shown in the
table is that of the Target Fund and the Acquiring Fund
post-Reorganization, respectively, and explain why current expenses for
the Acquiring Fund are not included.
Response: The Registrant confirms, as reflected by an explanatory
narrative in the paragraph preceding the table, that the table includes
current data for the Target Fund and pro forma data for the Acquiring
Fund post-Reorganization. Current expenses for each corresponding share
class of the Acquiring Fund are not shown because those share classes
do not currently exist. As discussed during the April 16th call, each
Acquiring Fund will be establishing the necessary share classes in
order to accommodate the assets of the Target Funds which will become
effective prior to or at the time of the Reorganization.
7. Staff 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 guidance issued by the SEC.
6
8. Staff Comment: The Staff indicated that certain disclosure contained in
the Prospectus appeared in all capital letters and requested a
different form of presentation.
Response: As discussed during the April 16th call, the disclosure
referenced appears in bold face type within each Prospectus/Information
Statement, not all capital letters. The EDGAR process converts bold
face type into all capital letters.
9. Staff Comment: The Staff requested that the Registrant move the
footnotes that accompany the Fee and Expense Tables to follow
immediately after the Examples rather than after the Fee and Expense
Tables and to move the narrative that appears between the various
tables so as to not separate those tables.
Response: Although 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, the narrative disclosure
that appears between the tables has been relocated in accordance with
the Staff's suggestion.
Further, as previously discussed with the Staff, the Registrant
believes that the most effective presentation of information in the
footnotes to the Fee and Expense Tables is to provide those footnotes
immediately after the table, as currently disclosed. The Registrant
believes that the current disclosure 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.
10. Staff Comment: The Staff noted that the term "junk bonds" should be
added in association with the term "non-investment grade bonds."
Response: The Registrant acknowledges the comment and confirms that it
has complied.
11. Staff Comment: Please provide clarification as to the meaning of "other
securities with equity characteristics" when disclosed as part of a
Fund's principal investment strategy.
Response: As discussed during the call, such disclosure, which lists
equity securities in which a Fund may invest, also includes the concept
that other securities may be identified which have equity
characteristics. These securities may include swaps, for example, which
provide exposure to the equity market. There is not an exhaustive list
to include but instead the disclosure provides flexibility of what may
be considered an equity security for purposes of meeting a Fund's
investment objective.
12. Staff Comment: Please clarify whether, as addressed in the Q&A section
of each Prospectus/Information Statement, a shareholder of a Target
Fund can continue to contribute to their existing account prior to the
Reorganization.
Response: As disclosed, a shareholder can continue to invest in a
Target Fund until the date of the Reorganization. There are not current
or anticipated plans at this time to limit such future contributions.
However, the disclosure also notes that there may be circumstances
where the Board determines that limiting further investments into a
Target Fund is appropriate in order to facilitate transitioning of the
assets.
7
13. Staff Comment: Please confirm that all Funds in the JAD Trust will be
reorganizing into the JIF Trust and that the JAD Trust will be
subsequently liquidated.
Response: The Registrant confirms that each Fund in the JAD Trust that
is not otherwise being liquidated will be reorganizing into a
corresponding series of the JIF Trust, and following each
Reorganization, the JAD Trust will be liquidated. In addition, the
Registrant has updated disclosure within the each
Prospectus/Information Statement to inform shareholders that are
considering exchanging their shares into another fund in the JAD Trust
prior to the Reorganization, that all other JAD funds will also be
subject to a reorganization.
14. Staff Comment: The Staff requested that the Registrant provide a "form
of" copy of the legal opinion of counsel for Staff review.
Response: The Registrant provided a copy of the opinion of counsel via
email on April 20, 2009, and per a telephone conversation with the
Staff on April 22, 2009, was informed that there were no issues with
this legal opinion.
15. Staff Comment: The Staff requested that disclosure be added to the
Registrant's prospectus to describe the details of special cash
compensation arrangements pursuant to NASD Rule 2830(l)(4).
Response: The Registrant believes that its current prospectus
disclosure meets the requirements of NASD Rule 2830(l)(4) (the "Rule").
