COIF Charity Funds - CCLA

COIF Charities Investment FundCOIF Charities Fixed Interest FundReport of the Boardfor the six months ended 30 June 2006We have pleasure in presenting our half-yearreports on COIF Charities Investment Fund andCOIF Charities Fixed Interest Fund. The Trustees’half-year report on COIF Charities Deposit Fundis set out on page 49. The half-year report andaccounts for COIF Charities Property Fund areavailable in a separate Fund report.Responsibilities of the BoardWe have met quarterly during the period to carryout our responsibility for the approval ofinvestment strategy, for setting distribution policy,to monitor investment diversification, suitabilityand risk and to review the performance of theFunds. In addition we have monitored theadministration, expenses and pricing of theFunds.We have also reviewed the progress of CCLAInvestment Management Limited and approvedthe valuation of the investments in the company,which are shown on page 19 in the PortfolioStatement for the Investment Fund.Review of investment activities and policies ofthe FundsDuring the period we met quarterly with theInvestment Manager to review investments,transactions and policies of the Funds. TheInvestment Manager’s reports, which appearlater, provide further details.Responsible investmentThe COIF Charity Funds are promoted asresponsible funds that consider the economic,social and environmental impacts of thecompanies in which the Funds invest. TheBoard’s main purpose is to obtain the best returnfor unitholders, consistent with commercialprudence and the need to ensure adequatespread and diversification of assets in accordancewith the duties of trustees. In addition, the Boardhas adopted a three-fold approach to sociallyresponsible investment. First, the Board’s policy,within its fiduciary duty, is for COIF CharitiesInvestment Fund and COIF Charities FixedInterest Fund to avoid direct investment inarmaments, gambling and tobacco. Secondly, theBoard has adopted a formal active voting policy,which is discussed below. Finally, the Board hasagreed a proactive engagement process, throughwhich the Manager engages, on behalf of theFunds, with the companies in which it invests, onnon-financial issues that may have a materialimpact on business, such as supply chainmanagement, environmental impacts, humanrights and labour standards. The Board believesthis to be a responsible and appropriate responseto the concerns of unitholders and the guidelinesissued by the Charity Commission. During theperiod to 30 June 2006, the manager undertook90 instances of engagement with 59 companies,incorporating 28 meetings with companies. Areasof engagement included HIV/AIDS, palm oil,rainforest destruction, supply chain issues, humanembryonic stem cell research and theenvironment. Details of engagement can befound in the Socially Responsible Investmentsection of the quarterly bulletin available on theCCLA website.GovernanceThe Board has adopted a formal corporategovernance policy, and routine informedshareholder voting is applied across all UKholdings in the COIF Charities Investment Fund.The policy adopted by the Board is to supportmanagement except where proposals are eitherdeemed not to be in shareholder interests orreflect poor corporate governance practice. TheManager, on behalf of the Board, either opposedor abstained from a number of specificresolutions on directors’ pay and other corporategovernance issues. In cases where proposals areopposed, the company is contacted and invitedto comment.During the period to 30 June 2006, the Managervoted at 78 UK company meetings comprising985 resolutions. 93.5% of votes were cast insupport of management, 3.0% against and theManager abstained in 3.5% of resolutions. Detailsof oppose votes and other information can befound on the Corporate Governance section ofthe COIF Charity Fund’s part of the CCLAwebsite at www.ccla.co.uk.4