Lunenburg Public Library Investment Policy
I. The Investment of Library Trust Funds
This section of the Investment Policy applies only to trust funds held
by the Lunenburg Public Library Trust and managed by the
Lunenburg Board of Library Trustees or its agents (hereinafter the
“trust funds”). This Policy may be amended from time to time by the
Trustees both upon their own initiative and upon consideration of the
advice and recommendations of others as requested by the Trustees
such as investment managers and fund professionals.
Use of the word “Treasurer” herein shall mean the Treasurer of the Town of
Massachusetts General Laws, Chapter 203C allows the trust funds to
be invested according to the prudent investor rule where compliance
with the prudent investor rule shall be determined in light of the facts
and circumstances existing at the time of a trustee’s decision or action.
Each trust fund must be accounted for separately as to its
unexpendable principal (if any), its expendable balance and its income.
These guidelines are intended to further the objective of securing the
highest return available that is consistent with safety of principal while
meeting the daily cash requirements for the operation of the Town
∙ Safety of principal is the foremost objective of the investment
program. Investments will be undertaken in a manner that seeks to
ensure the preservation capital through the mitigation of credit risk and
interest rate risk. These risks shall be lessened by the diversification
and prudent selection of investment instruments, and choice of bank or
brokerage house. Credit risk is the risk of loss due to the failure of the
security issuer or backer. Interest rate risk is the risk that the market
value of the security will fall due to changes in general interest rates.
∙ Yield is the next most important objective. Investments shall be made
so as to achieve the best rate of return, taking into account safety and
liquidity constraints as well as all legal requirements.
C. Investment Instruments
The trust funds will be invested in instruments allowed in the prudent investor
rule, so as to maximize the priorities stated above.
Consistent with MGL c. 203C, Section 4, the investments of the trust
shall be reasonably diversified, unless, under the circumstances, it is
prudent not to do so. More specifically, diversification should be
interpreted in two ways: in terms of maturity as well as instrument
type and issuer. The diversification concept should include prohibition
against over concentration of maturities, as well as concentration in a
specific institution. With the exception of U.S. Treasuries or agencies,
and M.M.D.T., no more than 25% of the Library’s investments should
be invested in a single financial institution unless that institution’s
investment is fully insured or collateralized, except during periods of
increased cash flows but not longer than two months.
The Treasurer has the authority to invest the trust funds as directed
by the Library Board of Trustees.
The Treasurer-Collector and Assistant Treasurer, the Library
Trustees, and any other officers authorized to invest library trust
funds, shall refrain from any personal activity that may conflict with
the proper execution of the investment program or which could
impair their ability to make impartial investment decisions. Said
individuals shall disclose to the Town Manager any material financial
interest in financial institutions that do business with the town as
defined by Conflict of Interest Law. They shall also disclose any
personal financial investment positions or loans that could be related
to the performance of the Library’s investments.
G. Relationship with Financial Institutions
Financial institutions shall be selected first and foremost with regard
to safety. The Library shall subscribe to and use one or more of the
recognized bank rating services, such as Veribanc or Sheshunoff.
Brokers shall be licensed, reputable dealers.
The Treasurer shall require any brokerage houses and
broker/dealers, wishing to do business with the municipality, to
supply the following information to the Treasurer:
-Audited financial statements
-Proof of National Association of Security Dealers certification.
Proof of credit worthiness (minimum standards: at least five
years in operation and a minimum capital of 10 million dollars)
H. Reporting Requirements
An annual report containing the following information will be
prepared by the Treasurer and given to the Library Director and
Chair of the Board of Trustees. The report will include the
following information, as a minimum requirement:
∙ A listing of the individual accounts and individual securities
held at the end of the reporting period.
∙ A listing of the short-term investment portfolio by security type
and maturity to ensure compliance with the diversification and
maturity guidelines established in the “Diversification” section
of this investment policy.
∙ The Treasurer shall include in the report a brief statement of
general market and economic conditions and other factors that may
affect the Library’s cash position.
∙ The report should demonstrate the degree of compliance with the
tenets set forth in the IPS.
II. Investment and Management Decisions
Pursuant to M.G.L. c.203C, Section 3 (a-f) A trustee or its agent shall invest and
manage trust assets as a prudent investor would, considering the purposes, terms,
and other circumstances of the trust, In satisfying this standard, the trustee shall
exercise reasonable care, skill, and caution.
Investment and management decisions respecting individual assets shall be
considered in the context of the trust portfolio as a part of an overall investment
strategy reasonably suited to the trust.
Among circumstances that a trustee shall consider in investing and managing trust
assets are such of the following as are relevant to the trust or its beneficiaries:
(1) general economic conditions;
(2) the possible effect of inflation or deflation;
(3) the expected tax consequences of investment decisions or strategies;
(4) the role that each investment or course of action plays within the overall trust
(5) the expected total return from income and the appreciation of capital;
(6) other resources of the beneficiaries;
(7) needs for liquidity, regularity of income, and preservation or appreciation of
(8) an asset’s special relationship or special value, if any, to the purposes of the
trust or to one of the beneficiaries.
Reasonable efforts shall be made to verify facts relevant to the investment and
management of trust assets.
Trust funds may be invested in any kind of property or type of investment
consistent with the prudent investor rule.
A trustee or its agent who has special skills or expertise, or is named trustee in
reliance upon the trustee’s representation that the trustee has such special skills or
expertise, shall have a duty to use such special skills or expertise.
III. Review of Assets
Consistent with M.G.L. c.203C, Section 5, within a reasonable time after
accepting a trusteeship or receiving trust assets, a trustee or its agent, shall review
the trust assets and make and implement decisions concerning the retention and
disposition of assets, in order to bring the trust portfolio into compliance with the
purposes, terms, and the other circumstances of the trust, and with the
requirements of this chapter.
IV. Delegation of Investment and Management Functions
Pursuant to M.G.L. c.203C, Section 10(a) a trustee may delegate investment and
management functions if it is prudent to do so. A trustee shall exercise reasonable
care, skill and caution in:
- selecting an agent;
- establishing the scope and terms of the delegation, consistent with the
purposes and terms of the trust; and
- periodically reviewing the agent’s actions in order to monitor the agent’s
performance and compliance with the terms of the delegation.
In performing a delegated function, an agent shall owe a duty to the trust to
exercise reasonable care to comply with the terms of the delegation.
A trustee who complies with the above requirements shall not be liable to the
beneficiaries or to the trust for the decisions or actions of the agent to whom the
function was delegated.
By accepting the delegation of trust functions from the trustee of a trust that is
subject to the laws of the Commonwealth of Massachusetts, an agent submits to
the jurisdiction of the courts of the Commonwealth.
Voted on and Approved by the entire Library Board of Trustees
on December 15, 2022