Statement of Investment Principles

This Investment Statement sets out the principles governing decisions about investments for the Matthew 
Algie and Company Limited Pension & Assurance Scheme (“the Scheme”) to meet the requirements of 
The Pensions Act 1995, as amended by the Pensions Act 2004, The Occupational Pension Schemes 
(Investment) Regulations 2005 and other subsequent amendments. It is subject to periodic review by the 
Trustee at least every three years and more frequently as appropriate.
The Scheme’s investment strategy is derived from the Trustee’s investment objectives. The objectives 
have been taken into account at all stages of planning, implementation and monitoring of the investment 
strategy.
In preparing this Statement, the Trustee has consulted with the principal employer (Matthew Algie & 
Company Limited) and has taken professional advice from their Investment Consultant (Isio Group 
Limited/Isio Services Limited (‘Isio’)).
Governance
The Trustee of the Scheme makes all major strategic decisions including, but not limited to, the Scheme’s 
asset allocation and the appointment and termination of investment managers.
When making such decisions, and when appropriate, the Trustee takes proper written advice. The 
Trustee’s investment advisers, Isio, are qualified by their ability in, and practical experience, of financial 
matters, and have the appropriate knowledge and experience. The investment advisers’ remuneration may 
be a fixed fee or based on time worked, as negotiated by the Trustee in the interests of obtaining best 
value for the Scheme.
Investment objective
The Scheme closed to new entrants and future benefit accrual on 31 August 2010.
The primary objective of the Scheme is to provide pension and lump sum benefits for the current members
on their retirement, and/or benefits on death, before or after retirement for their dependents, on a defined 
benefit basis. 
The Scheme’s present investment objective is to achieve a return of around 2.5 p.a. (based on Isio’s 
central assumptions as at 30 June 2020) above the return on UK Government bonds (which are 
considered to move in a similar fashion to the calculated value of the Scheme’s liabilities). Further detail on 
the expected return on investments is provided in the Appendix A.
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The Trustee’s medium term objective is to reach and maintain a funding position of 100% of technical 
provisions – such a target being consistent with the strength of the employer covenant and the Trustee’s 
investment risk tolerance.
The Trustee and Company agreed a long term funding objective of reaching full funding on a Gilts plus 
0.5% basis by 2028. The Trustee intends to reduce risk as funding improves to increase the certainty of
achieving this objective. In terms of the ultimate objective for the Scheme, the Trustee and Company 
continue to target securing all Members’ benefits within an insurance contract (i.e. reach full funding on an 
insurance buy-out basis). The Trustee also considers the Scheme’s funding position on other relevant 
bases for valuation and accounting. Funding positions are monitored regularly by the Trustee and formally
reviewed at each triennial valuation, or more frequently as required by the Pensions Act 2004.
Investment strategy
The Trustee takes a holistic approach to considering and managing risks when formulating the Scheme’s 
investment strategy.
The Scheme’s investment strategy was derived following careful consideration of the factors set out in 
Appendix B. The considerations include the nature and duration of the Scheme’s liabilities, the risks of 
investing in the various asset classes, the implications of the strategy (under various scenarios) for the 
level of employer contributions required to fund the Scheme, and also the strength of the sponsoring 
company’s covenant. The Trustee considered the merits of a range of asset classes. 
The Trustee recognises that the investment strategy is subject to risks, in particular the risk of a mismatch 
between the performance of the assets and the calculated value of the liabilities. This risk is monitored by 
regularly assessing the funding position and the characteristics of the assets and liabilities. This risk is 
managed by investing in assets which are expected to perform in excess of the liabilities over the long 
term, and also by investing in a suitably diversified portfolio of assets with the aim of minimising (as far as 
possible) volatility relative to the liabilities. 
The assets of the Scheme consist predominantly of investments which are traded on regulated markets.
Investment Management Arrangements
At present, three investment managers have been appointed to manage the assets of the Scheme as 
listed in the SIP. The investment managers are regulated under the Financial Services and Markets Act 
2000.
All decisions about the day-to-day management of the assets have been delegated to the investment 
managers via a written agreement. The delegation includes decisions about:
• Selection, retention and realisation of investments including taking into account all financially material 
considerations in making these decisions;
• The exercise of rights (including voting rights) attaching to the investments;
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• Undertaking engagement activities with investee companies and other stakeholders, where 
appropriate.
