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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – PASSED INCOME
1 Overview .......................................................................................................... 1 2 Interest Processing ............................................................................................ 3
2.1 POOLED FUND ACTIVITY ...................................................................................... 3 2.2 INTEREST ALLOCATION ..................................................................................... 16 2.3 TOP-LEVEL FUND ACTIVITY ................................................................................ 18
3 Dividend Processing ......................................................................................... 20 3.1 DIVIDEND ALLOCATION ..................................................................................... 24 3.2 TOP-LEVEL FUND ACTIVITY ................................................................................ 28
4 Interest on Pool Cash ....................................................................................... 30 5 Reconciliation of Top-Level Funds to the Pool ....................................................... 33 6 Top-Level Fund Valuation .................................................................................. 34
6.1 DISTRIBUTION AND ACCUMULATION OF INCOME ........................................................ 34
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
1 OVERVIEW
This section describes the processing of income activity within the Pooled Funds structure. Income accruals as well as payments can processed in the Pool or the Top-Level Fund, including interest, dividends and any related withholding and reclaim. The user can choose whether to settle income in the Pool or the Top-Level Fund on the Account Special Processing Definition (AASP) screen. The POOL ALLOC field on AASP allows the user to decide whether to settle income at the Pool Level (option 1 or 2), or at the Top-Level (option 3). For Pools which have no base country defined, tax will be calculated for the Pool fund based on the country and tax group of each Top-Level invested into that pool. The withholding and reclaim values attributable to each Top-level Fund are then allocated down to the same fund as if these values were independently calculated at the Top-Level Fund. The following examples demonstrate the income movements that occur based on which POOL ALLOCATION option (1, 2, or 3) is selected on the AASP screen:
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
2 INTEREST PROCESSING
2.1 POOLED FUND ACTIVITY
PURCHASED INCOME Special consideration must be given to purchased and sold income on bonds. Interest purchased/sold on a bond is not split as income to the funds owning the pool. It is not income earned, but a receivable purchased with pool assets. As such, it is an asset of the pool to be split to the funds based on the current allocation factors, just like any other asset, and it remains part of the Pool NAV. This also applies to any unrealized/realized “FX” gain and loss on purchased/sold interest. Income sold on the sale of a bond position is first applied to any purchased income on the position. The sold income decreases the value of the purchased income. (The income has been received so the receivable can be cleared.) After the purchased income has been cleared, any remaining sold income is earned, and as such is passed out of the Investment Pool to the Top-Level Fund. Example 1: Settled Foreign BUY with Purchased Interest. On 1st September, Pool A based in GBP processes a settled Buy on a USD Bond. The exchange rate is 1.3:
BUY USD GBP
Principal 10,000.00 7,692.31
Income 991.67 762.82
General Ledger Debit Credit
BUY
DR Income 762.82
DR Security at Value 7,692.31
DR Passed Liability 762.82
CR Currency Allowance 8,455.13
CR Passed Income 762.82
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Debit Credit
Generated CDN
DR Currency Allowance 8,455.13
CR Currency at Value 8,455.13
Generated INCTR
DR Cash (Principal) 762.82
CR Cash (Income) 762.82
Manual CBUY
DR Currency at Value 8,455.13
CR Cash (Principal) 8,455.13
INCOME ACCRUAL The daily accrued income is allocated to the Top-Level funds based on the current ownership in the Pool for that day. Only the Interest accrual on fixed income securities and any related revaluation of the accrual held in a Pool generate passed accrual. The Passed Values for all income are displayed in the Account Valuation Balance (VSVB3) screen. The purchased interest or any revaluation of the purchased interest is not included in the passed accrual as it is treated as an Asset. Example 1 (continued): Accrued Income following BUY transaction. On the 1st of September the USD Bond displays the following amounts on VSHO:
VSHO USD GBP
Purchased 991.67 762.82
Income 994.44 764.95
Daily Accrual 2.77 2.13
General Ledger Debit Credit
Accrual
DR Accrued Inc. Recv’ble 764.95
DR Passed Income 764.95
CR Income 764.95
CR Passed Liability 764.95
Passed Accrual
DR Passed Liability 764.95
CR Other Payable 764.95
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Remaining Balance after Settled Buy and Accrual
Capital Asset
Security at Value 7,692.31
Cash Principal (7,692.31)
Income Asset
Cash (Income) (762.82)
Accrued Inc. Rec’ble 764.95
Income Liability
Other Payable (764.95)
Passed Liability 762.82
Income P/L
Income (2.13)
Passed Income 2.13
REVALUATION OF INCOME The 2nd September exchange rate is 1.4. The revaluation of the income is split between the revaluation of the purchased interest (remains in the NAV of the Pool) and revaluation of the earned income (is passed). For this example we assume the price of the security remains the same. Purchased
USD 991.67 / 1.3 = GBP 762.82
USD 991.67 / 1.4 = GBP 708.33 Revaluation: 54.49
Earned Income
USD 2.77 / 1.3 = GBP 2.13
USD 2.77 / 1.4 = GBP 1.98 Revaluation: 0.15
Additional Accrual 2nd
USD 2.77 / 1.4 = GBP 1.98
General Ledger Debit Credit
Purchased Interest revaluation
DR Unrealised Exch. G/L 54.49
DR Other Receivable Capital (A038) 54.49
Earned Income Revaluation
DR Unrealised Exch. G/L 0.15
CR Accrued Inc. Rec’ble 0.15
Passed Accrual Revaluation
DR Other Payable 0.15
CR Unrealised Exch. G/L 0.15
Accrual
DR Accrued Inc. Rec’ble 1.98
DR Passed Income 1.98
CR Income 1.98
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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General Ledger Debit Credit
CR Passed Liability 1.98
Passed Accrual
DR Passed Liability 1.98
CR Other Payable 1.98
Remaining Balance after Settled Buy, Revaluation and Accrual
Capital Asset
Security at Value 7,692.31
Cash Principal (7,692.31)
Other Receivable Capital (54.49)
Capital
Unrealised Exchange G/L 54.49
Income Asset
Cash (Income) (762.82)
Accrued Inc. Rec’ble 766.78
Income Liability
Other Payable (766.78)
Passed Liability 762.82
Income P/L
Income (4.11)
Passed Income 4.11
INTEREST RECEIPT WITH PURCHASED INCOME
When the interest is received, it relieves the purchased income first before relieving any earned income. The INT transaction generates a PSINC for the earned income amount only. The purchased income portion is allocated as a receivable, like any other asset. Example 1 (continued): INT Receipt following BUY transaction, accrual and revaluation. On the 3rd September the Pool receives the INT payment and the exchange rate is now 1.5.
