The Havenwood-Heritage Heights Trust FundBAKER NEWMAN NOYES Baker Newman & Noyes. LLC BOSTON T:...

BAKER NEWMAN

NOYES

The Havenwood-Heritage Heights Trust Fund

Audite.d Financial Statements

Years Ended December 31, 2014 and 2013 With Independent Auditors' Report

Baker Newman & Noyes, LLC

BOSTON T: 857.233.2320 I MANCHESTER T: 603.626.2200

PORTLAND T: 207.879.2100 I PORTSMOUTH T: 603.436.1146

800.244.7444 I www.bnncpa.com

THE HA VENWOOD-HERITAGE HEIGHTS TRUST FUND

AUDITED FINANCIAL STATEMENTS

Years Ended December 31, 2014 and 2013

TABLE OF CONTENTS

Independent Auditors' Report

Audited Financial Statements: Statements of Financial Position Statement of Activities - Year Ended December 31, 2014 Statement of Activities - Year Ended December 31, 2013 Statements of Cash Flows Notes to Financial Statements

2 3 4 5 6

BAKER NEWMAN

NOYES

Baker Newman & Noyes. LLC

BOSTON T: 857.233.2320 I MANCHESTER T: 603.626.2200

PORTLAND T: 207.879.2100 I PORTSMOUTH T603.436.1146

800.244.7444 I www.bnncpa.com

INDEPENDENT AUDITORS' REPORT

Board of Trustees The Ravenwood-Heritage Heights Trust Fund

We have audited the accompanying financial statements of The Ravenwood-Heritage Heights Trust Fund, which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this. includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Ravenwood-Heritage Heights Trust Fund as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Manchester, New Hampshire April 20, 2015

Limited Liability Company


STATEMENTS OF FINANCIAL POSITION

December 3 1, 2014 and 2013

ASSETS

Cash and cash equivalents Interest receivable Investments, pooled Investments, charitable gift annuities Beneficial interest in trust

Total assets

LIABILITIES AND NET ASSETS

Line of credit Long-term debt Charitable gift annuities liability Accounts payable Accrued interest payable Due to affiliate

Total liabilities

Net assets: Unrestricted net assets

Temporarily restricted net assets: Restricted for resident support Restricted for charitable gift annuity program Restricted for specific purposes

Total temporarily restricted net assets

Permanently restricted net assets: Restricted for resident support Restricted for specific purposes

Total permanently restricted net assets

Total net assets

Total liabilities and net assets

See accompanying notes.

2

2014

$ 266,339 47,508

17,713,421 781,369 363,313

$12,171,950

$ 2,383,078

417,055 17,765

65,550

2,883,448

4,538,761

9,984,013 364,314

87,073

10,435,400

1,239,145 75,196

1,314,341

16,288,502

$12,171,95Q

2013

$ 180,167 36,903

16,739,732 838,242 361,301

$18, 156,345

$ 2,108,078 375,000 487,982

18,930 3,125

60,781

3,053,896

4,228,976

9,134,585 350,259

76,300

9,561,144

1,237,133 75 196

1,312,329

15,102,449

$18, 156,345


STATEMENT OF ACTIVITIES

Year Ended December 31, 2014

Temnorarily Restricted Permanently Restricted Restricted

Restricted for Restricted Restricted Restricted for Charitable for for for

Unre- Resident Gift Specific Resident Specific stricted Su1212ort Annuities Pumoses Su1212ort Pumoses Total

Support and revenue: Contributions and bequests $ - $ 30,978 $ 8,648 $ - $ - $ - $ 39,626 Investment income 122,327 309,119 29,890 4,382 - - 465,718 Net realized and unrealized gains on investments 307,362 732,359 38,455 11,026 - - 1,089,202 Change in value of beneficial interest in trust - - - - 2,012 - 2,012 Change in value of gift annuity agreements - - (1,686) - - - (1,686) Release of net assets:

Satisfaction of annuity restrictions - 49,852 (49,852) Satisfaction of income restrictions 151,345 (148,577) - (2,768) Total support and revenue 581,034 973,731 25,455 12,640 2,012 - 1,594,872

Expenses: Contributions to the Community 2,768 - - - - - 2,768 Support of residents and community 148,577 - - - - - 148,577 Distributions to annuitants 28,071 - - - - - 28,071 Administrative support 27,528 65,553 - 986 - - 94,067 Investment management fees 24,637 58,750 11,400 881 - - 95,668 Interest 39,668 - - - - - 39,668

