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There are several options that you can set up for each master fund that uses preferred shares processing. You can use the Create Master Fund panel or the Edit Master Fund/Sector panel to set up master funds for preferred shares processing.

To set up a master fund for preferred shares processing:

  1. In Accounting Center, in the left navigation pane, click Setup > Portfolio Setup > Mutual Funds > Create Master Fund. 
    You see the Create Master Fund panel where you can add a master fund. Otherwise, you can select the Edit Master Fund/Sector option to change a master fund.
  2. In the Open/Closed-end Fund list, click Closed.
  3. In the Preferred Shares Processing list, click Yes. 
    In the Fund Distribution Fields section, the Daily Distribution Method field displays a value of Preferred Stock Distributions. 
  4. Complete the remaining options in the panel, as appropriate.
  5. Click Submit.

The following are the options in the Master Fund Setup panel that affect preferred shares processing. For a complete list of panel options, see Create Master Fund Panel Options.

Create Master Fund Panel Options - Fields That Affect Preferred Shares Processing


Option

Tag

Description

Master Fund Identification

Open/Closed-end Fund1855

Indicates whether the entity is an open-end or closed-end fund. Options include:

  • Open
  • Closed
Preferred Shares Processing16858

Indicates whether the master fund is eligible for preferred shares processing. This field appears if you set the Open/Closed-end Fund field to a value of Closed. Options include: 

  • Yes. The fund is eligible for preferred shares processing. If you select Yes, under Fund Distribution Fields, the Daily Distribution Method field displays a value of Preferred Stock Distributions. 
  • No, The fund is not eligible for preferred shares processing.
NAV Processing

NAV Rule16850Identifies the name of the NAV rule for the master fund. The NAV ledger rule defines a range of ledger accounts that the system uses to calculate a total net asset value. When you use preferred shares processing, you can specify a NAV rule for the master fund to exclude preferred shares ledger accounts from the total net asset calculation amount.
Fund Distribution Fields



Daily Distribution Method

3904

Specifies the method the system uses to calculate the daily income distribution amount. Options include:

  • Fixed Rate.Default. Identifies the daily distribution as a fixed rate distribution. The system distributes a specified percentage of cap stock as income. If you select this option, the Fixed/NII Distribution Shares fields becomes available.
  • Net Investment Income.Identifies the daily distribution as net investment income. The system distributes all of the entity's net income daily. If you select this option, the Fixed/NII Set Rate Distribution Shares, Net Investment Income Rule, Late Activity Distribution Adjustment, Distribution Absorption Method, and Net Investment Income Split Method fields become available.
  • No Processing.Identifies the daily distribution as needing no processing.
  • Set Rate.Identifies the daily distribution as a set rate. The system calculates and reports a set distribution rate for each class of a multi class fund based on the base class rate that is established when you set up set rate processing. If you select this option, the Fixed/NII Set Rate Distribution Shares becomes available. Use this field to enter the distribution share type for the set rate.
  • Preferred Stock Distributions. Identifies the daily distribution as a preferred stock distribution when you track preferred shares ownership for closed-end funds. To use this option, you must first set the Preferred Shares Processing field to Yes. The Daily Distribution Method option then displays a value of Preferred Stock Distributions, and you cannot change it.

WRITERS NOTE: last bullet is new.