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The basic calculation of the expense accrual amount can be described as a series of steps that occur during the dynamic calculation process. These steps follow:
Look up the annual expense ratio for a fund.
For each month in the specified performance period:
Determine how many days are in the year.
Determine how many days are in the month.
Calculate a daily expense ratio (Annual Ratio / Days in Year).
Calculate a monthly expense ratio (Daily Ratio * Days in Month).
Calculate the monthly expense factor (Monthly Expense Ratio * Month End NAV).
Calculate the monthly expense accrual (Monthly Expense Factor * Prior Share Balance*).
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| *Prior Share Balance refers to a cumulative share balance that is generated dynamically at the run time of the report. |
At each month end, the expense accrual is reinvested in more shares of the fund.
At the end of the period, determine the final valuation and calculate the return ((Ending MV/Begin MV) - 1) * 100.
The system can also calculate a return that has been adjusted for expense waivers. The same processing occurs, however shares are removed from the accumulating balance.