Total expenses 271.249 124,303 11.400 1.867 - - 408.819

Excess of support and revenue over expenses 309,785 849,428 14,055 10,773 2,012 - 1,186,053

Net assets, beginning of year 4,228,976 9,134,585 350,259 76,300 1.237.133 75.196 15.102.449

Net assets, end of year $4,538,761 $9,984,013 $364.314 $87,073 $1.239.145 $ 75.196 $16.288.502


3


STATEMENT OF ACTIVITIES

Year Ended December 31, 2013

Temporarily Restricted Permanently Restricted Restricted

Restricted for Restricted Restricted Restricted for Charitable for for for

Unre- Resident Gift Specific Resident Specific stricted Support Annuities P.m.:poses Support Pumoses Total

Support and revenue: Contributions and bequests $ - $ 39,497 $ 8,373 $ - $ - $ 43,021 $ 90,891 Investment income 99,171 252,458 35,183 3,302 - - 390,114 Net realized and unrealized gains on investments 966,745 2,293,811 122,742 30,746 - - 3,414,044 Change in value of beneficial interest in trust - - - - 20,214 - 20,214 Change in value of gift annuity agreements - - (60,259) - - - (60,259) Release of net assets:

Satisfaction of annuity restrictions (519) (1,125) 1,644 Satisfaction of income restrictions 272,121 (272,121) Total support and revenue 1,337,518 2,312,520 107,683 34,048 20,214 43,021 3,855,004

Expenses: Donations to the Community from

gift annuity agreements (519) - - - - - (519) Support of residents and community 272,121 - - - - - 272,121 Distributions to annuitants 12,074 - - - - - 12,074 Administrative support 28,179 66,899 - 886 - - 95,964 Investment management fees 24,722 58,573 11,526 873 - - 95,694 Interest 46,819 - - - - - 46,819

Total expenses 383,396 125.472 11.526 1.759 - - 522.153

Excess of support and revenue over expenses 954,122 2,187,048 96,157 32,289 20,214 43,021 3,332,851

Net assets, beginning of year 3,274,854 6,947,537 254,102 44,011 1.216,919 32.175 11.769,598

Net assets, end of year $4.228.976 $9.134.585 $350.259 $76.300 $1.237.133 $ 75.196 $15.102.449


4

THE RAVENWOOD-HERITAGE HEIGHTS TRUST FUND

STATEMENTS OF CASH FLOWS


2014 2013 Cash flows from operating activities:

Excess of support and revenue over expenses $ 1,186,053 $ 3,332,851 Adjustments to reconcile excess of support and revenue over

expenses to net cash provided (used) by operating activities: Net realized and unrealized gains on investments (1,089,202) (3,414,044) Increase in beneficial interest in trust (2,012) (20,214) Change in value of charitable gift annuities (70,927) (23,000) Changes in operating assets and liabilities:

Increase in interest receivable (10,605) ( 4,525) Increase (decrease) in due to affiliate 4,769 (74, 708) Decrease in accrued interest payable (3,125) (417) (Decrease) increase in accounts payable (1,165) 1 833

Net cash provided (used) by operating activities 13,786 (202,224)

Cash flows from investing activities: Purchases of investments (3,205,603) (3 ,920,344) Proceeds from sale of investments 3,377,989 4,245,334

Net cash provided by investing activities 172,386 324,990

Cash flows from financing activities: Proceeds from line of credit 275,000 Payments on long-term debt (375,000) (50,000)

Net cash used by financing activities (100,000) (50,000)

Increase in cash and cash equivalents 86,172 72,766

Cash and cash equivalents at beginning of year 180 167 107 401

Cash and cash equivalents at end of year $ 266.339 $ 180.167

Supplemental disclosures of cash flow information: Interest paid $ 42 793 $ 47 236


5

THE HAVENWOOD-HERITAGE HEIGHTS TRUST FUND

NOTES TO FINANCIAL STATEMENTS


1. Description of Organization and Summary of Accounting Policies

Organization

The Ravenwood-Heritage Heights Trust Fund (the Trust Fund) was established on August 16, 1982 for the purpose of meeting the minimum needs of residents of the United Church of Christ Retirement Community, Inc. (the Community) and for general support of the Community. Requests for funds from the Trust Fund are made by the Board of Trustees of the Community (the Community Board) and payment is made at the discretion of the Trustees of the Trust Fund.