INT USD GBP Income 997.21 664.80 PSINC Sum of Daily Accrual 5.54 3.69 The revaluation of the INT transaction needs to be split between Purchased Income and Earned Income. The purchased Income and its revaluation remain in the NAV of the Pool, where the Earned Income and its revaluation is passed out of the Pool: Local USD Rate Base GBP Basis GBP Revaluation INT 997.21 1.5 664.80 766.78 - 101.98 Purchased 991.67 1.5 661.11 762.82 - 101.71 Earned 5.54 1.5 3.69 3.96 -0.27
SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
As per current functionality, Investment Accounting (InvestOne) reverses out all accrual and revaluation before posting the INT transaction:
General Ledger Debit Credit
Reversal of Accrual
DR Passed Liability 766.93
DR Income 766.93
CR Unrealised Exch G/L 0.15
CR Passed Income 766.93
CR Accrued Income Receivable 766.78
Reversal of Passed Accrual
DR Other Payable 766.78
DR Unrealised Exch G/L 0.15
CR Passed Liability 766.93
Reversal of Purchased Income Revaluation
DR Other Receivable Capital 54.49
DR Unrealised Exch G/L 54.49
Debit Credit
Generated INT
DR Real. Exch. G/L (inc) 0.27
DR Real. Exch G/L 101.71
DR Currency Allowance 664.80
DR Passed Income 766.78
CR Income 766.78
CR Passed Liability 766.78
Generated CUP USD 0001
DR Currency at Value 664.80
CR Currency Allowance 664.80
Generated CSELL USD 0001
DR Cash Income 664.80
CR Currency at Value 664.80
Generated PSINC Passed Interest
DR Passed Liability 3.96
CR Currency Allowance 3.69
CR Real Exch G/L (inc) 0.27
Generated CDN USD 0001
DR Currency Allowance 3.69
CR Currency at Value 3.69
Manual CBUY USD 0001
DR Currency at Value 3.69
CR Cash Income 3.69
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Debit Credit
Generated CAPTR
DR Cash Income 101.71
CR Cash Principal 101.71
Remaining Balance after INT
Capital Asset
Security at Value 7,692.31
Cash Principal (7,794.02)
Other Receivable Capital 0.00
Capital
Realised Exchange G/L 101.71
Unrealised Exchange G/L 0.00
Income Asset
Cash (Income) 0.00
Accrued Inc. Rec’ble 0.00
Income Liability
Other Payable 0.00
Passed Liability 0.00
Income P/L
Income (3.96)
Passed Income 3.96
Realised G/L Inc 0.00
ALERT: The user must make sure that no currency income is left in the pool after the INT has been process. A manual CBUY transaction can be entered for the PSINC Value and a CSELL can be generated for the INT transaction using the “FX” flag on the DAFT screen. If currency income is left in the Pool, the system automatically revalues the balance using the exchange rate of that day leaving an income balance in the Pool and therefore an incorrect NAV. The utility report run on the Pooling Analysis (POOLRP) screen flags any income balance left in the Pool.
INTEREST PAYMENT WITH PURCHASED INCOME (INCOME SETTLES IN TOP-LEVEL)
Provided that the relieved purchased income is an asset of the fund, it has to settle in the pool, no matter how the pool chooses to settle its income. With this being said, the income transaction which relieves purchased interest needs to have different general ledger effects from regular income transactions when the Pool chooses to settle income in the Top-Level Fund (Pool Allocation 3 on AASP screen). Further, earned income needs to be booked under Currency Allowance and the portion of income that represents purchased interest has to be accounted for under Pooled Currency Allowance because it belongs to the pool.
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
General Ledger for Interest or Short Interest
On Effective Date
INT DR Other Income Receivable
CR Interest
On Actual Settle date
INT DR Pooled Currency Allowance
CR Other Income Payable
On Effective Date
INTOP DR Interest
CR Other Income Payable
On Actual Settle Date
INTOP DR Other Income Payable
CR Pooled Currency Allowance
For all foreign interest transactions that relieve purchased income in the Top-Level Fund, one currency transaction (CUP) for the amount of purchased income must be generated to update Pool’s currency. A separate CUP has to be generated to update the currency balance of the TLF for the amount of earned income. The below diagram shows the currency transactions that need to be generated for the INT payments that relieve purchased interest.
Purchased Interest Earned Interest INT POOL:CCY* CUP CCY* CUP INTOP POOL:CCY* CDN CCY* CDN
* For Top-Level OEIC’s POOL:CCY and CCY with qualifier (0001).
Domestic income transactions that relieve purchased interest settle in the base currency of the Top-Level Fund and no CUP or CDN is needed for the earned income amount. However, the purchased interest still needs to be passed to pool’s currency by currency up/currency down transaction.
SOLD INCOME As with purchased interest, interest sold on a bond is not split as income to the funds owning the pool. Income sold on the sale of a bond position is first to be applied to any purchased income on the position. The sold income decreases the value of the purchased income first. (The income has been received so the receivable can be cleared.) After the purchased income has been cleared, any remaining sold income is earned and as such is passed out of the Investment Pool to the Top-Level Fund by a generated PSIC transaction. If the purchased income has already been previously relieved by an INT before the SELL occurs, the system still generates a PSIC transaction with zero value.
