Portfolio Disclosure of Cash

This article was originally published in the Investment Funds Practitioner in March 2014.

We received an inquiry as to the appropriate disclosure of cash and money market funds in the management report of fund performance (MRFP), Fund Facts, and quarterly portfolio disclosure. In staff's view, cash is a portfolio holding and must be included in a summary of investment portfolio in order to provide the reader with a complete understanding of the portfolio, especially if the level of cash held is significant.

The summary of investment portfolio in the MRFP is comprised of a listing of the top 25 positions and a portfolio breakdown into subgroups. In the top 25, staff expect cash and cash equivalents to be disclosed on a line separate from an investment in a money market fund. Cash, cash equivalents and money market funds cannot be treated interchangeably because money market funds, as defined in securities legislation,1 have the ability to invest in short-term debt in addition to cash and cash equivalents. Additionally, presenting a money market fund as a separate holding is consistent with how we expect any investment in another mutual fund to appear in the top 25. In the portfolio breakdown, however, holdings in money market funds can be grouped with cash and cash equivalents into one category. Staff hold this view because the summary nature of the portfolio breakdown allows for flexibility to group money market funds, cash and cash equivalents together.

In the Fund Facts, the same treatment should be applied in the top 10 investments, separating cash and cash equivalents from money market funds. We remind investment funds of the instruction in the Fund Facts form to use subgroups in the investment mix that are consistent with the fund's MRFP disclosure.

The top 25 holdings in the quarterly portfolio disclosure should be exactly the same as the fund's MRFP disclosure because of the requirement to prepare the quarterly portfolio disclosure in accordance with MRFP requirements.

1Item 1.1 of National Instrument 81-102 Mutual Funds.