When you set up master funds for use with Net Investment Income as its daily distribution method, ensure you update master funds and share classes as follows.
Update Master Funds
When you create or edit master funds that use a daily distribution method of Net Investment Income, ensure you review the master fund's Fund Distribution Fields settings. You can use the Create Master Fund panel or the Edit Master Fund/Sector panel to set up master funds for NII distributions.
To set up a master fund for NII distribution processing:
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In Accounting Center, in the left navigation pane, click Setup > Portfolio Setup >
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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.In
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the Daily Distribution Method
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list,
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click Net Investment Income.
Complete the Fund Distribution group of fields on the Create Master Fund panel that affect NII processing.
A description of these options follows.Complete the remaining fields in the panel, as appropriate.
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Click Submit.
The following are the Fund Distribution Fields options in the Master Fund Setup panel that affect NII distributions. For a complete list of panel options,
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see Create Master Fund Panel Options.
Create Master Fund Panel Options - Fund Distribution Fields That Affect NII Distributions
Option | Tag | Description |
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Fund Distribution Fields | ||
Daily Distribution Method | 3904 | Specifies the method the system uses to calculate the daily income distribution amount. Options include:
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Fixed/NII/Set Rate Distribution Shares | 3906 | Specifies the share base of the fixed |
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, net investment income (NII), or set rate distribution. This option is required if you set the Daily Distribution Method field to Fixed Rate, |
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Net Investment Income, or Set Rate. Options include Outstanding Shares and Settled Shares. | ||
Net Investment Income Rule | 3909 | Specifies a valid net investment income rule. For more information, |
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Late Activity Distribution Adjustment | 11959 | Flags late activity distribution adjustments. For example, if you set the Daily Distribution Method field to Net Investment Income and you set this field to Yes, you have the option of reversing late activity and reprocessing net investment income to include late distribution activity. For more information, see Understand NII Distribution Adjustments. Options include:
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Distribution Absorption Method | 4957 | Determines how to allocate an income distribution when it falls under a defined threshold. Options include:
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Net Investment Income Split Method | 5045 | Determines the method to use for split dividend processing. Split dividend processing allows you to split mil rates when ex-dates occur on non business dates. This option appears if you set the Daily Distribution Method field to a value of Net Investment Income. You can select a method if you set the Non Business Day Processing field (tag 3907) to a value of Process with Previous Business Day. If you use split dividend processing, you must add a distribution schedule that identifies the ex-dates. Options include:
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Waterfall Waiver Hierarchy Rule - Fund | 16730 | Identifies the waterfall waiver NII hierarchy fund rule for waterfall waiver yield to minimum distribution adjustments. This field appears if you set the Daily Distribution Method to Net Investment Income, set Special Waiver Processing to Waterfall Waiver Daily or to Waterfall Waiver FYTD, and set the Distribution Absorption Method field to Waterfall Waiver. |
Waterfall Waiver Hierarchy Rule - Class | 7038 | Identifies the waterfall waiver NII hierarchy class rule for waterfall waiver yield to minimum distribution adjustments. This field appears if you set the Daily Distribution Method to Net Investment Income, set Special Waiver Processing to Waterfall Waiver Daily or to Waterfall Waiver FYTD, and set the Distribution Absorption Method field to Waterfall Waiver. |
Expense Reimbursement Tier Rule | 5038 | Identifies the expense reimbursement tier rule. |
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rule allows a fund to waive expenses to separate waiver accounts if expenses exceed income in a fund that elects to fully distribute net investment income (NII). If you do not specify an expense reimbursement tier rule, the system reimburses expenses to one default ledger account for fund dividend expense reimbursement if expenses exceed income in a fund that elects to fully distribute net investment income (NII). |
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This option appears if you set the Distribution Absorption Method field to a value of Expense Reimbursement. | ||
Mutual Fund Yield Divisor | 5040 | Specifies the yield divisor used to calculate a yield for mutual funds that use net investment income (NII) distribution processing. Options include:
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Update Share Classes
When you set up master funds that use a daily distribution method of Net Investment Income, there are several options at the share class level that can also affect NII calculations.
Minimum Yield (tag 4992). You can specify the Minimum Yield (tag 4992) for a share class when you update a share class. If you specify a value, this value indicates the minimum yield that a daily distributing master fund entity must obtain. If the net investment income (NII) process calculates a yield below this threshold, it recalculates the distribution amount to equal this threshold. It processes an expense reimbursement to adjust NII and maintain the minimum yield. The system automatically posts the difference to a dividend expense reimbursement account. The system reports the minimum yield as a percentage; however, you must enter it as a numerical value. You can also enter a value for this field using the multi-row pane on the Create Master Fund panel.
WRITERS NOTE: have DD review revised description for Minimum Yield
NII Distribution Method (tag 11475). You can select an NII Distribution Method (tag 11475) for a share class. This option determines if the share class accumulates or distributes net investment income (NII). Options include:
- Accumulate. Allows the share class to accumulate net investment income. When you calculate net investment income, the mil rate and yield are calculated for the share class, but the distribution is not posted to the ledger and subledger. You can use the Calculate Accumulated NII panel to post accumulated distributions.
- Distribute. Allows the share class to distribute net investment income. When you calculate net investment income, the mil rate and yield are calculated for the share class, and the distribution is posted to the ledger and subledger.
For a description of all share class options, see Create Entity Share Class Information Panel Options.
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