Fundsmith Emerging Equities Trust plc (FEET) 2014年年度報告「LSE」.pdf

1、Fundsmith Emerging Equities Trust plc Annual Report for the period 31 October 2013 to 31 December 2014A member of the Association of Investment CompaniesPerivan Financial Print 234739Fundsmith Emerging Equities Trust plc33 Cavendish Square,London W1G 0PWwww.feetplc.co.ukFundsmith Emerging Equities T

2、rust plcAnnual Report&Accountsfor the Period from Incorporation on31 October 2013 to 31 December 2014234739 Fr ost r ow FEET Cover 02/04/2015 12:29 Page 1Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|1Contents Page 3Financial Highlights Pages 11-12Investment Portfolio Page 4-5Cha

3、irmans StatementStrategy and Outlook Pages 13-15Investment ManagersReviewAbout Fundsmith Emerging EquitiesTrust plc 2Company Summary 3Financial HighlightsStrategic Report4-5Chairmans Statement6-10Overview of Strategy11-12 Investment Portfolio13-15 Investment Managers Review16-18 Investment Philosoph

4、yGovernance19-20 Board of Directors21-23 Report of the Directors24Statement of DirectorsResponsibilities25-32 Corporate Governance33-34 Audit Committee Report35-36 Directors Remuneration Report37Directors RemunerationPolicy ReportFinancial Statements38-40 Independent Auditors Report41Income Statemen

5、t42Statement of Financial Position43Statement of Changes in Equity44Statement of Cash Flows 45-56 Notes to the AccountsFurther Information57Shareholder Information58Alternative Investment FundManagers Directive Disclosure59-60 Glossary of Terms61-62 How to Invest63-67 Notice of Annual General Meetin

6、g68-69 Explanatory Notesto the Resolutions70Company Information234739 Fr ost r ow FEET pp01 NEW 02/04/2015 12:45 Page 1Company Summary2|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Company SummaryThe CompanyThe Company is an investment trust and its shares arelisted on the Offic

7、ial List and traded on the main market ofthe London Stock Exchange.The Company is a member ofthe Association of Investment Companies.Total assets less current liabilities as at 31 December 2014were 192.8 million and the market capitalisation was207.3 million.ManagementThe Company employs Fundsmith L

8、LP(Fundsmith)asInvestment Manager and Alternative Investment FundManager(AIFM).Further details of the terms of theseappointments are provided on page 21.Performance is measured against the MSCI Emerging andFrontier Markets Index measured on a net sterling adjustedbasis.Capital StructureThe Companys

9、capital structure is composed of OrdinaryShares.Further details are given in note 11 to the accountson page 52.ISA StatusThe Companys shares are eligible for Individual SavingsAccounts(ISAs)and for Junior ISAs.Retail Investors advised by IFAsThe Company currently conducts its affairs so that itsshar

10、es can be recommended by Independent FinancialAdvisers(IFAs)in the UK to ordinary retail investors inaccordance with the Financial Conduct Authority(FCA)rulesin relation to non-mainstream investment products andintends to continue to do so.The shares are excluded fromthe FCAs restrictions which appl

11、y to non-mainstreaminvestment products because they are shares in aninvestment trust.Company SummaryFundsmith Emerging Equities Trust plc aims to provide shareholders with anattractive return by investing in a portfolio of shares issued by listed or tradedcompanies which have the majority of their o

12、perations in,or revenue derivedfrom,developing economies*and which provide direct exposure to the rise ofthe consumer classes in those countries.*See Fundsmiths Investment Philosophy on page 16 for further information.Further details of the Companys investment policy are set out in the Strategic Rep

13、ort on page 6.234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 2Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|3Financial HighlightsNet asset value per share-0.3%Ordinary share price+7.2%Benchmark over the period 25 June 2014 to 31 December 2014+0.5%997.00p1,072.00pMSCI

14、 Emergingand FrontierMarkets Index(measured on a net sterlingadjusted basis)Financial Highlights234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 3IntroductionHere is our first Annual Report since the launch of the Company and the listing of its shareson the London Stock Exchange on 25 Jun

15、e 2014.It covers the period from incorporation on31 October 2013 to 31 December 2014.Chairmans Statement4|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 The Companys share price rose by 7.2%in the periodPerformanceIn their report(beginning on page 13),our InvestmentManager describ

16、es how they have invested part of the fundsraised and also the development of the portfolio to-date.Thestock markets of territories in which we invest haveperformed poorly from when the Investment Manager beganinvesting(25 June 2014)to 31 December 2014.TheCompanys net asset value per share fell slig

17、htly(by 0.3%)in this period,after Investment Manager fees and otherexpenses.This compares to a rise of 0.5%in the MSCIEmerging and Frontier Markets Index measured on a netsterling adjusted basis,the Companys benchmark.TheCompanys performance relative to the benchmark wasaffected by the rate of inves

18、tment and consequent higherlevel of cash maintained over the period.The Companys share price performed much better,risingby 7.2%,to 1,072.0 pence per share.The premium to theCompanys net asset value per share ended the period at7.5%.The Board continues to keep this under review.Since the end of the

19、period under review,net asset valueper share performance has been below the benchmark,reflecting the fact that we are not yet fully invested.Inaddition,the Companys share price has also fallen slightly;the shares are currently trading on a 3.4%premium to theCompanys net asset value per share.Strateg

20、ic Report234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 4Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|5Share CapitalYour Company raised 192.9 million at its launch and thereare now a total of 19,337,921 ordinary shares in issue.Itis the Boards view that the ability

21、to issue new shares at apremium to net asset value plays an important part inensuring that the level of premium does not reach excessivelevels as growing the total funds under management willreduce on-going costs per share;it will also increase theliquidity of the Companys shares.However,your Boardb

22、elieves that it would not be appropriate to issue furthershares until the funds raised at launch have been invested.We are,however,seeking shareholder authority to issuefurther new shares(up to an additional 10%of theCompanys issued share capital)at the Annual GeneralMeeting.DividendsThe Board does

23、not anticipate recommending any dividendsin the near future.Its investment objective is for the sharesmainly to provide capital growth.The Company will complywith the United Kingdoms investment trust rules regardingdistributable income but does not expect significant incomefrom the shares in which i

24、t invests.Any dividends anddistributions will be at the discretion of the Board from timeto time.OutlookOur Investment Manager remains cautious with regard to theshort-term economic prospectsofemergingmarketcountries where investment is targeted.Whilst there hasbeen much negative stock market sentim

25、ent surroundingemerging markets export growth,there continues to besignificant underlying domestic demand-led growth.Stockselection continues to be key and your Board believes thatour Investment Managers strategy of focusing on well-managed companies that own long lived,cash generativeconsumer brand

26、s will provide attractive returns for ourshareholders.Annual General Meeting(“AGM”)The Companys AGM,which will be held on Tuesday,26 May2015 at 1.00pm at Barber-Surgeons Hall,MonkwellSquare,Wood Street,London EC2Y 5BL,providesshareholders with an opportunity to meet the Board and tohear a presentati

27、on from our Investment Manager.I lookforward to meeting as many shareholders as possible at theAGM.Martin BralsfordChairman19 March 2015234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 56|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic ReportOverview of Strateg

28、yInvestment objective AimTo provide shareholders with an attractive return by investingin a portfolio of shares issued by listed or traded companieswhich have the majority of their operations in,or revenuederived from,developing economies*and which providedirect exposure to the rise of the consumer

29、classes in thosecountries.*See Fundsmiths Investment Philosophy on page 16 for furtherinformationInvestment Approach and PolicyThe Company will maintain a portfolio diversified by issuerconcentration and it is anticipated that the Companys initialportfolio will comprise 35 to 55 investments once the

30、 netproceeds,raised at the Companys launch,are substantiallyinvested.The Company will comply with the following restrictions atthe time each investment is made:(i)not more than 5%of the Companys gross assets canbe invested in shares issued by any single company.This limit rises to 10%in respect of u

31、p to 40%of grossassets;(ii)not more than 40%of the Companys gross assets canbe invested in shares issued by companies domiciledin any single jurisdiction;(iii)not more than 20%of the Companys gross assets canbe in deposits held with a single bank or financialinstitution.In applying this limit all un

32、invested cash(except cash representing distributable income orcredited to a distribution account that the Depositaryholds)should be included;(iv)not more than 20%of the Companys gross assets canconsist of shares and approved money marketinstruments issued by the same group.When applyingthe limits se

33、t out in(i)this provision would allow theCompany to invest not more than five per cent.in theshares of each of four group member companies,or10%in two of them(if applying the 40%limit);(v)the Companys holdings in any combination of sharesor deposits issued by a single company or fund mustnot exceed

34、20%of the Companys gross assets overall;(vi)the Company must not acquire shares issued by acompany and carrying rights to vote at a generalmeeting of that company if the Company has the powerto influence significantly the conduct of business of thatcompany(or would be able to do so after the acquisi

35、tionof the shares).The Company is to be taken to havepower to influence significantly if it exercises or controlsthe exercise of 20%or more of the voting rights in thatcompany;and(vii)the Company must not acquire shares which do notcarry a right to vote on any matter at a general meetingof the compa

36、ny that issued them and represent morethan 10%of these securities issued by that company.Uninvested cash or surplus capital or assets may beinvested on a temporary basis in:cash or cash equivalents,money market instruments,bonds,commercial paper or other debt obligations withbanks or other counterpa

37、rties having a single-A(orequivalent)or higher credit rating as determined by aninternationally recognised rating agency;or any“government and public securities”as defined forthe purposes of the FCA rules.In general,the Company will not use portfolio managementtechniques such as interest rate hedgin

38、g and credit defaultswaps.However,the Company may use currency hedging,through derivatives if necessary,as a portfolio managementtechnique.Whilst the Company,generally,will not hedge itscurrency exposure,it does reserve the right to do so in thecircumstances where,in the opinion of the InvestmentMan

39、ager,a significant depreciation of a currency hasbecome likely but the Investment Manager wishes tocontinue owning the companies in the portfolio denominatedin that currency and where the cost of hedging that currencyis unlikely,in the opinion of the Investment Manager,toextinguish any gains from he

40、dging.234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 6Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|7Investment Strategy andBusiness ModelKey Performance Indicators The Companys Board of Directors meets regularly and ateach meeting reviews performance against a numbe

41、r of keymeasures,as follows:Net asset value return against the MSCI Emerging andFrontier Markets Index measured on a net sterlingadjusted basis;Share price return;Discount/premium of share price to net asset value pershare;and Ongoing charges ratio.Net asset value return against thebenchmarkThe Dire

42、ctors regard the Companys net asset value returnas being the overall measure of value delivered toshareholders over the long term.Fundsmiths investmentstyle is such that performance is likely to deviate from thatof the benchmark index.The Board considers the mostimportant comparator to be the MSCI E

43、merging and FrontierMarkets Index measured on a net sterling adjusted basis.During the period under review the Companys net assetvalue per share return was-0.3%,underperforming thebenchmark by 0.8%.A full description of performance during the year underreview and the investment portfolio is containe

44、d in theInvestment Managers Review commencing on page 13 ofthis annual report.Share price returnThe Directors also regard the Companys share price returnto be a key indicator of performance.This is monitoredclosely by the Board.During the period under review the Companys share pricereturn was+7.2%,o

45、utperforming the benchmark by 6.7%.Premium/discount of share price to netasset value per shareThe Board undertakes a regular review of the level ofpremium/discount and consideration is given to ways inwhich share price performance may be enhanced,includingthe effectiveness of marketing and share iss

46、uance and buy-backs,where appropriate.The making and timing of anyshare issuance and buy-backs is at the absolute discretionof the Board.It is the Boards view that the ability to issue new shares ata premium to net asset value plays an important part inensuring that the level of premium does not rea

47、ch excessivelevels.However,your Board believes that it is notappropriate to issue further shares until the funds raised atlaunch have been invested.Ongoing charges ratioThe Board continues to be conscious of expenses and workshard to maintain a sensible balance between good qualityservice and costs.

