Status under the EU Sustainable Finance Disclosure Regulation (SFDR) - Flexible Income Fund

B. No Sustainable Investment Objective

This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.

C. Environmental or social characteristics of the financial product

The Fund promotes the following environmental and/or social characteristics: -

• Support for UNGC principles (which cover matters including human rights, labour, corruption and environmental pollution).
• JHI leverages a proprietary ESG framework, utilising both third party data and proprietary insights, that incorporates at least 20 metrics across environmental, social, and governance factors to produce country-level ESG ratings ranging from AAA to CCC. To encourage the adoption of better environmental and/or social practices the Fund will only invest in sovereign issuers rated B or higher.
• JHI leverages a proprietary ESG framework, utilising both third party data and proprietary insights, to produce company ratings for corporate credit issuers. To encourage the adoption of better environmental and/or social practices the Fund will only invest in corporate credit issuers falling within the top 5 of the 6 ratings produce.
• JHI leverages a proprietary ESG framework, utilising both third party data and proprietary insights, to produce agency mortgage-backed securities issuer ratings. To encourage the adoption of better environmental and/or social practices the Fund will only invest in agency mortgage-backed securities issuers falling within the top 5 of the 6 ratings produced.
• Avoidance of investments in certain activities with the potential to cause harm to human health and wellbeing by applying binding exclusions.
• Climate change mitigation.

The Fund does not use a reference benchmark to attain its environmental or social characteristics.

D. Investment Strategy

This Fund primarily seeks to obtain maximum total return, consistent with preservation of capital.

Total return is expected to result from a combination of current income and capital appreciation, although income will normally be the dominant component of total return. The Fund pursues its objective by investing in income producing securities of US Issuers which will normally make up 70%, but at all times not less than 60% of the Fund’s net asset value.

The Fund is Actively Managed with reference to the Bloomberg US Aggregate Bond Index, which is broadly representative of the companies in which it may invest.

The Sub-Investment Adviser seeks to identify the best opportunities across fixed income markets using a bottom-up, fundamentally driven investment process. This approach rests on a belief that some companies have inherent strengths for creating shareholder values over time, have better prospects than their peer groups and should therefore outperform even in challenging industrial and economic circumstances. This approach drives decision making at a macro level, combined with informing risk and sector allocation decisions.

Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the supplement for the Fund under the heading “Investment Objective and Policies”).

The binding elements of the investment strategy described below that are implemented as screens are coded into the compliance module of an order management system utilising third-party data provider(s) on an ongoing basis. The exclusionary screens are implemented on both a pre and post trade basis enabling any proposed transactions in an excluded security to be blocked and to identify any changes to the status of holdings when third-party data is periodically updated.

E. Proportion of investments

A minimum of 80% of the investments of the financial product are used to meet the environmental or social characteristics promoted by the Fund.

The remaining investments are used for hedging or relate to cash held as ancillary liquidity. Other assets, which are not used to meet the environmental or social characteristics, may include cash or cash equivalents, derivatives for the purposes of efficient portfolio management, or derivatives for investment purposes other than those used to gain exposure to direct issuers and securitised assets other than agency mortgage-backed securities. No minimum environmental or social safeguards are applied to such investments.

F. Monitoring of environmental or social characteristics

The sustainability indicators used to measure the attainment of each of the environmental or social characteristics promoted by this financial product are:

• Overall UN GC Compliance Status.
• Ratings of sovereign issuers across the portfolio based on the proprietary framework.
• Ratings of corporate issuers across the portfolio based on the proprietary framework.
• Ratings of issuers of agency mortgage-backed-securities across the portfolio based on the proprietary framework.
• ESG Exclusionary screens – see “What are the binding elements of the investment strategy used to select the investments to attain each of the environmental or social characteristics promoted by this financial product?” below for details on the exclusions.
• Carbon - Carbon Intensity Scope 1&2 - this represents the company's most recently reported or estimated Scope 1 + Scope 2 greenhouse gas emissions normalized by sales, which allows for comparison between companies of different sizes.

G. Methodologies for environmental or social characteristics

The Sub-Investment Adviser will:

• Apply screens so that the Fund does not invest in issuers that are in breach of the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution).
• Leverage a proprietary ESG framework, utilising both third party data and proprietary insights, that incorporates at least 20 metrics across environmental, social, and governance factors to produce country-level ESG ratings ranging from AAA to CCC. To encourage the adoption of better environmental and/or social practices the Fund will only invest in sovereign issuers rated B or higher.
• Leverage a proprietary ESG framework, utilising both third party data and proprietary insights, to categorise corporate credit issuers against six ratings from “Category 1” (the highest) to “Category 6” (the lowest). To encourage the adoption of better environmental and/or social practices the Fund will only invest in the top 5 of 6 category ratings, i.e. it will not invest in “Category 6” (the lowest) rated issuers as such issuers have been evaluated as having insufficient management of sustainability risks. The category ratings reflect the Sub-Investment Adviser’s view of the most relevant level of ESG risk for most companies within the sector and can help inform portfolio construction in terms of exposure to a certain sector.
• Leverage a proprietary ESG framework, utilising both third party data and proprietary insights, to categorise issuers of agency mortgage-backed securities against six ratings from “Category 1” (the highest) to “Category 6” (the lowest). To encourage the adoption of better environmental and/or social practices the Fund will only invest in the top 5 of 6 category ratings, i.e. it will not invest in “Category 6” (the lowest) rated issuers as such issuers have been evaluated as having insufficient management of sustainability risks. The category ratings reflect the Sub-Investment Adviser’s view of the most relevant level of ESG risk for most companies within the sector and can help inform portfolio construction in terms of exposure to a certain sector.
• Apply screens to exclude investment in issuers if they derive more than 10% of their revenue from tobacco, or adult entertainment.
• Apply screens to exclude investment in issuers if they derive more than 10% of their revenues from oil sands extraction, arctic oil and gas, thermal coal extraction.

