Expense Reimbursement Recoupment Example

In the following example, a fund has three share classes and each one is set up with an expense reimbursement. Share class A and B are below the expense cap, while share class C is above the expense cap. Below this table, some notes describe each share class scenario.

Share Class A. This class has a recoupment amount of $5,901.64. (Gross expenses of $240,000.00 – Fee limit of $245,901.64). A contractual cap is not calculated because the gross expenses are below the fee limit. The NAV Component for this record is Prior Night Net Assets, which are 225,000,000.00. This amount is greater than the recoupment threshold value of 200,000,000.00, so the system processes the recoupment. The Prior Year Recoupment Recovery Order recoupment processing election is Target Prior Year Only/Oldest Year 1^st, going back 2 years. The 5,901.64 is taken from the 2014 prior year balances, which leaves the remaining balance for 2014 as $119,098.36 (125,000.00 – 5,901.64)

Share Class B. This class has a recoupment amount of $3,934.43. (Gross expenses of $160,000.00 – Fee limit of $163,934.43). A contractual cap is not calculated because the gross expenses are below the fee limit. The NAV Component for this record is Prior Night Net Assets, which are 150,000,000.00. This amount is less than the recoupment threshold value of 200,000,000.00, so the recoupment is not processed.

Share Class C. This class has a reimbursement amount of $18,387.98. (Gross expenses of $155,000.00 – Fee limit of $136,612.02). The system calculates the contractual cap limit because there is a reimbursement to process. The contractual cap limit is $145,150.27 (Prior Night Assets of $125,000,000.00 * Contractual Cap Value of 0.425 / Days in year 366 for 2016). The contractual cap value to store is $9,849.73. (Gross expenses of $155,000.00 – Fee limit of $145,150.07). The system stores $9,849.73 within Eagle Accounting and does not recoup it until at least the next fiscal year.