48、As at 31 December 2014 the ongoingcharges ratio was 1.7%.Ongoing charges ratio1.7%Premium of the Companys share price to net assetvalue per share on 31 December 20147.5%Number of Ordinary Shares in issue19,337,921234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 78|Fundsmith Emerging Equit

49、ies Trust plc Annual Report&Accounts 2014 Strategic ReportOverview of StrategyRisk ManagementThe Board is responsible for the management of theprincipal risks faced by the Company and the Board regularlyreviews these risks and how each risk is mitigated.TheBoard has categorised the risks faced by th

50、e Company underfive headings as follows:Investment activity and strategy Financial Shareholder relations and corporate governance Operational Accounting,legal and regulatoryA summary of these risks and their mitigation is describedbelow:Investment Activity andStrategyAn unsuccessful investment strat

51、egy,including asset allocation,may lead tounderperformance against the Companysbenchmark index and peer companies,andmay result in a widening of the Companysshare price discount to net asset value pershare.The Board regularly reviews the Companys investment mandate andits long-term investment strate

52、gy in relation to market and economicconditions,and the operation of the Companys peers,therebymonitoring whether the Company should continue in its present form.Fundsmith provides an explanation of stock selection decisions and anoverall rationale for the make-up of the portfolio.Fundsmith discusse

53、scurrent and potential investment holdings with the Board on a regularbasis in addition to new initiatives,which may enhance shareholderreturns.The Board sets appropriate investment restrictions andguidelines.Additional reports and presentations are made regularly toinvestors by Fundsmith and also b

54、y Investec Bank plc,the CompanysCorporate Stockbroker.In consultation with its advisers the Board also undertakes a regularreview of the level of premium/discount and consideration is given toways in which share price performance may be enhanced,includingthe effectiveness of marketing,share issuance

55、 and share buy-backs,where appropriate.Principal Risks and Uncertainties Mitigation234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 8Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|9Strategic ReportOperationalDisruption to,or failure of,accounting,dealingor payments syst

56、ems in place at theCompanys service providers,includingcustodian and appointed sub-custodians andthe depositarycould prevent accuratereporting and monitoring of the Companysfinancial position.The Board reviews both the internal controls and the disaster recoveryprocedures put in place by its princip

57、al service providers on a regularbasis.Shareholder Relations andCorporate GovernanceShareholder unrest could arise if there is pooradherence to best practice in corporategovernance and which could result inreputational damage to the Company.The Board receives regular reports on shareholder activity

58、and is keptinformed of shareholder sentiment.Regular contact is maintained withmajor shareholders.Details of the Companys compliance with corporategovernance best practice,including information on relations withshareholders,are set out in the Corporate Governance Statementbeginning on page 25.Financ

59、ialThe financial risks associated with theCompany include market risk(includingcounter-party risk),liquidity risk,foreignexchange risk and credit risk.The Companys assets comprise mainly of readily realisable liquidsecurities,which can be sold to meet funding requirements,if necessary.Further inform

60、ation on financial instruments and risk can be found innote 14 to the financial statements beginning on page 53.The Company is also exposed to the risk that the custodian and/orcounterparties may fail and that title to stocks does not survive anensuing liquidation.The Companys Investment Manager is

61、responsiblefor undertaking reviews of the credit worthiness of the counterpartiesthat it uses.The Board regularly reviews the Investment Managersapproved list of counterparties.As the Companys shares are denominated and traded in sterling,thereturn to shareholders will be affected by changes in the

62、value of sterlingrelative to those foreign currencies.Whilst the Company,generally,willnot hedge its currency exposure,it does reserve the right to do so inthe circumstance where,in the opinion of the Investment Manager,asignificant depreciation of a currency has become likely but theInvestment Mana

63、ger wishes to continue owning the companies in theportfolio denominated in that currency and where the cost of hedgingthat currency is unlikely in the opinion of the Investment Manager,toextinguish any gains from hedging.The Board relies on the services of its external advisers to ensurecompliance w

64、ith applicable law and regulations including the CompaniesAct,the Corporation Tax Act and the UKLA Listing Rules.The Board isaware of changes to the regulatory environment in the year ahead.Accounting,Legal and RegulatoryFailure to comply with appropriate law andregulations could expose the Company

65、toserious financial loss and reputationaldamage.Principal Risks and Uncertainties Mitigation234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 910|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic ReportOverview of StrategyDirector,Social,Economicand Environmental

66、Mattersand Looking to the FutureDirectorsThe Directors of the Company,who served during the period,are shown below.Further information on the Directors canbe found on page 19.Martin Bralsford(Chairman)(appointed 23 May 2014)David Potter(appointed 23 May 2014)John Spencer(appointed 23 May 2014)Simon

67、Godwin(appointed 31 October 2013,resigned27 May 2014)Mark Laurence(appointed 31 October 2013,resigned27 May 2014)All Directors seek election or re-election by shareholders ateach Annual General Meeting.Board DiversityThe Company is supportive of the recommendations of LordDavies Report that the perf

68、ormance of corporate boardscan be improved by encouraging the appointment of the bestpeople from a range of differing perspectives andbackgrounds.The Company recognises the benefits ofdiversity on the Board,including gender,and takes this intoaccount in its Board appointments.The Company iscommitted

69、 to ensuring that any Director search processactively seeks persons with the right qualifications so thatappointments can be made on the basis of merit againstobjective criteria from a diverse selection of candidates.Tothis end the Board will consider diversity during any Directorsearch process.Soci

70、al,Economic and EnvironmentalMattersThe Directors,through the Companys Investment Manager,do their best to encourage companies in which investmentsare made to adhere to best practice with regard to CorporateGovernance.In light of the nature of the Companysbusiness there are no relevant human rights

71、issues and theCompany does not have a human rights policy.The Company recognises that social and environmentalissues can have an effect on some of its investeecompanies.The Company is an investment trust and so its own directenvironmental impact is minimal.The Board of Directorsconsists of three Dir

72、ectors,one of whom is resident in theUK,one is resident in the US and one in the ChannelIslands.The Board holds all of its regular meetings in theUK each year.The Company does not have any employees.Therefore thereis no employee information to disclose.Looking to the FutureThe Board concentrates its

73、 attention on the Companysinvestment performance,and the Investment Managersinvestment approach,and on factors that may have aneffect on this approach.The Board is regularly updated onwider investment trust industry issues and discussions areheld at each Board meeting concerning the Companysfuture d

74、evelopment and strategy.The Companys overall strategy remains unchanged.234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 10Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|11Investment PortfolioInvestments held as at 31 December 2014Security Country of incorporation Fair

75、value 000%of investmentsEastern Tobacco Egypt 4,6324.4%East African Breweries Ltd Kenya 4,5354.3%Nigerian Breweries PLC Nigeria 4,4804.2%Godrej Consumer Products Ltd India 4,3994.2%Shoprite Holdings Ltd South Africa 4,2794.0%Universal Robina Corp Philippines 4,0243.8%Big C Supercenter PCL Thailand 3

76、,9863.8%Sun Art Retail Group Ltd Hong Kong 3,9823.8%Want Want China Holdings Ltd Cayman Islands 3,7083.5%Kroton Educacional SA Brazil 3,3793.2%Top 10 Investments 41,40439.2%Bim Birlesik Magazalar AS Turkey 3,3773.2%Grupo Nutresa SA Colombia 3,2423.1%Sa Sa International Holdings Ltd Cayman Islands 2,

77、9732.8%Ambev SA Brazil 2,9242.8%Magnit PJSC Russian Federation 2,8112.7%Colgate-Palmolive India Ltd India 2,6902.5%Hengan International Group Co Ltd Cayman Islands 2,6212.5%Marico Ltd India 2,6072.5%Hypermarcas SA Brazil 2,4902.3%Indofood CBP Sukses Makmur Tbk PT Indonesia 2,4682.3%Top 20 Investment

78、s 69,60765.9%Jollibee Foods Corp Philippines 2,4512.3%ITC Ltd India 2,4332.3%Wynn Macau Ltd Cayman Islands 2,4122.3%Forus SA Chile 2,3222.2%Souza Cruz SA Brazil 2,1182.0%Vitasoy International Holdings Ltd Hong Kong 2,0511.9%Emami Ltd India 1,7981.7%Mr Price Group Ltd South Africa 1,7231.6%Ceylon Tob

79、acco Co PLC Sri Lanka 1,6751.6%Unilever Nigeria PLC Nigeria 1,5541.5%Top 30 Investments 90,14485.3%Grupo Lala SAB de CV Mexico 1,5451.5%Natura Cosmeticos SA Brazil 1,4911.4%Guinness Nigeria PLC Nigeria 1,4701.4%Famous Brands Ltd South Africa 1,3291.3%Hindustan Unilever Ltd India 1,2491.2%Philippine

80、Seven Corp Philippines 1,1061.0%Britannia Industries Ltd India 1,0901.0%Unilever Indonesia Tbk PT Indonesia 1,0481.0%Nestl India Ltd India 8130.8%Spur Corp Ltd South Africa 7820.7%Top 40 Investments 102,06796.6%With the exception of liquidity funds,all portfolio holdings are in equities.234739 Fr os

