Investment Security Contract Template

SYSTEM MANUAL - SECTION 5.
610 - INVESTMENT CONTRACTS PROCESSING
5.610 Investment Contracts Processing
1 Overview .............................................................................................................. 1
2 Investment Contract Security Definition Activities....................................................... 3
2.1 BOBD: SECURITY DEFINITION SCREEN ........................................................................ 3
2.2 BOSB: SECURITY DEFINITION - BOND SCREEN .............................................................. 3
2.3 BODE: SECURITY DESCRIPTION SCREEN ...................................................................... 4
2.4 BOPM: PAYMENT SCHEDULE SCREEN .......................................................................... 4
3 Variable Rates Maintenance Activities ....................................................................... 7
4 Investment Contract Transaction Codes .................................................................... 8
5 Investment Contract Processing Explanation and Examples.......................................... 9
5.1 FORMULAS USED FOR EXAMPLES .............................................................................. 10
5.2 EXAMPLES ........................................................................................................ 11
5.3 INVESTMENT CONTRACT CONVERSION CONSIDERATIONS .................................................. 41
5.4 PROCESSING HELP .............................................................................................. 42
6 Investment Contract Reporting .............................................................................. 44
This document contains proprietary information of SunGard Institutional Asset Management & Securities Servicing.
No copy or other reproduction shall be made without written permission of SunGard.
SYSTEM MANUAL - SECTION 5.610 - INVESTMENT CONTRACTS PROCESSING
OVERVIEW
1 OVERVIEW
An Investment Contract is a loan agreement between two parties. In the context of the
functionality available within InvestOne Enterprise, a managed investment portfolio represents
the lending party, and an insurance company represents the lender. The specifics of the
contract dictate the principal amount and terms of the loan.
The interest rate may be fixed or variable and may be calculated using a simple, daily
compounding or monthly compounding method. Interest may accrue beginning on the
contractual settlement date of the opening of the contract through the day before the payment
date, or beginning on the day after settlement through the payment date. Interest may be
calculated such that no interest is earned on February 29th of leap year (i.e. assume 365 days
in every year), or such that interest is in fact earned on February 29th (i.e. accrue over the
actual number of days in any given year).
PAYMENT SCHEDULES
Investment Contracts have periodic payments of principal and interest typically scheduled on a
monthly, quarterly, semi-annual or at maturity basis. The payment schedule for principal and
interest is determined at the beginning of the investment contract, and may specify dates at
which only the accumulated interest (or a portion of the accumulated interest) is to be paid,
dates at which a portion or all of the accumulated interest and a portion or all of the principal
balance is to be paid, or dates at which only a portion of the principal balance is to be paid.
The schedule may indicate that:
• The total contract value (principal plus accumulated interest) is paid down such that the
remaining balance will be reduced to a stated amount with accumulated interest paid out
first (payment type A)
• A stated percentage of the outstanding contract value (principal plus accumulated interest)
balance is to be paid (payment type C).
• Only total accumulated interest is to be paid (payment type I).
• A stated percentage of the outstanding principal balance is to be paid (payment type N).
• All accumulated interest plus a stated percentage of the outstanding principal balance is to be
paid (payment type P).
NOTE: A major difference between investment contracts and other bond-like securities is that
instead of the interest earned accumulating between payment dates as accrued interest
receivable, the interest earned is added back to shares/par (securities at value) on a daily
basis.
INVESTMENT CONTRACTS MAY BE OPENED IN ONE OF TWO FORMS.

In the first form, the Investment Contract is complete upon its opening (i.e. the principal loan
amount and payment schedule are final).
In the second form, the Investment Contract is opened at the beginning of a window period,
during which additional contributions and withdrawals may occur.
• Contributions are for principal only (therefore, interest is not purchased).
• During the window period withdrawals may be made only from principal.
• After the window period is closed the completed Investment Contract may have
withdrawals from either principal or accumulated interest.
Since the window period is not actually defined to InvestOne Enterprise it is the user's
responsibility to acknowledge the restrictions implied by the concept of the 'window period' of
1
OVERVIEW
a given Investment Contract. InvestOne Enterprise allows principal deposits and principal and
accumulated income withdrawals at any time during the life of the contract.
CONSTRAINTS
• Investment Contracts may be processed only in purely domestic commingled or mutual
funds. Global and UK Unit Trust funds may not hold Investment Contracts.
• Guaranteed Investment Contracts (or GICs) should not be confused with Investment
Contracts. For GICs income earned accumulates as accrued income receivable until it is
collected or reinvested at payment dates. This section addresses Investment Contracts
(Accrual Methods K and L), not GICs (Accrual Method G).
The following sections discuss the processing of Investment Contracts available within InvestOne
Enterprise. Additional processing information is available on these topics in Processing Help:
• INTIC, PMTIC, and SELIC

• Adjustments to Principal Payment, Maturity and Accumulated Income
• Transaction/GNMA Generator
• Interest and Investment Contracts
2
INVESTMENT CONTRACT SUCURITY DEFINITION ACTIVITIES
2 INVESTMENT CONTRACT SECURITY DEFINITION ACTIVITIES

Investment Contracts are initially defined to InvestOne Enterprise via the same basic screen
progression as that which is used to define any bond-like security: Security Definition (BOBD),
Security Definition - Bond (BOSB) and Security Description (BODE). Special considerations in
defining Investment Contracts via this progression of screens follow:
2.1 BOBD: SECURITY DEFINITION SCREEN

• PRICE CODE must be 'F' (bond-like: price per 100 of face; no taxlots).
• ASSET GROUP must be 'IC' (Investment Contracts).
The rest of the data on this screen should be entered with the same considerations as those given
in defining other bond-like securities. See Section 5.20, Security Activities for further details.
2.2 BOSB: SECURITY DEFINITION - BOND SCREEN

The fields in this table must be configured as specified. The rest of the data on this screen should
be entered with the same considerations as those given in defining other bond-like securities. See
Section 5.20, Security Activities for further details.
Field Description. Fields Shaded Gray are Required.

ACCRUAL METHOD Must be 'K' or 'L'.
K - interest is accrued over 365 days each year (i.e. no interest is earned on
February 29th of a leap year.
L - interest is accrued over the actual number of days in a given year.
ACCR INCM OPT Must be '0', '1' or blank.
0 - Day of deposit. Full accumulation of interest on the day before a payment
date;
1 - Day of withdrawal. Full accumulation of interest on payment date.
Blank - the ACCRUED INCOME OPTION selected for the account is used to
determine whether income is fully accumulated on a day of deposit or day of
withdrawal basis (see Section 5.30, Account Definition for further details on
this option).
ISSUE DATE Must be specified only if ACCRUAL METHOD 'L' is selected, and then only if the
fiscal year of the contract differs from the calendar year.
In this case, enter the first day of a contract fiscal year in the ISSUE DATE field.
It is used by the accumulated interest calculation in determining the number of
actual days (i.e. 365 or 366) in a given year.
• The presence of an ISSUE DATE indicates that the contract fiscal year is to
be used in this determination
• The absence of an ISSUE DATE indicates that the calendar year is to be
used.
INTEREST RATE Must Enter rate of interest for fixed rate contracts. For variable rate contracts,
entering the initial rate of interest is optional.
The format assumes an annual percentage rate from 0.000000000 to
99.999999999 or 100.000000000 even.
MATURITY DATE Enter the maturity date of the contract.
COMPOUNDING OPT Must be specified only if the calculation of accumulated interest is to use a
compounding method. Valid Values
D - daily compounding
M - monthly compounding
Blank - no compounding, i.e. simple interest calculation is performed.
3

ANNUAL RATE TYPE Must be 'IC' (Investment Contracts) to indicate how interest rates stored on file
for this instrument are to be interpreted (i.e. rates are saved as annual
percentage rates).
The following fields are not used for Investment Contracts, as the information they imply is either
not applicable to these instruments or is defined elsewhere: FIRST COUPON DATE, PYMT FREQ,
PAYMENT MONTH/DAY, EFFECTIVE MATURITY DATE, CONSTANT DTM, EFFECTIVE MATURITY
PRICE, EFFECTIVE MATURITY LENGTH and EFFECTIVE MATY REF-DATE.
2.3 BODE: SECURITY DESCRIPTION SCREEN

In defining Investment Contracts, no unique considerations apply to this screen.
2.4 BOPM: PAYMENT SCHEDULE SCREEN