The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under the Prospectus section entitled “Investment Restrictions” in the Prospectus.

The Sub-Investment Adviser may include positions in the Fund that, based on third-party data or screens, appear to fail the above criteria, where the Sub-Investment Adviser believes that the third-party data is insufficient or inaccurate.

H. Data sources and processing

The Fund has chosen MSCI as its primary data source for ESG (Environmental, Social and Governance) research.

Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This helps ensure that consistent data and methodologies are used given an ESG measure per security type and hence can be compared correctly in the portfolio construction process.

JHI has built a centralised proprietary research alignment process; The central research alignment process aligns data at three different levels:

1. Entity Level,
2. Position Level, and
3. Fund Level.

The research alignment and mapping capability is critical to JHI's ESG methodology, as we recognize a security could inherit the ESG information from the issuing legal entity, however, some ESG risks will be instrument specific.

JHI applies a series of Data Quality rules to ensure the integrity of the data being ingested into the central research alignment solution. JHI data that is not aligned correctly to the definition as provided by the data vendor is not ingested into the central cloud-based data warehouse and exceptions are raised. These exceptions are monitored and remediated by a central support team. Remediation includes challenging the data provider or internal operations supporting internally managed Systems of Records. Where appropriate the Data Owner responsible and accountable for the data is notified through the internal Data Governance process to resolve outstanding exceptions.
JHI receives weekly automated data feeds from external ESG Data vendors, which are ingested into a cloud-based data warehouse.

Some data used to support binding criteria as received from external providers may be estimated data. For positions not covered by the external data provider, proprietary research may be used. This could range from proprietary research alignment against the external data vendor to written confirmation from the issuing entity that it aligns to the binding criteria. The appropriateness of the evidence provided is assessed by an independent body at JHI.

I. Limitations to methodologies and data

Data coverage is directly driven by the coverage of the underlying ESG Data Provider.

JHI’s internal data structure provides sufficient flexibility to incorporate proprietary research or adapt evaluations to future requirements.

JHI is aware of data gaps in ESG Research for non-traditional asset classes compared to mainstream asset classes such as equities and debt instruments.

J. Due diligence

The JHI ESG Investment Policy, which incorporates JHI’s Sustainability Risk Policy, sets out the firmwide approach to ESG Integration, including JHI’s Responsible Investment Principles for long-term investment success, our approaches to Stewardship and Engagement and Baseline Exclusions applied to investee companies. These exclusions are based on classifications provided by third-party data ESG data providers. This classification is subject to an investment research override in cases where sufficient evidence exists that the third-party field is not accurate or appropriate.

Each Investment desk completes their own due diligence processes ahead of making any investment decisions within their Article 8 funds, using internal and external tools and research. The Front Office Controls & Governance team provide ongoing assurance that alignment with documented sustainability commitments where automated controls and/or 3^rd party data are not available can be evidenced. Financial Risk review and challenge investment management in light of ESG-related risks, alongside traditional market risk metrics, and embed sustainability risk into the risk profiles. Investment Compliance ensure that ESG-related activities are managed in line with regulatory requirements and expectations and considered within our compliance framework.

K. Engagement Policies

In addition to the binding elements of the investment strategy described above, stewardship forms an integral and natural part of Janus Henderson’s long-term, active approach to investment management. Details of JHI’s approach to Engagement can be found in the ‘ESG Investment Policy’ published under the ‘ESG Resource Library’ on the Janus Henderson website.

The Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code.

Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process. The Committee is comprised of representatives of investments portfolio management, corporate governance, accounting, legal and compliance. Additionally, the Proxy Voting Committee is responsible for monitoring and resolving conflicts of interest with respect to proxy voting.

L. Designated Reference Benchmark

The Fund does not use a reference benchmark to attain its environmental or social characteristics.

Principal adverse impacts (PAI)

The legal entity identifier number (LEI) for the product is: 0R1G3KQZZSOO4WWMNN67

As at 29 December 2023, PAIs are considered at the product level.¹ The table below sets out where PAI is considered through the use of exclusionary screens:

Adverse Sustainability Indicator		Metric	How is PAI considered
Greenhouse gas emissions	GHG emissions	Scope 1 GHG emissions	Exclusionary screen
		Scope 2 GHG emissions	Exclusionary screen
	Carbon footprint	Carbon footprint	Exclusionary screen
	GHG Intensity of investee companies	HG intensity of investee companies	Exclusionary screen
	Exposure to companies active in the fossil fuel sector	Share of investments in companies active in the fossil fuel sector	Exclusionary screen
Social and employee matters	Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises	Share of investments in investee companies that have been involved in violations of the UNGC principles or OECD Guidelines for Multinational Enterprises	Exclusionary screen
	Share of investments in investee companies involved in the manufacture or selling of controversial weapons	Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)	Exclusionary screen

¹This was effective as of 29th December 2023 and periodic reporting will commence from 31st December 2023 due to Regulatory Requirements, for the first reference period from 29th December 2023.

'Where the translated version of this disclosure text differs from the English version, the original English version prevails'