Remuneration Policy

1. INTRODUCTION

1.1 Fundsmith LLP ("Fundsmith") is authorised by the Financial Conduct Authority ("FCA") as a UCITS manager and a full scope UK alternative investment manager ("AIFM"). It is therefore subject to:

1.1.1 the provisions of the Undertakings for Collective Investment in Transferable Securities Directive 2009/65/EC (the "UCITS Directive");

1.1.2 SYSC 19E: UCITS Remuneration Code contained in the FCA's Handbook of Rules and Guidance (the "UCITS Remuneration Code");

1.1.3 the guidelines on sound remuneration policies under the UCITS Directive issued by the European Securities and Markets Authority (ESMA/2016/575) (the "ESMA UCITS Remuneration Guidelines");

1.1.4 the provisions of the Alternative Investment Fund Managers Directive 2011/61/EU ("AIFMD");

1.1.5 SYSC 19B: AIFM Remuneration Code contained in the FCA's Handbook of Rules and Guidance (the "AIFM Remuneration Code") and the accompanying FCA guidance (the "FCA Guidance"); and

1.1.6 the guidelines on sound remuneration policies under the AIFMD issued by the European Securities and Markets Authority (ESMA/2013/201) (the "ESMA AIFMD Remuneration Guidelines").

The UCITS Remuneration Code and AIFM Remuneration Code each contain a set of substantially similar Remuneration Principles (the "Remuneration Principles") which should be considered by firms when establishing and applying their remuneration policies.

2. FUNDSMITH'S BUSINESS

2.1 Fundsmith was established in 2010 by its Partners. It is structured as a limited liability partnership. The business is managed, owned and controlled by its Partners. Fundsmith is a small firm. In addition to its 4 Partners, the firm has about 13 employees.

2.2 Fundsmith is the manager of two UCITS funds: the Fundsmith Equity Fund (a UK openended investment company) and the Fundsmith Equity Fund Feeder (a Luxembourg SICAV which is a UCITS feeder fund). Fundsmith also manages two alternative investment funds: the Fundsmith Equity Fund L.P. (a Delaware Limited Partnership) and the Fundsmith Emerging Equities Trust plc (a London Stock Exchange Listed Investment Trust)(collectively referred to as the "Funds”). In addition, Fundsmith manages a small number of discrete portfolios for professional investors on substantially the same investment strategy as the Fundsmith Equity Fund.

2.3 Throughout its business Fundsmith is focused on delivering superior investment performance at a reasonable cost. TS4/27967707/02/2JT/2JT 2 00 XXX 0000 00:00

2.4 The same fundamental investment strategy applies across all of the Funds. It is a simple buy and hold equity investment strategy. The Funds invest in a small number of high quality companies, with the intention of holding them for the long term. The rigorous research process of Fundsmith is central to the strategy. Fundsmith applies stringent screening criteria and exacting analysis standards to potential investments before admitting them to an "investable universe" of permitted stocks.

2.5 Sound and effective risk management is also a core element of the investment process. In addition to day to day monitoring and oversight by a risk manager and a Partner, a Risk Committee comprising two Partners, the compliance manager and the risk manager formally reviews all portfolios on a quarterly basis and reports to the Partners. The Partners formally review risk management quarterly but meet monthly in any event and will address any ad hoc issues at their next meeting or, if necessary, as and when they arise. These processes ensure that each Fund portfolio is managed in accordance with the investment objectives and policies of the Fund and in a manner which complies with the relevant regulatory requirements applicable to that type of Fund. None of the Funds invest in complex instruments or in derivatives, nor are any of the Funds leveraged.

2.6 Minimising the costs incurred on behalf of investors in implementing the strategy is also a core value of the business.

3. FUNDSMITH'S OVER-ARCHING PHILOSOPHY

3.1 Fundsmith has adopted a single remuneration policy which governs all personnel across all elements of Fundsmith's business.

