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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />4. <br />X <br />Other Information (Continued) <br />Pension Plans (Continued) <br />2. Hugo Firefighter's Relief Association <br />H. Plan Investments (Continued) <br />2. Asset Allocation <br />The long-term target asset allocation and long-term expected real rate of return is the <br />following: <br />Long -Term <br />Expected <br />Target Real Rate of <br />Asset Class Allocation Return <br />Cash 5.00% 2.25% <br />Fixed income 17.00% 3.30% <br />Equities 75.00% 7.50% <br />Other 3.00% 6.00% <br />Total 100% 6.50% <br />The long-term return on assets has been set based on the plan's target investment allocation <br />along with long-term return expectations by asset class. When there is sufficient historical <br />evidence of market outperformance, historical average returns may be considered. <br />3. Description of significant investment policy changes during the year <br />During 2016, the Plan increased its target allocation for investments in equity securities from <br />66% to 75% and decreased its target allocation for investments in fixed income securities from <br />27% to 17%. <br />I. Pension Plan Fiduciary Net Position <br />Detailed information about the Hugo Firefighter's Relief Association plan's fiduciary net <br />position as of December 31, 2016 is available in a separately -issued financial report that <br />includes financial statements and required supplementary information. <br />