Investment Considerations Richard Coulson CCLA Investment Management Limited

1. Investment ConsiderationsRichard CoulsonCCLA Investment Management Limited

2. Trustee Act 2000 • Trustees must have regard for • Suitability • Diversification • Even Handedness

3. Risk and Return:Correlation: Ice cream Sun cream Some assets perform in a similar way to each other. They are said to be highly correlated Perfect POSITIVE correlation: +1

4. Risk and ReturnCorrelation: Some assets consistently behave very differently. Perfect NEGATIVE correlation: -1

5. Risk and ReturnCorrelation: Sometimes there is no relationship at all

6. Equities • What is an equity? A share in a company. • A company is owned by shareholders • Shareholders have voting rights • They are entitled to dividends • Many equities are listed on a stock market • Shareholders stand at the end of the queue if the company faces liquidation.

7. What moves equities ? • Equity markets are moved by: • Economic trends • Events – war, disaster • Supply and demand • Individual companies are moved by: • Business prospects • Sector trends • Profits v expectations • Quality of management • Events – takeovers, rights issues

8. Equities Gilts Retail Prices Long term returns relative to inflation Source: Barclays Capital

9. Property • Institutional investment in the sector is overwhelmingly in commercial property – offices, shops, industrial sites, not private housing • Property provides a rising income flow via the rent received. • And capital growth over time • But • Single location – for good or bad • Large unit size • Expensive and time-consuming to buy and sell • Valuation risk

10. Why buy property ? • Exposure to the underlying economy gives expectations of good long term returns and protection against inflation • High income • A good diversifier for equities and bonds • Portfolio diversification = use of funds • Know your fund! • quality? • gearing?

11. Bonds • A loan made to the bond issuer for a known period of time and for a fixed rate of interest • At ‘maturity’ the bond is ‘redeemed’ at which point the principal is repaid. This is usually at ‘par’ - £100 per £100 nominal of stock • Bonds can be traded • Prices move on a daily basis

12. Who issues bonds? • Governments – to pay for income shortfalls • UK government bonds are also called ‘gilts’ • Lowest risk – but lowest yields • Companies – part of their capital • Higher risk – but not necessarily high risk • Risk profiles change over time – GEC?

13. Cash • Capital ‘guaranteed’ … • Available at short notice • Interest rates vary over time and will reflect convenience/ accessibility and the risk that is taken

14. Why hold cash? • To meet fixed obligations • Require safe haven • Tactical view on markets / changing strategies • But • No sure protection against inflation • Long term returns lag those from other assets

15. CBF Investment Fund A suitable ‘all-in-one’ long-term fund for most charities Highly diversified and well balanced spread of investments Focus on delivering attractive, growing income Designed to help meet growth and income requirements Steady income, current yield 5.41%* Fund size £643m Asset Allocation 31.03.09 Overseas Equities % Europe 9.0 USA 10.3 Japan 2.8 Pacific Ex Jap 5.1 Other 1.7 28.9 Source CCLA as at 31.03.09 * Based upon mid-market price and annual dividend of 45.0p

16. A top-down approach for CBF Ethical & Responsible Investment Exclude Climate change Biodiversity Human Rights Health & Safety Access to Medicines HIV/AIDS Bribery & Corruption Business Ethics Employment Voting Engagement Environmental Social Governance • Sector • Company • Issue • Reactive • Proactive • Project work

17. CBF Church of England Deposit Fund A great rate regardless of the amount invested No minimum balance Interest paid gross, quarterly AAA/V1 money market rating by Fitch Ratings Fund size £1,066m Current Deposit Rate as at 1 July 2009 1.00%A.E.R* Credit shortages provide opportunities to lock in great rates Focus on safety remains priority * A.E.R. = annual equivalent rate, which illustrates what the annual interest rate would be if the quarterly interest rates were compounded. As at 01.07.09

18. Approved list of Deposit takers Currently 36 approved institutions each with individual limits Deposit takers are monitored daily by the fund manager Source CCLA as at 15.05.09

19. Questions

20. Regulatory Information and Risk Warning The services described are provided by CCLA Investment Management Limited (CCLA), a firm authorised and regulated by the Financial Services Authority. This document is issued for information purposes only and is not a solicitation to buy or sell any investment. Nothing in the document should be deemed to constitute the provision of financial, investment or other professional advice. Past performance is not an indication of future performance. Values of investments, and any income derived from them, may fall as well as rise and you may not get back the amount you invested. Exchange rate changes may have an adverse effect on the value, price or income of investments. The levels and bases of, and relief from, taxation may change. You should obtain tax advice where appropriate before proceeding with any investment. Investments in higher yielding bonds issued by borrowers with lower credit ratings may result in a greater risk of default and have a negative impact on income and capital value. Income payments may constitute a return of capital in whole or in part. Income may be achieved by foregoing future capital growth. There may be additional risks associated with investment in emerging and developing markets. Where reference is made to Funds CCLA is the appointed Manager and these may be Unregulated Collective Investment Schemes. The Funds may deal infrequently and may limit redemption. Unit values may reflect fluctuations in property and share values. Fund charges may be applied to capital which may result in capital erosion. Any forward-looking statements are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise these. Actual results could differ materially from those anticipated.