3.2 Fundsmith seeks to ensure that its remuneration policies and practices:

3.2.1 are consistent with and promote sound and effective risk management; 3.2.2 do not encourage risk taking which is inconsistent with the risk profiles and constitutions of the Funds;

3.2.3 include measures to avoid conflicts of interest; and

3.2.4 are in line with Fundsmith's business strategies, objectives, values and longterm interests and with those of the Funds which it manages.

3.3 The Partners understand that the ultimate objective of the UCITS and AIFM Remuneration Codes is to ensure that remuneration practices, structures and incentives at Fundsmith do not encourage any behaviour or activity which could be detrimental to, or conflict with, the long term interest of the Funds and the investors in the Funds.

3.4 The Partners are the sole owners of Fundsmith LLP. All of the Partners have invested their own money into the business. The firm's capital is derived entirely from the Partners contributions of capital. All of the individuals who are Partners are involved in the management of the business on a full time, executive basis. The Partners are each paid a pre-determined, fixed proportion of Fundsmith’s net profits, in accordance with their ownership of the partnership. The Partners do not receive any other form of remuneration TS4/27967707/02/2JT/2JT 3 00 XXX 0000 00:00 from Fundsmith. The Partners do not receive any salary nor are they eligible for an award of a discretionary bonus from Fundsmith. The Partners' profit share is totally dependent on the overall profitability of the firm.

3.5 The Partners' interests are therefore totally aligned with and dependent upon the long term profitability and sustainability of Fundsmith LLP. Given Fundsmith's single business model, the long term profitability and sustainability of the firm is inextricably linked to the management fees generated from managing the Funds and segregated accounts, as this is the only source of the firm's revenue. In relation to each of the Funds and the segregated accounts, Fundsmith receives a flat rate fee based upon the level of the assets under management within the Fund portfolios and the segregated accounts. No performance fees are levied. The assets under management depend on both investors being willing to invest their money (and to continue to do so) and the ongoing investment performance of the Fund or portfolio. It is,therefore, very much in Fundsmith's interests (and the Partners' interests) to ensure that the Funds and portfolios perform well in a manner which is consistent with their stated investment objectives. As a result there is a natural alignment between Fund investors' interests, the interests of Fundsmith and the interests of the Partners.

3.6 In addition, a significant proportion of the Partners' investable wealth is invested in the Fundsmith Equity Fund.

4. APPLICATION OF THE REMUNERATION POLICY

4.1 This policy applies to all staff (including the Partners) of Fundsmith.

4.2 Under the UCITS and AIFM Remuneration Codes, some of the Remuneration Principles are directed at certain "Remuneration Code Staff", rather than all employees.

4.3 Remuneration Code Staff are, except where it is demonstrated that they have no material impact on the risk profile of Fundsmith or the Funds:

4.3.1 senior management (i.e. those individuals who are FCA Approved Persons performing a Significant Influence Function);

4.3.2 risk takers (i.e. those individuals responsible for making investment decisions);

4.3.3 heads of control functions (i.e. risk management, compliance, internal audit);

4.3.4 staff responsible for heading functions such as marketing, administration and human resources; and

4.3.5 any individuals receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.

4.4 Remuneration Code Staff include relevant staff employed by any entity to which portfolio management or risk management has been delegated. Fundsmith LLP delegates certain stock selection and portfolio construction activities to Fundsmith Investment Services Limited. Accordingly, relevant staff of Fundsmith Investment Services Limited are covered TS4/27967707/02/2JT/2JT 4 00 XXX 0000 00:00 by this policy. Fundsmith Investment Services Limited is owned by the same Partners as Fundsmith LLP. The Partners therefore receive dividends from Fundsmith Investment Services Limited and one Partner also receives a fixed salary in relation to his employment with Fundsmith Investment Services Limited. Neither the shareholder dividends nor the fixed salary paid by Fundsmith Investment Services Limited is regarded by the Management Committee as variable remuneration.