The Trustee takes investment managers’ policies into account when selecting and monitoring managers. 
The Trustee also takes into account the performance targets the investment managers are evaluated on. 
The investment managers are expected to exercise powers of investment delegated to them, with a view 
to following the principles contained within this statement, so far as is reasonably practicable. 
As the Scheme’s assets are invested in pooled vehicles, the custody of the holdings is arranged by the 
investment managers. 
Financially Material Considerations
The Trustee has considered financially material factors such as environmental, social and governance 
(‘ESG’) issues as part of the investment process to determine a strategic asset allocation over the length 
of time during which the benefits are provided by the Scheme for members. It believes that financially 
material considerations (including climate change) are implicitly factored into the expected risk and return 
profile of the asset classes they are investing in. 
In endeavouring to invest in the best financial interests of the beneficiaries, the Trustee has elected to
invest through pooled funds. The Trustee acknowledges that it cannot directly influence the environmental, 
social and governance policies and practices of the companies in which the pooled funds invest. However, 
the Trustee does expect its fund managers and investment consultant to take account of financially 
material considerations when carrying out their respective roles. 
The Trustee accepts that the Scheme’s assets are subject to the investment managers’ own policies on
socially responsible investment. The Trustee will assess that these correspond with its responsibilities to 
the beneficiaries of the Scheme with the help of its investment consultant. 
An assessment of the ESG and responsible investment policies forms part of the manager selection 
process when appointing new managers and these policies are also reviewed regularly for existing 
managers with the help of the investment consultant. The Trustee will only invest with investment 
managers that are signatories for the United Nations Principles of Responsible Investment (‘UN PRI’) or 
other similarly recognised standard.
The Trustee will monitor financially material considerations through the following means:
• Obtain training where necessary on ESG considerations in order to understand fully how ESG 
factors including climate change could impact the Scheme and its investments;
• Use ESG ratings information provided by its investment consultant, to assess how the Scheme's 
investment managers take account of ESG issues; and
• Request that all of the Scheme's investment managers provide information about their ESG 
policies, and details of how they integrate ESG into their investment processes, via its investment 
consultant. 
If the Trustee determines that financially material considerations have not been factored into the 
investment managers’ process, it will take this into account when considering whether to select or retain an
investment.
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Stewardship
The Trustee’s policy on the exercise of rights attaching to investments, including voting rights, is that these 
rights should be exercised by the investment managers on the Trustee’s behalf, having regard to the best 
financial interests of the beneficiaries.
The investment manager should engage with companies to take account of ESG factors in the exercise of 
such rights as the Trustee believes this will be beneficial to the financial interests of members of the long 
term. The Trustee will review the investment managers’ voting policies, with the help of its investment 
consultant, and decide if they are appropriate. 
The Trustee also expects the fund manager to engage with investee companies on the capital structure 
and management of conflicts of interest.
If the policies or level of engagement are not appropriate, the Trustee will engage with the investment 
manager, with the help of its investment consultant, to influence the investment manager’s policy. If this 
fails, the Trustee will review the investments made with the investment manager. 
The Trustee has taken into consideration the Financial Reporting Council’s UK Stewardship Code and 
expects investment managers to adhere to this where appropriate for the investments they manage.
Investment Manager Monitoring and Engagement 
The Trustee monitors and engages with the Scheme’s investment managers and other stakeholders on a 
variety of issues. Below is a summary of the areas covered and how the Trustee seeks to engage on these 
matters with investment managers.
Areas for 
engagement
Method for monitoring and engagement Circumstances for additional 
monitoring and engagement
Performance,
Strategy and 
Risk
• The Trustee receives a quarterly
investment performance report which 
details information on the underlying 
investments’ performance, strategy 
and overall risks, which are 
considered at the relevant Trustee 
meeting.
• There are significant 
changes made to the 
investment strategy.
• The risk levels within 
the assets managed by 
the investment 
managers have 
increased to a level 
above and beyond the 
Trustee’s expectations.
• Underperformance vs
the performance 
objective over the 
period that this 
objective applies. 
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Environmental, 
Social, 
Corporate 
Governance 
factors and the 
exercising of 
rights
• The Trustee’s investment managers 
provide annual reports on how they
have engaged with issuers regarding 
social, environmental and corporate 
governance issues (including those 
concerning capital structure and 
conflicts of interest).
