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 additional share class options, see Create Entity Share Class Information Panel Options.
WRITERS NOTE: update changes for entity and share class panels.
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