Set Up Share Classes for NII Distributions

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 affect NII calculations. For general information about creating and editing share classes, see Manage Share Classes. 

Minimum Yield (tag 4992). You can specify a Minimum Yield (tag 4992) value for a share class when you create or edit a share class. This value identifies 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. 

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 system calculates the mil rate and yield for the share class, but does not post the distribution to the ledger and subledger. You use the Calculate Accumulated NII panel to post the accumulated distributions to the ledger and subledger.

• Distribute. Allows the share class to distribute net investment income. When you calculate net investment income, the system calculates the mil rate and yield for the share class, and posts the distribution to the ledger and subledger.