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Example 2: Settled Foreign SELL with Sold Interest. Taking the above example, on 3rd September, instead of an INT being generated, the security is sold. The revaluation of the SELL transaction needs to be split between Purchased Income and Earned Income. The purchased Income and its revaluation remain in the NAV of the Pool, where the Earned Income and its revaluation is passed out of the Pool: Local USD Rate Base GBP Basis GBP Revaluation SELL Principal 10,000.00 1.5 6,666.67 7,692.31 - 1,025.64 SELL Income 997.21 1.5 664.80 766.78 - 101.98 Purchased 991.67 1.5 661.11 762.82 - 101.71 Earned 5.54 1.5 3.69 3.96 - 0.27 As per current functionality, Investment Accounting (InvestOne) reverses out all accrual and revaluation before posting the SELL transaction:
General Ledger Debit Credit
Reversal of Accrual
DR Passed Liability 766.93
DR Income 766.93
CR Unrealised Exch G/L 0.15
CR Passed Income 766.93
CR Accrued Income Receivable 766.78
Reversal of Passed Accrual
DR Other Payable 766.78
DR Unrealised Exch G/L 0.15
CR Passed Liability 766.93
Reversal of Purchased Income Revaluation
DR Other Receivable Capital 54.49
DR Unrealised Exch G/L 54.49
Debit Credit
SELL
DR Real. Exch. G/L (inc) 0.27
DR Real. Exch G/L 1,127.35
DR Currency Allowance 7,331.47
DR Passed Income 766.78
CR Income 766.78
CR Passed Liability 766.78
CR Security at Value 7,692.31
Generated CUP
DR Currency at Value 7,331.47
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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Debit Credit
CR Currency Allowance 7,331.47
Generated PSIC Passed Interest
DR Passed Liability 3.96
CR Currency Allowance 3.69
CR Real Exch G/L (inc) 0.27
Generated CDN
DR Currency Allowance 3.69
CR Currency at Value 3.69
Manual CSELL USD
DR Cash Capital 7,327.78
CR Currency at Value 7,327.78
Generated CAPTR
DR Cash Income 762.82
CR Cash Principal 762.82
Remaining Balance after SELL
Capital Asset
Security at Value 0.00
Cash Principal (1,127.35)
Other Receivable Capital 0.00
Capital
Realised Exchange G/L 101.71
Unrealised Exchange G/L 0.00
Income Asset
Cash (Income) 0.00
Accrued Inc. Rec’ble 0.00
Income Liability
Other Payable 0.00
Passed Liability 0.00
Income P/L
Income (3.96)
Passed Income 3.96
Realised G/L Inc 0.00
MATURITY OF INCOME As with purchased/sold interest, interest matured on a bond is not split as income to the funds owning the pool. Income maturity on a bond position is first applied to any purchased income on the position. The maturity of income decreases the value of the purchased income first. (The income has been received so the receivable can be cleared.) After the purchased income has been cleared, the remaining income is earned and as such is passed out of the Investment Pool to the Top-Level Fund by a generated PSINC transaction.
SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Example 3: Settled Foreign MATU. Taking the above example, on 3rd September, instead of a SELL being generated, the security is matured. The revaluation of the MATU transaction needs to be split between Purchased Income and Earned Income. The purchased Income and its revaluation remain in the NAV of the Pool, where the Earned Income and its revaluation is passed out of the Pool: Local USD Rate Base GBP Basis GBP Revaluation MATU Principal 10,000.00 1.5 6,666.67 7,692.31 - 1,025.64 MATU Income 997.21 1.5 664.80 766.78 - 101.98 Purchased 991.67 1.5 661.11 762.82 - 101.71 Earned 5.54 1.5 3.69 3.96 - 0.27 As per current functionality, Investment Accounting (InvestOne) reverses out all accrual and revaluation before posting the MATU transaction:
General Ledger Debit Credit
Reversal of Accrual
DR Passed Liability 766.93
DR Income 766.93
CR Unrealised Exch G/L 0.15
CR Passed Income 766.93
CR Accrued Income Receivable 766.78
Reversal of Passed Accrual
DR Other Payable 766.78
DR Unrealised Exch G/L 0.15
CR Passed Liability 766.93
Reversal of Purchased Income Revaluation
DR Other Receivable Capital 54.49
DR Unrealised Exch G/L 54.49
Debit Credit
Generated MATU
DR Real. Exch. G/L (inc) 0.27
DR Real. Exch G/L 1,127.35
DR Currency Allowance 7,331.47
DR Passed Income 766.78
CR Income 766.78
CR Passed Liability 766.78
CR Security at Value 7,692.31
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
Generated CUP
DR Currency at Value 7,331.47
CR Currency Allowance 7,331.47
Manual CSELL USD
DR Cash Capital 7,331.47
CR Currency at Value 7,331.47
Generated PSINC Passed Maturity
DR Passed Liability 3.96
CR Currency Allowance 3.69
CR Real Exch G/L (inc) 0.27
Generated CDN 0001
DR Currency Allowance 3.69
CR Currency at Value 3.69
Generated CUP 0001
DR Currency at Value 664.80
CR Currency Allowance 664.80
Manual CSELL USD 0001
DR Cash Income 661.11
CR Currency at Value 661.11
Generated CAPTR
DR Cash Income 101.71
CR Cash Principal 101.71
Remaining Balance after MATU
Capital Asset
Security at Value 0.00
Cash Principal (462.65)
Other Receivable Capital 0.00
Capital
Realised Exchange G/L 101.71
Unrealised Exchange G/L 0.00
Income Asset
Cash (Income) 0.00
Accrued Inc. Rec’ble 0.00
Income Liability
Other Payable 0.00
Passed Liability 0.00
Income P/L
Income (3.96)
Passed Income 3.96
Realised G/L Inc 0.00
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
ALERT: The user must make sure that no currency income is left in the pool after the MATU has been process. A manual CSELL transaction must be entered. If currency income is left in the Pool, the system automatically revalues the balance using the exchange rate of that day leaving an income balance in the Pool and therefore an incorrect NAV. The utility report run on the Pooling Analysis (POOLRP) Screen flags any income balance left in the Pool.
