Page Comparison

Performance fees determine a fee based on the difference between a fund return and an assigned benchmark return.  

Performance fees differ from other expense types in that they are associated with a rolling performance period and a rolling average NAV component.  Other types of expenses usually have one open ended period, and use a prior day NAV based component. For example, a regular variable expense accrues daily, until you close the fee. Every day, the variable expense looks up the prior day NAV, multiples it by a tiered rate, and posts the result as the fee. In contrast, a variable performance fee has many consecutive rules, each spanning a single performance period. For every day in the rule, it calculates an average NAV for the current period.  It multiplies the average NAV  by a performance rate, and posts the result as the fee. The system automatically creates the next period rule created on the last day of the current period fee rule. You must close the latest fee rule in order to stop the fee.

Type of Performance Fees

Eagle's expense processing allows you to calculate

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three types of performance fees:

• Current Period Variable Expense (PVX). The system calculates this fee ion a daily basis. Each day you input the performance and benchmark returns and the expense process determines the new daily performance fee posting The performance fee is based on daily returns in the current period. It includes return and NAV for all the days in the current fee rule period. Calculations are always based on prior day numbers, so at the beginning of the next period, the system calculates the expense for the final day in the prior period and creates a separate true-up rule to get to the correct fee for that period.
• Prior Period Budgeted Expense (PBX). The system calculates this fee once per calculation period (monthly, quarterly, and so on) and then spreads the calculated expense over the number of days in the calculation  The performance fee is based on the returns and average NAV for the prior period end date. It does not use any return or NAV data for the current rule period. It projects the prior period data onto the current period, spreading (or budgeting) the calculated fee over the current performance period.
• Prior Period Estimated Budgeted Expense (PEX). This fee is similar to the Prior Period Budgeted Expense, but with two differences. You can select a NAV Comparison period for this type of fee. If the fee is set up to use average net assets of 1 year, but also has a NAV comparison period of monthly average net assets, the procedure calculates the performance fee using both NAV components and applies the fee that is of the smaller value. Also, this type of fee always calculates a true-up amount for the prior period to ensure the fee is accurate for the prior period. it treats the projection like an estimate. The performance fee is based on the returns and average NAV for the prior period end date. It does not use any return or NAV data for the current rule period. It projects the prior period data onto the current period, spreading (or budgeting) the calculated fee over the current performance period. However, at the beginning of the next fee period, as with Current Period Variable Expense, it calculates the actual expense for the prior period and creates a separate true-up rule to get to the correct fee for that period.

You can set up performance fees only at the Total Fund level. Funds can elect to compare the performance of one share class to a benchmark, but the system always accrues the fee amount at the Total Fund level, and allocates it to all classes according to the fund's allocation methodology if the fund is a multiple class fund. 

The system can calculate average net assets up to a five-year period and can calculate a prior period performance fee without posting the fee to the accounting ledger.

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following pages describe each type of performance fee in greater detail.

WRITERS NOTE: need better description of how the 3 fees work from a business perspective