If the contract provides for payment of interest and principal only at maturity, the security
definition requirements are complete after following the basic screen progression described above.
If the contract payment schedule indicates that payments are due before maturity, the Payment
Schedule (BOPM) screen must be called to establish the schedule of principal and interest
payments specific to the contract.
BASIC BOPM
To add a schedule or to add, change or delete an entry in an existing schedule, request the BOPM
screen (default is MODE ADD). Enter SECURITY NUMBER and PAYMENT DATE. Press ENTER and
the screen returns with the cursor at the TYPE field, and displays the security's short name. Enter
the TYPE and PRINCIPAL AMT/%, and then press ENTER again to complete the process. Values for
the fields are interrelated. See explanation after the Field Descriptions.
The message PAYMENT DATA APPLIED displayed in the lower left area of the screen indicates a
successful update. This results in recalculations of valuation-dependent system-calculated
amounts for open valuations period from the specified PAYMENT DATE forward.
CONSTRAINTS
• The Payment Schedule (BOPM) screen is valid only for Investment Contracts.
• Payment Schedule data may not be automatically captured from external sources.
• Once specified, the asset group of an Investment Contract (i.e. ASSET GROUP 'IC') may not be
changed. Conversely, the asset group of a security that is not an Investment Contract (i.e.
ASSET GROUP other than 'IC') may not be changed to 'IC'.
4
BOPM Screen: Payment Schedule

NEXT BOPM MODE ADD FDMP253
* * * * * PAYMENT SCHEDULE * * * * *
SECURITY NO:
PAYMENT DATE:
TYPE........: PRINCIPAL AMT/%

SECURITY NO The security number (including date and qualifier, if applicable) of the security
for which a payment date is to be input or maintained.
PAYMENT DATE Payment date of the specific entry to be input or maintained. Up to 11
payment dates worth of schedule data are displayed, in descending order by
payment date.
TYPE Type of payment scheduled for the requested payment date. Valid Values are
I, N, C, P, and A. – Refer to Type and Principal Amount% for details on the
use and significance of theses values.
PRINCIPAL AMT/% Amount or percentage associated with a principal payment (i.e. a payment
date for which type 'A', 'C', 'N' or 'P' has been specified).
• '0.00' is displayed if an amount is not already on file as of the requested
PAYMENT DATE.
• Payment dates scheduled via BOPM must be less than or equal to maturity
date. A payment date is not required on the maturity date of a contract but
may optionally be scheduled.
• Whether the final payment date is scheduled via BOPM or not, all remaining
interest and principal is assumed to be paid at maturity.
Range for type A - 0.00 to 99,999,999.99 inclusive, where the format
assumes currency and the implication is that the outstanding
principal balance is to be paid down to this amount at this
date.
Range for type 'C', 'N' or 'P' - .01 to 100.00 inclusive, where the format
assumes percentage and the implication is that the
outstanding principal balance or contract value is to be paid
down by this percentage at this date.
5
TYPE AND PRINCIPAL AMOUNT%

TYPE When To Use Result Effect on PRINCIPAL AMT/%
I To schedule a date for All accumulated interest is No entry is required.
payment of interest only. to be paid; no principal is
to be paid.
N To schedule a date for No interest is to be paid; Specify the percentage of outstanding
payment of a percentage of the outstanding principal principal or contract value to be paid.
the principal balance and no balance is to be paid down
accumulated interest. by a percentage.
C To schedule a date for Both the accumulated Specify the percentage of outstanding
payment of a percentage of interest and outstanding principal or contract value to be paid
the total contract value principal balance are '100.00' indicates the principal balance or
prorated between reduced proportionately outstanding contract balance is to be paid
accumulated interest and by a percentage of the down in full at this date. This allows the
the principal balance. total contract value. entire loan to be paid off prior to maturity
of the contract.
P To schedule a date for All accumulated interest is Specify the percentage of outstanding
payment of all accumulated to be paid; additionally, principal or contract value to be paid
interest plus a portion of the the outstanding principal '100.00' indicates the principal balance or
principal balance where the balance is to be paid down outstanding contract balance is to be paid
principal payment is to be by a percentage. down in full at this date. This allows the
stated in the schedule as entire loan to be paid off prior to maturity
being a percentage of the of the contract.
outstanding principal
balance.
A To schedule a date for Pay down to a specific Adding or changing a TYPE 'A' payment
payment of interest or contract value; reducing requires that the contract value to be paid
payment of interest plus accumulated interest first. down to is specified in this field (as an
principal where the payment amount).
itself is not actually stated in A PRINCIPAL AMT /% of '0.00' for
the schedule, rather the payment 'A' indicates the outstanding
remaining contract value to contract balance is to be paid down in full
be paid down to is stated. at this date (thereby providing a means of
paying off the entire loan prior to maturity
of the contract).
6
VARIABLE RATES MAINTENANCE ACTIVITIES
3 VARIABLE RATES MAINTENANCE ACTIVITIES

Interest rates used for the processing of variable rate Investment Contracts within InvestOne
Enterprise are maintained via the Corporate Actions/Rates (DECR) screen. The use of the screen
in Investment Contract processing is presented here, and detailed further in Investment Contract
Processing Explanation and Examples.
The initial rate can be defined on DECR, or on the Security Definition - Bond (BOSB) screen as
part of the initial security definition process (See Investment Contract Security Definition
Activities), in which case the BOSB rate is assumed to be in effect until the Effective Date of a rate
entered via DECR is encountered.
• An interest rate must be available for each day for which income is to be calculated (i.e. for all
days including and since the contractual settle date of the opening of an Investment Contract).
• An Effective Date is associated with each rate and determines the date as of which the
accounting effects of a given rate change are taken.
• A Reset Date is also associated with each rate and corresponds with the actual rate change
date.
When a rate change is entered in a timely manner (i.e. the effects of the rate change are taken on
the date the rate actually changes) the effective and reset dates are equal. When notification of a
rate change occurs after the actual rate change date (or 'Reset Date') the provision of two dates
on the DECR screen allows for control over the exact date at which the accounting effects are to
be taken. EX: If the rate changed on the first day of the month but notification of the rate change
occurred on the third day, the rate could be entered with the third day of the month as its
Effective Date, and the first day of the month as its Reset Date. The impact of the rate change
(on daily earned income) is then calculated from the first day of the month yet the accounting
impacts would not be taken until the third day of the month.
The Reset Date may be less than the Effective Date by up to one month to allow for this
backdating of rate changes. A given rate remains in effect until the Effective Date of the next rate
is reached. Therefore, rate entries are required only as of Contractual Settle Date of the initial
opening of the contract, and thereafter only when the rate actually changes or notification of a
rate change occurs.
ADD, CHANGE OR DELETE A RATE

To add, change or delete a rate, request the DECR screen in either ADD or CHANGE mode, enter
the SECURITY NO (including security date and qualifier, if applicable), the effective date of the rate
change in the COUPON/EX-DATE/EFF-DATE field and press ENTER. The screen returns with the
cursor at the RESET DATE field. '00 00 00' is shown if a rate is not already on file as of the
requested EFF-DATE. Enter the RESET DATE of the rate and the cursor moves to INTEREST RATE.
Zeroes are shown if a rate is not on file as of the requested EFF-DATE. Enter the actual rate,
expressed as an annualized interest percentage rate.
If a rate is already on file as of the requested EFF-DATE, your RESET DATE and/or
INTEREST RATE entries override those already on file for that rate. Overtyping a
displayed rate with zero deletes that rate.
Up to 11 rates prior to the requested EFF-DATE (if any such rates are already on file) are
displayed below (in descending order, by EFF-DATE). To complete the update function, press
ENTER. "RATES APPLIED" indicates a successful update: recalculations of valuation dependent
system-calculated amounts for open valuation periods (from EFF-DATE forward).
7
INVESTMENT CONTRACT PROCESSING EXPLANATION AND EXAMPLES
4 INVESTMENT CONTRACT TRANSACTION CODES

A set of specialized transaction codes is required for the processing of Investment Contracts.
The following charts identify these transaction codes and their requirements and accounting
effects:
TRAN CODE PROCESSING REQUIREMENTS