• The Trustee receives information from 
their investment adviser on the 
investment managers’ approaches to 
engagement. 
• The manager has not 
acted in accordance 
with their policies and 
frameworks.
• The manager’s policies 
are not in line with the 
Trustee’s policies in this 
area.
Through the engagement described above, the Trustee will work with the investment managers to improve 
their alignment with the above policies. Where sufficient improvement is not observed, the Trustee will 
review the relevant investment manager’s appointment and will consider terminating the arrangement.
Realisation of investments
The Trustee operates a bank account for daily cash flow needs. 
The significant majority of the Scheme’s investments may be realised quickly if required. 
Additional voluntary contributions (AVCs) 
Assets in respect of member’s AVCs are held with LGIM in investment vehicles chosen by the Trustee. 
These vehicles have been closed to new contributions since 1 June 2006. 
Agreed as final version on behalf Dalriada Trustees Limited as the Trustee of the Matthew Algie 
and Company Limited Pension & Assurance Scheme.
Date: 28 September 2020
Date of Amendments
First Amendment: June 2004
Second Amendment: February 2008
Third Amendment: February 2016
Fourth Amendment: September 2019
Fifth Amendment: September 2020
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Appendix A
Asset split by asset class (as at 30 June 2020)
Investment 
Manager
Asset Class
Strategic 
Benchmark 
(%)
Expected 
Return1
(%)
LGIM
Global Equity 10.0 4.0
Long Lease 
Property
10.0 2.5
Diversified Growth 10.0 3.5
Liability Driven 
Investment 
28.0 0.0
CQS Diversified Credit 20.0 2.6
JP Morgan Diversified Credit 10.0 1.5
Partners 
Group2
Direct Lending 12.0 4.2
Total 100.0 2.5
1 Expected return assumptions quoted relative to Gilts and based on Isio’s central assumptions as at 30 
June 2020. 
2 The mandate is expected to be implemented over H2 2020. 
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Appendix B – Risks, Financially Material Considerations and Non-Financial matters 
A non-exhaustive list of risks and financially material considerations that the Trustee has considered and 
sought to manage is shown below. 
The Trustee adopts an integrated risk management approach. The three key risks associated within this 
framework and how they are managed are stated below:
Risks Definition Policy
Investment The risk that the Scheme’s 
position deteriorates due to the
assets underperforming. 
• Selecting an investment objective 
that is achievable and is consistent 
with the Scheme’s funding basis and 
the sponsoring company’s covenant 
strength.
• Investing in a diversified portfolio of 
assets.
Funding The extent to which there are 
insufficient Scheme assets 
available to cover ongoing and 
future liability cash flows.
• Funding risk is considered as part of 
the investment strategy review and 
the actuarial valuation. 
• The Trustee will agree an 
appropriate basis in conjunction with 
the investment strategy to ensure an 
appropriate journey plan is agreed to 
manage funding risk over time. 
Covenant The risk that the sponsoring 
company becomes unable to 
continue providing the required 
financial support to the 
Scheme.
• When developing the Scheme’s 
investment and funding objectives, 
the Trustee takes account of the 
strength of the covenant ensuring 
the level of risk the Scheme is 
exposed to is at an appropriate level 
for the covenant to support. 
The Scheme is exposed to a number of underlying risks relating to the Scheme’s investment strategy, 
these are summarised below:
Risk Definition Policy
Interest rates and 
inflation
The risk of mismatch between
the value of the Scheme 
assets and present value of 
liabilities from changes in 
interest rates and inflation 
expectations.
To hedge c.72% of the impact of interest 
rate and inflation movements on the value of 
the Scheme’s liabilities (measured on a flat
gilts basis)
Liquidity Difficulties in raising sufficient 
cash when required without 
adversely impacting the fair 
market value of the 
investment. 
To maintain a sufficient allocation to liquid 
assets so that there is a prudent buffer to 
pay members benefits as they fall due 
(including transfer values), and to provide 
collateral to the LDI manager.
Market Experiencing losses due to 
factors that affect the overall 
performance of the financial 
markets.
To remain appropriately diversified and 
hedge away any unrewarded risks, where 
practicable. 
Credit Default on payments due as 
part of a financial security 
contract.
To diversify this risk by investing in a range 
of credit markets across different 
geographies and sectors.