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
TRANSACTION CODES As displayed in the example below, when interest are received, sold or matured with any withholding and reclaim, the system automatically generates a passed transaction to remove the earned income (not the purchased interest) from the NAV of the pool.
MATU PSINC SELL PSIC
MATU- PSINC- RSELL PSIC-
MATU+ PSINC RBSELL PSIC
RMATU PSINC-
RBMATU PSINC
INT PSINC RECL PSRECL
INT - PSINC- RECL- PSRCL-
INT + PSINC RECL+ PSRECL
RINT PSINC- RRECL PSRCL-
RBINT PSINC RBRECL PSRECL
WEXP PSWEXP RECU PSRECL
WEXP- PSWXP- RECU- PSRCL-
WEXP+ PSWXP RECU+ PSRECL
RWEXP PSWXP- RRECU PSRCL-
RBWEXP PSWEXP RBRECU PSRECL
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
2.2 INTEREST ALLOCATION
All purchased or earned interest is allocated to the Top Level Funds based on the current ownership factor. The allocation process only allocates the local values, as the Top Level Funds can have a different exchange rate source than the pool. Purchased Interest being an asset, it is rebalanced between Top Level Funds when a change of ownership occurs. The allocation can be summarized as follows: Accrual: Allocated using the current ownership factor.
Payment: Allocated using the sum of interest accruals for each TLF up to the prior day of the pay date. This stops the allocation of income to Top-Level Funds that are not entitled to it.
Adjustment: Allocated based on the ownership factors in effect as of the trade date of the transaction.
Reversal: Allocated based on the sum of the accrual as at trade date of the transaction. If the trade date of the reversal transaction (RINT) entered match the effective date of the original transaction (INT), then the amount of the reversal transaction is split to the TLF the same way as the original transaction was.
Payment with no accrual:
Allocated base on the ownership factors in effect as of the trade date of the transaction. A payment with no accrual is considered by the system as an adjustment.
EXAMPLES For the purpose of this example, all transactions are settled. ACCRUAL Pool 1 has the following activity:
Security UK Treasury Transaction BUY Settlement date Day1 Shares 10,000 Principal 10,000 Income 975 Daily accrual 2.77
POOL FUND A FUND B FUND C
DAY 1 Ownership 100% 50% 50% 0%
Purchased interest 975.00 487.50 487.50 0.00
Daily accrual 2.77 1.39 1.38 0.00
DAY 2 Ownership 100% 48% 22% 30%
Rebalancing of Purch. Int. -19.50 -273.00 292.50
Daily accrual 2.77 1.33 0.61 0.83
DAY 3 Ownership 100% 40% 15% 45%
Rebalancing of Purch. Int. -78.00 -68.25 146.25
Daily accrual 2.77 1.11 0.42 1.24
DAY 4 Ownership 100% 20% 45% 35%
Rebalancing of Purch. Int. -195.00 292.50 -97.50
Daily accrual 2.77 0.55 1.25 0.97
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION OF SUNGARD ASSET ARENA INVESTMENT ACCOUNTING. NO COPY OR OTHER REPRODUCTION SHALL BE MADE WITHOUT WRITTEN PERMISSION OF SUNGARD.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
PAYMENT On Day 4 the pool receives an Interest Payment. The INT is allocated based on the sum of the accruals and purchased income up to Day 3, plus or minus any rebalancing of purchased income happening on Day 4, to arrive at the total on which the payment allocation is based:
POOL FUND A FUND B FUND C TOTAL DAY 3 Sum of Purchased interest 975.00 390.00 146.25 438.75 Sum of Daily accrual 8.31 3.83 2.41 2.07
TOTAL 983.31 393.83 148.66 440.82 Rebalancing of Day 4. -195.00 292.50 -97.50
TOTAL 983.31 198.83 441.16 343.32
Sum of the Accrual Ownership 100% 20.220479807% 44.864793401% 34.91472679% Interest Receipt Allocation 983.31 198.83 441.16 343.32
ADJUSTMENT On Day 5 an Interest Adjustment is process for 150.00 on the pool with a Trade Date of Day 4. The allocation process uses the ownership factor as of the trade date entered on the INT – (day 4), not the sum of the accrual of Day 4, or the ownership factor of Day 5. If the user wants to make an adjustment on an INT related to a Bond, it is preferable to use Reversal and Rebook transactions, which allocate based on the sum of the accrual of the transaction being reversed. Adjustments are generally used for Interest on Cash balances. POOL FUND A FUND B FUND C DAY 4 Ownership 100% 20% 45% 35% Interest Receipt Allocation 983.31 198.83 441.16 343.32 DAY 5 Ownership 100% 25% 60% 15% INT – with trade day Day 4. -150.00 -30.00 -67.50 -52.50 REVERSALS On Day 5 a Reversal and Rebook for 1000 of the Interest received on Day 4 is processed on the pool with a Trade Date to equal the effective date of the original transaction. The allocation process allocates the reversal and rebook in exactly the same way as the original transaction if the pool fund allocates reversals based on effective date of the original trade ( ‘O’ on RV/RB field on AASP or ALOC RV/RB on DARV). With current ownership, any reversal and rebook with earned income or expense will allocate based on the sum of the accrual at the time of the original transaction. Purchased income will allocate on current ownership.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
POOL FUND A FUND B FUND C DAY 4 Ownership 100% 20% 45% 35% Interest Receipt Allocation 983.31 198.83 441.16 343.32 DAY 5 Ownership 100% 25% 60% 15% RINT with Trade Day 4. -983.31 -198.83 -441.16 -343.32 RBINT with Trade Date Day4 1,000.00 202.20 448.65 349.15
2.3 TOP-LEVEL FUND ACTIVITY
ACCRUAL All accruals are split to the Top-Level Funds using the allocation process. This process creates a holding and pool-lot records for each accrual. All interest accrual passed up from the Pool are in the currency of the security they originated from. The accruals are reported the same way as on any other funds types. In addition, they are also reported separately on the currency Balance Base Amounts (CBAL6) screen, and all Pool-Lots are displayed on the Pool Fund Data Analysis (VSPHDA) screen. On the transaction analysis report, the “Trading Account” Spectra code (A8) displays the Pool number from which the transaction originates in the event of the same transaction on the same security being processed on multiple pools.