81、t r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 1112|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic ReportInvestment PortfolioInvestments held as at 31 December 2014 continuedSecurity Country of incorporation Fair value 000%of investmentsDabur India Ltd India 7730.7%Nest

82、l Nigeria PLC Nigeria 7520.7%Alicorp SAA Peru 7310.7%Tiger Brands Ltd South Africa 6170.6%Nestl Lanka PLC Sri Lanka 2500.2%FAN Milk Ltd Ghana 1970.2%British American Tobacco Bangladesh Co Ltd Bangladesh 910.1%GlaxoSmithKline Consumer Healthcare Ltd India 870.1%Procter&Gamble Hygiene Healthcare Ltd I

83、ndia 780.1%Nestl Pakistan Ltd Pakistan 470.0%Top 50 Investments 105,690100.0%With the exception of liquidity funds,all portfolio holdings are in equities.Portfolio BreakdownEquities 105,69055.9%Liquidity Funds 83,21844.1%188,908100.0%Liquidity funds consist of investments in money market funds,with

84、the aim of protecting capital while earning income,until the Company is fully invested.Portfolio Distributionas at 31 December 2014 46%45%9%Consumer Discretionary Consumer Staples Cash(incl.Money Market Funds and cash held at bank)By Sector(based on net asset value)50%19%31%Europe,Middle East,Africa

85、 Asia Latin AmericaBy Geography(by Country of Incorporation)234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 12Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|13Investment Managers ReviewAt the time of the Companys launch,we believed that afavourable entry point for our

86、strategy of investing inconsumer stocks in Developing Economies(a term asdefined in the Investment Philosophy report)lay ahead as aresult of two major developments:The mooted end of Quantitative Easing(“QE”)in theUnited States which might lessen the flow of funds intoEmerging Markets(“EM”)and even l

87、ead funds to returnto the United States;and The economic slowdown in China and its knock-on effectin countries which are dominated by commodity exports,most of which are also Developing Countries.So far this thesis seems to have played out mostly as weexpected.QE in the United States has ended and w

88、e nowawait the end to the other unconventional policy measurethe Zero Interest Rate Policy(“ZIRP”).Chinas economy hasdefinitely been slowing and the knock-on effect oncommodity prices has been profound since Chinarepresented more than 100%of the increase in demand forsome commodities since 2009 when

89、 it undertook a massivestimulus in response to the financial crisis.The oil price hasbeen the most obvious casualty but other commodities,such as iron ore,have experienced price falls of similarmagnitude.We are firmly in the camp which expects a fall in oil andother commodity prices to be a benefit

90、to the world economy.Almost every economic activity requires energy input whichis heavily dependent upon the price of oil.Other input costsare affected as the prices for products which are by-productsof oil such as artificial fertilisers,packaging,and plasticsas well as other commodities fall.Most o

91、f the companies inthe Companys portfolio have energy and oil in particular asa major input cost and a fall in its price should benefit theirmargins as well as leaving consumers with a larger portionof their income to spend on their products.If you are in any doubt about the impact of the oil price o

92、neconomic activity consider the following.Every globalrecession since 1970 has been preceded by a doubling ofthe oil price(January to March 1974,March to October1979,July to October 1990,June 1999 to March 2000,January 2007 to July 2008).When oil prices have fallen bymore than 50%,this been followed

93、 by rapidly acceleratingglobal growth(1987-88,1993-94,1998-99,2003-04 and2010-11).There were of course other factors involved in causing theseperiods of boom and bust,but it is hard to doubt that a fallin the oil price will boost economic activity above what itwould otherwise have been.The last part

94、 of the precedingsentence is underlined because it is important:the fall inthe price of oil and other commodities may boost growth butit may also be telling us that the world economy was in farworse shape than many commentators had realised whichhas affected demand for oil and helped to cause the pr

95、icefall.The fall in the price of oil also has differential effects oncompanies and countries.Fairly obviously it is not good news for oil producers and wehave seen the adverse effects of the fall in the oil price onthe currencies of major oil exporters such as Colombia,Nigeria and Russia,and to a le

96、sser extent Brazil and Mexico,during this period.We await the likely positive economiceffect on major oil importers in which we invest such asChina,India,Pakistan and the Philippines.Nor is oil the onlycommodity which will be producing less revenue forexporters in the developing world,so will coal,i

97、ron ore,andcopper which will affect Brazil,Chile,Indonesia,Peru andSouth Africa.Other events which affected the areas where we seek toinvest during this period include:The overthrow of the presidential regime in the Ukraine,the consequent Russian annexation of the Crimea,andthe dispute over the terr

98、itory in Eastern Ukraine whichhas led to sanctions against Russia by the USA and theEU.We only have one Russian company in theCompanys portfolio,the leading retailer Magnit whichin our view is a very good business.Its just a pity atpresent that it is in Russia;Elections in Brazil,India,Indonesia,and

99、 Sri Lanka.Ifthere was a theme to these elections it is the overthrowof incumbent parties and the emergence of reformers,although Brazil does not fit this pattern with there-election of Dilma Roussef;and In India Narendra Modis election in May swept asidethe Congress Party and placed a man with a re

100、al reformagenda and a track record of achievement as Governorof Gujarat in power.Our only problem with this is thatMr Modi had the poor timing to get himself elected inthe month before the Company began investing and theexuberant response of the Indian stock market to hiselection has made it difficu

101、lt for us to achieve the levelof investment we would like in Indian consumercompanies at valuations which are reasonable.However,at the moment actual consumer spendingwhich underpins the results of the portfolio companies234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 13The top five cont

102、ributors to that performance and the five biggest detractors with the amount contributed by local currencymovements are as follows:14|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic Reporthas yet to match the improvement in sentiment fromthis reform agenda so we hope to g

103、et the full weightingwe desire in Indian companies at a more reasonablevaluation.Overall the markets we seek to invest in performed relativelypoorly in 2014.From the date we started investing(24 June2014)to the 31 December 2014 the MSCI Emerging andFrontier Markets Index was up 0.5%with the MSCI Eme

104、rgingMarkets Index up 0.7%(all in sterling terms).The CompanysNet Asset Value(“NAV”)was down by 0.3%over the sameperiod.This was heavily influenced by the fact that we beganwith 100%of the assets in cash and ended the year withc.45%still in cash.In contrast,the share price was up 7.2%and traded at a

105、 premium of 7.5%to the net asset value pershare as at 31 December 2014.Investment Managers ReviewTop Five Contributors Country of Incorporation Contribution%Of which Currency%Eastern Tobacco Egypt 0.460.05Emami Ltd India 0.180.01Universal Robina Corp Philippines 0.160.03Shoprite Holdings South Afric

106、a 0.14(0.01)Indofood CBP Sukses Indonesia 0.120.00Top Five Detractors Country of Incorporation Contribution%Of which Currency%Magnit Russian Federation (0.17)0.07Wynn Macau Macau (0.16)0.04Sun Art Retail Group China (0.11)0.06Natura Cosmeticos Brazil (0.11)(0.03)Unilever Nigeria Nigeria (0.11)(0.02)

107、The portfolio list on pages 11 and 12 and the portfoliodistribution pie charts on page 12 show a breakdown of ourportfolio at the end of 2014 on the basis of geography andsector.India is the largest country exposure.At the end of the year we held stakes in 50 companies.Ouraverage company was founded

108、 in 1958 and had a medianmarket capitalisation of just over 3 billion.All of themoperate in sectors which directly serve the consumeralthough none are in consumer durables.However,atpresent,cash remains our largest asset.As part of our analysis of the portfolio,we consider anumber of measures:Return

109、 on Capital Employed;GrossMargin;Cash Conversion;and Growth.The average of ourportfolio,listed on pages 11 and 12,weighted by the sizeof our holdings against the measures is disclosed below.The companies in our portfolio had an average Return onCapital Employed(“ROCE”)of 37%in the past year,43%ifgoo

110、dwill is excluded from capital employed,which gives anindication of the return on their operating capital.To say thisis high would be an understatement.The average Gross Margin(the profit after the cost of goodssold)was 43%.Our companies sell goods for 10 which theypurchase or make for under 6 which

111、 is good consideringthat we own some retailers which are low marginbusinesses.Average Operating Profit margins are 17%.On average our companies convert 105%of their profits intocash.This measure deserves two additional notes ofexplanation.Firstly,you might wonder how a company canconvert more than 1

112、00%of its profits into cash.There ismore than one way this can occur,but the commonest isthat it has negative working capital because it gets paidbefore it has to pay its suppliers.Retailers are commonly inthis situation:shoppers pay for their goods on the spot,theretailers do not pay their supplier

113、s as promptly.Secondly,the cash flow number we are quoting is the“neutral”cashflow(as in Neutral Free Cash Flow or“NFCF”)which takesthe capital expenditure as being in line with the depreciationcharge.We make this assumption because the companieswe seek to invest in are high growth companies which o

114、ftenhave such high capital expenditure that they have no cashflow left after this item.If we measured their cash flow aftersubtracting the actual capital expenditure we would neverbuy their shares as they would have negative cash flows,and given the returns they are making we should want themto rein

115、vest as much in growing their businesses as possible.So we make the assumption that all their capital234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 14Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|15expenditures over and above the depreciation charge arevoluntary spen

116、ding undertaken in order to grow the businessand we assess their free cash flows on that basis.In the last year these companies have grown their revenuesat 12%and earnings per share at 20%,both numbers whichcompanies operating in the developed world can only dreamof,although of course that may not p

117、ersist.All of these performance statistics seem to confirm that weare invested in good businesses.What about valuation?Our companies have a price earningsratio(or“PE”)of 30 which does not sound cheap,althoughwhen placed in context with earnings growth of 20%itcompares favourably with the valuation a

118、nd growthprospects of comparable companies in developed markets.We prefer not to use PEs for valuation purposes as earningsare not the same as cash and take no account of the capitalemployed to generate the earnings.The free cash flow yieldon our portfolio(the free cash flows which the companiesgene

119、rate,divided by their market value and weighted fortheir respective size in the portfolio again using theassumption that capital expenditure equals depreciation)is4.1%.Again,this compares favourably with the free cashflow yield available on comparable developed worldcompanies.Once the Company become

120、s fully invested thesefundamental characteristics of the portfolio companiesshould begin to take on additional significance as theyshape our expectations of long term returns on ourinvestment.We remain cautious about the immediate prospects forDeveloping Economies in the light of the same factors wh

121、ichwe foresaw at the time of launch and we will continue toseek what we believe are at least reasonable valuations aswe seek to invest the balance of the cash raised in ourportfolio companies.Terry SmithFundsmith LLPInvestment Manager19 March 2015234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:3

