COIF Charity Funds - CCLA

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COIF Charities Deposit FundReport of the Investment Managerfor the six months ended 30 June 2006 A money fund for short-term cash Competitive rates of interest (even onsmall balances) Rated Aaa by Moody’s Investors Service Withdrawal on demand with no loss ofinterestStable rates but a divided Bank of EnglandMonetary Policy CommitteeThe Bank of England Monetary Policy Committee(MPC) gave little serious discussion to changingrates during the reporting period; base rate hasremained unchanged for eleven consecutivemonths at 4.5%. However, following the MayMPC meeting a watershed may have beenreached. The minutes revealed a widening rangeof member views about the economic outlook.These views focused upon an economyappearing to be gathering pace and the prospectthat inflation could pick up at a time whenunemployment was at its highest in almost threeyears. The MPC was split in three directions, thefirst time this had occurred since August 1998.Six members voted for no change, one for anincrease and one for a cut. Money market rateshave however moved a little higher and nowdiscount a rise in base rate before the end of theyear. The latest Bank of England quarterlyinflation report incorporated a future interest rateprofile that also assumed a need to increase rates,though not until 2007.Total Client depositsNew clients have been attracted to the COIFCharities Deposit Fund and additional depositsreceived. Over the half-year total deposits(excluding those of the COIF CharitiesInvestment, Fixed Interest and Property Funds)increased by £35 million to £1.073 billion at 30June 2006.A highly competitive deposit rate whichaveraged 4.32% (4.39% A.E.R.)The Deposit Fund rate averaged 4.32% over thehalf-year, equivalent to an Annual EquivalentRate (A.E.R.) of 4.39%. The Deposit Fund rate at30 June 2006 was 4.43% (4.50% A.E.R.).Fund’s total return higher than its benchmarkOver the six months to 30 June 2006 the Fundachieved a total return before managementexpenses of 2.28%. This was higher than theFund’s benchmark, the London Inter-Bank 7-DayBid rate (7-day LIBID), which averaged 2.25%.A high quality Deposit Fund rated Aaa byMoody's Investors ServiceThe Fund is rated Aaa (Triple A) by Moody'sInvestors Service. This is the highest moneymarket fund rating that can be awarded andreflects the high quality of the Fund's ApprovedLending List, the employment of an appropriateinvestment policy, a low overall level of riskthrough diversification and the quality ofmanagement and internal controls. This excellentcredit rating continues to underline to depositorsthe high credit quality of this Fund.MPC will continue to ‘wait-and-see’The need for the MPC to cut rates to insureagainst weak economic growth now looks lesslikely, though we do not see an immediate needto increase rates. More recent economic datahave been reassuring with house prices broadlyflat and industrial surveys easing a little. TheMPC’s primary role is to control inflation. Whileinflation may move higher in the coming monthsas increased household energy prices feedthrough, it is likely to be a temporary factor. TheMPC can afford to continue with the ‘wait-andsee’approach unless there are signs that any risein inflation expectations are feeding through toemployment pay negotiations.Stuart P. FreemanFund ManagerCCLA Investment Management Limited27 July 200650
COIF Charities Deposit FundAverage Rates of Interest Paidfor the six months ended 30 June 2006 (unaudited)ActualGross A.E.R.*Month % p.a. %January 2006 4.30 4.37February 4.30 4.37March 4.30 4.37April 4.30 4.37May 4.31 4.38June 4.38 4.45Years to Actual Gross A.E.R.*31 December % p.a. %2001 4.89 4.992002 3.68 3.732003 3.41 3.452004 4.18 4.242005 4.46 4.54To 30 June 2006 4.32 4.39* A.E.R. = Annual Equivalent Rate51
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COIF Charity Funds - CCLA

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