PAYMENT When an Interest payment is received in the Pool, the allocation process automatically splits it to the Top-Level Funds based on the allocation method explained previously. An Interest Transaction INT is created on the Top-Level Fund and is shown passing through the pooled currency position of the Top-Level Fund. For Top-Level OEIC, it passes through the pooled income currency (qualifier 0001). All transactions coming from the Pool are considered global when being split to the Top-Level Fund. This is to make sure that the cash received from the Pool is dissociated from the base cash of the Top-Level Fund. Therefore, when an income transaction is processed (whether domestic or global), a currency transaction CUP is generated out of translation to update the currency balance. Another currency transaction CDN is also generated to update the currency balance for the currency paid to the funds. The two generated currency transactions are exactly offsetting each others, netting to zero. They simply track the flow of the currency through the pool, up to the Top-Level Funds. The interest is applied to the currency of the Top-Level Fund using the PSCCRC (Passed Cash/Currency Receipt) transaction. For Top-Level OEIC, it is written to the income currency (qualifier of 0001). Finally, a CSELL (Currency Sell) transaction is also generated to convert the currency to cash.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – OVERVIEW, INTEREST PROCESSING
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General Ledger for Interest or Reclaim
INT/RECL DR Pooled Currency Allowance
CR Interest Income or Withholding Tax Exp/Reclaim
CUP DR Pooled Currency at Value
CR Pooled Currency Allowance
CDN DR Pooled Currency Allowance
CR Pooled Currency at Value
PSCCRC DR Currency at Value
CR Pooled Currency Allowance
CSELL DR Cash (Income)
CR Currency at Value
Ending Result
DR Cash (Income)
CR Interest Income or Withholding Tax Exp/Reclaim
General Ledger for Withholding Tax
WEXP DR Withholding Tax Exp/Reclaim
CR Pooled Currency Allowance
CDN DR Pooled Currency Allowance
CR Pooled Currency at Value
CUP DR Pooled Currency at Value
CR Pooled Currency Allowance
PSCCPD DR Pooled Currency Allowance
CR Currency at Value
CBUY DR Currency at Value
CR Cash (Income)
Ending Result
DR Withholding Tax Exp/Reclaim
CR Cash (Income)
Pooled interest payments are reported separately on the Currency Balance Base Amount (CBAL6) screen and the Pool Fund Data Analysis (VSPHDA) screen.
SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
3 DIVIDEND PROCESSING
All dividends, withholding tax and reclaims are processed in the Pools for Pool funds with a base country defined on the Account Definition II (AAMF) screen and that select either Pool Allocation level 1 or 2, on the Account Special Processing Definition (AASP) screen. The Pools then pass all related dividend activity (accruals/payment) onto each Top-Level Fund. For Pools which have no base country defined, the gross dividend accruals is calculated based on the Pool holdings and passed to the Top Level Funds. For these Pools, withholding or reclaim accruals are calculated based on the base country/tax group (withholding tax and reclaim rates) of a TLF as well as the local value of the dividend accrual attributable to each Top-Level Fund. The local dividend is computed by multiplying the local dividend value at the pool fund by the ownership factor available on the ex-date of the dividend. Later, that local value of the dividend corresponding to each Top-Level Fund is multiplied by the tax rates (matching with the base country and tax group of TLF) in order to figure out the withholding and reclaim accrual. Lastly, in order to derive at the pool’s withholding and reclaim accruals, the amounts for all Top-Level Fund’s has to be aggregated. The same values then need to be allocated to each Top-Level Fund. The allocation process creates one withholding/reclaim accrual for each holding and pool-lot record Pooled Fund Activity
ACCRUAL The dividend accruals are processed in the Pools using existing functionalities. Each dividend accrues in the currency of the security. Each valuation period, the Pool calculates the dividend accruals during the normal inventory (sweep) processing in accordance with the income rate of the Corporate Actions – Rates (DECR) screen. Just like any other type of account, when the income is accrued for the Pool, the income receivable account is updated. In addition, for Investment Pools, two other accounts, “Passed Income” and “Passed Liabilities”, are updated. Dividend Accrual Journal Entries
DR Accrued Income Receivable
DR Passed Income
CR Dividend Income
CR Passed Liability
Withholding Accrual Journal Entries
DR Withholding Tax Exp/Reclaim
DR Passed With/Recl Exp Liability
CR Other Payable
CR Passed With/Recl
Reclaim Accrual Journal Entries
DR Reclaim Receivable
DR Passed With/Recl
CR Withholding Tax Exp/Reclaim
CR Passed With/Recl Exp Liability
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
All dividend accruals are displayed and reported the same way as OEIC dividend accruals are.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
PASSED ACCRUAL: The system automatically allocates all Pool Dividend, Withholding, Reclaim accruals to the Top-Level Funds for each valuation period. No transactions are generated for the passed accrual. However, all passed dividend/withholding/reclaim accruals amounts are displayed on the Account Valuation Balance (VSVB3) screen for domestic amount and on the Currency Balance Base Amounts (CBAL6) screen for global amounts. The Passed Accruals update the “Other Payable” and “Passed Liability” accounts: Passed Income Journal Entries
DR Passed Liability
CR Other Payable
Passed Withholding Expense Journal Entries
DR Other Receivable
CR Passed With/Recl Exp Liability
Passed Reclaim Journal Entries
DR Passed With/Recl Exp Liability
CR Reclaim Payable
The receivable value from the dividend and reclaim accrual contra with the payable value of the passed accrual and vice versa for the withholding tax accrual, so the income earned has no effect on the net assets of the Pool. The net effect on the Pool is zero. The Pool is not to be affected by exchange gain loss on the accrued income. Since the income receivable and the income payable offset each other, any exchange gain or loss to one is offset by the other.
