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THE JANUS 2 FUND DOES ITS HOMEWORK



You've seen their slick commercials and heard all about how Janus' portfolio managers are always out on the road visiting companies to get the real scoops on what's happening inside. Well guess what? They really do.

When I spoke with John Schreiber, portfolio manager of the Janus 2 Fund, (800-525-3713), he was in Los Angeles getting ready to meet with folks from Disney, a company currently not in this fund's portfolio. Face-to-face meetings with management, long hours of report reading and fact checking are the order of the day for Schreiber who has been at Janus since 1997 and Fidelity investments prior to that.

The Janus 2 Fund is not an exact clone of the Janus Fund. It has fewer holdings, about 50 vs. the 100 or so held by that company's flagship fund. It also has a broader charter allowing it to invest in small-, medium- and large-cap companies as opposed to the Janus Fund which is large-cap fund focused, and is nimbler in size. "Janus 2 is currently about 550 million dollars so it's about 1/70th the size of the Janus Fund---it's about $36 billion," says Schreiber.

Investing in brand new funds like this, it's only been around since Dec. 2000, always means taking on additional risks. Investing in new funds in rocky markets adds more risk. But despite Janus' rough ride in the past year, the combination of growth stocks and the Janus Family has been one worth listening to. So, here's more from Schreiber:

Q: What's your current outlook on the market?

Schreiber: I'm gradually becoming more bullish as I look out into the second half of this year and into next year. And, I look at it in terms of ups and downs.

Right now the downs I've seen are interest rates, they are coming down; hopefully, the tax burden will be coming down; the regulatory burdens are coming down; and from a valuation basis, many quality blue chip-stocks are trading at attractive valuations certainly vs. nine and 12 months ago. Finally, investor expectations have come down. I think fewer people consider 25 percent annual returns to be their birthright today than a year ago and that's healthy for the market.

Two ups are that money supply growth in this country is really starting to accelerate, it's been in the double digits for the last couple of months. Secondly, the breadth of the market has been rising since about November of last year. Breath is a measure of new highs being made in the market versus new lows. It's really a barometer for the overall health of the underlying market and is not a market-cap weighted measure. So, many times you can have indexes going up or down while breadth is moving in the opposite direction.

Q: When the market is down as it has been, is there really much difference between value and growth stocks?

Schreiber: The definitions of value and growth are both in the eyes of the beholder. Traditionally, value funds have invested in stocks with low price to earnings ratios, low price to book values, etc. Growth investors are traditionally folks who are willing to pay a higher price for companies that are already exhibiting revenue and earnings growth.

When the market is down what happens is psychologically growth investors become circumspect about what kinds of valuations they are willing to pay for earnings growth. And that kind of fits right into the theme of Janus 2 which is a high quality growth at a reasonable price fund.

Q: What is the sector breakdown of the fund?

Schreiber: Financials total about 23-24 percent of the fund and the brokerage group within that is roughly half. Technology is probably one-quarter of the fund. And media stocks, with AOL/Time Warner being a prime example, between 15-20 percent of the fund.

Q: A couple of holdings?

Schreiber. AOL is one and Inhale Therapeutics is another. That's a drug delivery company that essentially owns most of the intellectual properties surrounding powderizing of drugs. They take existing drugs and turn them into very fine powders that can be inhaled rather than ingested. Their lead product is inhaled insulin which diabetics could use in lieu of injections. When tests are finished and if it's approved, it could reach the market in 2003.

Q: What do you like best about managing this new fund?

Schreiber: I was a baseball player in college and really liked the daily rhythm of the market and knowing---at the end of the day--- exactly what the score was. So there is a very athletic rhythm to this that rings home to me.

Q: One that kind of says you don't have to hit a home run everyday?

Schreiber: Exactly. The Janus 2 Fund is designed to hit lots of singles and doubles, hit for a high batting average and move runners around the bases to score a lot of hits. It's not designed to go up the plate and swing for the fences. This is a Tony Gwynn's fund; not Reggie Jackson's.


Janus 2:

SYMBOLJTWOX
TOP HOLDINGSNot available until late June.
PERFORMANCEThe inception date on this fund is Dec. 29, 2000. Year-to-date through May 30, the fund was down 7.20 percent.
TOLL-FREE NUMBER800-525-3713
WEBSITEwww.janusfunds.com

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