122、1 Page 1516|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic ReportFundsmith Emerging Equities Trust plc(FEET)invests incompanies which have the majority of their operations in,orrevenue derived from,Developing Economies*and whichprovide direct exposure to the rise of the

123、consumer classesin those countries.We apply a three step investment process to implement thatstrategy:1.We aim to invest in high quality businessesIn our view,a high quality business is one which can sustaina high return on operating capital employed in cash.We are seeking a sustainable high rate of

124、 return.Animportant contributor to this is repeat business,usually fromconsumers.A company that sells many small items eachday is better able to earn consistent returns over the yearsthan a company whose business is cyclical,like a steelmanufacturer,or“lumpy”,like a property developer,a moviestudio

125、or even a drugs company.This approach rules outmost businesses that do not sell directly to consumers orwhich make goods which are not consumed at short andregular intervals.Capital goods companies and industrial suppliers makecomponents,ingredients and packaging to sell tobusinesses.Business buyers

126、 are able to defer purchasesof such products when the business cycle turns down.Moreover,business buyers employ staff whose sole raisondtreis to drive down the cost of purchase and lengthentheir payment terms.In contrast we as consumers have nodirect bargaining power.An important contributor to resi

127、lience is a resistance toproduct obsolescence.This means that we try not to investin industries which are subject to rapid technologicalinnovation.Innovation is often sought by investors but doesnot always produce lasting value for them.Developmentssuch as canals,railroads,aviation,microchips and th

128、einternet have transformed industries and peoples lives.They have created value for some investors,but a lot ofcapital gets destroyed for others,just as the internet hasdestroyed the value of many traditional media industries,most notably newspapers,as well as quite a lot of capitalinvested in the i

129、nternet companies that didnt make it andat the peak of bubbles such as the Dotcom boom.Even when a company sells to consumers,it is unlikely tofit our criteria if its products have a life which can beextended.When consumers hit hard times,they can deferreplacing their cars,houses and appliances,but

130、not food,toiletries,cosmetics and cleaning products.Hence we donot intend to invest in manufacturers of consumer durables.We seek to invest in businesses whose assets areintangible and difficult to replicate.It may seem counter-intuitive to seek businesses which do not rely upon tangibleassets.The b

131、usinesses we seek to invest in do somethingvery unusual:they break the rule of mean reversion thatstates returns must revert to the average as new capital isattracted to business activities earning above-averagereturns.They can do this because their most important assets arenot physical assets,which

132、 can be replicated by anyone withaccess to capital,but intangible assets which can be verydifficult to replicate,no matter how much capital acompetitor is willing to spend.Moreover,its hard forcompanies to replicate these intangible assets usingborrowed funds,as banks tend to favour the(often illuso

133、ry)comfort of tangible collateral.This means that the businessdoes not suffer from economically irrational(or at leastinnumerate)competitors when credit is freely available.Tobe fair,during equity market“bubbles”,some irrationalcompetition can be funded by equity which seems to requireno foreseeable

134、 return,but such Dotcom style phenomenamostly seem to attract capital to technology,biotech,socialnetworking,e-tailing and online businesses and not the lessglamorous world of consumer non-durables.The kinds of intangible assets we seek are brand names,trademarks,dominant market shares,patents,licen

135、ses,franchises,intellectual property or know how,distributionnetworks,supply chains,client relationships and installedbases of equipment or software that lock in clients forservice,spares,repairs,renewals,consumables andtransactions.Some combination of such intangibles definesa companys franchise.Si

136、nce stock markets typically valuecompanies on the not unreasonable assumption that theirreturns will regress to the mean,businesses whose returnsdo not do this can become undervalued.Therein lies ouropportunity as investors.We avoid companies that have to use leverage to make anadequate return on eq

137、uity.We only invest in companies thatearn a high return on their capital on an unleveraged basis.The companies we invest in may well have leverage,but theydont require borrowed money to function.For example,*Where we refer to our investments in Developing Economies or Emerging Markets we mean countr

138、ies other than thoseincluded in the MSCI World Index,i.e.in the widest possible sense.Clearly when referring to others references to emergingmarkets,developing economies or the developing world their own definition applies.Investment Philosophy 234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31

139、Page 16Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|17financial companies(such as banks,investment banks,credit card lenders or leasing companies)typically earn alow unleveraged return on their assets.They then have tolever up that capital several times over with money fromlende

140、rs and depositors in order to earn what they deem tobe an acceptable return on their shareholders equity.Thismeans that not only are their unlevered equity returnsinadequate,but periodically the supply of credit iswithdrawn,often with disastrous consequences given theilliquidity of their asset base.

141、In assessing leverage,weinclude off-balance sheet finance in the form of operatingleases,which are common in some sectors,such asretailing.The businesses we seek must have growth potential.It isnot enough for companies to earn a high unlevered rate ofreturn.Our definition of growth is that they must

142、 also be ableto reinvest at least a portion of their excess cash flow backinto the business to grow,while generating a high return onthe cash thus reinvested.Over time,this should compoundshareholders wealth by generating more than a pound ofstock-market value for each pound reinvested.In our view,g

143、rowth cannot be thought about sensibly in isolation fromreturns.Rapid growth may be good news or it may be badnews.It depends on how much capital you have to invest togenerate that growth.The source of growth is also a factor to consider.Growth inprofits from increasing prices can simply build an um

144、brellabeneath which competitors can flourish.We are moreinterested in companies which have physical growth in themerchandise or service sold than simply pricing power,although having both is nice.2.We try not to overpay for shares when investingWe only invest when we believe the valuation is attract

145、ive.We estimate the free cash flow of every company after taxand interest,but before dividends and other distributions,and after adding back any discretionary capital expenditurewhich is not needed to maintain the business.Otherwise wewould penalise companies which can invest in order to grow.Our ai

146、m is to invest only when free cash flow per share as apercentage of a companys share price(the free cash flowyield)is high relative to long-term interest rates and whencompared with the free cash flow yields of other investmentcandidates both within and outside the portfolio.Our goalis to buy securi

147、ties that we believe will grow and compoundin value,which bonds cannot,at yields that are similar to orbetter than what we would get from a bond.3.We aim to buy and hold We aim to be long-term,buy-and-hold investors.We seek toown only stocks that will compound in value over the years.Accordingly,we

148、try to be very careful about the stocks wepick.We do not have a good new investment idea every day,or indeed,not even every year.Even when we are able tofind a new company we would like to invest in,we have towait,sometimes forever,for a price and valuation at whichwe can justify investing.The resul

149、ting low level of dealingactivity also minimises the frictional costs of trading,a costwhich is often overlooked by investors as it is not normallydisclosed as part of the costs of running fundsOur investment philosophy is also defined by a number ofthings we dont do:(A)We try never to engage in so-

150、called“Greater FoolTheory”We really want to own all of the companies that we investin.We do not buy them knowing that they are not goodbusinesses or are over-valued in the hope that someonemore gullible will come along and pay an even higher pricefor them.We assume that there is no greater fool than

151、 us.(B)Indices are not used for portfolio constructionWe are interested in indices in order to benchmark ourperformance but not as a tool to aid our portfolioconstruction.The simplest reason for this is that we wish to performbetter than the relevant indices and the majority of fundmanagers who hug

152、the index composition with their portfolioselections.As the legendary investor Sir John Templetonsaid“If you want to have a better performance than thecrowd,you must do things differently from the crowd.”There is also the problem that the MSCI Emerging MarketsIndex is dominated by companies of a sor

153、t that we wouldnever own.The top ten companies in the MSCI Emerging Markets Indexare all in the banking,energy,technology and telecomssectors.They all fall into sectors which we would neverinvest in because they are cyclical,rely on leverage to deliveran adequate return,are subject to rapid and unpr

154、edictablechange and/or have returns controlled by governments.In contrast,under 10%of the Index is in Consumer Staples,which is the bedrock of the Fundsmith strategy and aconsistent producer of shareholder value with high unleveredreturns on capital in cash.234739 Fr ost r ow FEET pp02-pp20 NEW 02/0

155、4/2015 12:31 Page 1718|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 Strategic Report(C)We do not attempt market timingOnce we are fully invested we will not attempt to managethe percentage invested in equities in our portfolio to reflectany view of market levels,timing or develo

156、pments.Gettingmarket timing right is a skill we do not possess.We assumethat if you own shares in FEET you have already taken thedecision to invest that portion of your portfolio in EmergingMarket equities,managed in the manner we describe.Our inability and unwillingness to try to make market timing

157、calls is one factor which prevents us from investing insectors which are highly cyclical.It is possible to deliverperformance from such investments,but it requires a goodsense of timing for the economic cycle and how the marketcycle relates to it.It also requires strong nerves,becausesuch investment

158、s are often counter-intuitive,as exemplifiedin the investment adage“Only buy cyclicals when they lookexpensive”.This is because when they have little or noearnings,and so look expensive on the basis of theirprice/earnings ratio,they are at,or close,to the bottom ofthe cycle.The converse applies:you

159、should sell them whenthey look cheap,as they are then at,or close,to peakearnings.We are not sure we have either the skill set or theconstitution for such investing.In any event,investing incyclical businesses has one big disadvantage.They aremostly poor quality businesses which struggle to makeadeq

160、uate returns on their capital.Whilst you wait to seewhether you have got your timing right,the underlying valueof your investment is more likely to erode than compoundwhilst you await the upturn,and of course occasionally theydo not survive a cycle at all.(D)Corporate GovernanceInvestment in emergin

161、g markets has dangers which mightloosely be labelled as problems of corporate governance.There are examples of companies which have had assetsconfiscated by governments,which have had their know-howtaken by a local joint venture partner who has set up incompetition with them,of minority investment i

162、n businesscontrolled by local families which have gone awry.We do not intend to bring enlightenment to EmergingMarkets in the form of improved corporate governance viaour investments.We are minority investors and we willassume that the corporate governance landscape we see isthe one we have to deal

163、with rather than assuming we canchange it.Then we will select investments in thatenvironment the same way that porcupines make love carefully.We are helped in this regard by the fact that about a fifth ofthe companies in our Investable Universe and about aquarter of the portfolio for FEET are quoted

164、 subsidiaries,associates or franchisees of the multinational companies.This certainly helps from a due diligence/corporategovernance standpoint.(E)CurrenciesOur policy is generally not to hedge FEETs currencyexposure.The exception in FEET would be in thecircumstances where we believe significant dep

165、reciation ofa currency has become likely but we wish to continue owningthe companies in FEET denominated in that currency and weare comfortable that we can put in place a hedge the costof which will not extinguish any gains from hedging.Such acombination of circumstances is unusual.Terry SmithFundsm