The Trustees of the Trust Fund elect their own members and may include members of the Community Board or others designated by the Community. A majority of the Board must be independent of the Community.

Community Interest in Fund Net Assets

The Financial Accounting Standards Board (F ASB) Accounting Standards Codification (ASC) Topic 958 requires that a specified beneficiary recognize its rights to assets held by a recipient organization as an asset unless the donor has explicitly granted the recipient organization variance power. Management of the Community and the Trust Fund has determined that the Trust Fund has not been granted such variance power. Therefore, the Community's interest in the net assets of the Trust Fund has been recognized in the Community's financial statements.

Basis o(Accounting and Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting.

Cash and Cash Equivalents

The Trust Fund considers all highly liquid, short-term investments with an original maturity of three months or less to be cash equivalents. The Trust Fund maintains its cash in a bank deposit account which, at times, may exceed federal depository insurance limits. The Trust Fund has not experienced any losses in such account and believes it is not exposed to any significant risk on this account.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates, by their nature, are based on judgment and available information. The most significant area which is affected by the use of estimates includes the charitable gift annuity liability. Actual results could differ from these estimates.

6

THE HA VENWOOD-HERIT AGE HEIGHTS TRUST FUND

NOTES TO FINANCIAL ST A TEMENTS


1. Description of Organization and Summary of Accounting Policies (Continued)

Concentration of Credit Risk

Financial instruments which subject the Trust Fund to credit risk consist of cash and cash equivalents and investments. The risk with respect to cash equivalents is minimized by the Trust Fund's policy of investing in financial instruments with short-term maturities issued by highly rated financial institutions. The Trust Fund's investment portfolio consists of diversified investment funds, which are subject to market, interest rate, and credit risks, among others. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in value will occur in the short-term and that such changes could be material. See Notes 3, 4 and 9 for additional information related to investments.

Investments

Investments are stated at fair value in the statements of financial position. See Note 9 for further discussion regarding fair value.

Gains and losses on securities are determined on a specific identification method. Investment income or loss (including realized and unrealized gains and losses on investments and interest and dividends) is allocated to the related net asset classifications within the unrestricted and temporarily restricted net asset classes.

With the exception of investments for its charitable gift annuity program, the Trust Fund utilizes a pooled investment fund basis for managing its investments.

Donor-Restricted Gifi;s

Unconditional promises to give cash and other assets are reported at fair value at the date the promise is received. The gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met within the same year as received are reported as unrestricted contributions in the statement of activities.

Income Taxes

The Internal Revenue Service determined that the Trust Fund is a publicly-supported charity under Internal Revenue Code Section 50l(c)(3) and, therefore, not subject to federal income taxes or federal excise taxes imposed upon private foundations.

Tax-exempt organizations could be required to record an obligation for income taxes as the result of a tax position they have historically taken on various tax exposure items including unrelated business income or tax status. In accordance with accounting principles generally accepted in the United States of America, assets and iiabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the "more-likely-than-not" threshold, based upon the technical merits of the position. Estimated interest and penalties, if applicable, related to uncertain tax positions are included as a component of income tax expense.

7




1. Description of Organization and Summary of Accounting Policies (Continued)

Management has evaluated the Trust Fund's tax positions taken on its filed tax returns and concluded that the Trust Fund has maintained its tax-exempt status, does not have any significant unrelated business income and has taken no uncertain tax positions that require adjustment to the financial statements. The Trust Fund is no longer subject to tax examinations by the federal or state tax authorities for years before 2011.

Subsequent Events

Events occurring after the statement of financial position date are evaluated by management to determine whether such events should be recognized or disclosed in the financial statements. Management has evaluated subsequent events through April 20, 2015 which is the date the financial statements were available to be issued.