PAYMENT:
Pool level dividend, withholding tax and reclaims are paid in the currency of the security. Like in any other accounts, the transaction generator (BGTG) generates all the Dividend, Withholding and Reclaim transactions. The payments update the same accounts as the accruals (Passed Income and Passed Liability): DIVD
General Ledger DR Passed Income
DR Cash (Income)
CR Dividend Income
CR Passed Liability
WEXP
General Ledger DR Withholding Tax Exp/Reclaim
DR Passed With/Recl Exp Liability
CR Cash (Income)
CR Passed With/Recl
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
RECL
General Ledger DR Passed With/Recl
DR Cash (Income)
CR Withholding Tax Exp/Reclaim
CR Passed With/Recl Exp Liability
Dividend, withholding payment and reclaim receipt are shown online similar to the OEIC. As current functionality, when a foreign income transaction is processed, a currency transaction is generated out of translation to update the currency balance. In addition, a currency transaction is also generated to update the currency balance for the currency paid to the funds. The two generated currency transaction are exactly offsetting each other, netting to zero. They simply track the flow of the currency through the pool, up to the Top-Level Funds.
PASSED DIVIDEND, WITHHOLDING, RECLAIM TRANSACTIONS: When dividend transactions are processed a Passed-Income transaction is created to offset it. When withholding or reclaims apply, a Passed-withholding and Passed-Reclaim are also created to offset them. The same applies to adjustment or reversal transactions.
DIVD PSINC RECL PSRECL
DIVD- PSINC- RECL- PSRCL-
DIVD+ PSINC RECL+ PSRECL
RDIVD PSINC- RRECL PSRCL-
RBDIVD PSINC RBRECL PSRECL
WEXP PSWEXP RECU PSRECL
WEXP- PSWXP- RECU- PSRCL-
WEXP+ PSWXP RECU+ PSRECL
RWEXP PSWXP- RRECU PSRCL-
RBWEXP PSWEXP RBRECU PSRECL
The Passed-Income transactions include both the local currency and the Pool base currency value of the income. For income payment in foreign currency, the passed transactions are created after the base currency equivalent of the foreign income has been determined in translation. The value of the passed transaction must be exactly equal to the values of the original income transaction. The total of the income transaction and the generated Passed-Income transaction related to dividend should net to zero. As well as “Cash (Income)”, the Passed transaction also updates “Passed Liability”
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
PSINC
General Ledger DR Passed Liability
CR Cash (Income)
PSWEXP
General Ledger DR Cash (Income)
CR Passed With/Recl Exp Liability
PSRECL
General Ledger DR Passed With/Recl Exp Liability
CR Reclaim Payable
These transactions are displayed on line in all places where the dividend transactions are. In addition, they are also displayed on the Account Valuation Balances (VSVB3) screen for domestic amount and on the Currency Balance Base Amounts (CBAL6) screen, (See “New Online Reporting Screen” section for detail of the fields).
3.1 DIVIDEND ALLOCATION
The Top-Level Fund cannot have Dividend activity other than the one passed from the Pools. For the above reason, the TLF accounts must have all generator fields on the Account Definition (AAAD) screen set up as “N”. Therefore, all Pools dividends and related taxes must be passed to the TLF each valuation period. As with any other passed transactions, a holding is generated in the Top-Level Fund for each passed transaction. The holding also has pool-lots under it for each Pool. For Pools which have no base country defined, the gross dividend and interest transactions are calculated on the pool holdings and passed to the Top Level Funds. For these Pools, withholding tax or reclaim transactions are generated on the Pool but the calculation of tax values is different. Withholding tax and reclaim transactions for cross jurisdictional Pools are based on the base country of the TLF (withholding tax and reclaim rates), and ownership percentage* effective date on the ex-date of the dividend of each Top-level Fund invested into that Pool. The local value of the dividend or interest attributable to each Top-Level Fund is used later to compute tax values at each TLF. This is done by multiplying the value of the local dividend/interest for the TLF by the withholding/reclaim rate (that is matching to the Base Country and Tax Group of that specific Top-Level Fund). The tax values on the Pool are obtained by summing all withholdings and reclaims for each individual Top-Level Fund owning the Pool. Lastly, the values corresponding to each TLF that were used to calculate the withholding and reclaim amounts at the Pool are utilized when allocating the withholding and reclaim transactions to the TLF’s. The allocation process only allocates the local values of the transactions (base values are calculated during the translation of the Top-Level Funds).
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
The allocation can be summarized as follows: Accrual: Allocated using the current ownership factor.
Payment: Allocated using the sum of dividend accruals for each TLF up to the prior day of the pay date. Normally, the dividend accrual has been allocated on EX DATE using the ownership factor on this date, and the payment is split using this allocation. Any Top-Level Fund that came in after EX DATE is not entitled to a proportion of the payment.
Adjustment: Allocated based on the ownership factors in effect as of the trade date of the transaction.
