Conflicts of Interest Statement

Fundsmith’s conflicts of interest procedures

Fundsmith maintains and operates organisational and administrative arrangements designed to identify, prevent, manage and monitor conflicts of interest in order to reduce the potential impact of conflicts that may affect the interests of its clients.

The policy applies to the firm’s clients, namely its segregated mandate clients, the funds that it manages and the investors in those funds.

Fundsmith takes all reasonable steps to avoid conflicts of interest. Where conflicts of interest cannot be avoided, Fundsmith will implement controls to manage conflicts and prevent them from crystallising.

Identification of potential conflicts

Fundsmith takes all appropriate steps to identify conflicts of interest that arise or may arise in the course of providing its services to clients. This includes the circumstances which may give rise to a conflict of interest, involving a material risk of damage to the interests of one or more clients. Potential conflicts may arise between:

• Fundsmith (including its partners and employees) and a client;
• One client and another.

Circumstances will be treated as giving rise to a conflict of interest where Fundsmith may gain a benefit and there is a potential disadvantage to a client, and where one client may gain a benefit or avoid a loss to the detriment of another client.

Preventing, managing and monitoring identified conflicts of interest

Fundsmith takes all reasonable steps to prevent conflicts of interest. Where a conflict of interest cannot be prevented, Fundsmith takes appropriate steps to manage and monitor those conflicts of interest.

Training is provided to partners and employees on the identification, management and monitoring of conflicts of interest. A Conflicts of Interest Register is maintained detailing potential conflicts along with the internal controls and governance arrangements in place to manage and mitigate these potential conflicts. The Conflicts of Interest Policy and the Conflicts of Interest Register are reviewed at least annually and as and when any significant business events occur.

Fundsmith maintains a number of organisational and administrative arrangements and internal control systems designed to prevent, manage and monitor potential conflicts of interest to minimise the risk of harm to clients. These include, but are not limited to:

• Effective corporate governance structure;
• Segregation of duties and senior management oversight;
• Robust management information;
• Code of Ethics;
• Compliance Manual;
• Compliance and Risk function that is independent from the first line of business;
• Employee Handbook and terms and conditions of employment;
• Conflicts of Interest Policy
• Market Conduct Policy
• Order Execution Policy

Disclosure of Conflicts

Fundsmith treats disclosure of conflicts as a last resort, to be used only where the established framework to prevent and manage conflicts of interest are not sufficient to ensure, with reasonable confidence, that the risk of harm to a client will be prevented. In such instances Fundsmith will clearly disclose to clients:

• The nature of the conflict of interest; and
• The steps taken to mitigate the risk.

Potential conflicts of interest may exist in relation to aspects of Fundsmith’s business, which Fundsmith considers are appropriately prevented or managed and accordingly they are not disclosed to clients. No conflicts of interest are currently considered to exist which Fundsmith is unable to prevent or manage to ensure, with reasonable confidence, that risk of harm to clients will be avoided.

Further details in relation to Fundsmith’s arrangements relevant to the management of conflicts of interest are available on request.