The Rule provides that no NASD (now known as FINRA) member shall accept
any cash compensation unless such compensation is described in a
current prospectus. Further, the Rule requires when special cash
compensation arrangements are made available to a FINRA member, which
arrangements are not made available on the same terms to all members
who distribute the mutual fund shares, a member shall not enter into
such arrangements unless the name of the member and the details of the
arrangements are disclosed in the prospectus.
The Registrant's prospectus disclosure entitled "PAYMENTS TO FINANCIAL
INTERMEDIARIES BY JANUS CAPITAL OR ITS AFFILIATES," provides an
overview of the various types of payments made by Janus Capital or its
affiliates to intermediaries, including disclosure of the details of
and conflicts associated with payments based on sales, assets, or
transactional charges to intermediaries for distribution, marketing,
promotional, or related services. Specifically, the prospectus includes
disclosure of the current ranges of sales- and asset-based payments
made (namely, up to 25 basis points on sales and up to 20 basis points
on average annual net assets), as well as the factors considered by
Janus Capital and its affiliates in making such payments (including,
distribution capabilities of the intermediary, the overall quality of
the relationship, expected gross and/or net sales generated by the
relationship, redemption and retention rates of assets held through the
intermediary, the willingness of the intermediary to cooperate with
Janus Capital's marketing efforts, access to sales personnel, and the
anticipated profitability of sales through the institutional
relationship).
The prospectus further discloses that such payments are limited to the
top 100 distributors and directs readers to the Statement of Additional
Information (SAI) for a list of broker/dealer firms currently receiving
or expected to receive these fees. The SAI is incorporated by reference
into the Prospectus and is made available to customers upon request.
Inclusion of names of FINRA members receiving special cash compensation
in a Fund's SAI rather than its prospectus was specifically addressed
by the NASD in NTM 99-55, in which the NASD indicated that disclosure
of special cash compensation in the SAI would satisfy NASD disclosure
requirements under the Rule (See NASD Notice to Members 99-55:
Questions and Answers Relating to Non-Cash Compensation Rules, Question
#18).
8
The Registrant believes its current disclosure meets the requirements
of the Rule because it contains details of revenue sharing
arrangements, including ranges of fees paid, manner of payment or
calculation of such fees, conflicts associated with payment of revenue
sharing, manner of selection of intermediaries receiving payment, and
specific identity of broker/dealer firms receiving such compensation.
16. Staff Comment: The Staff requested clarification as to whether any
expense recoupment by Janus Capital is permitted pursuant to any
expense limitation agreement(s) between the Registrant and Janus
Capital on behalf of the Funds.
Response: No Fund on whose behalf a Prospectus/Information Statement
has been filed and is subject to this review by the Staff, has the
ability to recoup expenses pursuant to an expense limitation agreement.
17. Staff Comment: The Staff noted that pursuant to Rule 483 of the
Securities Act of 1933, the Registrant should furnish a separate new
power of attorney (POA), rather than incorporate POAs utilized for
previous filing.
Response: The Registrant believes that it may incorporate POAs, as any
other required exhibit, by reference to previous filings containing the
POAs. The Registrant does not believe that it is required to have
separate POAs executed and filed with respect to each filing. The POAs
relate to filings applicable to the Registrant's current registration
statement, as required by Rule 483, and the Board of Trustees ratifies
the POAs previously filed in connection with upcoming filings,
including this one. The Registrant believes that its practices with
respect to POAs are consistent with industry practice.
JAD Contrarian Fund into JIF Contrarian Fund
18. Staff Comment: In the second Q&A on page 4 that discusses interests of
the JAD shareholders, please explain why the Registrant believes that
the second and seventh bullet points are "in the best interest" of the
shareholders.
Response: The bullet points actually relate to the factors the Board
considered when determining whether to approve the Reorganization. The
Registrant has clarified the question to reflect that it addresses
factors the Board considered.
19. Staff Comment: In the second Q&A on page 4, please explain how the
sixth bullet point (which states that Fund expenses are not expected to
increase materially as a result of the Reorganization) and the eighth
bullet point (which states that current Target Fund shareholders may
pay higher fees post-reorganization) relate to each other.