Reversal: Allocated based on the sum of the accrual as at trade date of the transaction. If the trade date of the reversal transaction (RDIVD) entered match the effective date of the original transaction (DIVD), then the amount of the reversal transaction is split to the TLF the same way as the original transaction was.
Payment with no accrual:
Allocated base on the ownership factors in effect as of the trade date of the transaction. A payment with no accrual is considered by the system as an adjustment.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
3.1.1 Examples
In these examples, the percentage amounts shown in the box underneath the fund represents the current ownership factor.
ACCRUAL Pool 1 displays the following information on the Corporate Actions / Rates (DECR) screen:
Security: ATT Ex-date: Day 1 Pay-date: Day 4 Income rate: 0.1
Pool 1 hold 10,000 shares in security ATT as at ex-date. Day 1:
$600 $400FUND A FUND B
60% 40%
POOL 1
$1,000Day 2: No further accrual. Fund C invests into Pool 1 Day 3: No further accrual. Fund B invests more into Pool 1
FUND A FUND B FUND C50.00% 30.00% 20.00%
POOL 1
FUND A FUND B FUND C50.00% 40.00% 10.00%
POOL 1
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
PAYMENT Day 4: Fund D invests into Pool 1 and ATT pays its dividend
$600 $400.00FUND A FUND B FUND C FUND D40.00% 30.00% 20.00% 10.00%
POOL 1
$1,000
ADJUSTMENT Day 5: Fund D invests more money into Pool 1. An adjustment of $500 is made with a trade
date of day 4. The allocation process uses the ownership factor as of the trade date day 4, even if the ownership factor of day 5 is different.
$200 $150.00 $100 $50FUND A FUND B FUND C FUND D45.00% 25.00% 15.00% 15.00%
POOL 1 $500
REVERSALS Day 5: The payment of $1000 is reversed and a rebook is made for $1200 with a trade date
to equal the effective date of the original DIVD transaction that is, day 4.
$720 $480
F U N D A F U N D B F U N D C F U N D D45.00% 25.00% 15.00% 15.00%
P O O L 1
$1,200
($600) ($400 .00)
($1 ,000)
The income is allocated from the Pool to the Top-Level Funds at each valuation period. The allocation generates the following activity:
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
3.2 TOP-LEVEL FUND ACTIVITY
ACCRUAL All accruals are split to the Top-Level Funds using the allocation process. This process creates a holding and pool-lot records for each accrual. All dividend accrual passed up from the Pool are in the currency of the security they originated from. All the pooled accruals are reported the same way as accrual on other funds types are. In addition, they are also reported separately on the Currency Balance Base Amounts (CBAL6) screen. All Pool-Lots are displayed on the Pool Fund Data Analysis (VSPHDA) screen.
PAYMENT When the dividend payment is received in the Pool, the allocation process automatically splits it to the Top-Level Funds. A Dividend transaction DIVD is created on the TLF and is shown passing through the pooled currency position of the TLF. For Top-Level OEIC, it passes through pooled income currency (qualifier 0001). All transaction coming from the Pool is considered global when being split in the Top-Level Funds. Therefore, when a domestic income transaction is processed , a currency transaction CUP is generated out of translation to update the currency balance. Another currency transaction CDN is also generated to update the currency balance for the currency paid to the funds. The two generated currency transaction are exactly offsetting each other, netting to zero. They simply track the flow of the currency through the pool, up to the Top-Level Funds. The dividend is applied to the currency of the Top-Level Fund using the PSCCRC (Passed Cash/Currency Receipt) transaction. For Top-Level OEIC, it is written to the income currency (qualifier of 0001). Finally, a CSELL (Currency Sell) transaction is also generated to convert the currency to cash.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
GENERAL LEDGER FOR DIVIDEND OR RECLAIM
Debit Credit
DIVD/RECL Pooled Currency Allowance
Dividend Income or Withholding Tax Exp/Reclaim
CUP Pooled Currency at Value
Pooled Currency Allowance
CDN Pooled Currency Allowance
Pooled Currency at Value
PSCCRC Currency at Value
Pooled Currency Allowance
CSELL Cash (Income)
Currency at Value
Ending Result:
Cash (Income)
Dividend Income or Withholding Tax Exp/Reclaim
GENERAL LEDGER FOR WITHHOLDING TAX
Debit Credit
WEXP Withholding Tax Exp/Reclaim
Pooled Currency Allowance
CDN Pooled Currency Allowance
Pooled Currency at Value
CUP Pooled Currency at Value
Pooled Currency Allowance
PSCCPD Pooled Currency Allowance
Currency at Value
CBUY Currency at Value
Cash (Income)
Ending Result:
Withholding Tax Exp/Reclaim
Cash (Income)
Pooled dividend payments are reported separately on the Currency Balance Base Amount (CBAL6) screen and the Pool Fund Data Analysis (VSPHDA) screen.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
Cross Jurisdictional Pools For Pools with no Base Country defined on the Account Definition II screen (AAMF), or that choose to settle income in the Top-Level Fund via POOL ALLOC option 3 on the Account Special Processing Definition screen (AASP), the generated INT, DIVD or RECL on the Top-Level Fund passes through the currency position of the Top-Level Fund. For Top-Level OEIC funds, it passes through the income currency (qualifier 0001). For all foreign income transactions in the Top-Level Fund, a currency transaction CUP is generated out of translation to update the currency balance of the Top-Level Fund. The CUP will be processed under the currency or income currency (OEIC) of the Top-Level Fund and not the pool fund. Domestic income transactions will settle in the base currency of the Top-Level Fund and no CUP or CDN is needed. Under new settlement option no currency sell (CSELL) or Passed Cash Receipt (PSCCRC) transaction codes are generated as the Top-Level Fund is receiving currency now. The main difference for allocating a withholding expense is that a CDN is generated out of translation instead of a CUP. The currency buy (CBUY) or Passed Cash Paid are not generated because the income settles in the Top-Level Fund.
