Performance Evaluation Questionnaire Template for the Directors of Investment Trusts

Prepared by Trust Associates Limited in accordance with the Performance Evaluation Guidance laid out in the “Higgs Suggestions for Good Practice” in the Combined Code, as updated in July 2003.

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Introduction The Combined Code, as updated in July 2003 to incorporate the recommendations of the Higgs Report, provides that the board of a company should “…undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors”. This study is designed to assist the Chairman and Directors of investment trusts in complying with this provision. The relevant section of the Code further states: “It is the responsibility of the Chairman to select an effective process and to act on its outcome. The use of an external third party to conduct the evaluation will bring objectivity to the process. The non-executive directors, led by the senior independent director, should be responsible for performance evaluation of the Chairman, taking into account the views of executive directors. The evaluation process will be used constructively as a mechanism to improve board effectiveness, maximise strengths and tackle weaknesses. The results of board evaluation should be shared with the board as a whole while the results of individual assessments should remain confidential between the chairman and the nonexecutive director concerned.” The Code then goes on to outline questions that should be considered in performance evaluation with the caveat that companies “…will wish to tailor the questions to suit their own needs and circumstances”. The prescription, then, is for a combination of self-assessment, peer assessment and third-party scrutiny, all under the direction of the Chairman, with the specifics of the evaluation being tailored to suit the nature of the company. This questionnaire has been devised by Trust Associates Limited to comply this provision and should, we believe, assist boards, as part of a larger evaluation process, in evaluating and improving their effectiveness in the supervision of their trusts, with particular reference to several issues which are of particular and exclusive relevance to a company of this kind. Our experience suggests, however, that boards should consider using third-party facilitation from time to time and that this can often highlight issues which simple self-assessment may not. To discuss how we may be of assistance to you in this process, please email [email protected] and one of our consultants will contact you. The Board Questionnaire - Guidance notes - Please read before completing The purpose of the Board Questionnaire is to encourage directors to reflect on the performance of the board as a whole, and that of individual directors, in discharging their responsibilities. The questionnaires, which should be returned directly to the Chairman or the Senior Independent Director as appropriate, will be confidential, insofar as all comments will be reported to the Chairman or SID alone and this should encourage directors to be candid in their comments. It is important to stress that it would not be reasonable to expect all members of an investment trust board to possess a uniformly high degree of knowledge and

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competence with regard to all the topics which come under board scrutiny. It should therefore be recognised that, although all directors should preferably have some minimum degree of familiarity with most subjects, the ascription of a low score to a director with regard to a particular subject, should not necessarily be regarded as personal criticism. Indeed, a fairly robust and candid approach to differential scoring, where appropriate, is essential if the questionnaire is to form a useful part of the essential skills audit which the Code calls for. Low scores in an individual director’s area of supposed specialist knowledge should, however, give cause for concern. In assessing the performance of the board as a whole with regard to any topic, the appraiser should not necessarily deem it inconsistent if responses indicate, for example, a low level of competence and/or performance on the part of most directors with regard to a particular topic and a high score for the board overall. This might reasonably reflect a belief that one or two very competent individual members invariably can and very competently do, carry the board through certain topics. Such views would also be a useful contribution to the skills audit. This questionnaire is based on a template which, in the view of Trust Associates, represents an appropriate series of questions for consideration by an investment trust board going through this process, but it may be modified it in places, so as to more closely reflect the individual characteristics of your company. We hope that this will minimise the number of instances where you will feel obliged to omit responses because, for one reason or another, you deem the questions to be inapplicable or inappropriately framed. Please answer all the questions or use the space left for comments at the end of each section, to explain why you have not answered a particular question. Except where otherwise indicated, the questionnaire asks you to rate the board and its individual members on a rising 1-5 scale, with regard to their competence and performance in relation to specific subjects. The questionnaires are homogeneous in this respect (i.e. your own name is included in the list) and so self-assessment is required in this process. In scoring your responses, please follow the spirit of the following definitions: 0: Not applicable (i.e. will not be scored) Please explain why where possible. 1: Lowest rating: This does imply some degree of criticism, in terms of any or all of: unacceptable lack of knowledge, interest, attendance, contribution etc. and suggests that some kind of remedial action is required. 2: Low rating: Not necessarily a criticism, but reflects a lower than average, minimally adequate or slightly inadequate rating in terms of knowledge, interest, attendance, contribution etc. Such a score might not imply any need for remedial action, but rather some temporary factor or that the individual’s strengths lie elsewhere. 3: Average/satisfactory rating: Implies that the individual can and does make a full contribution to the board’s work in the specific subject. 4: High rating: Indicates that the individual makes a strong or above average contribution in the specific subject. 5: Highest rating: Implies outstanding strength and perhaps a dominant role in the board’s work in the specific subject.