Response: The bullet points in question are indirectly related. The
sixth bullet point addresses Fund expenses on a gross level where as
the eighth bullet addresses net expenses. With respect to the eighth
bullet point, this discussion relates to the fact that the current
expense limitation agreement for the Target Fund will expire in
December 2009 but as part of the Reorganization, the Target Fund
shareholders will get the benefit of an expense limitation agreement of
the Acquiring Fund that will extend until at least November 2010
therefore providing shareholders with a "cap" on certain expenses for a
longer duration than under their current expenses limitation agreement.
9
20. Staff Comment: In the second Q&A on page 4, please confirm what entity
will be paying the fees associated with the Reorganization.
Response: Janus Capital will pay the fees, including legal fees and
costs associated with mailing of the Prospectus/Information Statements.
This information is discussed elsewhere in each Prospectus/Information
Statement.
21. Staff Comment: In the Q&A on page 6 that discusses whether the
Reorganization will result in higher Fund expenses, please clarify
whether the last sentence which discusses the Funds' total operating
expense limits is actually referring to the Funds' expense limits or
total expense ratios.
Response: The sentence refers to each Fund's expense limit and not the
net expense ratios. The JIF Contrarian Fund will have a lower expense
limit on certain expenses post-Reorganization than the current limit
for the JAD Contrarian Fund. Each Fund's expense limit excludes certain
expenses which may result in a total expense ratio that is higher than
the stated expense limit.
22. Staff Comment: Under the section titled "Principal Risk Factors of
Investing in the Funds" on page 8, please clarify that the following
statement does not address the risks associated with the Funds'
principal investments: "The fact that a particular risk is not
identified does not indicate that a Fund does not invests its assets
in, or is precluded from investing its assets in, securities that give
rise to that risk."
Response: The Registrant has updated the disclosure across all the
Prospectus/Information Statements in response to the Staff's comment.
23. Staff Comment: With respect to disclosure pertaining to the
nondiversification classification of certain Funds, the Staff stated
its view that Rule 13a-1 under the 1940 Act, is intended to apply to
nondiversified funds which temporarily become diversified, not
nondiversified funds which normally operate as diversified funds. It
was the Staff's opinion that the disclosure should accurately reflect
each Fund's subclassification consistent with this view.
Response: As discussed, the disclosure indicates when a Fund is
classified as nondiversified. Item 2 of Form N-1A indicates that a Fund
classified as nondiversified include disclosure that it "may" invest a
larger portion of its assets in fewer issuers. The Registrant
acknowledges the Staff's view with regard to "de facto diversified
companies" in Investment Company Release Act No. 179 (August 6, 1941)
and believes its disclosure is consistent with Form N-1A and Release
179.
24. Staff Comment: Under "Foreign Exposure Risk", please clarify whether
either Fund had a large, single country emerging markets investment
and, if so, please indicated the percentage of any country
concentration.
Response: The Registrant has included the specific percentage of
emerging markets allocation as of March 31, 2009 across all applicable
Prospectus/Information Statements, however, the Registrant believes
that specific country allocation is more appropriate in shareholder
reports and Form N-Q. As previously discussed with and agreed to by the
Staff, disclosure was previously added to the prospectuses directing
investors to shareholder reports and Form N-Q for a summary of
investments by country in order that investors may have the most
up-to-date information.
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25. Staff Comment: In the Annual Fund Operating Expenses table on page 17,
please confirm that the Acquiring Fund, as indicated by "pro forma" in
the table, is the accounting survivor.
Response: The Registrant confirms that the Acquiring Fund is the
accounting survivor. Specifically, in the body of the table following
the name of the Acquiring Fund, there is disclosure that states "pro
forma assuming consummation of the Reorganization," therefore
indicating that the pro forma numbers contained in the chart are those
of the acquiring JIF Fund post-Reorganization.
26. Staff Comment: In the section titled "Key Differences in the Rights of
JAD Contrarian Fund and JIF Contrarian Fund Shareholders" on page 31,
the Prospectus states that according to the JIF Trust Instrument a
shareholder cannot be held personally liable unless agreed to by the
shareholder. Please confirm that shareholders of JIF Contrarian Fund
have not agreed to be held personally bound for the obligations of the
Fund.
Response: To the best knowledge of the Registrant, no shareholder of
any JIF Fund within the JIF Trust has consented to being held
personally liable for the obligations of their respective Fund.
JIF High-Yield Fund into JAD High-Yield Fund
27. Staff Comment: Under "Bank Loan Risk" on page 9, please clarify whether
any of the securities classified as "bank loans" are the type of
securities that would be considered "toxic assets" and, if so, please
add related risk disclosure.