166、ith LLPInvestment Manager19 March 2015Investment Philosophy234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 18Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|19Board of DirectorsThe Board of Directors,all of whom are non-executive,supervise the management of the Company

167、and look after the interestsof shareholders.The Board considers that all the Directors are independent and there are no relationships or circumstanceswhich are likely to affect or could appear to affect their judgment.Martin BralsfordChairman Martin was articled with Pannell Kerr Forster&Co,London,q

168、ualifying as a CharteredAccountant in 1970 and obtained a masters degree at the London Business School in 1974.Until July 2007 he was Chief Executive of C.I.Traders,taking up this role in August 2002when it acquired Le Riche Group.He joined Le Riche Group as its Chief Executive inNovember 1992 after

169、 having previously been Group Managing Director and Chairman ofPremier Brands Ltd,(now Premier Foods Ltd),part of Hillsdown Holdings.Prior to this heheld a number of financial and general management appointments in Calor Gas,Rank Group,SmithKline Beecham and Cadbury Schweppes.He has served as an ind

170、ependent memberof the boards of a number of commercial,banking and investment companies includingGartmore Capital Strategy Fund Limited and Acorn Income Fund Limited.He is a Trustee ofa number of charitable trusts;a former President of the Jersey Chamber of Commerce;anda former Chairman of both the

171、Training and Employment Partnership in Jersey and the DurrellWildlife Conservation Trust of which he is a Life Trustee.David PotterAfter 35 years in the City(CSFB,Montagu,Midland,Guinness Mahon,Investec)David hasspent the last 15 years as a Chairman,Non-Executive and Trustee in a wide range ofcompan

172、ies and institutions.He is currently Chairman of Spark Ventures PLC,a Director ofMaven Income and Growth VCT,a member of the Council of The Centre for the Study ofFinancial Innovation,Chairman of the Bryanston and National Film&TV School Foundationsand a member of The Kings College London Investment

173、 Board.David is Chairman of theManagement Engagement Committee.John SpencerJohn Spencer qualified as a chartered accountant in 1966 and worked with KPMG from 1966to 1969.He joined Barclays Bank in 1969 and held a variety of posts,including Presidentof Barclays Bank of New York and chief executive of

174、 the USA Banking division.He returnedto the UK in 1990 as deputy chief executive of BZW and chief executive of the Global Marketsdivision and was appointed a member of the Group Executive Committee.He wasNon-Executive chairman of Regent Inns plc from 1995 to 1998 and served as non-executivechairman

175、of S plc,a director of Numerica Group plc and Chief Executive ofSnell&Wilcox Limited,a private company.He was appointed Director of Tullett Prebon(originally Collins Stewart)in 2000 until 2007 where he was the Senior IndependentNon-executive Director and a member of the Audit,Remuneration and Nomina

176、tionsCommittees.He is a Non-Executive Director of tpSEF Inc.John is Chairman of the AuditCommittee.All Directors are members of the Audit and Management Engagement Committees.234739 Fr ost r ow FEET pp02-pp20 NEW 02/04/2015 12:31 Page 19Meeting AttendanceThe number of Board and Committee meetings he

177、ld in the period 31 October 2013 to 31 December 2014,and eachDirectors attendance level,is shown below:ManagementEngagementType and number of meetingsBoardAudit CommitteeCommitteeheld in the period 31 October 2013 to 31 December 2014(6)(1)(1)Martin Bralsford(appointed 23 May 2014)411David Potter(app

178、ointed 23 May 2014)411John Spencer(appointed 23 May 2014)411Simon Godwin(appointed 31 October 2013,resigned 27 May 2014)2Mark Laurence(appointed 31 October 2013,resigned 27 May 2014)2Directors InterestsThe beneficial interests of the Directors and their families in the Company were as set out below:

179、Shares of 1p each31 December 2014Martin Bralsford100,000David Potter 5,000John Spencer5,000There have been no changes in the above Directors interests as at 19 March 2015.Board of DirectorsGovernance20|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 234739 Fr ost r ow FEET pp02-pp2

180、0 NEW 02/04/2015 12:31 Page 20Report of the DirectorsFundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|21The Directors present their annual report on the affairs ofthe Company together with the audited financial statementsand the Independent Auditors Report for the period fromincorpo

181、ration on 31 October 2013 to 31 December 2014.Business and Status of the CompanyThe Company is registered as a public limited company inEngland(Registered Number 08756681)and is aninvestment company within the terms of Section 833 of theCompanies Act 2006(the Act).Its shares are listed on theOfficia

182、l List of the UK Listing Authority and traded on themain market of the London Stock Exchange,which is aregulated market as defined in Section 1173 of the Act.The Company has applied for and been accepted as anapproved investment trust under sections 1158 and 1159of the Corporation Taxes Act 2010 and

183、 Part 2 Chapter 1 ofStatutory Instrument 2011/2999.This approval relates toaccounting periods commencing on or after 25 June 2014.The Directors are of the opinion that the Company hasconducted its affairs so as to be able to retain suchapproval.Investment PolicyIn order to achieve its investment obj

184、ective,the Companyinvests in a portfolio of shares issued by listed or tradedcompanies which have the majority of their operations in,orrevenue derived from,developing economies and whichprovide direct exposure to the rise of the consumer classesin those countries.Further details concerning the Comp

185、anys investment policycan be found in the Strategic Report on page 6 and theInvestment Philosophy on page 16.ResultsThe results attributable to shareholders for the period areshown on page 41.Gearing The Company has the power to borrow using short-termbanking facilities to raise funds for short-term

186、 liquiditypurposes or for discount management purposes includingthe purchase of its own shares,provided that the maximumgearing represented by such borrowings shall be limited to15%of the Companys net assets at the time of draw downof such borrowings.The Company is not currently geared.LeverageFor t

187、he purposes of the Alternative Investment FundManagers(AIFM)Directive,leverage is any method whichincreases the Companys exposure,including the borrowingof cash and the use of derivatives.It is expressed as a ratiobetween the Companys exposure and its net asset valueand can be calculated on a Gross

188、and a Commitmentmethod.The current maximum permitted limit under theGross and Commitment methods is 115%.Up to dateinformation is available in the Investor Disclosure Documenton the Companys website www.feetplc.co.uk.Furtherinformation can also be found in the Alternative InvestmentFund Managers Dir

189、ective Disclosure on page 58.Investment Management and AlternativeInvestment Fund Manager(“AIFM”)Investment Management Agreement:Fundsmith receives a periodic fee equal to 1.25%p.a.of theCompanys net asset value.The Investment ManagementAgreement may be terminated by either party giving noticeof not

190、 less than 12 months.Fundsmith under the terms ofthe agreement provides,inter alia,the following services:seeking out and evaluating investment opportunities;recommending the manner by which monies should beinvested,disinvested,retained or realised;advising on how rights conferred by the investments

191、should be exercised;analysing the performance of investments made;advising the Company in relation to trends,marketmovements and other matters which may affect theinvestment policy of the Company;and acting as AIFM to the Company.Continuing Appointment of theInvestment Manager and AIFMThe Board has

192、concluded that it is in shareholders intereststhat Fundsmith acting as both the Investment Manager andAIFM continues in its roles.The review undertaken by theBoard considered the Companys investment performancetogether with the quality and adequacy of other servicesprovided.The Board also reviewed t

193、he appropriateness of the termsof the Investment Management Agreement in particular thelength of notice period and the fee structures.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 2122|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 GovernanceReport of the DirectorsDi

194、rectors&Officers Liability InsuranceCoverDirectors&officers liability insurance cover wasmaintained by the Company during the period ended 31December 2014.It is intended that this policy will continuefor the year ending 31 December 2015 and subsequentyears.Directors IndemnitiesAs at the date of this

195、 report,indemnities are in forcebetween the Company and each of its Directors under whichthe Company has agreed to indemnify each Director,to theextent permitted by law,in respect of certain liabilitiesincurred as a result of carrying out his or her role as aDirector of the Company.The Directors are

196、 also indemnifiedagainst the costs of defending any criminal or civilproceedings or any claim by the Company or a regulator asthey are incurred provided that where the defence isunsuccessful the Director must repay those defence coststo the Company.The indemnities are qualifying third partyindemnity

197、 provisions for the purposes of the Companies Act2006.A copy of each deed of indemnity is available for inspectionat the Companys registered office during normal businesshours and will be available for inspection at the AnnualGeneral Meeting.Beneficial Owners of Shares InformationRightsBeneficial ow

198、ners of shares who have been nominated bythe registered holder of those shares to receive informationrights under section 146 of the Companies Act 2006 arerequired to direct all communications to the registeredholder of their shares rather than to the Companys registrar,Capita Asset Services,or to t

199、he Company directly.Individual Savings AccountsThe Companys shares are eligible to be held in the stocksand shares component of an ISA or Junior ISA,subject toapplicable annual subscription limits(15,000 for an ISAand 4,000 for a Junior ISA for the 2014/2015 tax year)(15,240 and 4,080 respectively f

200、or 2015/2016 tax year).Investments held in ISAs or Junior ISAs will be free of UKtax on both capital gains and income.The opportunity toinvest in Ordinary Shares through an ISA is restricted tocertain UK resident individuals aged 18 or over.Junior ISAsare available for UK resident children aged unde

201、r 18 andborn before 1 September 2002 or after 2 January 2011.Sums received by a shareholder on a disposal of OrdinaryShares held within an ISA or Junior ISA will not count towardsthe shareholders annual limit.S.I.2007/1093 C.49 CommencementNo.2 Order 2007The following disclosures are made in accorda

202、nce with S.I.2007/1093 C.49 Commencement No.2 Order 2007.Capital StructureThe Companys capital structure is summarised in note 11on page 52.Voting Rights in the Companys sharesDetails of the voting rights in the Companys shares at thedate of this Annual Report are given in note 9 to the Noticeof Ann

203、ual General Meeting on page 66.Political DonationsThe Company does not intend to make any politicaldonations.Substantial Shares InterestThe Company was aware of the following substantial interests in the voting rights of the Company:19 March 2015*31 December 2014Number of%of issuedNumber of%of issue

204、dShareholdersharesshare capitalsharesshare capitalMr Simon Justin Nixon2,000,00010.32,000,00010.3Mr Duncan Russell Cameron1,000,0005.21,000,0005.2As at 31 December 2014 the Company had 19,337,921 shares in issue.As at 19 March 2015 the Company had19,337,921 shares in issue.*19 March 2015 being the l