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The Board Questionnaire Competence and performance of the board: In this section, we ask you to rate the performance of the board as a whole (including the Chairman) in discharging the various elements of its role and the contributions made by each director in relation to each subject. In this context, we would ask you to appraise the chairman in his role as a director; you will be asked to comment on various aspects of his role as chairman in a separate section, the results of which will be communicated to the senior independent director. A: Investment matters A1: Performance monitoring and evaluation How do you rate the competence and performance of the board as a whole and of its individual members in…monitoring and evaluating relative and absolute investment performance on the basis of all the data provided and bearing in mind all factors that impinge on performance? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. A2: Evaluation of investment strategy …monitoring and evaluating the manager’s stated investment strategy? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. A3: Evaluation of portfolio management …monitoring and evaluating the manager’s portfolio management method and style? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. A4:Macroeconomics …understanding of the macroeconomic factors which have a bearing on the portfolio management policy? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____.

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A5: Specific Investment focus …understanding the sectors, technologies and companies which are the particular focus of the portfolio? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. A6: Risk management …setting parameters for, and monitoring, evaluating and controlling investment risk? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. A7: Gearing …formulating policy on the level, management and funding of gearing and monitoring its effects on portfolio performance and volatility? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. Additional comments; Section A:

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B. Overall strategy and corporate issues B1: Basic Strategy How do you rate the competence and performance of the board as a whole and of its individual members in…reviewing the issues most fundamental to the company’s strategy? (e.g. its continued existence, investment objectives, closedend form, shareholding structure etc.) The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. B2: The Management Contract …reviewing the management contract and rigorously evaluating the manager’s performance in the context of the decision as to whether or not to continue with the current arrangements? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. B3: Investment Trust Developments How well do you think the board as a whole, and its individual members, keep up-to-date with current issues and trends in the investment trust sector? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. Additional comments; Section B:

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C. Shareholder value C1:Management of costs How do you rate the competence and performance of the board as a whole and of its individual members in …managing the company’s total expense ratio (TER)? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. C2: Management fees (including performance fees) …monitoring, evaluating and negotiating management fees, including any performance fee arrangements that might exist? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. C3: Remuneration …reviewing and determining directors fees? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. C4: Discount …monitoring, understanding and management of any discount to NAV which might arise, including the management of share repurchases, tender offers or any other initiatives which might be taken in this connection? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. C5: Marketing …formulating, monitoring and understanding the process through which the ownership of the company’s shares is promoted, whether through “wrappers” in the retail market or, including through the corporate broker, to the institutional sector? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____.

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Additional comments; Section C:

D. Governance D1: Compliance How do you rate the competence and performance of the board as a whole and of its individual members in …ensuring, with the assistance of the manager and the company secretary, that the company complies with all laws and regulations with regards to its investment trust status, listing, reporting etc.? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. D2: Board Composition and Nominations How do you rate the competence of the nominations committee in examining the existing structure and competencies of the board, in succession planning and in appointing new directors? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. . D3: Accounts How do you rate the competence and performance of the audit committee and of its individual members in understanding and scrutiny of the company’s accounts prior to publication? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. Additional comments; Section D:

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E: Shareholder relations and communications E1: Institutional shareholders How do you rate the competence and performance of the board as a whole and of its individual members in …understanding the viewpoint of and communicating directly with the company’s institutional shareholders? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. E2: Retail shareholders and their intermediaries …understanding the viewpoint of and communicating with the company’s retail shareholders and the intermediaries through which they deal? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. Additional comments; Section E:

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F. Process and style Frequency and duration of meetings: (please tick the box as appropriate) F1: Do you think that the number of regular, scheduled board meetings is: a) Insufficient ? ____ ; b) Slightly insufficient?____; c) About right?____; d) Slightly excessive?____ ; e) Excessive? ____. An ideal number of board meetings per annum would be :_____ F2: Do you think that the board convenes irregular meetings or otherwise communicates between meetings, in order to deal with unscheduled or randomly occurring events: a) Inadequately? ____; b) Slightly inadequately? ____; c) Adequately? ____; d) Comprehensively? ____; e) Excessively? ____ F3: Agendas and board papers Do you think that the agendas and supporting papers for board meetings usually: a) b) c) d) e)

Cover less ground and/or in less detail than they should?____ Are maybe slightly lacking in coverage or depth? ____ Deal with the issues in a balanced, appropriate manner? ____ Are slightly excessive in scope and/or detail? ____ Are excessive in scope and/or detail? ____

F4: Do you think that the overall time allocated for/taken by scheduled board meetings is: a) Insufficient ? ____ ; b) Slightly insufficient?____; c) About right?____; d) Slightly excessive?____ ; e) Excessive? ____. Please also rate the time given to investment topics a) Insufficient ? ____ ; b) Slightly insufficient?____; c) About right?____; d) Slightly excessive?____ ; e) Excessive? ____. F5: Focus and efficiency Please rate the focus and efficiency of board meetings overall and that of the individual members in their conduct?

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The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____.

F6: Attendance and Participation How do you rate the individual directors in terms of …their attendance at and participation in board meetings? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. F7: Apparent preparation for board meetings? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. F8: …following up on and resolving issues that have arisen in meetings? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. F9: How would you rate the individual directors overall, in terms of their competence, enthusiasm and contributions to the board’s work? The Board:____ ; The Chairman:_____; Director 1:____; Director 2: ____ ; Director 3____ ; Director 4:____; Director 5_____; Director 6_____. F10: What do you consider to be your own most important contribution to the board’s work?

Additional comments; Section F:

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G: Support and relationships with suppliers G1: How do you rate the competence and efficiency of the Company Secretary? (please score 1-5) a) The individual:____ b) The company providing company secretarial services:____ G2: How do you rate the competence and efficiency of the Corporate Broker? (please score 1-5) :____ G3: How do you rate the competence and efficiency of the Company’s auditors? (please score 1-5) :____ G4: How do you rate the provision of information by/liaison with the Manager? (please score 1-5) : ____ Additional comments; Section G:

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Appraising the Chairman In this section, we ask you to evaluate the Chairman with regard to some aspects which are more important in the performance of a chairman than they are for other directors. Ch1: Which of the following do you think best describes Chairman’s relationship with the Manager? a) b) c) d) e)

Excessively friendly and accommodating:____ Critical but generally gives the manager the benefit of any doubt: ____ Even-handedly and appropriately critical/supportive:____ Tends to be rather suspicious of the Manager:____ Excessively critical and antagonistic:____

Ch2: Do you think there is a risk that the Chairman may be too dependent on the Manager for advice? Yes/No Ch3: Do you think, given the length of his tenure, that there is a risk that the Chairman might contribute to inertia in the board’s attitudes, deliberations and policies? Yes/No Ch4: How do you rate the performance of the Chairman in terms of the focus, use of time and overall efficiency of board meetings? (please use scale 1-5):____ Ch5: How do you rate the Chairman in terms of his ability to manage the board’s agenda, responding to changing circumstances as necessary? :____ Ch6: How do you rate the performance of the Chairman in following up on and resolving issues that have arisen in meetings? :____ Ch7: How well does the Chairman deal with any problems of what might be described as “group dynamics” (e.g. extrovert directors dominating the proceedings at the expense of their quieter colleagues; tensions between directors etc.) which might arise? (n/a is an acceptable response here if no such problems have been experienced): ____ Ch8: How would you rate the Chairman overall, in terms of his competence, enthusiasm and contributions to the board’s work ? :____ Ch9: What should be the most important attributes of the Chairman’s successor?

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Ch10: Please use the space below to suggest what you think should be the most important issue on the board’s agenda for the next year and for any other comments you might have:

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