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Share class hedging allows a share class to have exposure to assets/securities denominated in a foreign currency without the associated currency risk of the base currency of the fund. A share class can elect to use share class hedging in order to allow Eagle Accounting to allocate the currency gain/loss directly to the hedge class.

Because the currency of money inflows and outflow is different than the base currency of the fund, Eagle Accounting lets investment managers open forward positions in a sector to offset the currency market fluctuation. The realized and unrealized activity from these positions is allocated directly to the hedge share class. However, the capital stock that is booked on the hedge share class is still subject to currency gain loss and, by default, Eagle Accounting allocates the gain/loss on currency to all share classes. Eagle Accounting allows a share class to elect share class hedging to ensure that realized gain-loss on capital stock settlements is fully allocated to the hedge share class. When a share class settles a non base capital stock subscription or redemption and the Share Class Hedging election is Yes, then the gain/losses from that settlement are fully allocated to the hedge share class.

You can use the Hedge Ratios report to verify currency hedge ratios of your hedge share classes in order to verify that your hedge share classes are properly hedged.WRITERS NOTE: Revised. Review again