205、atest practicable date before publication of the Annual Report.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 22Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|23Global Greenhouse Gas EmissionsThe Company has no greenhouse gas emissions to reportfrom its operations,nor

206、 does it have responsibility for anyother emissions producing sources under the Companies Act2006(Strategic Reports and Directors Reports)Regulations2013,including those within its underlying investmentportfolio.By order of the BoardFrostrow Capital LLPCompany Secretary19 March 2015234739 Fr ost r o

207、w FEET pp21-pp30 NEW 02/04/2015 12:32 Page 2324|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 GovernanceStatement of Directors ResponsibilitiesThe Directors are responsible for preparing the AnnualReport and the financial statements in accordance withapplicable law and regulation

208、s.Company law requires the directors to prepare financialstatements for each financial year.Under that law thedirectors have elected to prepare the financial statementsin accordance with International Financial ReportingStandards(IFRSs)as adopted by the European Union.Under company law the directors

209、 must not approve thefinancial statements unless they are satisfied that they givea true and fair view of the state of affairs of the companyand of the profit or loss of the company for that period.Inpreparing these financial statements,InternationalAccounting Standard 1 requires that directors:prop

210、erly select and apply accounting policies;present information,including accounting policies,in amanner that provides relevant,reliable,comparable andunderstandable information;provide additional disclosures when compliance with thespecific requirements in IFRSs are insufficient to enableusers to und

211、erstand the impact of particulartransactions,other events and conditions on theentitys financial position and financial performance;and make an assessment of the Companys ability tocontinue as a going concern.The Directors are responsible for keeping adequateaccounting records that are sufficient to

212、 show and explainthe companys transactions and disclose with reasonableaccuracy at any time the financial position of the companyand enable them to ensure that the financial statementscomply with the Companies Act 2006.They are alsoresponsible for safeguarding the assets of the company andhence for

213、taking reasonable steps for the prevention anddetection of fraud and other irregularities.The Directors are responsible for the maintenance andintegrity of the corporate and financial information includedon the companys website.Legislation in the UnitedKingdom governing the preparation and dissemina

214、tion offinancial statements may differ from legislation in otherjurisdictions.Going ConcernThe Directors believe that it is appropriate to continue toadopt the going concern basis in preparing the financialstatements as the assets of the Company consist mainly ofsecurities which are readily realisab

215、le and,accordingly,theCompany has adequate financial resources to continue inoperational existence for the foreseeable future.In reviewingthe position as at the date of this report,the Board hasconsidered the Going Concern and Liquidity Risk:Guidancefor Directors of UK Companies 2009,published by th

216、eFinancial Reporting Council 2009.Disclosure of Information to the AuditorSo far as the Directors are aware,there is no relevantinformation of which the Auditor is unaware.The Directorshave taken all steps they ought to have taken to makethemselves aware of any relevant audit information and toestab

217、lish that the Auditor is aware of such information.Responsibility Statement of the Directorsin respect of the annual financial report The Directors,whose details can be found on page 19,confirm to the best of their knowledge that:the Financial Statements,within this Annual Report,have been prepared

218、in accordance with applicableaccounting standards,give a true and fair view of theassets,liabilities,financial position and the return forthe period ended 31 December 2014;the Strategic Report and the Report of the Directorsinclude a fair review of the information required by4.1.8R to 4.1.11R of the

219、 FCAs Disclosure andTransparency Rules;and the annual report and financial statements taken as awhole are fair,balanced and understandable andprovide the information necessary to assess theCompanys performance,business model and strategy.On behalf of the BoardMartin BralsfordChairman19 March 2015 23

220、4739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 24Corporate GovernanceFundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|25Corporate GovernanceThe Board is accountable to shareholders for the governance of the Companys affairs.As an investment trust,theCompanys day-to-day re

221、sponsibilities are delegated to third parties;the Company has no employees and the Directors areall non-executive.Therefore not all the provisions of the UK Corporate Governance Code(the UK Code)issued by theFinancial Reporting Council(FRC)are directly applicable to the Company.The Board has therefo

222、re considered the principlesand recommendations of the Code of Corporate Governance published by the Association of Investment Companies inFebruary 2013(the AIC Code)by reference to the AIC Corporate Governance Guide for Investment Companies(the AICGuide).The AIC Code,as explained by the AIC Guide,a

223、ddresses all the applicable principles set out in the UK Code as wellas setting out additional principles and recommendations on issues that are of specific relevance to investment companies.The FRC has confirmed that,by following the AIC Guide,boards of investment companies meet their obligations i

224、n relationto the UK Code and paragraph 9.8.6 of the Listing Rules.Copies of the AIC Code,the AIC Guide and the UK Code can be found on the respective organisations websites:www.theaic.co.uk and www.frc.org.uk.Throughout the period ended 31 December 2014 the Company complied with the provisions of th

225、e AIC Code and AICGuide.The Principles of the AIC CodeThe AIC Code is made up of twenty-one principles split into threesections covering:The Board Board Meetings and relations with Fundsmith Shareholder CommunicationsThe BoardAIC Code PrincipleCompliance StatementThe Chairman,Martin Bralsford,is ind

226、ependent of Fundsmith.There is a clear division ofresponsibility between the Chairman,the Directors,Fundsmith and the Companys otherthird party service providers.The Chairman is responsible for the leadership of the Boardand for ensuring its effectiveness in all aspects of its role.The Board consist

227、s of three non-executive Directors,each of whom is independent ofFundsmith.No member of the Board is a Director of another investment company managedby Fundsmith,nor has any Board member been an employee of the Company,Fundsmith orany of its service providers.All Directors will submit themselves for

228、 annual re-election by shareholders.The individual performance of each Director standing for re-election is evaluated annuallyby the remaining members of the Board and,if considered appropriate,a recommendationis made that shareholders vote in favour of their re-election at the Annual General Meetin

229、g.1.The Chairman should beindependent.2.A majority of the Boardshould be independent of themanager.3.Directors should besubmitted for re-election atregular intervals.Nomination forre-election should not beassumed but be based ondisclosed procedures andcontinued satisfactoryperformance.234739 Fr ost

230、r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 2526|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 GovernanceCorporate GovernanceThe BoardcontinuedAIC Code PrincipleCompliance StatementThe Board considers its structure and recognises the need for progressive refreshments.The Board

231、subscribes to the view expressed within the AIC Code that long-serving Directorsshould not be prevented from forming part of an independent majority.It does not considerthat a Directors tenure necessarily reduces his ability to act independently and,followingformal performance evaluations,believes t

232、hat each of those Directors is independent incharacter and judgment and that there are no relationships or circumstances which arelikely to affect their judgment.The Boards policy on tenure is that continuity and experienceare considered to add significantly to the strength of the Board and,as such,

233、no limit onthe overall length of service of any of the Companys Directors,including the Chairman,has been imposed.In view of its non-executive nature,the Board considers that it is notappropriate for the Directors to be appointed for a specified term,although new Directorsare appointed with the expe

234、ctation that they will serve for a minimum period of three yearssubject to shareholder approval.The terms and conditions of the Directors appointments are set out in letters ofengagement which are available for inspection on request at the office of Frostrow CapitalLLP,the Company Secretary,and at t

235、he Annual General Meeting.The Directors biographical details,set out on page 19 demonstrate the wide range of skillsand experience that they bring to the Board.Details of the Boards Committees and their composition are set out below and on page 31.The Audit Committee membership comprises the whole B

236、oard under the Chairmanship ofJohn Spencer.The Chairman of the Company is a member of the Audit Committee,butdoes not chair it.His membership of the Audit Committee is considered appropriate giventhe Chairmans extensive business experience.The Management Engagement Committee is comprised of the whol

237、e Board under theChairmanship of David Potter.The Board will consider annually the skills possessed by the Directors and identifies anyskill shortages to be filled by new Directors.When considering new appointments,the Board will review the skills of the Directors andseeks to add persons with comple

238、mentary skills or who possess the skills and experiencewhich fill any gaps in the Boards knowledge or experience and who can devote sufficienttime to the Company to carry out their duties effectively.The experience of the current Directors is detailed in their biographies set out on page 19.The Comp

239、any is committed to ensuring that any vacancies arising are filled by the mostqualified candidates and recognises the value of diversity in the composition of the Board.When Board positions become available as a result of retirement or resignation,theCompany will ensure that a diverse group of candi

240、dates is considered.During the course of 2015 the performance of the Board,its committees and individualDirectors(including each Directors independence)will be evaluated through a formalassessment process led by the Chairman.The Board is satisfied that the structure,mix of skills and operation of th

241、e Boardcontinues to be effective and relevant for the Company.4.The Board should have apolicy on tenure,which isdisclosed in the annual report.5.There should be fulldisclosure of information aboutthe Board.6.The Board should aim tohave a balance of skills,experience,length of serviceand knowledge of

242、 the company.7.The Board should undertakea formal and rigorous annualevaluation of its ownperformance and that of itscommittees and individualdirectors.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 26Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|27The Boardcontinued

243、AIC Code PrincipleCompliance StatementThe Board will periodically review the fees paid to the Directors and compare these withthe fees paid by the Companys peer group and the investment trust industry generally,taking into account the level of commitment and responsibility of each Board member.Detai

244、ls on the remuneration arrangements for the Directors of the Company can be foundin the Directors Remuneration Policy Report and Directors Remuneration Report onpages 35 to 37 and in note 5 on page 49.As all of the Directors are non-executive,the Board considers that it is acceptable for theChairman

245、 of the Company to chair meetings when discussing Directors fees.The Chairmantakes no part in discussions regarding his own remuneration.The Board periodically takesadvice from external independent advisers on Directors remuneration.Subject to there being no conflict of interest,all Directors are en

246、titled to vote on candidatesfor the appointment of new Directors and on the recommendation for shareholders approvalthe Directors seeking re-election at the Annual General Meeting.New appointees to the Board will be provided with a full induction programme.The programmewill cover the Companys invest

247、ment strategy,policies and practices.The Directors are alsogiven key information on the Companys regulatory and statutory requirements as they ariseincluding information on the role of the Board,matters reserved for its decision,the terms ofreference for the Board Committees,the Companys corporate g

248、overnance practices andprocedures and the latest financial information.It is the Chairmans responsibility to ensurethat the Directors have sufficient knowledge to fulfil their role and Directors are encouraged toparticipate in training courses where appropriate.The Directors have access to the advic

249、e and services of a Company Secretary through itsappointed representative which is responsible to the Board for ensuring that Boardprocedures are followed and that applicable rules and regulations are complied with.TheCompany Secretary is also responsible for ensuring good information flows between