I I M P P
C C D I N N A O P M M S W
F F E N T T T P M T T E T
I I P T I I U N T I I L H
C C I I C C I I I C C I I
TRAN CODE + - C C + - C C C + - C C X - Required (or expected)
ACCOUNT NO. X X X X X X X X X X X X X O - Optional
SECURITY NO. X X X X X X X X X X X X X
EFFECTIVE DATE X X X X X X X X X X X X X D - Defaults to effective date
TRAN CODE X X X X X X X X X X X X X S - Defaults to Shares/Par amount
TRADE DATE D D D D D D D D D D D D D C - Calculated
CONTRACTUAL SETTLE DATE D D D D D D D D D D D D D
ACTUAL SETTLE DATE D D D D D D D D D D D D D
INCOME EFFECT X X X O O
SHARES/PAR X X X X X X X X X X
TOTAL PRINCIPAL S S S S S S O O
COST C C C C C C C C
SECURITY NO. includes security DATE and QUALIFIER, if applicable.
Accounting Effects
Cash
Tran Code Description Inc Prin Share Cost Class
CFIC+ Increase Contract Value (Accumulated Income) N N + N VICA
CFIC- Decrease Contract Value (Accumulated Income) N N - N VICA
DEPIC Investment Contract Deposit N - + + VICO
INTIC Interest Payment for Investment Contract + N N N VICI
INTIC+ Increase Int Payment for Investment Contract + N N N VICI
INTIC- Decrease Int Payment for Investment Contract - N N N VICI
MATUIC Maturity of Investment Contract N + - - VICM
OPNIC Open Investment Contract N - + + VICO
PMTIC Principal Payment for Investment Contract N + - - VICP
PMTIC+ Increase Prin Payment for Investment Contract N + - - VICP
PMTIC- Decrease Prin Payment for Investment Contract N - + + VICP
SELIC Sell Investment Contract + + - - VICC
WTHIC Investment Contract Withdrawal + + - - VICC
NOTES
1. The ACCOUNTING EFFECTS indicated above are those specified on the Transaction Code
Definition (CD) Master Record. General Ledger accounting effects (as seen on the GLIN
screen) are documented in Section 8.110, General Ledger Entries.
2. These transaction codes are valid only for Investment Contracts and are the only transaction
codes valid for Investment Contracts.
8
5 INVESTMENT CONTRACT PROCESSING EXPLANATION AND EXAMPLES

The examples in this section illustrate the processing of Investment Contracts within the context
of InvestOne Enterprise. They also:
• Demonstrate the influence of security and account definition characteristics on processing

• Show the intended use and general ledger effects of the various transaction codes associated
with Investment Contracts.
• Present the calculations of income accumulated and due at key points in time.
We assume a working knowledge of the InvestOne Enterprise system in a more general context.
The characteristics of a given contract are determined based on:

• The security definition characteristics
• The variable rate maintenance activities
• The transaction activities related to the contract
For an Investment Contract position, the shares/par, cost and market values are all equal. They
represent the contract value, which is comprised of the remaining principal and accumulated
income balances.
Daily income earned accumulates until it becomes due at a scheduled coupon date and/or at
maturity, at which time it is reset in anticipation of an interest payment transaction. Income
earned on an Investment Contract depends on the interaction of account and security definition
characteristics, and on whether the interest rate is fixed or variable in nature and on transaction
events influencing the position. These dependencies are shown in these examples, each using a
unique compounding option for income calculations.
NOTE: Many characteristics are common to all examples. Differences in the examples
illustrate the available functionality in InvestOne Enterprise for the processing of Investment
Contracts. Each of the first three examples is mainly distinguished by its compounding option.
Where income calculations for multiple day's worth of income are shown, keep in mind that
the actual calculations performed by InvestOne Enterprise result in each day's income result
being rounded to 2 decimal places. The calculations in the examples approximate the actual
calculations; the actual results are presented. A fourth and final example is provided to
illustrate the use of transaction codes designed to manually adjust the accumulating income
balance of an Investment Contract position.
Example 1: Fixed Rate Investment Contract Using Daily Compounding Option.

Example 2: Fixed Rate Investment Contract Using Monthly Compounding Option.
Example 3: Variable Rate Investment Contract Using Simple Interest Calculation.
Example 4: Partial Interest Payments.
Example 5: Manual Adjustment To Investment Contract Accumulated Income Balance.
9
5.1 FORMULAS USED FOR EXAMPLES

The basic formula for the compounding options is first presented, followed by the actual examples.
Example One
The daily compounding option for which one day of income for the current accumulation period is
calculated as follows:
I = (P * (1 + R) I/F ) - P
Where, I - Income
P - Remaining contractually settled principal balance
R - Annual interest rate in effect for the date of the calculation
F - Frequency of compounding. Values are '365' for 365-day basis (i.e. BOSB ACCRUAL
METHOD 'K') or '365' or '366' for actual-day basis (i.e. BOSB ACCRUAL METHOD 'L')
Example Two
The monthly compounding option for which one day of income for the current accumulation
period is calculated as follows:
R
I = CV * Y
Where, I - Income
CV - Contractually settled contract value at prior month end
Y - Number of days in the year. Values are '365' for 365-day basis (i.e. BOSB
ACCRUAL METHOD 'K') or '365' or '366' for actual-day basis (i.e. BOSB ACCRUAL
METHOD 'L')
Example Three
No compounding (i.e. elects a simple interest method) for which one day of income for the
current accumulation period is calculated as follows:
R
I = P *Y
Where, I - Income
P - Remaining contractually settled principal balance
Y - Number of days in the year. Values are '365' for 365-day basis (i.e. BOSB ACCRUAL
METHOD 'K') or '365' or '366' for actual-day basis (i.e. BOSB ACCRUAL METHOD 'L')
10
5.2 EXAMPLES
EXAMPLE 1: FIXED RATE INVESTMENT CONTRACT USING DAILY COMPOUNDING OPTION.

Account 16998 enters into an investment contract on 10/01/95. An additional deposit of principal
is made on 10/07/95 and a partial withdrawal of principal is made on 10/15/95. Accumulated
interest is due at 12/31/95. At 01/31/96 accumulated interest is again due, as is 60% of the then
remaining principal balance. On 03/25/96 a partial withdrawal of principal and interest takes
place. The contract matures on 03/31/96.
The security is defined via the standard security definition screen progression for bonds (BOBD →
BOSB → BODE) as documented in Section 5.20 Security Activities. The BOBD screen appears as
follows, where (aside from the usual bond-like security definition considerations) the IC ASSET
GROUP designation is of most significance:
NEXT BOBD MODE VIEW FDMP43

* * * SECURITY DEFINITION * * *
SECURITY NO IC001 SHORT NAME IC #001 SHORT NAME

MODEL SECURITY IND:
STATE CODE......................... 80 INCEPTION DATE...............04 10 95
REPT/NO:... CUSIP (PRICING) NUMBER...... IC001
PRICE CODE......................... F ASSET GROUP........................IC
SEGMENT......................... 0000 CATEGORY.........................0000
SECTOR.......................... 0000 INDUSTRY.........................0000
HIGH PRICE RANGE ............... 99.9 LOW PRICE RANGE.................99.9-
SIC CODE........................ CROSS REFERENCE CODE.........
ISSUER CODE................... IC001 TRANSACTION GENERATION............. Y
LAG DAYS.. 0005 LAG DAYS METHOD.. 1 FEDERAL TAX STATUS.............. T
INCOME CATE MAIN................ 0000 INCOME CATE SUB................. 0000
PRICE SOURCE...................... PRICE TYPE....................
BACKUP PRICE SOURCE............... BACKUP PRICE TYPE.............
FORM 13F FLAG. Y EXCLUDE MGT FEES N TITLE OF CLASS (CODE)............
ISSUE CURRENCY.. PREC... ISSUE COUNTRY CODE...............
INCOME CURRENCY.. PREC... GUARANTOR......................
TRADE CURRENCY.. PREC... PRICE GROUP......................
FRANKED/UNFRANKED.................. BID/OFFER SPREAD (%)........ 0.000
11
The BOSB screen appears as follows, where the following characteristics are significant:
ACCRUAL METHOD L - Investment Contract - actual days
ACCR INCM OPT 0 - day of deposit
ISSUE DATE 10/01/95 - representing the first day of a contract fiscal year
INTEREST RATE 6.9(%) - the fixed annual interest percentage rate of the contract
MATURITY DATE 03/31/1996
COMPOUNDING OPT D - daily compounding of accumulating interest
ANNUAL RATE TYPE IC - Investment Contract
NEXT BOSB MODE VIEW FDMP46