4.5 Fundsmith has considered carefully which of its staff (and those of Fundsmith Investment Services Limited) are within the definition of Remuneration Code Staff. It has determined that only the Partners are Remuneration Code Staff. In reaching this determination, the Partners took the following into consideration:

4.5.1 The small size of the firm and its simple internal organisational structure.

4.5.2 The only persons with legal authority to bind Fundsmith as a firm are the Partners. The Management Committee, which comprises only the Partners, has day to day responsibility for the management and operation of the firm.

4.5.3 Fundsmith's investment selection process is strictly adhered to at all times. Stocks are only selected for inclusion in a portfolio if they have already been admitted to an "investable universe" of potential stocks. A stock can only be admitted to the investable universe following rigorous analysis, following which the Chief Investment Officer (who is a Partner) and the Head of Research (who is a Partner) make a recommendation to the Partners as a whole. A stock is only added to the investable universe with the agreement of all Partners.

4.5.4 Portfolio construction (i.e. the process of selecting the stocks from the investable universe for a particular Fund portfolio) is only undertaken by the Chief Investment Officer or, in his absence, the Head of Research.

4.5.5 The Compliance Officer is a Partner.

4.5.6 None of the employees receives remuneration at a level which takes them into the same remuneration bracket as the Partners.

4.6 As explained in paragraph 3.4 above, the only remuneration which the Partners receive from Fundsmith LLP is a pre-determined, fixed proportion of Fundsmith’s net profits. The Partners have concluded that as this is not related to individual or Fund performance and cannot be varied it is not variable remuneration under the UCITS and AIFMD Remuneration Codes. Accordingly a number of the Remuneration Principles relating to variable remuneration are not relevant to the Partners' profit share in Fundsmith LLP. Nor are they relevant to any payment of dividend which a Partner may receive as a shareholder in Fundsmith Investment Services Limited. However, if it transpires that the Partners were wrong to conclude that their profit share or dividends were not variable remuneration, the Partners would have felt justified in dis-applying these requirements on grounds of proportionality. This applies in particular to the requirements described in paragraphs TS4/27967707/02/2JT/2JT 5 00 XXX 0000 00:00

5.3.2 to 5.3.5 below. The concept of proportionality and its current application to Fundsmith is discussed below in section 5.

5. FUNDSMITH'S APPROACH TO PROPORTIONALITY

5.1 Fundsmith is required to comply with the UCITS and AIFMD Remuneration Codes in a way and to the extent that is appropriate to the firm's size and internal organisation and to the nature, scale and complexity of the firm's activities.

5.2 The Partners, having considered in detail the ESMA UCITS Remuneration Guidelines, the ESMA AIFMD Remuneration Guidelines and the FCA Guidance, have concluded that it would not be proportionate to apply certain of the Remuneration Principles to its Remuneration Code Staff and employees more generally.

5.3 In particular, the Partners have determined that the following Remuneration Principles (as described in the UCITS Remuneration Code) need not be adhered to in their entirety:

5.3.1 Remuneration Principle 3 – Governance – disapplied in so far as it relates to the establishment of a Remuneration Committee and the requirement to have non-executives on the management body taking responsibility for the adoption, implementation and review of the remuneration policy.

5.3.2 Remuneration Principle 5 (a) – Remuneration Structures – Assessment of Performance – requirement not applicable to Remuneration Code Staff and not applied on grounds of proportionality to non Remuneration Code Staff in so far as it relates to assessing performance in the context of a multi-year framework appropriate to the recommended holding period for investors in the Funds.

5.3.3 Remuneration Principle 5 (e) – Remuneration Structures – A substantial proportion of variable remuneration to be paid by way of Fund units, shares or similar instruments subject to a retention policy – requirement not applicable to Remuneration Code Staff and not applied at all on grounds of proportionality to non Remuneration Code Staff.