250、allparties.Principle 11 applies to the launch of new investment companies and is therefore notapplicable to the Company.9.The Independent Directorsshould take the lead in theappointment of new Directorsand the process should bedisclosed in the annual report.8.Director remunerationshould reflect thei

251、r duties,responsibilities and the value oftheir time spent.10.Directors should be offeredrelevant training and induction.11.The Chairman(and theBoard)should be brought intothe process of structuring a newlaunch at an early stage.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 2728|Fundsm

252、ith Emerging Equities Trust plc Annual Report&Accounts 2014 GovernanceCorporate GovernanceBoard Meetings and relations with FundsmithThe Board meets regularly throughout the year and a representative of Fundsmith is inattendance at each Board meeting.The Chairman encourages open debate to foster asu

253、pportive and co-operative approach for all participants.The Board has agreed a schedule of matters specifically reserved for decision by the Board.This includes establishing the investment objectives,strategy and benchmarks,the permittedtypes or categories of investments,the markets in which transac

254、tions may be undertaken,the amount or proportion of the assets that may be invested in any category of investmentor in any one investment,and the Companys share issuance and share buy back policies.The Board,at its regular meetings,undertakes reviews of key investment and financialdata,revenue proje

255、ctions and expenses,analyses of asset allocation,transactions andperformance comparisons,share price and net asset value performance,marketing andshareholder communication strategies,the risks associated with pursuing the investmentstrategy,peer group information and industry issues.The Audit Commit

256、tee reviews the Companys risk matrix and the Management EngagementCommittee reviews the performance and cost of the Companys third party service providers.The Board is responsible for strategy and has established an annual programme of agendaitems under which it reviews the objectives and strategy f

257、or the Company at each meeting.The Management Engagement Committee meets at least once a year.It reviews annuallythe performance of Fundsmith(the Companys Investment Manager and AIFM)and theCompanys other principal service providers.The Committee considers the quality,cost andremuneration method of

258、the service provided by Fundsmith against their contractualobligations and the Board receives regular reports on compliance with the InvestmentRestrictions which it has set.The Audit Committee reviews the compliance and control systems of Fundsmith in operationinsofar as they relate to the affairs o

259、f the Company and the Board undertakes periodicreviews of the arrangements with and the services provided by the Custodian,and thedepositary to ensure that the safeguarding of the Companys assets and security of theshareholders investment is being maintained.The Investment Management Agreement betwe

260、en the Company and Fundsmith sets outthe limits of Fundsmiths authority,beyond which Board approval is required.The Boardhas also agreed detailed investment guidelines with Fundsmith,which are considered ateach Board meeting.A representative from Fundsmith attends each meeting of the Board to addres

261、s questionson specific matters and to seek approval for specific transactions which Fundsmith isrequired to refer to the Board.The Board has delegated discretion to Fundsmith to exercise voting powers on its behalf,other than for contentious or sensitive matters which are to be referred to the Board

262、 forconsideration.The Board has reviewed Fundsmiths Stewardship Policy,which includes its CorporateGovernance and Voting Guidelines.Reports on commissions paid by Fundsmith are submitted to the Board regularly.14.Boards should givesufficient attention to overallstrategy.15.The Board should regularly

263、review both the performance of,and contractual arrangementswith,the investment managerand the manager(or executivesof a self-managed company).16.The Board should agreepolicies with the investmentmanager and the managercovering key operational issues.12.Boards and managersshould operate in a supporti

264、ve,co-operative and openenvironment.13.The primary focus atregular board meetings shouldbe a review of investmentperformance and associatedmatters,such as gearing,assetallocation,marketing/investorrelations,peer groupinformation and industryissues.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:

265、32 Page 28Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|29Board Meetings and relations with Fundsmith continuedAIC Code PrincipleCompliance StatementThe Board considers any imbalances in the supply of and the demand for the Companysshares in the market and takes appropriate actio

266、n when considered necessary.The Board considers the discount or premium to net asset value of the Companys shareprice at each Board meeting.At each meeting the Board reviews reports from Fundsmith on marketing and shareholdercommunication strategies.It also considers their effectiveness as well as m

267、easures ofinvestor sentiment and any recommendations on share buy-backs and issuance.The Management Engagement Committee reviews,at least annually,the performance ofall the Companys third party service providers,including the level and structure of feespayable and the length of the notice period,to

268、ensure that they remain competitive and inthe best interests of shareholders.The Audit Committee reviews reports from the principal service providers on complianceand the internal and financial control systems in operation and relevant independent auditreports thereon,as well as reviewing service pr

269、oviders anti-bribery and corruption policiesto address the provisions of the Bribery Act 2010.Shareholder CommunicationsA detailed analysis of the substantial shareholders of the Company is provided to theDirectors at each Board meeting.Representatives of Fundsmith regularly meet withinstitutional s

270、hareholders and private client asset managers to discuss strategy and tounderstand their issues and concerns and,if applicable,to discuss corporate governanceissues.The results of such meetings are reported at the following Board meeting.Reports from the Companys broker are submitted to the Board on

271、 investor sentiment andindustry issues.Shareholders wishing to communicate with the Chairman,or any other member of theBoard,may do so by writing to the Company,for the attention of the Company Secretary atthe Offices of Frostrow.All shareholders are encouraged to attend the Annual GeneralMeeting,wh

272、ere they are given the opportunity to question the Chairman,the Board andrepresentatives of Fundsmith.Fundsmith will make a presentation to shareholders coveringthe investment performance and strategy of the Company at the forthcoming AnnualGeneral Meeting.The Directors welcome the views of all shar

273、eholders and placeconsiderable importance on communications with them.All substantive communications regarding any major corporate issues are discussed by theBoard taking into account representations from Fundsmith,the Auditor,legal advisers andthe Corporate Stockbroker.20.The Board should normallyt

274、ake responsibility for,and havea direct involvement in,thecontent of communicationsregarding major corporateissues even if the manager isasked to act as spokesman.19.The Board should regularlymonitor the shareholder profileof the company and put in placea system for canvassingshareholder views and f

275、orcommunicating the Boardsviews to shareholders.18.The Board should monitorand evaluate other serviceproviders.17.Boards should monitor thelevel of the share price discountor premium(if any)and,ifdesirable,take action to reduceit.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 29Corporat

276、e Governance30|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 GovernanceShareholder Communications continuedAIC Code PrincipleCompliance StatementThe Company places great importance on communication with shareholders and aims toprovide them with a full understanding of the Company

277、s investment objective,policy andactivities,its performance and the principal investment risks by means of informativeAnnual and Half Year reports.This is supplemented by the daily publication,through theLondon Stock Exchange,of the net asset value of the Companys shares.The Annual Report provides i

278、nformation on Fundsmiths investment performance,investmentportfolio risk and operational and compliance issues.Further details on the risk/rewardbalance are set out in the Strategic Report under Risk Management on pages 8 and 9 andin note 14 beginning on page 53.The investment portfolio is listed on

279、 pages 11 and 12.The Companys website,www.feetplc.co.uk,is regularly updated with monthly factsheetsand provides useful information about the Company including the Companys financialreports and announcements.21.The Board should ensurethat shareholders are providedwith sufficient information forthem

280、to understand therisk/reward balance to whichthey are exposed by holding theshares.234739 Fr ost r ow FEET pp21-pp30 NEW 02/04/2015 12:32 Page 30Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|31Committees of the BoardDuring the period from incorporation on 31 October 2013 to31 Dec

281、ember 2014 the Board delegated certainresponsibilities and functions to committees.Copies of thefull terms of reference,which clearly define theresponsibilities of each Committee,can be obtained fromthe Company Secretary,will be available for inspection atthe Annual General Meeting,and can be found

282、at theCompanys website at www.feetplc.co.uk.The membershipof the Companys committees comprises all of theCompanys Directors.The Audit Committee is chaired byJohn Spencer,the Management Engagement Committee byDavid Potter.The table on page 20 details the number of Board andCommittee meetings attended

283、 by each Director.During theperiod there were six Board meetings,one Audit Committeemeeting and one meeting of the Management EngagementCommittee.Management Engagement CommitteeThis committee meets at least once a year and reviews theterms of engagement of the AIFM and Investment Managerand the Comp

284、anys other service providers.Audit CommitteeThe Audit Committee meets at least twice a year and isresponsible for the review of the half-year and annualfinancial statements,the nature and scope of the externalaudit and the findings there from and the terms ofappointment of the Auditor,including thei

285、r remuneration andthe provision of any non-audit services by them.The Audit Committee meets representatives of the AIFM andInvestment Manager and their Compliance Officer whoreport as to the proper conduct of business in accordancewith the regulatory environment in which the Company andInvestment Ma

286、nager operate.The Companys externalAuditor also attend meetings of this Committee at itsrequest and report on their work procedures and theirfindings in relation to the Companys statutory audit.Theyalso have the opportunity to meet with the Committeewithout representatives of the Investment Manager

287、beingpresent.The Audit Committee reviews the need for non-auditservices to be provided by the Auditor and authorises suchon a case by case basis,having consideration to the costeffectiveness of the services and the independence andobjectivity of the Auditor.Details of the fees(both auditableand non-

288、audit related)paid to Deloitte LLP can be found onpage 49.The Board has concluded,on the recommendationof the Audit Committee,that the Auditor continues to beindependent.Anti-Bribery and Corruption PolicyThe Board has adopted a zero tolerance approach toinstances of bribery and corruption.Accordingl

289、y it expresslyprohibits any Director or associated persons when acting onbehalf of the Company,from accepting,soliciting,paying,offering or promising to pay or authorise any payment,publicor private in the UK or abroad to secure any improper benefitfor themselves or for the Company.The Board applies

290、 the same standards to its serviceproviders in their activities for the Company.A copy of the Companys Anti Bribery and Corruption Policycan be found on its website at www.feetplc.co.uk.The policyis reviewed regularly by the Audit Committee.Relations with ShareholdersThe Board considers the sharehol

291、der register at each Boardmeeting.Fundsmith has regular contact with the Companysinstitutional shareholders.The Board supports the principlethat the Annual General Meeting be used to communicatewith private investors.It is the intention that the full Boardwill attend the Annual General Meeting under

292、 theChairmanship of the Chairman of the Board.Details of proxyvotes received in respect of each resolution will be madeavailable to shareholders at the meeting and will also bepublished on the Companys website at www.feetplc.co.uk.Representatives from the Investment Manager will attendthe Annual Gen

293、eral Meeting and give a presentation oninvestment matters to those present.The Company hasadopted a nominee share code which is set out overleaf.The Board receives marketing and public relations reportsfrom Fundsmith.The Board reviews and considers themarketing plans on a regular basis.The annual an