* * * SECURITY DEFINITION - BOND * * *
SECURITY NO: IC001 IC #001 SHORT NAME

BOND CODE .1 1ST PWDN DATE.. ACCR METH. L ACCR OPT. 0 INT PUR.
FIRST COUPON DATE ........... ISSUE DATE................. 10 01 95
INTEREST RATE ... 6.900000000 MATURITY DATE ............. 03 31 1996
COMPOUNDING OPT.. D PYMT FREQ.. PAYMENT MONTH/DAY ............. MM DD
AMORT/ACCRET.. N INFLAT INDEX.. DEFAULT DATE.. CPN CC
MSTR NOTE FLOOR (000) .... ISSUE PRICE ...
MSTR NOTE CEILING (000)... RATING: S AND P MOODYS
MATRIX CODE.... TBA FLAG.. ORIGINAL BAL....
EFF MATY DATE.. CCYY PREPAY.. PAR OUTSTANDING..
BENCHMARK.. CCYY RATE CHANGE FREQ.. INCREMENT..
BENCHMARK SPREAD ......... FIRST DATE.. MONTH-END...
ANN RATE TYPE .......IC GNMA GEN .. CONSTANT DTM. 2A-7. DEMAND.
AMORT TO EFF MATY DATE..N ACTIVE.. CLASS OF SHARES REF X
CCB DAYS... CONTRA EXPENSE...N EFF MATY PRICE.. 100.0000 MATU
SEC YIELD: MAX. MIN. SEC OVR EFF MAT LEN
REPORT AS CASH. N PEP EXPIRY EFFECTIVE MATY REF-DATE
NOTE: RATES FOR MULTIPLE RATE ITEMS ARE NOT ENTERED HERE SWP=>
The BOPM screen appears as follows, where the following characteristics are significant:
Accumulated interest is due at: Entry at that date:
12/31/95 TYPE 'I'
01/31/96 as is 60% of the principal balance remaining at that time TYPE 'P'
03/31/96 (maturity) as is 100% of the principal balance remaining at that time TYPE 'P'


PAYMENT DATE: 03 31 96
TYPE........: P PRINCIPAL AMOUNT/% 100.00
DATE TYPE PRINCIPAL AMOUNT/%
03/31/96 P 100.00
01/31/96 P 60.00
12/31/95 I .00
12
The series of transactions entered by the user via the Trade Entry (DETE) screen are as follows
(where, for all transactions, the account number entered was 16998 and the security number
entered was IC001):
Trade and
Contractual Actual
Tran Effective Settle Settle Total Income Cost
Code Date Dates Date Share/Par Principal Effect (calculated)
OPNIC 10/01/95 10/01/95 10/01/95 10,000,000.00 10,000,000.00 0.00 10,000,000.00
DEPIC 10/07/95 10/07/95 10/07/95 150,000.00 150,000.00 0.00 150,000.00
WTHIC 10/15/95 10/15/95 10/15/95 70,000.00 70,000.00 0.00 70,000.00
INTIC 12/31/95 12/31/95 01/05/96 0.00 0.00 168,634.25 0.00
INTIC 01/31/96 01/31/96 02/05/96 0.00 0.00 57,127.94 0.00
PMTIC 01/31/96 01/31/96 02/05/96 6,048,000.00 6,048,000.00 0.00 6,048,000.00
WTHIC 03/25/96 03/25/96 03/25/96 201,978.62 200,000.00 1,978.62 200,000.00
INTIC 03/31/96 03/31/96 03/31/96 0.00 0.00 42,145.67 0.00
MATUIC 03/31/96 03/31/96 03/31/96 3,832,000.00 3,832,000.00 0.00 3,832,000.00
For each of the above transactions the cost amount is calculated by the system and represents the
impact of the transaction on the principal balance (seen on the Holdings Definition (VSHO) screen
as PRINCIPAL BALANCE). The shares/par amount of a given transaction represents its direct
impact on the contract value (seen on the Holdings Definition (VSHO) screen as CARRY, COST and
MARKET VALUES). The income effect of a given INTIC transaction drives the other income
receivable and income cash general ledger entries expected when the accumulated income
balance (seen on the Holdings Definition (VSHO) screen as INCOME BALANCE) is reset based on a
scheduled interest payment date.
The income effect of a given WTHIC transaction represents its direct impact on the
accumulated income balance. The general ledger effects of each of the above transactions (as
would be seen on the General Ledger Transaction Inquiry (GLIN) screen) are as follows:
• The 10/01/95 OPNIC (Open Investment Contract):

(Entries for 10/01/95) -
Securities at Value 10,000,000.00
Cash (Principal) 10,000,000.00
• The 10/07/95 DEPIC (Investment Contract Deposit):

Securities at Value 150,000.00
Cash (Principal) 150,000.00
• The 10/15/95 WTHIC (Investment Contract Withdrawal):

• The 12/31/95 INTIC (Interest Payment for Investment Contract):
Other Income Receivable 168,634.25
(Income Main Classification) 168,634.25

Cash (Income) 168,634.25
13


• The 01/31/96 PMTIC (Principal Payment for Investment Contract):

Securities Sold Receivable 6,048,000.00

Securities Sold Receivable 6,048,000.00
• The 03/25/96 WTHIC (Investment Contract Withdrawal):


• The 03/31/96 MATUIC (Maturity of Investment Contract):

14
The 10/31/95 position in the contract as seen on the Holdings Definition (VSHO) screen:
NEXT VSHO MODE VIEW FDMP28
* * * HOLDINGS DEFINITION * * *
ACCOUNT NO: ...... 000000000016998 INVESTMENT CONTRACT FUND

SECURITY NO: ........... IC001 IC #001 SHORT NAME
SECURITY DATE ......... 00 00 0000 SECURITY UNIQUE .............. 00000
HOLDINGS DATE ........... 10 31 95
PRICE CODE .................... F COMMITMENT FLAG.................... N

EFFT DATE/OLDEST PEND ... 99 99 99 THERE ARE TRANS DURING THE PERIOD
SCHEDULE PAYMENT DATE ... 00 00 00 INCOME BALANCE.... 57,142.49
BASE AMORT........... 0.00
SETTLED MARKET............... 10,137,142.49 DURATION.. N/A
TRADED MARKET................ 10,137,142.49 DIVIDEND REINVEST....
PRICE......... 0.000000 ACCRUED INCOME.... 0.00
AMORT/ACCRET.. 0.00 WITHHOLDING....... 0.00
DESCRIPTION CARRY COST
TRADED..................... 10,137,142.4900 10,137,142.49
PLEDGED.................... 0.0000 0.00
SETTLED.................... 10,137,142.4900 10,137,142.49
PRINCIPAL BALANCE.......... 10,080,000.00
The contract value at 10/31/95 is 10,137,142.49 and is comprised of 10,080,000.00 in

principal (the net effect of transactions to date) and 57,142.49 in accumulated income. The
income accumulation calculations are approximated as follows:
10/01 through 10/06 = 6 days of income:

(10,000,000.00 * ((1+0.069)^(6/366))) - 10,000,000.00 = 10,944.29

((10,010,944.29+150,000)*((1+0.069)^(8/366)))-
(10,010,944.29+150,000)=14,829.95

((10,175,774.24-70,000)*((1+0.069)^(17/366)))-(10,175,774.24-
70,000)=31,368.25
10,944.29 + 14,829.95 + 31,368.25 = 57,142.49 income balance at 10/31/95
10,080,000.00 + 57,142.49 = 10,137,142.49 contract value at 10/31/95

principal and 112,735.94 in accumulated income. The calculation of additional income
accumulated for the month of November is approximated as follows:

(10,137,142.49 * ((1+0.069)^(30/366))) - 10,137,142.49 = 55,593.45
57,142.49 + 55,593.45 = 112,735.94 income balance at 11/30/95
15
Accumulated income is due on 12/31/95 and the income balance is reset to zero in anticipation
of the income collection. The calculation of income due at 12/31/95 is based on the
accumulation of income through November plus the additional accumulation for the month of
December approximated as follows:

(10,192,735.94 * ((1+0.069)^(30/366))) - 10,192,735.94 = 55,898.31
112,735.94 + 55,898.31 = 168,634.25 income due at 12/31/95

principal and 1,837.80 in accumulated income where the income calculation is approximated
as follows:
12/31 through 12/31 = 1 day of income:

