Frequently Asked Questions on Schedule of Investments
- (1) Should the determination of whether long and short positions in the same security be disclosed on the schedule of Investments be performed on a gross or net basis? (TIS Section 6910)
- For the purposes of the five percent test, determination should be made on a gross basis. This is because there is market risk if one position is closed before the other or experience loss on disposition.
- (2) If an investment company has a long position that exceeds five percent of net assets and a short position in the same issuer which is less than five percent, is the investment company required to disclose both the long and short position? (TIS Section 6910)
- As mentioned earlier, for the purposes of five percent test, long position and short position in any one issuer should be considered separately. If the value of the long position exceeds five percent, disclosure of the long position is required. If the value of the short position is less than five percent, disclosure is not required.
- (3) How should the disclosure be made on the schedule of investment when the investment company holds one or more types of securities and/or one or more types of derivatives of the same issuer? (TIS Section 6910)
- The fair value of the securities and derivatives that are classified as assets should be aggregated. To the extent the sum constitutes more than five percent of the net assets, each position must be presented separately in the condensed schedule of investments. Similarly, the fair value of the securities and derivates that are classified as liabilities should be aggregated to determine whether the sum constitutes more than five percent of the net assets. Each position should be then presented separately on the condensed schedule of investments.
- (4) When comparative financial statements are presented, should the schedule of investments be presented as of the end of each period? (TIA Section 6910)
- Because the schedule of investments is considered significant relative to the statement of assets and liabilities, for each statement of assets and liabilities presented, a schedule of investment should be also presented.
What would you like to do?