Legal & Regulatory

The UK Stewardship Code (“the Code”) was published by the Financial Reporting Council in July 2010. The Code sets out principles for institutional investors in their dealings with companies they have invested in. Firms that commit to the code can either comply in full or choose not to comply with aspects, and where there is non compliance an explanation should be provided.

Cheviot Asset Management (“Cheviot”) manages assets for both professional and retail clients. Cheviot's client base is predominately retail investors, however the firm also undertakes investment management for institutional investors including authorised collective investment schemes.

Cheviot invests in well managed companies to produce a positive return for clients over the medium to longer term. The investment process involves, but is not limited to, analysis of financial statements, company announcements, share performance, third party research and where appropriate engagement with the company management and/or company advisers. If Cheviot has concerns over the company's governance, strategy and/or performance it will actively engage the company's management or advisors seeking clarification or resolution. Any unsatisfactory outcome might result in an abstention or vote against future resolutions. Where the exposure to a company is a small fraction of the issued share capital, there will be fewer resources applied to engagement. Full engagement for all companies is not cost effective.

Where Cheviot votes, it does so in the best interest of its clients. If Cheviot does not vote, no conclusion should be assumed as to Cheviot's support or otherwise for the resolution or company management.

On occasions, Cheviot may be notified of price sensitive information such as strategic or corporate activity. Cheviot manages such information in line with its Conflicts of Interest Policy and the laws and regulations affecting such information.

Dependant on circumstances, Cheviot may communicate with other shareholders which may or may not result in collective engagement. When collaborating with other shareholders Cheviot is mindful of the risks associated with such activity including conflicts of interest, inside information and acting in concert. Engagement with other shareholders will be managed via Cheviot's Chief Investment Officer.

Given the management of predominately retail clients, Cheviot does not believe it is appropriate to publicly disclose the voting activity. However, institutional clients may request details of Cheviot's voting record.

Cheviot Asset Management
2011