Annual Ratio Methodology

The Annual Ratio methodology is built into the dynamic calculation engine. It is optionally enabled by clicking a box within a dynamic mutual fund performance field. Once enabled, the return is grossed up by reinvesting an expense accrual amount (based on the fund's annual expense ratio) at each month end.
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:

1. Look up the annual expense ratio for a fund.
2. 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*).

  Note:

  Prior Share Balance refers to a cumulative share balance that is generated dynamically at the run time of the report.

1. At each month end, the expense accrual is reinvested in more shares of the fund.
2. 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.