(10,080,000.00 * ((1+0.069)^(1/366))) - 10,080,000.00 = 1,837.80
Accumulated income and 60% of remaining principal is due on 01/31/96 and the income
balance is reset to zero in anticipation of the income collection. The calculation of income due
at 01/31/96 is based on the accumulation of income through December plus the additional
accumulation for the month of January approximated as follows:

(10,081,827.80 * ((1+0.069)^(30/366))) - 10,081.827.80 = 55,290.14
1,837.80 + 55,290.14 = 57,127.94 income due at 01/31/96
The contract value at 01/31/96 is 4,032,735.12 and is comprised of 4,032,000.00 in principal

and 735.12 in accumulated income where the income calculation is approximated as follows:

(4,032,000.00 * ((1+0.069)^(1/366))) - 4,032,000.00 = 735.12
4,032,000.00 + 735.12 = 4,032,735.12 contract value at 01/31/96
Note that the 01/31/96 principal payment has reduced the principal balance by 60% (or
6,048,000.00) to 4,032,000.00.

and 22,112.03 in accumulated income where the income calculation is approximated as
follows:

(4,032,000.00 * ((1+0.069)^(30/366))) - 4,032,000.00 = 22,112.03
16
Accumulated income and 100% of remaining principal is due on 03/31/96 and the income
balance is reset to zero in anticipation of the income collection. The calculation of income due
at 03/31/96 is approximated as follows:

(4,032,000.00 * ((1+0.069)^(54/366))) - 4,032,000.00 = 39,888.95
Less the income withdrawn on 03/25, or 1,978.62
Plus 03/25 through 03/30 = 6 days of income based on remaining contract value of:
3,832,000.00 + 39,888.95 - 1,978.62 = 3,869,910.33 contract value at 03/25
3,869,910.33 * ((1+0.069)^(6/366))) - 3,869,910.33 = 4,235.34
39,888.95 - 1,978.62 + 4,235.34 = 42,145.67 income due at 03/31/96.
The 03/25 withdrawal reduced the principal balance (by 200,000.00) to 3,832,000.00 and
the maturity reduced the principal balance (by 100%) to zero.
17
EXAMPLE 2: FIXED RATE INVESTMENT CONTRACT USING MONTHLY COMPOUNDING OPTION.

Account 16998 enters into an investment contract on 10/01/95. An additional deposit of
principal is made on 10/07/95 and a partial withdrawal of principal is made on 10/15/95.
Accumulated interest is due at 12/31/95. At 01/31/96 accumulated interest is again due and
the remaining principal balance is to be paid down to 4,032,000.00. On 03/25/96 a partial
withdrawal of principal and interest takes place. The contract matures on 03/31/96.

SECURITY NO IC002 00 00 0000 00000 SHORT NAME IC #002 SHORT NAME

MODEL SECURITY IND:
SECTOR.......................... 0000 INDUSTRY.........................0000
18
BOSB Screen
NEXT BOSB MODE VIEW FDMP46
SECURITY NO: IC002 00 00 0000 00000 IC #002 SHORT NAME

BOND CODE . 1 1ST PWDN DATE.. ACCR METH. L ACCR OPT. INT PUR.
FIRST COUPON DATE ........... ISSUE DATE................. 00 00 00
INTEREST RATE ... 6.900000000 MATURITY DATE ............. 03 31 1996
COMPOUNDING OPT.. M PYMT FREQ.. PAYMENT MONTH/DAY ............. MM DD
MSTR NOTE FLOOR (000) .... 0 ISSUE PRICE ...
MSTR NOTE CEILING (000) .. 0 RATING: S AND P MOODYS
BENCHMARK SPREAD ......... FIRST DATE.. 00 00 00 MONTH-END...
ANN RATE TYPE .......IC GNMA GEN .. CONSTANT DTM. 2A-7. DEMAND.
The following characteristics are significant:

ACCR OPT Blank - use accrued income option of the account - day of deposit
ISSUE DATE 00/00/00 - use calendar year to identify 365 or 366 as numerator
COMPOUNDING OPT M - monthly compounding of accumulating interest
19
• Accumulated interest is due at 12/31/95, designated by the TYPE 'I' entry at that date.
• Accumulated interest is due at 01/31/96, and the principal balance is to be paid down to
4,032,000.000 at that time, designated by the TYPE 'A' entry at that date.
• Accumulated interest is due at 03/31/96 (maturity), and the principal balance is to be paid
down to zero at that time, designated by the TYPE 'A' entry at that date.
NEXT BOPM MODE VIEW FDMP253

SECURITY NO: IC002 00 00 0000 IC #002 SHORT NAME

TYPE........: A PRINCIPAL AMOUNT/% .00
03/31/96 A .00
01/31/96 A 4,032,000.00
12/31/95 I .00
entered was IC002):
Trade and
Contractual Actual
OPNIC 10/01/95 10/01/95 10/01/95 10,000,000.00 10,000,000.00 0.00 10,000,000.00
DEPIC 10/07/95 10/07/95 10/07/95 150,000.00 150,000.00 0.00 150,000.00
WTHIC 10/15/95 10/15/95 10/15/95 70,000.00 70,000.00 0.00 70,000.00
INTIC 12/31/95 12/31/95 12/31/95 0.00 0.00 174,414.73 0.00
INTIC 01/31/96 01/31/96 01/31/96 0.00 0.00 58,926.23 0.00
PMTIC 01/31/96 01/31/96 01/31/96 6,048,000.00 6,048,000.00 0.00 6,048,000.00
WTHIC 03/25/96 03/25/96 03/25/96 202,041.38 200,000.00 2,041.38 200,000.00
INTIC 03/31/96 03/31/96 03/31/96 0.00 0.00 43,473.28 0.00
MATUIC 03/31/96 03/31/96 03/31/96 3,832,000.00 3,832,000.00 0.00 3,832,000.00
20
scheduled interest payment date. The income effect of a given WTHIC transaction represents its
direct impact on the accumulated income balance. The 10/31/95 position in the contract would
appear as follows if viewed via the Holdings Definition (VSHO) screen:


SECURITY DATE ......... 00 00 0000 SECURITY UNIQUE ..............
HOLDINGS DATE ........... 10 31 95

BASE AMORT........... 0.00
TRADED..................... 10,139,086.6300 10,139,086.63
PLEDGED.................... 0.0000 0.00
SETTLED.................... 10,139,086.6300 10,139,086.63


(10,000,000.00 * (0.069/365)) rounded * 6 days = 11,342.46

(10,150,000.00 * (0.069/365)) rounded * 8 days = 15,350.16

(10,080,000.00 * (0.069/365)) rounded * 17 days = 32,394.01
21


(10,139,086.63 * (0.069/365)) rounded * 30 days = 57,501.00

(10,196,587.63 * (0.069/365)) rounded * 30 days = 57,827.10
116,587.63 + 57,827.10 = 174,414.73 income due at 12/31/95

principal and 1,905.53 in accumulated income where the income calculation is approximated
as follows:

(10,080,000.00 * (0.069/365)) rounded * 1 day = 1,905.53
of the income collection. The principal balance is also to be paid down to 4,032,000.00 at this
date. The calculation of income due at 01/31/96 is based on the accumulation of income for
the month of January approximated as follows:

(10,081,905.53 * (0.069/366)) rounded * 30 days = 57,020.70
1,905.53 + 57,020.70 = 58,926.23 income due at 01/31/96

and 760.13 in accumulated income where the income calculation is approximated as follows:

(4,032,000.00 * (0.069/366)) rounded * 1 day = 760.13
4,032,000.00 + 760.13 = 4,032,760.13 contract value at 01/31/96
Note that the 01/31/96 principal payment has reduced the principal balance (by
6,048,000.00) to 4,032,000.00.
22

and 22,807.96 in accumulated income where the income calculation is approximated as
follows:

(4,032,000.00 * (0.069/366)) rounded * 1 day = 760.13
(4,032,760.13 * (0.069/366)) rounded * 29 days = 22,047.83
760.13 + 22,047.83 = 22,807.96 income balance at 02/29/96
Accumulated income and remaining principal is due on 03/31/96 and the income balance is
reset to zero in anticipation of the income collection. The calculation of income due at
03/31/96 is approximated as follows:

(4,032,000.00 * (0.069/366)) rounded * 1 day = 760.13
(4,032,760.13 * (0.069/366)) rounded * 29 days = 22,047.83
(4,054,807.96 * (0.069/366)) rounded * 24 days = 18,346.32
Less the income withdrawn on 03/25: 2,041.38
Plus 03/25 through 03/30 = 6 days of income:
(3,854,807.96 * (0.069/366)) rounded * 6 days = 4,360.38
760.13 + 22,047.83 + 18,346.32 - 2,041.38 + 4,360.38 = 43,473.28 income due at
03/31/96.
The 03/25 withdrawal reduced the principal balance and the basis for earnings for the
remaining days in the current month by 200,000.00. (i.e. at 03/25 the principal balance is
reduced to 3,832,000.00 and the basis for earnings for the remaining days in the current
month is reduced to 3,854,807.96). The maturity transaction reduced the principal balance to
zero.
23
EXAMPLE 3: VARIABLE RATE INVESTMENT CONTRACT USING SIMPLE INTEREST CALCULATION.

