[Federal Register Volume 60, Number 90 (Wednesday, May 10, 1995)]
[Notices]
[Pages 24955-24957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11519]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21042; 812-9564]
Janus Investment Fund, et al.; Notice of Application
May 4, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Janus Investment Fund and Janus Aspen Series (collectively,
the ``Trusts''), all existing and future series of the foregoing
investment companies, Janus Capital Corporation (``Janus Capital''),
and any other registered investment companies that now or in the future
are advised by Janus Capital or an entity controlling, controlled by,
or under common control with Janus Capital.\1\
\1\All existing investment companies that presently intend to
rely on the requested order are named as applicants.
RELEVANT ACT SECTIONS: Order requested under section 6(c) for an
exemption from section 12(d)(1)(A)(ii), under sections 6(c) and 17(b)
for an exemption from section 17(a), and under rule 17d-1 to permit
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certain transactions in accordance with section 17(d) and rule 17d-1.
SUMMARY OF APPLICATION: Applicants seek an order that would permit
certain [[Page 24956]] money market funds to sell their shares to
affiliated investment companies and the money market funds subsequently
to redeem such shares.
FILING DATES: The application was filed on April 5, 1995 and amended on
April 27, 1995.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on May 30, 1995 and
should be accompanied by proof of service on the applicant, in the form
of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, D.C.
20549. Applicant, Janus Capital Corporation, 100 Fillmore Street, Suite
300, Denver, Colorado 80206-4923.
FOR FURTHER INFORMATION CONTACT:
Marianne H. Khawly, Staff Attorney, at (202) 942-0562, or C. David
Messman, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch.
Applicant's Representations
1. The Trusts are open-end management investment companies that
currently offer twenty-four series (each a ``Fund''). Four of the Funds
are money market funds subject to the requirements of rule 2a-7 under
the Act (together with any future money market funds, the ``Money
Market Funds''). The other twenty Funds are non-money market funds
(together with any future non-money market funds, the ``Non-Money
Market Funds'').
2. Janus Capital serves as investment adviser and administrator for
each of the Funds. Janus Distributors, Inc. serves as distributor for
Janus Investment Fund. Shares of Janus Aspen Series are self-
distributed. United Missouri Bank, N.A. serves as custodian for each
Money Market Fund. Investors Fiduciary Trust Company serves as
custodian and transfer agent for each Non-Money Market Fund. Janus
Service Corporation is the transfer agent for each Money Market Fund.
3. The Money Market Funds seek current income, liquidity, and
capital preservation by investing exclusively in short-term money
market instruments, such as United States government securities, bank
obligations, commercial paper, municipal obligations, or repurchase
agreements secured by government securities. These short-term debt
securities are valued at their amortized cost pursuant to rule 2a-7.
4. The Non-Money Market Funds invest in a variety of debt and/or
equity securities in accordance with their respective investment
objectives and policies. Each of the Funds has, or may be expected to
have, uninvested cash in an account with the custodian. This cash
either may be invested directly in individual short-term money market
instruments or may not be invested in any portfolio securities.
5. Applicants seek an order that would permit (a) each of the Funds
to utilize cash reserves that have not been invested in portfolio
securities to purchase shares of one or more of the Money Market Funds
(each such Fund, including Money Market Funds, purchasing shares of a
Money Market Fund, is an ``Investing Fund'') and (b) each Money Market
Fund to sell shares to, and redeem such shares from, an Investing Fund.
By investing cash balances in the Money Market Funds as proposed,
applicants believe that the Investing Funds will be able to combine
their cash balances and thereby reduce their transaction costs, create
more liquidity, enjoy greater returns, and further diversify their
holdings. The policies of the Funds permit the Funds to purchase money
market instruments, including shares of a money market fund.
6. The shareholders of the Investing Funds would not be subject to
the imposition of double management fees. Janus Capital and its
respective affiliated persons will remit to the respective Investing
Funds, or waive, an amount equal to the investment advisory fees Janus
Capital and its affiliated persons earn as a result of the Investing
Funds' investments in the Money Market Funds to the extent the fees are
based upon the Investing Funds' assets invested in shares of the Money
Market Funds (the ``Reduction Amount''). Further, no sales charge,
contingent deferred sales charge, 12b-1 fee, or other underwriting or
distribution fee will be charged by the Money Market Funds with respect
to the purchase or redemption of their shares. If a Money Market Fund
offers more than one class of shares, each Investing Fund will invest
only in the class with the lowest expense ratio at the time of the
investment.
7. Several of the Funds have voluntary expense cap arrangements
with Janus Capital for the purpose of keeping each Fund's total
expenses below a certain predetermined percentage amount (an ``Expense
Waiver''). To the extent actual expenses of the Funds exceed these
caps, Janus Capital waives or reimburses a Fund in the amount of the
excess. Any applicable Expense Waiver will not limit the advisory and
administrative fee waiver or remittance discussed above.
8. Applicants also request relief that would permit the Funds to
invest uninvested cash in a Money Market Fund in excess of the
percentage limitations set out in section 12(d)(1)(A)(ii) of the Act.
