Understand Preferred Shares Processing

When you set up preferred shares processing:

• Create NAV Rules. Set up a NAV ledger rule that allows an entity to include the appropriate ledger accounts when the system calculates a total net asset value. For more information, see Manage NAV Rules.

• Set Up Master Funds. Identify the closed-end fund, elect preferred shares processing, and attach the NAV rule to the entity. For more information, see Set Up Entities for Preferred Shares Processing.

• Set Up Share Series. Review the codes used for share series. For more information, see Manage Preferred Share Series Code Values.

• Book Preferred Stock Transactions. The preferred stock processing procedure calculates the correct sub paid in surplus for each transaction and books each transaction to the ledger and subledger. The database stores preferred stock transactions and the balance of each preferred stock series. For information on booking, cancelling, and viewing preferred stock activity, see Manage Preferred Shares Transactions.

• Set Up Preferred Shares Distributions. If a preferred stock series elects to have a daily distribution accrual, you can set up a daily distribution rate. Once the system calculates all preferred stock processing as well as other fund transaction activity, it calculates the transaction close process and posts preferred stock distributions to the ledger and subledger. For more information, see Set Up Preferred Shares Distributions.

• Understand NAV Calculation. During valuation close, the system uses the NAV rule assigned to the entity to calculate the total net asset value of the fund. It stores the NAV amount and uses it for NAV reporting. For more information, see Understand NAV Calculation for Preferred Shares.