Report of the Trustees 2005/2006: Page Seven

Investment policy

During the year, strong recovery took place in the world's stock markets, recouping much of the ground lost in earlier years. This resulted in an overall gain of £265,000 in the Charity's investments.

The relatively limited size of the Charity's investment portfolio, at £1.8 million, continues to call into question whether the fees of a potential investment manager would be likely to be significantly outweighed by the improved investment performance they could generate. The case for the appointment of an investment manager will be revisited during 2006/07. A further review will also be carried out, as part of the Charity's strategic planning, of the appropriate balance to be struck between cash holdings and investments.

Reserves policy

Taking into account the nature and volume of income streams and the pattern of expenditure in meeting the Charity's objects, the Trustees have maintained their view that to ensure efficient management and the provision of a financial buffer allowing uninterrupted services, a free reserve equivalent to three months' unrestricted fund expenditure is required. This amounts to £646,000 on the basis of 2005/06 expenditure. The free reserves amounted to £910,000 at the balance sheet date.

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