MFP Gross Performance Accrual Methodology (Sys Item 16)

Although expenses are always reinvested at month end, the method by which the expense accrual is calculated can either be monthly or daily. The system default is M for Monthly. You can set it to Daily processing by changing the value to D.

In the Monthly Accrual method, the annual ratio is first converted into a daily ratio, then multiplied by the number of days in a month to derive the monthly expense ratio. The monthly expense ratio is multiplied by the month end NAV to get a per share equivalent. The per share equivalent is multiplied by the accumulated share balance as of the end of the day prior to the month end date. With the Monthly Accrual methodology, you must have prices loaded for each month end in the performance period. If you are using the Monthly Accrual method and you are missing a month end price record, Eagle does not estimate the return. Instead, the Diagnostic tab (and report log) shows an error message indicating the system is missing a required price.

In the Daily Accrual method, the annual ratio is converted to a daily ratio. The daily ratio is multiplied by each day's NAV during the month to derive a per share equivalent. The daily per share equivalent is multiplied by the prior day's (end of day) shares to derive the one day accrual for that day. The daily accrual amount is then summed up as of the end of the month and reinvested as of the end of the month. The Daily Accrual method requires that prices exist for each day of the performance period.

If you are using the Daily Accrual method and you are missing a price record for any day during the performance period, Eagle Performance does not calculate a gross return. Instead, the Diagnostic tab (and report log) shows an error message indicating the system is missing a required price. Since many firms cannot guarantee the existence of daily NAVs, the system defaults to the Monthly Accrual method.

MFP Gross Return Reinvestment (Sys Item 17)

As noted earlier, the reinvestment of expense adjustments is always done at month end. Eagle Performance supports only one assumption for when the adjustments occur, so it is not necessary to provide a system setting. However, the system includes one for the purpose of providing flexibility in the future (as necessary). The system default is M for monthly. No other frequencies are supported at this time.

MFP Gross Up Before Other Distributions (Sys Item 18)

There are two options for this setting, N (No) and Y (Yes). The default is N (No). This option is meant to control the share balance that is used when calculating the reinvestment of actual distribution activity. If the setting is N (No), the impact of both the expenses and distributions are calculated using the prior day's end-of-day share balance. If the setting is Y (Yes), the calculation first reinvests the expense accrual (which is calculated using the prior day's shares as noted above). Once the share balance has been increased by the expense, it reinvests the distributions. This has the effect of increasing the share balance used to calculate the reinvestment shares of the distribution.

Eagle could not find commentary from a governing body, stating that it is a requirement to reinvest expense adjustments prior to calculating the effect of actual distributions. Therefore, the system default for this setting is N (No). This means that the effects of both expenses and actual distribution activity (for the same day) are based on the same prior day share balance.

MFP Tax Adjustments (Sys Item 20)

There are two options for this setting, N (No) and Y (Yes). This option is meant to control whether or not the reinvestment shares from expense adjustments are subject to post-tax and post-liquidation processing. If the setting is N (No), and the dynamic mutual fund performance field is set to be a post-tax or post-liquidation field, the calculation does not tax the expense accrual amount. Nor does it track the cost basis and apply post-liquidation processing (it continues to tax adjust distribution activity). If the setting is Y (Yes) and the field is either post-tax or post liquidation, the expense accrual is taxed as income prior to reinvestment. The reinvestment shares are then tracked just like a distribution and treated the same in terms of post-liquidation processing. The default for this setting is N (No).