5.3.4 Remuneration Principle 5 (f) – Remuneration Structures – A substantial proportion of variable remuneration should be deferred – requirement not applicable to Remuneration Code Staff and not applied at all on grounds of proportionality to non Remuneration Code Staff.

5.3.5 Remuneration Principle 6 – Measurement of Performance including adjustment mechanisms to reflect risks – requirement not applicable to Remuneration Code Staff, but applied to non- Remuneration Code staff. TS4/27967707/02/2JT/2JT 6 00 XXX 0000 00:00

6. REMUNERATION POLICIES

Remuneration Structure and Core Policies

6.1 Fundsmith's remuneration policies reflect the fact that Fundsmith is a limited liability partnership. A clear distinction is made between the Partners and the employees of the firm.

6.2 Fundsmith's approach to remuneration is relatively simple, reflecting the size and internal organisation of the business.

6.3 The Partners are each paid a pre-determined, fixed proportion of Fundsmith’s net profits, in accordance with their ownership of the partnership. These ownership levels are written into the Fundsmith Limited Partnership Agreement. The Partners do not receive any salary nor are they eligible for an award of a discretionary bonus from Fundsmith. The Limited Partnership Agreement (being the Firm’s constitutional document) has been drafted to support the Firm’s continuation, and does not require payment to any exiting Partner.

6.4 The employees' remuneration package comprises:

6.4.1 a basic salary;

6.4.2 the possibility of being awarded an annual discretionary bonus; and 6.4.3 certain other benefits including personal pension contribution, season ticket loans and bike scheme loans.

The basic salary of an employee is set at a competitive level, in line with current market practice. It will always be at a sufficiently high level to allow for a fully flexible approach to be taken to the possibility of awarding (or not awarding) an annual bonus. The payment of a bonus is entirely at Fundsmith's discretion and will depend on both the financial position of the firm and the outcome of the individual's performance review which is undertaken at the end of each financial year. The performance review process takes into account a range of factors including the individual's performance and their broader contribution to the business. Those employees working in control functions such as risk management or compliance have their personal objectives set by reference to their specific functions and will be rewarded according to the achievement of those objectives, rather than the performance of the business more generally. Any bonus payment for an employee is agreed by unanimous consent of the Partners.

As far as pension benefits are concerned, Fundsmith contributes 2% of the employee’s salary into a personal pension scheme. Employees may contribute as much as they wish, in accordance with the normal rules governing personal pension schemes. The Firm's policy is not to make any increases in pension contribution when someone leaves the firm. 6.5 Fundsmith does not guarantee any annual bonus award, except where this is absolutely necessary in the context of hiring a new employee in the first year of their employment. TS4/27967707/02/2JT/2JT 7 00 XXX 0000 00:00

6.6 Fundsmith's policy is not to pay employees leaving the firm any early termination payments.

6.7 Fundsmith staff (including the Partners) are not permitted to undermine the principles of the UCITS and AIFMD Remuneration Codes by using personal hedging strategies, remuneration-related insurance or liability-related insurance. Staff are not remunerated with interests in the Funds and therefore have no reason to seek to hedge their liabilities. This Remuneration Policy is supplemented by the Personal Account Dealing Policy.

Risk Management

6.8 Fundsmith is required to ensure that remuneration practices are consistent with, and promote, sound and effective risk management. The remuneration policy should not encourage risk taking which is inconsistent with the risk profiles of the Funds.

6.9 Fundsmith's investment strategy is described in detail at paragraphs 2.4 and 2.5. Sound and effective risk management is a key element of Fundsmith's investment strategy. The same strategy is adopted for all of the Funds and segregated accounts. The investment process is rigorously adhered to at all times.

6.10 The Partner's profit share is dependent upon Fundsmith's overall profitability which in turn is largely dependent upon the management fees received from the Funds. Fundsmith charges the Funds competitive flat rate fees based on the level of assets under management within the Fund. Performance fees are not charged. There is no financial incentive to take risks which are not consistent with the risk profiles of the Funds.

