Lunenburg Public Library Investment Policy 

A. Scope

This section of the Investment Policy applies only to trust funds held by the Lunenburg Public Library Trust (hereinafter the “trust funds”) and managed by the Lunenburg Public Library Board of Trustees or its agents (hereinafter the “Trustees”). This Investment 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.

B. Objectives

In accordance with Massachusetts General Laws, Chapter 203C, the purpose of this policy is to provide guidance to the Trustees on how to invest the trust funds. No investment or disposition of either income or principal shall be made which is inconsistent with the terms of the trusts in which the property is held. 

Trustees will follow the prudent investor rule where compliance shall be determined in light of the facts and circumstances existing at the time of the Trustees’ decision or action. When selecting financial institutions and investment instruments, the Trustees will pursue an overall investment strategy that has risk and return objectives reasonably suited to the entire trust funds portfolio. Trustees will strive to invest for total return, considering both income generation and capital appreciation. The Trustees shall exercise reasonable care, skill, and caution when choosing investment instruments as a prudent investor would. 

These guidelines are intended to further the objective of securing the highest return available that is consistent with the preservation and appreciation of principal while ensuring funds are available for special projects or to enhance and enrich the Library’s services as opportunities arise and in accordance with the Lunenburg Public Library’s Strategic Plan.

∙ Safety of principal is the foremost objective of the investment program. Investments will be undertaken in a manner that seeks to ensure the preservation of capital through the mitigation of credit risk, market risk, liquidity risk, inflation risk and interest rate risk. These risks shall be lessened by diversification, portfolio rebalancing and the prudent selection of investment instruments, banks or brokerage houses. 

∙ 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. Diversification

The investments of the trust funds shall be reasonably diversified. Diversification shall be used to spread capital risk across various industries, sectors, geographies and asset classes to reduce risk during economic downturns. Diversification should be interpreted in terms of maturity as well as instrument type and issuer. 

D. Authorization

The Treasurer of the Town of Lunenburg shall invest the trust funds as directed by the Treasurer of the Trustees and Library Director. 

E. Ethics

The Town Treasurer, Town Assistant Treasurer, Trustees, and any other agents authorized to invest the 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

F. Delegation of Investment Function

The Trustees may delegate investment functions if it is prudent to do so.  The Trustees shall exercise reasonable care, skill and caution in selecting an investment agent and will periodically monitor the agent’s performance and compliance.

Agents shall be selected first and foremost with regard to safety. Before a relationship with a financial institution, brokerage house or broker is established, the Treasurer of the Trustees must perform a background analysis considering the following requirements:

• Capital requirements of at least ten million dollars and in sound financial condition, using current audited financial statements
• At least five years in operation, with experience managing public or institutional funds
• Satisfactory compliance record with regulatory requirements, investment-related licensing, arbitration agreements and complaints
• A written guarantee of fiduciary standard, requiring advisors to act in clients’ best interests at all times

To safely maximize the rate of return, the Trustees must also consider if an agent

• Offers financial instruments and services that appropriately support the Library’s needs and strategic goals
• Costs for services are appropriate, reasonable and transparent

G. Documentation 

The Library Director will maintain records documenting compliance, including all trust documents, expenditures and investments. Each trust fund must be accounted for separately as to its unexpendable principal (if any), its expendable balance and its income.

H. Reporting Requirements

The Treasurer of the Trustees or delegated agent will provide an annual performance report for the Library Director and Trustees that evaluates the annual trust funds performance and degree of compliance with the tenets set forth in this policy. 

I. New Trust Assets 

Within a reasonable time after accepting a trusteeship or receiving new trust assets, the Trustees or its agent, shall review the trust assets and make and implement decisions concerning the retention and disposition of assets to bring the trust portfolio into compliance with the purposes, terms, and the other circumstances of the trust funds.

Voted on and Approved on December 15, 2022; Revised and approved on March 19, 2026.