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To appoint investment managers who 
actively manage this risk by seeking to 
invest only in debt securities where the yield
available sufficiently compensates the 
Scheme for the risk of default.
Environmental, 
Social and 
Governance
Exposure to Environmental, 
Social and Governance
factors, including but not 
limited to climate change, 
which can impact the 
performance of the Scheme’s 
investments.
To appoint managers who satisfy the 
following criteria, unless there is a good 
reason why the manager does not satisfy 
each criteria:
1. Responsible Investment (‘RI’) Policy / 
Framework 
2. Implemented via Investment Process 
3. A track record of using engagement and 
any voting rights to manage ESG factors 
4. ESG specific reporting
5. UN PRI Signatory
The Trustee monitors the managers on an 
ongoing basis. 
The Trustee considers ESG issues as part of 
the investment process, and believes that 
financially material considerations (including 
climate change) are implicitly factored into 
the expected risk and return profile of the 
asset classes they are investing in.
Currency The potential for adverse 
currency movements to have 
an impact on the Scheme’s 
investments.
Hedge all currency risk on all assets that 
deliver a return through contractual income.
Hedge c. 50% of currency risk on equities.
Non-financial
matters
The views of the members 
including (but not limited to) 
their ethical views and their 
views in relation to social and
environmental impact and 
present and future quality of 
life.
Non-financial matters are not taken into 
account in the selection, retention or 
realisation of investments.
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Appendix C - Policy on Investment Manager Arrangements
The Trustee has the following policies in relation to the investment management arrangements for the 
Scheme:
How the investment managers are 
incentivised to align their investment 
strategy and decisions with the 
Trustee’s policies.
• As the Scheme is invested in pooled funds, there
is not scope for these funds to tailor their strategy 
and decisions in line with the Trustee’s policies.
However, the Trustee invests in a portfolio of 
pooled funds that are aligned to the strategic 
objective.
• The Trustee believes the annual fee paid to the 
fund managers incentivises them to stick to the 
fund objective, which is used to reflect the 
investment strategy.
How the investment managers are 
incentivised to make decisions based
on assessments of medium to longterm financial and non-financial 
performance of an issuer of debt or 
equity and to engage with them to 
improve performance in the medium to 
long-term.
• The Trustee reviews the investment managers’ 
performance relative to medium and long-term 
objectives as documented in the investment 
management agreements.
• The Trustee monitors the investment managers’ 
engagement and voting activity on an annual 
basis as part of their ESG monitoring process.
• The Trustee does not incentivise the investment 
managers to make decisions based on nonfinancial performance.
How the method (and time horizon) of 
the evaluation of investment 
managers’ performance and the 
remuneration for their services are in 
line with the Trustee’s policies.
• The Trustee reviews the performance of all of the 
Scheme’s investments on a net of cost basis to 
ensure a true measurement of performance 
versus investment objectives.
• The Trustee evaluates performance over the time 
period stated in the investment managers’ 
performance objective, which is typically 3 to 5 
years.
• Investment manager fees are reviewed annually 
to make sure the correct amounts have been 
charged and that they remain competitive.
The method for monitoring portfolio 
turnover costs incurred by investment 
managers and how they define and 
monitor targeted portfolio turnover or
turnover range.
• The Trustee does not directly monitor turnover 
costs. However, the investment managers are 
incentivised to minimise costs as they are 
measured on a net of cost basis.
• The Trustee recognises that portfolio turnover 
and associated transaction costs are a necessary 
part of investment management and that the 
impact of portfolio turnover costs is reflected in 
performance figures provided by the investment 
managers.
• The Trustee does not believe in setting a portfolio 
turnover target – being the frequency with which 
the assets are expected to be bought/sold –
because each investment manager’s style differs 
in terms of level of frequent active management, 
and therefore turnover, involved. The Trustee 
believes transaction costs should be monitored 
indirectly as one aspect of a holistic approach to 
overall manager performance assessment.
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The duration of the Scheme’s
arrangements with the investment 
managers
• The duration of the arrangements is considered 
in the context of the type of fund the Scheme
invests in. 
o For closed ended funds or funds with a lockin period the Trustee ensures the timeframe 
of the investment or lock-in is in line with the 
Trustee’s objectives and Scheme’s liquidity 
requirements.
o For open ended funds, the duration is flexible 
and the Trustee will from time-to-time 
consider the appropriateness of these 
investments and whether they should 
continue to be held