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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />3. Detailed Notes on All Funds (Continued) <br />A. Deposits and Investments (continued) <br />(g) Money market funds with institutions that have portfolios consisting exclusively of United <br />States Treasury obligations and Federal Agency issues. <br />(h) Guaranteed investment contracts (gic's) issued or guaranteed by United States commercial <br />banks or domestic branches of foreign banks or United States insurance companies and <br />with a credit quality in one of the top two highest categories. <br />Interest Rate Risk <br />Interest rate risk is the risk that changes in market interest rates will adversely affect the fair <br />value of an investment. Generally, the longer the maturity of an investment, the greater the <br />sensitivity of its fair value to changes in market interest rates. The City does not have a formal <br />policy related to interest rate risk for its investments, but one of the ways that the City manages <br />its exposure to interest rate risk is by purchasing a combination of shorter and longer term <br />investments and by timing cash flows from maturities so that a portion of the portfolio is <br />maturing or coming close to maturity evenly over time as necessary to provide the cash flow <br />and liquidity needs for operation. <br />The following is a summary of the City of Hugo's cash and investment portfolio including the <br />range of maturities and investment ratings by type of investment: <br />Investment <br />Cash <br />Certificates of Deposit <br />Range of <br />Maturities <br />N/A <br />March 2016 - March 2018 <br />Money Market Funds N/A <br />U.S. Government Securities January 2018 - December 2020 <br />Total <br />N/A Not applicable or not available <br />* Where rated <br />43 <br />Rating Value <br />N/A $ 104,480 <br />N/A 3,632,863 <br />Unrated 23,215,724 <br />AAA - AA+* 8,380,653 <br />$ 35,333,720 <br />