6.11 The employees may be awarded an annual bonus, but this is entirely at Fundsmith's discretion, and will depend on both the firm's profitability and the individual's performance. Paragraph 6.4 describes the employee's performance review process more fully. Fundsmith does not have any practice of remunerating its investment personnel for generating high returns in the short term.

Alignment with Business Strategy and the Interests of the Funds

6.12 Remuneration practices must be in line with the business strategy, objectives, values and interests of each of Fundsmith, the Funds and the investors and should include measures to avoid conflicts of interest.

6.13 The remuneration policies are in line with Fundsmith's business strategy, objectives, values and interests.

6.14 The Partners, as owners of the business, receive a profit share which is totally dependent on the overall profitability of the firm. The alignment of the Partners' interests with those of the Funds and investors is discussed in detail in paragraphs 3.3 to 3.6 above.

6.15 As far as employees are concerned, Fundsmith seeks to attract and retain high calibre staff. The employee remuneration package is therefore competitive and reflects industry market practice. As described in paragraph 6.4, annual bonus awards are entirely TS4/27967707/02/2JT/2JT 8 00 XXX 0000 00:00 discretionary and depend on the performance of the individual as well as the firm itself. In the opinion of the Partners, the pension policy in place does not pose any conflict with the long term interests of the Funds or with the investors in those Funds.

6.16 The Partners have identified two primary types of risk which could arise within a typical asset management business from inappropriate remuneration structures:

6.16.1 incentives related to investment performance, which could give rise to a focus on short term investment performance and potentially increase the risks for the investors; and

6.16.2 incentives related to sales, which could encourage employees to inappropriately sell a Fund to investors for whom it is unsuitable.

The nature of Fundsmith’s business, the nature of the Funds which it manages and the nature of its remuneration practices naturally mitigate these risks. From an investment perspective the risk identified above is controlled through Fundsmith's investment process and as noted above there is no incentivisation of investment staff based on short term investment performance. Investment decisions are only made by the Chief Investment Officer or in his absence the Head of Research, both of whom are Partners.

From a sales perspective, given the clear and simple nature of the investment strategy, the Funds are generally suitable for the majority of investor types, including retail investors. Fundsmith emphasises the long term nature of the investment strategy in all Fund literature and other documentation and seeks to ensure that investors understand that the strategy is not appropriate for those seeking short term returns. The sales teams performance is considered in the light of the net sales of the relevant Funds and will therefore be negatively affected if investors sell their investment.

6.17 The Partners believe that the firm's remuneration practices are in line with the interests of the Funds and the investors within the Funds.

7. GOVERNANCE AND REVIEW

7.1 This Remuneration Policy has been developed by the Management Committee comprising all of the Partners in conjunction with the Compliance Manager. The Management Committee is responsible for approving, maintaining and overseeing this policy and for approving any exemptions or changes. The Remuneration Policy will be reviewed by the Management Committee at least annually.

7.2 On an annual basis the Compliance Manager will support the Compliance Officer in reviewing the firm's compliance with this Remuneration Policy. Any issues identified as a result of this review will be reported to the Management Committee.

7.3 Taking into account Fundsmith's size, internal organisation and the nature, scope and complexity of its activities and the size of the Funds which it manages, the Management TS4/27967707/02/2JT/2JT 9 00 XXX 0000 00:00 Committee has determined that it would not be proportionate for Fundsmith to establish a remuneration committee. All decisions on the remuneration of personnel are made by the Partners, who own the business and are collectively responsible for remuneration practices of the firm.

8. DISCLOSURE

8.1 Fundsmith includes quantitative and qualitative remuneration disclosures in the annual fund report for each Fund as required by the UCITS Directive and AIFMD.

8.2 This Remuneration Policy contains details of Fundsmith's remuneration policies and practices for the firm as a whole. It is available on the Fundsmith website and to all staff on request.