Trustees of the Trust Fund Minutes 07.29.16

Town of Bradford Trustees of Trust Funds

Meeting July 29, 2016

The Trustees met to discuss a revised investment policy statement. The new policy, drafted by Michael James, is mostly a novice investor’s guide to risk and reward, serving as a topographical and boundary map of the terrain needed to be understood by all Trustees of Trust Funds. Also incorporated into the new policy, however, are the principles of the Bradford Trustees’ existing Investment Policy, which was last reviewed in 2015.  The Trustees agreed to and signed the new investment policy.

Most of the discussion, however, addressed issues implicit in both the old and new investment policies, specifically how to distinguish Category I from Category II trust funds. Category I investments (now termed Capital Reserve and Expendable Trust Funds) require guaranteed preservation of principal, while Category II investments (now simply designated Trust Funds) are more flexible, allowing for pursuit of enhanced growth of principal to offset inflation.

This discussion quickly led to questions of which Trust Funds fall into which categories, since Category II investments are considered long term (more than five years), while category I investments may require liquidation at a moment’s notice. However, some of Bradford’s Category I Capital Reserve Funds have existed for years without being touched, and some, such as the1960 Highway Department Heavy Equipment Capital Reserve Fund, have been repeatedly emptied and replenished. (Originally established in 1960 as a Capital Reserve Fund “for the special purpose of purchasing equipment,” this fund was recently liquidated and reestablished as an Expendable Trust. It is now the 2015 Highway Expendable Trust Fund.)

The Trustees plan to establish more clearly which Trust Funds should be designated Category I and which Category II. The issue is important since Category II investments permit greater flexibility and hence more promise of higher investment returns. Clearly, Funds such as the 1905 Cemetery Perpetual Care Trust Fund are Category II. But others, such as 1964 Bradford School Scholarship Trust Fund, are just as likely to go on forever, and therefore are worthy of investments likely to enhance their principal. To sort out these fund designations be the task before the Trustees in the coming months.

Under the heading additional business, Harry Wright distributed copies of the 2014 MS-9 report to be sent to the state, as well as a copy of the 2015 MS-9 report, which was signed by the Trustees and will be sent on to Town Hall as well as the State.

Tim Rodd agreed to update and distribute the compendium describing all of the Town’s Trust Funds.

A date for a future meeting was not decided.