Response: The Registrant has removed the disclosure relating to bank
loans from this section as it believes such disclosure is not currently
applicable.
28. Staff Comment: With respect to question #3 relating to bank loans in
the section titled "Frequently Asked Questions About Principal
Investment Strategies," to the extent the risks differ between floating
rate securities and floating rate loans please disclose the
differences.
Response: As noted above, the Registrant has removed the disclosure
relating to bank loans from this section as it believes such disclosure
is not currently applicable.
JAD Small-Mid Growth Fund into JIF Triton Fund
29. Staff Comment: In the Q&A on page 5 that discusses the similarities
between the Funds, please indicate whether each Fund defines "market
cap" the same.
Response: In response to the Staff's comment, the Registrant has
updated the disclosure to clarify that the Funds' apply the same
definition of "market cap."
30. Staff Comment: In the "Risk Factors of the Funds" on page 8, for the
Growth Securities Risk, please remove "often" from the first sentence
of the risk.
Response: Registrant has complied with this request for the Growth
Securities Risk across all Prospectus/Information Statements where this
risk appears.
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31. Staff Comment: In the "Frequently Asked Questions About Principal
Investment Strategies" on page 9, the response to the first question in
this section relating to how common stocks are selected, please remove
the word "if" from the first sentence.
Response: The Registrant acknowledges the Staff's comment but believes
that removing the word "if" in this sentence would not be an accurate
reflection on how common stocks are selected for the Funds' portfolios.
For this reason, the Registrant has elected to keep the disclosure as
originally filed.
32. Staff Comment: In the footnotes to the Management Expense table on
page 26, there are references that Janus Capital will limit the Funds'
total operating expenses to certain levels for a period of time. Please
disclose what those levels are in the footnotes.
Response: The Registrant acknowledges the comment and has added
disclosure regarding expense limits.
JAD Flexible Bond Fund into JIF Flexible Bond Fund
33. Staff Comment: With respect to the pro forma financial statements for
the JAD and JIF Flexible Bond Funds, please explain why the Registrant
identified certain securities as collateral in the Notes to the
Financial Statements when there were no noted variation margins,
premiums, etc. reflected on the Statement of Assets and Liabilities.
Response: The Registrant responds by noting that the collateral was
designated to cover the TBA, delayed settlement, securities identified
in the Schedule of Investments. TBA securities do not have any premium
or variation margin associated with them. As such, the Registrant did
not reflect a line item for margins or premiums in the Funds' Statement
of Assets and Liabilities.
34. Staff Comment: On page 5, with respect to the bullet point outlining
the Board's considerations relating to the contractual management fee
rate for the Funds, the Staff reads this section to be addressing two
distinct points: (1) the contractual management fee for each Fund; and
(2) the contractual expense limit for each Fund. Please clarify.
Response: The Registrant acknowledges the Staff's comment and, for
clarification purposes, has moved the last sentence that discusses the
contractual expense limit to the bullet point immediately following
which outlines the Board's considerations relating to the expense
limitation agreements applicable to each Fund.
JAD Research Core Fund into JIF Research Core Fund
35. Staff Comment: With respect to disclosure relating to securities
purchased on a when-issued, delayed delivery, or forward commitment
basis, the Staff asked if the process of segregating assets to a broker
are consistent with SEC rules.
Response: The Registrant acknowledges the comment and believes that the
process is consistent with SEC guidance. Disclosure relating to the
segregation of assets is in each Fund's statement of additional
information.
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JAD Orion Fund into JIF Orion Fund
36. Staff Comment: In the section titled "Principal Investment Strategies,"
please provide updated information relating to number of securities
held by the Funds and the percentage of the Funds' portfolios these
securities comprised.
Response: The Registrant has updated this disclosure as of March 31,
2009.
JAD Mid Cap Growth Fund into JIF Enterprise Fund
37. Staff Comment: In the Q&A on page 5 that discusses the similarities
between the Funds and in the section titled "Principal Investment
Strategies" on page 8, please provide updated information relating to
market capitalizations within the Russell Midcap Growth Index to a more
recent date.
Response: The Registrant has updated this disclosure as of March 31,
2009.