Account 16998 enters into an investment contract on 10/01/95. An additional deposit of
principal is made on 10/07/95 and a partial withdrawal of principal is made on 10/15/95.
Accumulated interest is due at 12/31/95. At 01/31/96 accumulated interest is again due and
the remaining principal balance is to be paid down to 4,032,000.00. On 03/25/96 a partial
withdrawal of principal and interest takes place. The contract matures on 03/31/96.
The security is defined via the standard security definition screen progression for bonds (BOBD
→ BOSB → BODE) as documented in Section 5.20 Security Activities. The BOBD screen
appears as follows, where (aside from the usual bond-like security definition considerations)
the IC asset group designation is of most significance:

SECURITY NO IC003 00 00 0000 SHORT NAME IC #003 SHORT NAME

MODEL SECURITY IND:
SECTOR.......................... 0000 INDUSTRY.........................0000
24
ACCRUAL METHOD K - Investment Contract - 365 days

ACCR INCM OPT 1 - day of withdrawal
INTEREST RATE 6.9(%) - the initial annual interest percentage rate of the contract
COMPOUNDING OPT Blank - no compounding of accumulating interest
Rate changes are anticipated on the second Tuesday of each month (as indicated by the rate
change schedule data present on BOSB). See Section 5.20, Security Activities for further
information on the BOSB rate change schedule). The rate in effect at the opening of the contract
has been entered on BOSB. Rate changes are entered via the Corporate Actions/Rates (DECR)
screen. Defining the initial rate via BOSB is optional and is available as a convenience, as all rates
(including the initial rate) could instead be entered via DECR.
NEXT BOSB MODE CHANGE FDMP46


BOND CODE . 1 1ST PWDN DATE.. ACCR METH. K ACCR OPT. 1 INT PUR.
FIRST COUPON DATE ........... ISSUE DATE .................00 00 00
INTEREST RATE ... 6.900000000 MATURITY DATE ............03 31 1996
COMPOUNDING OPT.. PYMT FREQ.. PAYMENT MONTH/DAY .............00 00
MSTR NOTE FLOOR (000) .... 0 ISSUE PRICE ... 0.00000000
MATRIX CODE.... TBA FLAG.. ORIGINAL BAL... 0.00
EFF MATY DATE.. CCYY PREPAY.. PAR OUTSTANDING.. 0.00
BENCHMARK.. CCYY RATE CHANGE FREQ.. TU INCREMENT..02
ANN RATE TYPE ......IC GNMA GEN .. CONSTANT DTM. 2A-7. DEMAND.
AMORT TO EFF MATY DATE..M ACTIVE.. CLASS OF SHARES 00 REF X
SWP=>
25
This condition is designated by the TYPE→ TYPE

Accumulated interest is due at 12/31/95 I
Accumulated interest is due at 01/31/96, and the principal balance is to be paid down to A
3,832,000.000 at that time
• No payment date entry is present for the 03/31/96 maturity date. Whether or not an entry
is present on BOPM, all income and remaining principal is due at maturity.
NEXT BOPM MODE VIEW FDMP253


TYPE........: PRINCIPAL AMOUNT/% .00
01/31/96 A 4,032,000.00
12/31/95 I .00
Rate changes over the life of the contract are maintained via the DECR screen. The equivalent
screen requested in VIEW mode for the contract presented in this example appears as follows:
NEXT VSCR MODE VIEW FDMP53

* * * CORPORATE ACTIONS/RATES * * *

COUPON/EX-DATE/EFF-DATE:..... 03 31 96 TYPE: IC ORDER: 0 PRICE CODE:... F
RESET DATE:.................. 00 00 00 INTEREST RATE:.. 0.000000000000
GIVE: SHRS FOR EVERY SHRS
EFF-DATE RESET ORDER TYPE INTEREST RATE

03/12/96 03/12/96 0 IC 7.625000000000
02/13/96 02/13/96 0 IC 7.500000000000
01/09/96 01/09/96 0 IC 7.375000000000
12/17/95 12/12/95 0 IC 7.250000000000
11/14/95 11/14/95 0 IC 7.125000000000
10/17/95 10/17/95 0 IC 7.000000000000
26
Note that most of the rates were entered in a timely manner (i.e. each rate's EFF-DATE is equal to
its RESET DATE), resulting in the accounting impacts of each of these rates being taken at the
same date (i.e. the EFF-DATE) as of which the rate is to change the daily income earned (i.e. the
RESET DATE)). The exception is the rate entered with an EFF-DATE of 12/17/95. This rate change
ultimately impacts the daily income calculation starting at 12/12/95 (its RESET DATE)), but its
accounting effects (based on its impact on the accumulated income balance) are not taken until
12/17/95 (its EFF-DATE).
entered was IC003):
Trade and
Contractual Actual
OPNIC 10/01/95 10/01/95 10/01/95 10,000,000.00 10,000,000.00 0.00 10,000,000.00
DEPIC 10/07/95 10/07/95 10/07/95 150,000.00 150,000.00 0.00 150,000.00
WTHIC 10/15/95 10/15/95 10/15/95 70,000.00 70,000.00 0.00 70,000.00
INTIC 12/31/95 12/31/95 12/31/95 0.00 0.00 177,864.91 0.00
INTIC 01/31/96 01/31/96 01/31/96 0.00 0.00 62,861.85 0.00
PMTIC 01/31/96 01/31/96 01/31/96 6,048,000.00 6,048,000.00 0.00 6,048,000.00
WTHIC 03/25/96 03/25/96 03/25/96 202,179.44 200,000.00 2,179.44 200,000.00
INTIC 03/31/96 03/31/96 03/31/96 0.00 0.00 46,561.27 0.00
MATUIC 03/31/96 03/31/96 03/31/96 3,832,000.00 3,832,000.00 0.00 3,832,000.00
direct impact on the accumulated income balance.
27
The 10/31/95 position in the contract as it appears on the Holdings Definition (VSHO) screen

SECURITY DATE ......... 00 00 0000 SECURITY UNIQUE ..............
HOLDINGS DATE ........... 10 31 95

BASE AMORT........... 0.00
TRADED..................... 10,137,595.4000 10,137,595.40
PLEDGED.................... 0.0000 0.00
SETTLED.................... 10,137,595.4000 10,137,595.40


(10,000,000.00 * (0.069/365)) rounded * 6 days = 11,342.46

(10,150,000.00 * (0.069/365)) rounded * 8 days = 15,350.16

(10,080,000.00 * (0.069/365)) rounded * 1 day = 1,905.53

(10,080,000.00 * (0.07/365)) rounded * 15 days = 28,997.25
11,342.46 + 15,350.16 + 1,905.53 + 28,997.25 = 57,595.40 income balance at 10/31/95
28


(10,080,000.00 * (0.07/365)) rounded * 13 days = 25,130.95
(10,080,000.00 * (0.07125/365)) rounded * 17 days = 33,450.39

(10,080,000.00 * (0.07125/365)) rounded * 11 days = 21,644.37
(10,080,000.00 * (0.0725/365)) rounded * 20 days = 40,043.80
116,176.74 + 21,644.37 + 40,043.80 = 177,864.91 income due at 12/31/95

and 0.00 in accumulated income. (Based on day of withdrawal, income earned on the 12/31/95
payment date is assumed to be collected on this date).
Accumulated income is due on 01/31/96 and the income balance is reset to zero in anticipation of
the income collection. The principal balance is also to be paid down to 4,032,000.00 at this date.
The calculation of income due at 01/31/96 is based on the accumulation of income for the month
of January approximated as follows:

(10,080,000.00 * (0.0725/365)) rounded * 8 days = 16,017.52
(10,080,000.00 * (0.07375/365)) rounded * 23 days = 46,844.33
16,017.52 + 46,844.33 = 62,861.85 income due at 01/31/96
The contract value at 01/31/96 is 4,032,000.00 and is comprised of 4,032,000.00 in principal and
0.00 in accumulated income. (Based on day of withdrawal, income earned on the 01/31/96
payment date is assumed to be collected on this date). Note that the 01/31/96 principal payment
has reduced the principal balance (by 6,048,000.00) to 4,032,000.00.
29
The contract value at 02/29/96 is 4,055,032.00 and is comprised of 4,032,000.00 in principal and 23,032.00 in
accumulated income where the income calculation is approximated as follows:

(4,032,000.00 * (0.07375/365)) rounded * 12 days = 9,776.16

(4,032,000.00 * (0.075/365)) rounded * 16 days = 13,255.84
02/29 through 02/29 = 0 days of income (ACCRUAL METHOD 'K' does not count 02/29)
Accumulated income and remaining principal is due on 03/31/96 and the income balance is
reset to zero in anticipation of the income collection. The calculation of income due at
03/31/96 is approximated as follows:

(4,032,000.00 * (0.07375/365)) rounded * 12 days = 9,776.16

(4,032,000.00 * (0.075/365)) rounded * 27 days = 22,369.23

(4,032,000.00 * (0.07625/365)) rounded * 14 days = 11,792.20
Less the income withdrawn on 03/25: 2,179.44
Plus 03/26 through 03/31 = 6 days of income:
(3,832,000.00 * (0.07625/365)) rounded * 6 days = 4,803.12
9,776.16 + 22,369.23 + 11,792.20 -2,179.44 + 4,803.12 = 46,561.27 income due at
03/31/96.
The 03/25 withdrawal reduced the principal balance (by 200,000.00) to 3,832,000.00 and the
maturity reduced the principal balance to zero.
30
EXAMPLE 4: PARTIAL INTEREST PAYMENTS

Account 514 enters into an investment contract on 10/01/95. An additional deposit of principal is
made on 10/07/95, a partial withdrawal of principal is made on 10/15/95 and a partial withdrawal
of principal and interest is made on 03/25/96.
Additionally, the contract calls for the following scheduled payments:
12/31/95 Half of the outstanding principal plus half of the accumulated interest
01/31/96 One tenth of the outstanding principal and no accumulated interest
02/29/96 Total contract value is paid down to $4,600,000.00
03/31/96 Total contract value is paid down to $4,000,000.00
The contract matures on 04/30/96.

SECURITY NO IC004 SHORT NAME IC #004 SHORT NAME

MODEL SECURITY IND: STATUS DATE ..................06 10 96
STATE CODE.......................... 80 INCEPTION DATE................06 10 96
REPT/NO:... CUSIP (PRICING) NUMBER....... IC004
PRICE CODE.......................... F ASSET GROUP.........................IC
SEGMENT.......................... 0007 CATEGORY..........................0720
SECTOR........................... 0000 INDUSTRY..........................0000
HIGH PRICE RANGE ................ 99.9 LOW PRICE RANGE..................99.9-
SIC CODE......................... CROSS REFERENCE CODE.........
ISSUER CODE.................... IC004 TRANSACTION GENERATION.............. Y
LAG DAYS.. 0000 LAG DAYS METHOD.. 1 FEDERAL TAX STATUS............... T
INCOME CATE MAIN................ 0020 INCOME CATE SUB.................. 000
PRICE SOURCE...................... PRICE TYPE.....................
BACKUP PRICE SOURCE............... BACKUP PRICE TYPE..............
FORM 13F FLAG. Y EXCLUDE MGT FEES N TITLE OF CLASS (CODE).............
ISSUE CURRENCY.. PREC... ISSUE COUNTRY CODE................
INCOME CURRENCY.. PREC... GUARANTOR.......................
TRADE CURRENCY.. PREC... PRICE GROUP.......................
FRANKED/UNFRANKED.................. BID/OFFER SPREAD (%).. 0.000
31

ACCR INCM OPT Blank - use accrued income option of the account - day of deposit
ISSUE DATE 00/00/00 - use calendar year to identify 365 or 366 as numerator
COMPOUNDING OPT M - monthly compounding of accumulating interest
NEXT BOSB MODE CHANGE FDMP46


BOND CODE . 1 1ST PWDN DATE.. ACCR METH. L ACCR OPT. INT PUR.
FIRST COUPON DATE .......... 00 00 00 ISSUE DATE ................ 00 00 00
INTEREST RATE ... 6.900000000 MATURITY DATE ........... 04 30 1996
COMPOUNDING OPT.. M PYMT FREQ.. PAYMENT MONTH/DAY ............. MM DD
MSTR NOTE FLOOR (000) .... 0 ISSUE PRICE ...
ANN RATE TYPE ......IC GNMA GEN .. CONSTANT DTM. 2A-7. DEMAND.
32
This condition is designated by the TYPE→ TYPE
Half of the outstanding principal plus half of the accumulated interest is due at 12/31/95 C
Ten percent of the remaining principal balance is due to be paid down at 01/31/96 N
The total contract value (remaining principal plus accumulated interest) is due to be paid down A
to $4,600,000.00 as of 02/29/96
The total contract value (remaining principal plus accumulated interest) is due to be paid down A
to $4,000,000.00 as of 03/31/96


TYPE........: PRINCIPAL AMOUNT/% .00
03/31/96 A 4,000,000.00
02/29/96 A 4,600,000.00
01/31/96 N 10.00
12/31/95 C 50.00
33
entered was IC004):
Trade and
Contractual Actual
Tran Effective Settle Settle Income Cost
Code Date Dates Date Share/Par Total Principal Effect (Calculated)
OPNIC 10/01/95 10/01/95 10/01/95 10,000,000.00 10,000,000.00 0.00 10,000,000.00
DEPIC 10/07/95 10/07/95 10/07/95 150,000.00 150,000.00 0.00 150,000.00
WTHIC 10/15/95 10/15/95 10/15/95 70,000.00 70,000.00 0.00 70,000.00
INTIC 12/31/95 12/31/95 12/31/95 0.00 0.00 87,207.36 0.00
PMTIC 12/31/95 12/31/95 12/31/95 5,040,000.00 5,040,000.00 0.00 5,040,000.00
PMTIC 01/31/96 01/31/96 01/31/96 504,000.00 504,000.00 0.00 504,000.00
INTIC 02/29/96 02/29/96 02/29/96 0.00 0.00 78,608.36 0.00
WTHIC 03/25/96 03/25/96 03/25/96 202,179.44 200,000.00 2,179.44 200,000.00
INTIC 03/31/96 03/31/96 03/31/96 0.00 0.00 88,475.82 0.00
PMTIC 03/31/96 03/31/96 03/31/96 336,000.00 336,000.00 0.00 336,000.00
INTIC 04/30/96 04/30/96 04/30/96 0.00 0.00 22,627.06 0.00
MATUIC 0430/96 04/30/96 04/30/96 4,000,000.00 4,000,000.00 0.00 4,000,000.00
direct impact on the accumulated income balance.
34
The 10/31/95 position in the contract would appear as follows if viewed via the Holdings Definition
(VSHO) screen:
NEXT VSHO MODE ADD FDMP28

ACCOUNT NO: ...... 000000000000514 IC EXAMPLE ACCOUNT

SECURITY DATE ......... CCYY SECURITY UNIQUE ..............
HOLDINGS DATE ........... 10 31 95
PRICE CODE .................... F COMMITMENT FLAG....................