2. Classification of Net Assets

In accordance with the Uniform Prudent Management of Institutional Funds Act (UPMIF A), net assets are classified and reported based on the existence or absence of donor-imposed restrictions. Contributions are reported as permanently restricted or temporarily restricted depending upon specific language in the gift instrument. In accordance with UPMIF A, the Trust Fund considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

1. The duration and preservation of the fund 2. The purpose of the Trust Fund and the donor-restricted endowment fund 3. General economic conditions 4. The possible effect of inflation and deflation 5. The expected total return from income and the appreciation of investments 6. Other resources of the Trust Fund 7. The investment policies of the Trust Fund

The following provides a description of the net asset classifications represented in the Trust Fund's assets:

• Unrestricted net assets includes amounts appropriated for expenditure from temporarily restricted net assets as well as all other funds not classified as endowment because there are no donor-imposed restrictions in the gift instrument. Income derived from unrestricted assets is classified as unrestricted.

• Temporarily restricted net assets includes the portion of donor-restricted endowment funds that are deemed to be restricted over the donor-specified period of the endowment by explicit donor stipulation. In addition, investment returns from permanently and temporarily restricted net assets are classified as temporarily restricted until appropriated for expenditure. Once appropriated, temporarily restricted assets are released to unrestricted assets. Such transfers are reported in the statement of activities as "release of net assets due to satisfaction of restrictions".

• Permanently restricted net assets includes the portion of donor-restricted endowment funds that are deemed to be permanently restricted by explicit donor stipulation. The amount classified as permanently restricted includes the original fair value of the initial gift and any subsequent gifts. Investment returns from the investment of these assets are classified as temporarily restricted.

8




2. Classification of Net Assets (Continued)

Investment and Spending Policies

The Trust Fund has adopted an investment policy that will allow for the annual withdrawal of income as needed for resident and community support and still increase the purchasing power of the Trust Fund prior to additions and without undue risk. The long-term objective of this policy is to generate a total return net of fees which is at least 5% in excess of inflation rate, as measured by the Consumer Price Index, over rolling ten-year periods. Total return is defined as dividend or interest income, plus realized and unrealized capital appreciation or depreciation at fair market value. The trustee approved annual spending rate should not exceed 5.5% of the three-year moving market value average. The approved spending rate for 2014 and 2013 was 5%. In 2014 and 2013, it was determined that the full rate of 5% for which the Trust was authorized to spend was not needed and the actual spending rate was approximately 1.5% and 3.5%, respectively.

In recognition of the prudence required of fiduciaries, reasonable diversification is sought where possible. Asset allocation parameters have been developed based on investment objectives, liquidity needs, and time horizon for intended use.

Endowment Net Asset Composition bv Type o(Fund

The major categories of endowment funds at December 31 are as follows:

2014 Resident support Charitable gift annuity program Other

Total endowment net assets

2013 Resident support Charitable gift annuity program Other

Total endowment net assets

Unrestricted

$ -

$ -

$ -

$ -

9

Temporarily Restricted

$ 9,984,013 364,314

87,073

$10.435.400

$ 9,134,585 350,259

76,300

$ 2,561,144

Permanently Restricted Total

$1,239,145 $11,223,158 364,314

75,196 162,269

$1.314.341 $11.749.741

$1,237,133 $10,371,718 350,259

75,196 151,496

$1,312,329 $10,873,473





Changes in Endowment Net Assets

The Trust Fund had the following endowment-related activities during the years ended December 31:

Temporarily Permanently Unrestricted Restricted Restricted Total

2014 Net endowment assets,

December 3 1, 2013 $ - $ 9,561,144 $1,312,329 $10,873,473

Investment return: Investment income 343,391 343,391 Net appreciation (realized

and unrealized) 781,840 2,012 783,852 Investment fees (71,031) (71,031)

Total net investment return 1,054,200 2,012 1,056,212

Change in value of gift annuity agreements (1,686) (1,686)

Contributions 39,626 39,626 Appropriated for expenditure (217,884) (217,884)

Net endowment assets, December 31, 2014 $=- $10.4J5,4QD $ L314.341 $11,749.741

2013 Net endowment assets,

December 31, 2012 $ - $ 7,245,650 $1,249,094 $ 8,494,744

Investment return: Investment income 290,943 290,943 Net appreciation (realized

and unrealized) 2,447,299 20,214 2,467,513 Investment fees (70,972) (70,972)

Total net investment return 2,667,270 20,214 2,687,484

Change in value of gift annuity agreements (60,259) (60,259)

Contributions 47,870 43,021 90,891 ,A~ppropriated for expenditure (339,387) (339,387)

Net endowment assets, December 31, 2013 $ - $ 9,561,144 $ l,312,329 $~

10





Funds With Deficiencies

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the Trust Fund to retain as a fund of permanent duration. Deficiencies of this nature are reported in unrestricted net assets. There was no deficiency between the fair value of the investments of the endowment fund at December 31, 2014 and 2013 and the level required by the donor stipulation.