38. Staff Comment: Under "Mid-Sized Companies Risk" on page 9, the
Registrant indicates that the Funds' have the ability to also invest in
small-sized companies. Please add risks associated with small-sized
companies, if applicable.
Response: In response to the Staff's comment, the Registrant has
removed the disclosure relating to small-sized companies from the
mid-sized companies risk.
JAD Large Cap Growth Fund into Janus Fund
39. Staff Comment: In the Q&A on page 5 relating to the similarities
between the Funds, please clarify how the Funds define "larger"
companies for purposes of each Fund's investment policy.
Response: The weighted market capitalization for each Fund is outlined
in the section titled "Principal Investment Strategies" in the
Prospectus/Information Statement.
40. Staff Comment: In the Q&A on page 5, please explain how the Acquiring
Fund's and Target Fund's investment policies are similar if one Fund is
subject to Rule 35d-1 (the names rule) and the other is not.
Response: As outlined in the Prospectus/Information Statement, each
Fund pursues its investment objective by primarily investing in common
stocks of large-sized companies. JAD Large Cap Growth Fund is subject
to investing, under normal circumstances, at least 80% of its net
assets in common stocks of large-sized companies. While Janus Fund is
not subject to this 80% investment requirement because it is not
subject to Rule 35d-1, and could technically drift from investing in
large-sized companies, it has historically invested in the same or
similar securities as JAD Large Cap Growth Fund. Each Fund is managed
by the same portfolio managers.
JAD INTECH Risk-Managed Core Fund into JIF INTECH Risk-Managed Core Fund
41. Staff Comment: Please verify that the investment advisory fee rate for
the Acquiring Fund will not increase as a result of changing the share
class utilized for measuring Fund performance and calculating the
Fund's Performance Adjustment post-Reorganization.
Response: As discussed during the call, the change in share class used
for calculating the Performance Adjustment component of the investment
advisory fee rate from the initial share class to Load-Waived
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Class A Shares post-Reorganization is not expected to result in an
increase in the advisory fee rate for the Acquiring Fund
post-Reorganization. The Target Fund currently calculates its
Performance Adjustment based on the performance of Load-Waived Class A
Shares compared to that Fund's primary benchmark index and this
Acquiring Fund uses its initial share class. As noted in Registrant's
response to comment #2 above, the class specific expenses of the
Acquiring Fund's initial share class and the Target Fund's Load-Waived
Class A Shares, the differences of which would determine the impact to
a Performance Adjustment, are not material to the calculation of the
Performance Adjustment, and therefore are not material to the
management fee rate, for either Fund. To the extent there are
differences in the expenses of the Funds, Load-Waived Class A Shares
are generally a more expensive share class than the Acquiring Fund's
initial share class. Therefore, using Load-Waived Class A Shares to
calculate the Performance Adjustment rather than the initial share
class should make it more difficult for the Acquiring Fund to
outperform its benchmark, resulting in an advisory fee rate that over
time, is equal to or less than the advisory fee rate that the Acquiring
Fund would have paid if it would have continued to calculate the
Performance Adjustment based on its initial share class.
JAD Worldwide Fund into JIF Worldwide Fund
42. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
JAD Perkins Small Company Value Fund into JIF Perkins Small Cap Value Fund
43. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
JAD Perkins Mid Cap Value Fund into JIF Perkins Mid Cap Value Fund
44. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
JAD International Growth Fund into JIF Overseas
45. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
JAD Growth and Income Fund into JIF Growth and Income Fund
46. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
JAD Balanced Fund into JIF Balanced Fund
47. The Staff indicated that there were no comments to the filing other
than the general comments outlined above, as applicable.
14
48. Staff Comment: The Staff requested that the Registrants provide a Tandy
representation in a response letter to be filed as correspondence
separate from the filing.
Response: The Registrants provide their responses below.
The Registrants acknowledge responsibility for the adequacy and
accuracy of the disclosure in the filings. In addition, the Registrants
acknowledge 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
filings.
If you have any concerns regarding the above responses, please call me at (303)
336-4045. Thank you for your assistance in this matter.
Regards,
/s/ Robin Nesbitt
Robin Nesbitt
Legal Counsel
cc: Stephanie Grauerholz-Lofton, Esq.
Donna Brungardt
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