Section 12(d)(1)(A)(ii) prohibits a registered investment company from
acquiring the securities of another investment company if, immediately
thereafter, the acquiring company would have more than 5% of its total
assets invested in the securities of the selling company. Applicants
propose that each Fund be permitted to invest in shares of a Money
Market Fund so long as each Fund's aggregate investment in such Money
Market Fund does not exceed the greater of 5% of such Fund's total net
assets or $2.5 million. Applicants will comply with all other
provisions of section 12(d)(1).
Applicants' Legal Analysis
1. Sections 17(a) (1) and (2) make it unlawful for any affiliated
person of a registered investment company, or an affiliated person of
such affiliated person, acting as principal, to sell or purchase any
security to or from such investment company. Because each fund may be
deemed to be under common control with the other Funds, it may be an
``affiliated person,'' as defined in section 2(a)(3), of the other
Funds. Accordingly, the sale of shares of the Money Market Funds to the
Investing Funds, and the redemption of such shares of the Money Market
Funds from the Investing Funds, would be prohibited under section
17(a).
2. Section 17(b) authorizes the SEC to exempt a single transaction
from section 17(a) if the terms of the proposed transaction, including
the consideration to be paid or received, are reasonable and fair and
do not involve overreaching on the part of any person concerned, the
proposed transaction is consistent with the policy of each investment
company concerned, and the proposed transaction is consistent with
[[Page 24957]] the general purposes of the Act. Under section 6(c), the
SEC may exempt a series of transactions from any provision of the Act
or any rule or regulation thereunder if and to the extent that such
exemption is necessary or appropriate in the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. Thus, applicants
request relief under sections 6(c) and 17(b) because they wish to
engage in a series of transactions rather than a single transaction.
3. The Investing Funds will retain their ability to invest their
cash balances directly into money market instruments if they believe
they can obtain a higher return. Each of the Money Market Funds has the
right to discontinue selling shares to any of the Investing Funds if
its board of trustees determines that such sales would adversely affect
the portfolio management and operations of such Money Market Fund.
Therefore, applicants believe that the proposal satisfies the standards
for relief.
4. Section 17(d) and rule 17d-1 prohibit an affiliated person of an
investment company, acting as principal, from participating in or
effecting any transaction in connection with any joint enterprise or
joint arrangement in which the investment company participates. Each
Investing Fund, Janus Capital, and each of the Money Market Funds could
be participants in a joint enterprise or other joint arrangement within
the meaning of section 17(d)(1) and rule 17d-1.
5. Under rule 17d-1, the SEC may permit a proposed joint
transaction if participation by a registered investment company is
consistent with the provisions, policies, and purposes of the Act, and
not on a basis different from or less advantageous than that of the
other participants. Applicants believe that the proposal satisfies
these standards.
6. Section 12(d)(1), as noted above, sets certain limits on an
investment company's ability to invest in the shares of another
company. The perceived abuses section 12(d)(1) sought to address
include undue influence by an acquiring fund over the management of an
acquired fund, layering of fees, and complex structures. Applicants
believe that none of these concerns are presented by the proposed
transactions and that the proposed transactions meet the section 6(c)
standards for relief.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. Shares of the Money Market Funds sold to and redeemed from the
Investing Funds will not be subject to a sales load, redemption fee, or
distribution fee under a plan adopted in accordance with rule 12b-1.
2. Applicants will cause Janus Capital and its affiliated persons
to remit to the respective Investing Fund, or waive, an amount equal to
the Reduction Amount. Any of these fees remitted or waived will not be
subject to recoupment by Janus Capital or its affiliated persons at a
later date.
3. For the purpose of determining any amount to be waived and/or
expenses to be borne to comply with any Expense Waiver, the adjusted
fees for an Investing Fund (gross fees minus Expense Waiver) will be
calculated without reference to the amounts waived or remitted pursuant
to condition 2. Adjusted fees then will be reduced by the amount waived
pursuant to condition 2. If the amount waived pursuant to condition 2
exceeds adjusted fees, Janus Capital also will reimburse the Investing
Fund in an amount equal to such excess.
4. Each of the Investing Funds will be permitted to invest
uninvested cash in, and hold shares of, a Money Market Fund only to the
extent that the Investing Fund's aggregate investment in such Money
Market Fund does not exceed the greater of 5% of the Investing Fund's
total net assets or $2.5 million.
5. Each Investing Fund will vote its shares of each Money Market
Fund in the same proportion as the votes of all other shareholders of
such Money Market Funds entitled to vote on the matter.
6. As shareholders of a Money Market Fund, the Investing Funds will
receive dividends and bear their proportionate share of expenses on the
same basis as other shareholders of such Money Market Funds. A separate
account will be established in the shareholder records of each of the
Money Market Funds for each of the Investing Funds.
For the SEC, by the Division of Investment Management, pursuant
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-11519 Filed 5-9-95; 8:45 am]
BILLING CODE 8010-01-M
