About the Swing NAV Adjustment

The Swing Pricing mechanism allows you to adjust the fund’s NAV by a predefined Swing Factor. The adjustment to the NAV captures the costs incurred as a result of redemptions from, and subscriptions into, the fund.

On a daily basis, the system retrieves cashflow estimates from the Transfer Agent (TA) and compares them to a predefined threshold. If the estimates exceed the threshold, the system applies the swing factor to the end-of-day Total Net Assets (TNA) to calculate the swing NAV adjustment. Additionally, you have the option to set up the fund for daily swings without any tolerance checks.

The system uses either the Inside or Outside method to manage the swing NAV adjustment, which you can specify when configuring the Swing Decision Rules.

Inside Method

The Inside method applies the calculated swing NAV adjustment to the general ledger at the individual class levels and rolls it up as a summed Total Fund (TF) level posting on the ledger reports.

The general ledger activity for the adjustment posts to the following ledger accounts:

• 1005000410 - Dilution Receivable (TF level posting on the balance sheet side of the trial)

• 3002000700 - Dilution (Class level posting on the capital account that rolls up to TF)

Additionally, the system automatically posts a reversal of the swing NAV adjustment on the following business day to the same ledger accounts. This posting adjusts your daily accounting NAV per share and is published to the market. The adjusted NAV impacts the nightly distribution yield calculations and next-day expense calculations that use prior day’s net asset value.

The pre and post swing NAV data are stored in a separate sub ledger table and can be viewed in the Swing NAV History Report.

Outside Method

The Outside method does not apply the calculated swing NAV adjustment to the general ledger and has no impact on the daily accounting NAV per share. Instead, the system uses the unswung NAV for distribution yield calculations and next-day expense calculations. For TA purposes, the system virtually calculates the swing NAV adjustment.

The pre and post swing NAV data are stored on the sub ledger table and can be viewed in the Swing NAV History Report.