294、d half-year financial reports and a monthly factsheet are available to all shareholders.The Board considersthe format of the annual and half-year financial reports soas to ensure they are useful to all shareholders and otherstaking an interest in the Company.In accordance with bestpractice,the annua

295、l report,including the Notice of theAnnual General Meeting,is sent to shareholders at least 20working days before the meeting.Separate resolutions areproposed for substantive issues.Governance234739 Fr ost r ow FEET pp31-pp40 NEW 02/04/2015 12:33 Page 31Corporate Governance32|Fundsmith Emerging Equi

296、ties Trust plc Annual Report&Accounts 2014 Exercise of Voting PowersThe Board has delegated authority to Fundsmith(as AIFMand Investment Manager)to vote the shares owned by theCompany that are held on its behalf by its custodian,StateStreet Bank and Trust Company.The Board has instructedthat Fundsmi

297、th submit votes for such shares whereverpossible.This accords with current best practice whilstmaintaining a primary focus on financial returns.Fundsmithmay refer to the Board on any matters of a contentiousnature.Nominee Share CodeWhere shares are held in a nominee company name,theCompany undertake

298、s:to provide the nominee company with multiple copies ofshareholder communications,so long as an indicationof quantities has been provided in advance;and to allow investors holding shares through a nomineecompany to attend general meetings,provided thecorrect authority from the nominee company isava

299、ilable.Nominee companies are encouraged to provide thenecessary authority to underlying shareholders to attend theCompanys general meetings.By order of the BoardFrostrow Capital LLPCompany Secretary19 March 2015 Governance234739 Fr ost r ow FEET pp31-pp40 NEW 02/04/2015 12:33 Page 32Fundsmith Emergi

300、ng Equities Trust plc Annual Report&Accounts 2014|33Audit Committee Reportfor the period from incorporation on 31 October 2013 to31 December 2014The Committee,which comprises all of the Directors,metonce during the period.Attendance by each Director isshown in the table on page 20.The Committee also

301、 met on26 February 2015.ResponsibilitiesThe Committees main responsibilities during the year were:1.To review the Companys half-year and annual financialstatements.In particular,the Committee consideredwhether the annual financial statements are fair,balanced and understandable,allowing shareholders

302、 tomore easily assess the Companys strategy,investmentpolicy,business model and financial performance.2.To review the risk management and internal controlprocesses of the Company and its key serviceproviders.As part of this review the Committee againreviewed the appropriateness of the Companys anti-

303、bribery and corruption policy.3.To recommend the appointment of an external auditorand agreeing the scope of its work and its remuneration,reviewing its independence and the effectiveness of theaudit process.4.To consider any non-audit work to be carried out by theauditor.The Audit Committee has con

304、sidered the extentand nature of non-audit work performed by the auditorand is satisfied that this did not impinge on theirindependence and is a cost effective way for theCompany to operate.5.To consider the need for an internal audit function.Since the Company delegates its day-to-day operationsto t

305、hird parties and has no employees,the Committeehas determined there is no requirement for such afunction.The Committees terms of reference are available for reviewon the Companys website at www.feetplc.co.uk.Meetings and BusinessThe following matters were dealt with at its meetings:August 2014 Revie

306、w of the Committees terms of reference Review of the Auditors plan for the 2014 audit Review of risks,internal control and compliance Review of the Companys anti bribery and corruptionpolicy and the measures put in place by the Companysservice providers Review of the Companys half-year results Appro

307、val of the half-year reportFebruary 2015 Review the Committees terms of reference Review the Companys results Approval of the annual report and financial statements Review of risk management,internal controls andcompliance Review the outcome of the Audit and discuss mattersarisingFinancial Statement

308、sThe Board has requested the Committee to confirm that inits opinion the Board can make the required statement thatthe Annual Report taken as a whole is fair,balanced andunderstandable and provides the information necessary forshareholders to assess the Companys performance,business model and strate

309、gy.The Committee has given thisconfirmation on the basis of its review of the wholedocument,underpinned by involvement in the planning forits preparation and review of the processes to assure theaccuracy of factual content.RiskThe Directors have identified(Strategic Report pages 8 and9)five main are

310、as of risk:Investment Activity and Strategy,Financial,Shareholder Relations and Corporate Governance,Operational and Accounting,Legal and Regulatory and hasset out the actions taken to evaluate and manage theserisks.The Auditor has also detailed two specific areas ofrisk in their report:investment v

311、aluation and liquidity andownership of investments and has set out the work theyhave performed to satisfy themselves that these have beenproperly reflected in the financial statements.TheCommittee reviews the various actions taken and satisfiesitself that they are sufficient:in particular the Commit

312、teereviews the Companys schedule of key risks at eachmeeting and requires amendments to both risks andmitigation actions if appropriate.234739 Fr ost r ow FEET pp31-pp40 NEW 02/04/2015 12:33 Page 33Audit Committee Report34|Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014 External au

313、ditorMeetings:This year the nature and scope of the audit together withDeloitte LLPs audit plan were considered by the Committeeon 27 August 2014.As Chairman of the Committee,I met with Deloitte LLP(bytelephone)on 24 February 2015 to discuss the outcome ofthe audit and the draft 2014 annual report a

314、nd accounts.The Committee then met Deloitte LLP on 26 February 2015to review the outcome of the audit and to discuss mattersthat arose.Independence and Effectiveness:In order to fulfil the Committees responsibility regarding theindependence of the Auditor,the Committee reviewed:the senior audit pers

315、onnel in the audit plan for the year;the Auditors arrangements concerning any conflicts ofinterest;the extent of any non-audit services;the statement by the Auditor that they remainindependent within the meaning of the regulations andtheir professional standards;and Auditor independence.In order to

316、consider the effectiveness of the audit process,the Committee reviewed:the Auditors fulfilment of the agreed audit plan;the report arising from the audit itself;and feedback from Frostrow Capital LLP(as CompanySecretary)on the conduct of the audit.The Committee is satisfied with the Auditors indepen

317、denceand the effectiveness of the audit process,together with thedegree of diligence and professional scepticism brought tobear.Audit TenderingAs a Public Company listed on the London Stock Exchange,the Company will in future be subject to the mandatoryAuditor rotation requirements of the European U

318、nion.Subject to the detailed implementation of the Europeanrequirements in the UK,this is likely to mean that theCompany will put the external audit out to tender at leastevery ten years,and change auditor at least every twentyyears.The Committee will,however,continue to considerannually the need to

319、 go to tender for audit quality orindependence reasons.Auditor ReappointmentDeloitte LLP have indicated their willingness to continue toact as auditor to the Company for the forthcoming year anda resolution for their re-appointment will be proposed at theAnnual General Meeting.The Committee reviews

320、the scope and effectiveness of theaudit process,including agreeing the Auditors assessmentof materiality and monitors the Auditors independence andobjectivity.It conducted a review of the performance of theAuditor during the year and concluded that performance wassatisfactory and there were no groun

321、ds for change.John SpencerChairman of the Audit Committee19 March 2015Governance234739 Fr ost r ow FEET pp31-pp40 NEW 02/04/2015 12:33 Page 34Fundsmith Emerging Equities Trust plc Annual Report&Accounts 2014|35Directors Remuneration ReportStatement from the ChairmanI am pleased to present the Direct

322、ors Remuneration Reportto shareholders.This report has been prepared inaccordance with the requirements of Section 421 of theCompanies Act 2006 and the Enterprise and RegulatoryReform Act 2013.An Ordinary Resolution for the approvalof this report will be put to shareholders at the Companysforthcomin

323、g Annual General Meeting.The law requires theCompanys auditor to audit certain of the disclosuresprovided in this report.Where disclosures have beenaudited,they are indicated as such and the Auditors auditopinion is included in its report to shareholders on pages38 and 40.The Remuneration Policy Rep

324、ort on page 37forms part of this report.The Board considers the framework for the remuneration ofthe Directors on an annual basis.It reviews the ongoingappropriateness of the Companys remuneration policy andthe individual remuneration of Directors by reference to theactivities of the Company and com

325、parison with othercompanies of a similar structure and size.This is in-line withthe AIC Code.As the Directors were appointed on 23 May 2014 a reviewof their fees has not yet been undertaken.A review will beheld in 2015.Directors Fees and ExpensesThe Directors,as at the date of this report,were allap

326、pointed on 23 May 2014 and received the fees listed inthe table below.These exclude any employers nationalinsurance contributions,if applicable.No other forms ofremuneration were received by the Directors and so feesrepresent the total remuneration of each Director.Directors Emoluments for the Perio

327、d(audited information)Date of AppointmentFeesto the Board2014()Martin Bralsford(Chairman)23 May 201413,250David Potter23 May 201412,051John Spencer23 May 201412,05137,352Sums paid to Third Parties(audited information)Fees due to Mr Bralsford were paid to Marbral Limited(acompany of which he is a dir

328、ector),otherwise none of thefees referred to in the above table were paid to any thirdparty in respect of the services provided by any of theDirectors.Other BenefitsTaxable Benefits Article 149 of the Companys Articles ofAssociation provides that Directors are entitled to bereimbursed for reasonable

329、 expenses incurred by them inconnection with the performance of their duties andattendance at Board and General Meetings.Pensions related benefits Article 158 permits theCompany to provide pension or similar benefits for Directorsand employees of the Company.However,no pensionschemes or other simila

330、r arrangements have beenestablished and no Director is entitled to any pension orsimilar benefits.Loss of officeDirectors do not have service contracts with the Companybut are engaged under Letters of Appointment.Thesespecifically exclude any entitlement to compensation uponleaving office for whatev

331、er reason.Share Price Total ReturnA five year performance comparison is required to bepresented in this report.However,as the Company wasincorporated on 31 October 2013 and commenced tradingon 25 June 2014,the performance comparison is thereforeshown overleaf for the period from 24 June 2014 to31 De

332、cember 2014 using the MSCI Emerging and FrontierMarkets Index on a net sterling adjusted basis,which theBoard has adopted as the measure for both the Companysperformance and that of the Investment Manager for theperiod.234739 Fr ost r ow FEET pp31-pp40 NEW 02/04/2015 12:33 Page 35Directors Interests

333、 in the Companys Shares(auditedinformation)Ordinary sharesof 1p each31 December2014Martin Bralsford(Chairman)100,000David Potter5,000John Spencer5,000Total110,000Annual StatementOn behalf of the Board and in accordance with Part 2 ofSchedule 8 of the Large and Medium-sized Companies andGroups(Accounts and Reports)(Amendment)Regulations2013,I confirm that the Remuneration Policy,set out onpage 35 o