3. Pooled Investments

Pooled investments consist of the following at December 31:

2014 2013 Fair Fair

Cost Value Cost Value

Cash and cash equivalents $ 61,338 $ 61,338 $ 47,351 $ 47,351 Common equity securities 6,128,656 10,933,484 5,884,112 10,653,226 Fixed income mutual funds 1,602,783 1,609,256 1,809,779 1,814,688 International equity mutual funds 1,117,615 1,001,248 1,117,615 1,023,361 Corporate bonds 3,553,619 3,881,947 2,747,912 3,001,106 Municipal bonds 204,794 226,148 200,000 200,000

$12,668,805 $11,713,421 $11,806,769 $16,739,732

Total investment income, realized gains and losses, and net unrealized appreciation (depreciation) for pooled investments reported within the statements of activities for the years ended December 31 are summarized as follows:

2014 2013 Unrestricted:

Investment income $ 122,327 $ 99,171 Net realized and unrealized gains on investments 307,362 966,745

Total unrestricted net investment revenue 429,689 1,065,916

Restricted: Investment income 313,501 255,760 Net realized and unrealized gains on investments 743,385 2,324,557

Total restricted net investment revenue 1,056,886 2,580,317

Total net investment revenue $1,486,575 $3,646,233

11




4. Split Interest Agreements

5.

The Community established a charitable gift annuity program in 1987 whereby donors may transfer assets to the Trust Fund in exchange for the right to receive an annuity during the donors' lifetime and/or the lifetime of a specified beneficiary. These split interest agreements with donors consist primarily of charitable gift annuities and irrevocable charitable remainder trusts for which the Trust Fund serves as trustee. Assets are invested and payments are made to donors and/or other beneficiaries in accordance with the respective agreements.

When a donor contributes assets for a split interest agreement, the difference between the amount contributed and the present value of future annuity payments is recognized as temporarily restricted income at the date of the agreement. The present value is recognized as a liability for future annuity payments. The present value is determined using published life expectancy tables and the applicable federal rate published monthly in Internal Revenue Service Rulings.

The annuity liability is revalued annually based upon the recalculated present value that uses the current age of the annuitants and the original discount rate for each annuity contract. Distributions paid and income earned on annuity investments are recorded as changes in the liability and increases or decreases in the temporarily restricted net asset class in the statement of activities. The annuity liability was $417,055 and $487,982 at December 31, 2014 and 2013, respectively. Distributions paid on the split interest agreements totaled $78,966 and $89,886 for the years ended December 31, 2014 and 2013, respectively.

Upon the death of the annuitant, the funds are transferred to the pooled investments of the Trust Fund and/or directly to the Community under the restrictions specified by the donor.

Investments for the charitable gift annuity program consist of the following at December 31:

2014 2013 Fair Fair

Cost Value Cost Value

Cash and cash equivalents $ 30,737 $ 30,737 $ 10,772 $ 10,772 Fixed income mutual funds 92,405 93,341 90,088 89,375 International equity mutual funds 74,791 72,641 90,047 99,069 Domestic equity mutual funds 485,465 584,650 505,331 639,026

$683.398 $781.369 $696.238 $ 838.242

Beneficial Interest in Trust

The Trust Fund is an irrevocable beneficiary of a charitable remainder trust held by a bank as trustee. These resources are neither in the possession of, nor under the control of the Trust Fund. The terms of the trust provide for income of the trust to be distributed to the current beneficiary and upon termination of the trust, the principal is to be distributed to the Trust Fund. At December 31, 2014 and 2013, the Trust Fund has recorded its beneficial interest in trust of $363,313 and $361,301, respectively.

12




6. Line of Credit

The Trust Fund has entered into a demand line of credit with a financial institution of up to $4,500,000. At December 31, 2014 and 2013, $2,383,078 and $2,108,078, respectively, was outstanding under this agreement. These funds were for the purpose of supporting the construction to expand housing units by the Community. Advances under the line are based upon a formula based upon certain percentages of specified investment balances. Borrowings under the line of credit bear interest equal to the one month LIBOR rate plus 1.0% (1.17% at December 31, 2014), and are collateralized by the Trust Fund's unrestricted investments. The line of credit is subject to renewal on June 30 of each year.