GENERAL LEDGER FOR INTEREST, DIVIDEND OR RECLAIM
Debit Credit
INT/DIVD/RECL Pooled Currency Allowance
Interest/Dividend Income/Reclaim
CUP Pooled Currency at Value
Pooled Currency Allowance
Ending Result: Pooled Currency Allowance
Interest/Dividend Income/Reclaim
GENERAL LEDGER FOR WITHHOLDING TAX
Debit Credit
WEXP Withholding Tax Exp/Reclaim
Pooled Currency Allowance
CDN Pooled Currency Allowance
Pooled Currency at Value
Ending Result: Withholding Tax Expense
Pooled Currency at Value
4 INTEREST ON POOL CASH
Interest accruals or interest payments on a Cash balance held in a Pool are passed to each Top-Level Fund. Passed transactions are generated in the Pool for each interest transaction on Cash and Passed Journal entries are posted for interest accruals on pool cash.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
Interest accrued on a Cash balance held in a Pool is allocated to a Top-Level Fund as interest accrued on a pooled currency balance. An INT transaction for Cash in a Pool is allocated as a CINC transaction for Pooled Currency in a Top-Level Fund. The following examples show how an INT transaction for Cash in a USD-base Pool is allocated as a CINC for Pool:USD in a USD-based Top-Level Fund (assuming100% ownership). Example 1: Investment Pool and Top-Level Mutual Fund have Same Base Currency How an INT transaction for Cash in a Pool is allocated to a Top-Level Mutual Fund: Account: Investment Pool General Ledger
Security: Cash DR:Cash (Income)
Tran: INT DR:Passed Income
Income: 100.00 CR:Income
CR:Passed Liability
Account: Investment Pool General Ledger
Security: Cash DR:Passed Liability
Tran: PSINC CR:Cash (Income)
Income: 100.00
Account: Top-Level Fund General Ledger
Security: Pool:USD DR:Pooled Currency at Value
Tran: CINC CR:Income
Shares/Par: 100.0000
Principal: 100.00
Account: Top-Level Fund General Ledger
Security: USD DR:Currency at Value
Tran: PSCCRC CR:Pooled Currency Allowance
Shares/Par: 100.0000
Principal: 100.00
Account: Top-Level Fund General Ledger
Security: Pool:USD DR:Pooled Currency Allowance
Tran: CDN CR:Pooled Currency at Value
Shares/Par: 100.0000
100.00
Account: Top-Level Fund General Ledger
Security: USD DR:Cash (Principal)
Tran: CSELL CR:Currency at Value
Shares/Par: 100.0000
Principal: 100.00
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – INTEREST ON POOL CASH
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Example 2: Investment Pool and Top-Level OEIC have Same Base Currency This example shows how an INT transaction for Cash in a Pool is allocated to a Top-Level OEIC:
Account: Investment Pool General Ledger
Security: Cash DR:Cash (Income)
Tran: INT DR:Passed Income
Income: 100.00 CR:Income
CR:Passed Liability
Account: Investment Pool General Ledger
Security: Cash DR:Passed Liability
Tran: PSINC CR:Cash (Income)
Income: 100.00
Account: Top-Level Fund General Ledger
Security: Pool:USD DR:Pooled Currency at Value
Tran: CINC CR:Income
Shares/Par: 100.0000
Principal: 100.00
Account: Top-Level Fund General Ledger
Security: USD 00001 DR:Currency at Value
Tran: PSCCRC CR:Pooled Currency Allowance
Shares/Par: 100.0000
Principal: 100.00
Account: Top-Level Fund General Ledger
Security: Pool:USD DR:Pooled Currency Allowance
Tran: CDN CR:Pooled Currency at Value
Shares/Par: 100.0000
Principal: 100.00
Account: Top-Level Fund General Ledger
Security: USD 00001 DR:Cash (Income)
Tran: CSELL CR:Currency at Value
Shares/Par: 100.0000
Principal: 100.00
SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING – RECONCILIATION OF TOP-LEVEL FUNDS TO THE POOL
5 RECONCILIATION OF TOP-LEVEL FUNDS TO THE POOL
The reconciliation process checks that the local value of the dividend, interest, withholding tax and reclaim at the Pool Level matches the total local values of dividend, interest, withholding tax and reclaim allocated to the Top-Level Funds (as Pools and TLF could have different base currencies). The reconciliation process is as follows: For each outstanding dividend, interest, withholding tax or reclaim on the Pool, the system identifies each corresponding dividend, interest, withholding tax or reclaim held by the Top-Level Funds relating to that Pool (identified by pool-lot), sums and compares the following items: Top Level Funds Investment Pool
Local gross income accrued and paid Local gross income accrued and paid
Local tax withholding accrued and paid Local tax withholding accrued and paid
Local tax reclaims accrued and paid Local tax reclaims accrued and paid
Local net amount accrued and paid Local net amount accrued and paid
For any dividend, interest, withholding tax or reclaim where the amounts do not reconcile, the system produces an exception.
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SYSTEM MANUAL - SECTION - 5.3170 – INVESTMENT POOL FUND PROCESSING INCOME PROCESSING –TOP-LEVEL FUND VALUATION
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6 TOP-LEVEL FUND VALUATION
Once the allocation processed is finished, the fund can be valued in the “Top-Level Valuation” (TLFVL) screen. However, for the valuation of the TLF to be meaningful, all of the Pools that the fund is invested in should be allocated through the period to be valued. The TLF valuation process should apply prices and exchange rates to the currency transactions and positions allocated from the Pools.
6.1 DISTRIBUTION AND ACCUMULATION OF INCOME
The distribution and accumulation of income of the TLF is process with the same functionality. The distribution/accumulation of the income of the TLF has no impact in the Pool as it has no income left.
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