The loan agreement places certain restrictions on the Trust related to incurring additional indebtedness, making certain loans or advances, selling or disposing of assets, and mergers, consolidations or acquisitions, among other restrictions.

7. Long-Term Debt

The Trust Fund's long-term debt consists of the following at December 31:

Note payable to CFM Building Associates, LLC, due in quarterly installments of interest at 5% plus annual principal installments of $50,000, paid in full in 2014

8. Related-Party Transactions

$ -~ $375.000

The Trust Fund has no employees. It reimburses the Community for financial, administrative and fund development services. The amounts paid to the Community for these services were $75,000 in 2014 and 2013.

At December 31, 2014 and 2013, the Trust Fund owed the Community $65,550 and $60,781, respectively, for resident support related matters.

9. Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of nonperformance risk including the Trust Fund's own credit risk.

13




9. Fair Value Measurements (Continued)

The fair value hierarchy for valuation inputs prioritizes the inputs into three levels based on the extent to which input used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

• Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

• Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

For the fiscal years ended December 31, 2014 and 2013, the application of valuation techniques applied to similar assets has been consistent. The following describes the valuation methodologies used to measure different financial assets at fair value:

Investments

The fair value of investments in cash equivalents, equity securities and mutual funds are based upon quoted prices in active markets for identical assets and are reflected as Level 1.

The fair value of investments in corporate and municipal bonds are based upon quoted prices in not active markets for identical and similar instruments and are reflected as Level 2.

The valuation of beneficial interest in trust is based on information from the trustee which is based on the fair market value of the underlying assets, which are investments with quoted prices in active markets or inactive markets for identical or similar investments.

14





Assets Measured at Fair Value on a Recurring Basis

The following table presents the Trust Fund's assets measured at fair value on a recurring basis at December 31 :

2014 Cash and cash equivalents Common equity securities:

Consumer nondurables Consumer services Business products and services Capital goods Industrial/electronics Energy Basic industries Transportation Financial Utilities International

Fixed income mutual funds International equity mutual funds Domestic equity mutual funds:

Mid cap Large cap Blend

Corporate bonds Municipal bonds Beneficial interest in trust

Assets detailed above include: Investments, pooled Investments, charitable gift annuities Beneficial interest in trust

Level 1

$ 92,075

1,746,321 983,705

2,369,064 1,679,685

977,957 456,107 596,964 266,616

1,141,029 151,470 564,566

1,702,597 1,073,889

63,812 74,499

446,339

$14.386.695

15

Level2 Level 3 Balance

$ $ $ 92,075

1,746,321 983,705

2,369,064 1,679,685

977,957 456,107 596,964 266,616

1,141,029 151,470 564,566

1,702,597 1,073,889

63,812 74,499

446,339 3,881,947 3,881,947

226,148 226,148 363,313 363,313

$4.471.408 $ $18.858.103

$17, 713,421 781,369 363.313

$18,858,103


NOTES TO FINANCIAL ST A TEMENTS



Level 1 Level2 Level3 Balance 2013 Cash and cash equivalents $ 58,123 $ $ - $ 58, 123 Common equity securities:

Consumer nondurables 1,461,516 1,461,516 Consumer services 942,419 942,419 Business products and services 2,221,076 2,221,076 Capital goods 1,596,264 1,596,264 Industrial/electronics 986,070 986,070 Energy 516,136 516,136 Basic industries 630,327 630,327 Transportation 131,880 131,880 Financial 1,686,929 1,686,929 International 480,609 480,609

Fixed income mutual funds 1,904,063 1,904,063 International equity mutual funds 1,122,430 1,122,430 Domestic equity mutual funds:

Mid cap 72,333 72,333 Small cap 14,786 14,786 Large cap 62,731 62,731 Growth 64,496 64,496 Blend 408,509 408,509 Real estate 16,171 16, 171

Corporate bonds 3,001, 106 3,001,106 Municipal bonds 200,000 200,000 Beneficial interest in trust 361,301 361,301

$1iJ76.868 $3.562A07 $_ - $17.939.275

Assets detailed above include: Investments, pooled $16,739,732 Investments, charitable gift annuities 838,242 Beneficial interest in trust 361,301

$11,939,275

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