INCOME BALANCE.... 59,086.63
BASE AMORT........... 0.00
TRADED MARKET................ 10,139,086.63 DIVIDEND REINVEST.... N
TRADED..................... 10,139,086.6300 10,139,086.63
PLEDGED.................... 0.0000 0.00
SETTLED.................... 10,139,086.6300 10,139,086.63
The contract value at 10/31/95 is $10,139,086.63 and is comprised of $10,080,000.00 in

principal (the net effect of transactions to date) and $59,086.63 in accumulated income. The

(10,000,000.00 * (0.069/365)) rounded * 6 days = 11,342.46

(10,150,000.00 * (0.069/365)) rounded * 8 days = 15,350.16

(10,080,000.00 * (0.069/365)) rounded * 17 days = 32,394.01
11,342.46 + 15,350.16 + 32,394.01 = $59,086.63 income balance at 10/31/95
principal and $116,587.63 in accumulated income. The calculation of additional income

(10,139,086.63 * (0.069/365)) rounded * 30 days = 57,501.00
35
Half of the outstanding principal plus half of the accumulated interest (payment due) is due at
12/31/95, and the income balance is reset to $87,207.37 (one half of the accumulated income
balance as of the end of day 12/30/95 *) in anticipation of the income collection. The
calculation of income due at 12/31/95 is based on the accumulation of income through
November plus the additional accumulation for the month of December approximated as
follows:

(10,196,587.63 * (0.069/365)) rounded * 30 days = 57,827.10
116,587.63 + 57,827.10 = 174,414.73 accumulated income at 12/30/95
174,414.73 * 50% = 87,207.36 income due at 12/31/95
Half of the outstanding principal balance is also due to be paid down at 12/31/95.
10,080,000.00 * 50% = 5,040,000.00 principal payment due at 12/31/95

principal and $88,165.69 in accumulated income where the income calculation is approximated
as follows:

(5,069,380.45 * (0.069/365)) rounded * 1 day = 958.32
(116,587.63 - 87,207.36) + 57,827.10 + 958.32 = 88,165.69 accumulated income
at 12/31/95
Note that the income payment due 12/31/95 is applied to the oldest accumulated
balance (prior to the last compounding date of 11/30/95) first.
Ten percent of the remaining principal balance (payment due) is due to be paid down at
01/31/96. No interest payment is due.
5,040,000.00 * 10% = 504,000.00 principal payment due at 01/31/96.
*
Accumulated Income is reset to one half of the accumulated income balance as of the end of day
12/30/95 rather than as of 12/31/95 (the payment date) because this contract is accruing on a day of deposit
basis. The reset is effective at the beginning of the day 12/31/95.
36

principal and $118,041.16 in accumulated income where the income calculation is
approximated as follows:

(5,128,165.69 * (0.069/366)) rounded * 30 days = 29,003.70

(4,624,165.69 * (0.069/366)) rounded * 1 day = 871.77
88,165.69 + 29,003.70 + 871.77 = 118,041.16 accumulated income as of 01/31/96
The total contract value (remaining principal plus accumulated interest) is due to be paid down
to $4,600,000.00 as of 02/29/96. The payment due on 2/29/96 is approximated as follows:
Total contract value as of 02/28/96** is $4,678,608.36 and is comprised of $4,536,000.00 in

principal and $142,608.36 in accumulated income where the income calculation is
approximated as follows:

(4,654,041.16 * (0.069/366)) rounded * 28 days = 24,567.20
118,041.16 + 24,57.20 = 142,608.36
4,536,000.00 + 142,608.36 = 4,678,608.36
Because the paid down contract value per BOPM is greater than the current principal
outstanding, no principal payment is due at 02/29/96. The entire payment due will be taken
from accumulated income.
4,678,608.36 - 4,600,000.00 = 78,608.36 interest payment due 02/29/96.
The contract value at 02/29/96 (after the payment) is $4,600,862.58 and is comprised of
$4,536,000.00 in principal and $64,862.58 in accumulated income where the income
calculation is approximated as follows:

((4,654,041.16 -78,608.36)) * (0.069/366)) rounded * 1 day = 862.58
(118,041.16 - 78,608.36) + 24,567.20 + 862.58 = 64,862.58 accumulated income as
of 02/29/96
**
The total contract value as of 02/28/96 is used to determine the amount of the 02/29/96 payment
because the contract is accrued on a day of deposit basis.
37
The total contract value (remaining principal plus accumulated interest) is due to be paid down
to $4,000,000.00 as of 03/31/96.
The 03/25 withdrawal reduced the principal balance by $200,000.00, the accumulated income
balance by $2,179.44 and the basis for earnings compounding for the remaining days in the
current month by $202,179.44.
The payment due on 3/31/96 is approximated as follows:
Total contract value as of 03/30/96*** is $4,424,475.82 and is comprised of $4,336,000.00 in

principal and $88,475.82 in accumulated income where the income calculation is approximated
as follows:

(4,600,862.58 * (0.069/366)) rounded * 24 days = 20,817.12
Less income withdrawn on 03/25: 2,179.44

(4,398,683.14 * (0.069/366)) rounded * 6 days = 4,975.56
64,862.58 + 20,817.12 - 2,179.44 + 4,975.56 = 88,475.82 accumulated income as
of 03/30/96
Because the paid down contract value per BOPM is less than the current principal outstanding,
a principal payment is due at 03/31/96. In addition to this principal, all accumulated income
will be paid out, bringing the total contract value down to the amount specified.
Total contract value as of 03/30/96 4,424,475.82

03/31/96 paid down contract value per BOPM 4,000,000.00
Total payment due 03/31/96 424,475.82
Less accumulated income as of 03/30/96 88,475.82
Principal payment due 03/31/96 336,000.00

principal and $754.10 in accumulated income where the income calculation is approximated as
follows:

((4,424,475.82 - 424,475.82)) * (0.069/366)) rounded * 1 day = 754.10
4,000,000.00 + 754.10 = 4,000,754.10 contract value 03/31/96
***
The total contract value as of 03/30/96 is used to determine the amount of the 03/31/96 payment
because the contract is accrued on a day of deposit basis.
38
EXAMPLE 5: MANUAL ADJUSTMENT TO INVESTMENT CONTRACT ACCUMULATED INCOME BALANCE.

A final example is presented to illustrate the use of transaction codes available for adjusting
the accumulated income balance of an Investment Contract position. The transaction codes are
CFIC+ and CFIC- and are used to increase or decrease (respectively) the accumulated income
balance. The amount entered on the transaction is applied to the income balance at the
specified date. Where the transaction is entered such that contractual settle and effective
dates are equal the adjustment is applied to the balance remaining at that date (i.e. the
closing balance in accumulated income) as of the entry point in time of the transaction. Where
compounding of accumulating income is elected for a given Investment Contract the
adjustment transaction's effects on compounding begin on the next compounding date (i.e. for
daily compounding this would be the day after contractual settle date; for monthly
compounding this would be the first day of the month after contractual settle date). This allows
the transaction's effect to be readily predictable and allows it to influence future compounding
in a logical way. Where the transaction is entered such that its contractual settle date is less
than its effective date the adjustment is applied to the balance remaining at the contractual
settle date (i.e. the closing balance in accumulated income) as of the effective date and entry
point in time of the transaction. This allows the transaction to adjust what the balance was at
some previous date (i.e. the contractual settle date) but to delay the accounting effects (driven
by the transaction's influence actually changing the income balance on the position) until a
later date (i.e. the effective date). The contractual settle date may be less than the effective
date by up to one month to allow for backdating of adjustment transactions in this manner.
The final Investment Contract example is a variation on the scenario presented in Example 1.
All characteristics are the same as those presented in Example 1 until 11/05/95, at which point
the user is notified that the income balance at 10/31/95 was short by 100.00 and an
adjustment to correct this needs to be made where the accounting effects are to be taken on
11/05/95. Prior to making the adjustment the contract value at 11/05/95 is 10,146,386.96
and is comprised of 10,080,000.00 in principal and 66,386.96 in accumulated income. The
11/05/95 income balance is the result of accumulating 5 additional days of onto the 57,142.49
balance at 10/31/95, where the calculation is approximated as follows:

(10,137,142.49 * ((1+.069)^(5/366)) - 10,137,142.49 = 9,244.47
57,142.49 + 9,244.47 = 66,386.96 income balance at 11/05/95 (before adjustment)
The adjustment is made by entering the following transaction via the Trade Entry (DETE)
screen (where the account number entered is 16998 and the security number entered is
IC001):
Trade and
Contractual Actual
CFIC+ 11/05/95 10/31/95 11/05/95 100.00 0.00 0.00 0.00
39
The position in the contract is unaffected until 11/05/95. After the adjustment the contract
value at 11/05/95 is 10,146,487.06 and is comprised of 10,080,000.00 in principal and
66,487.06 in accumulated income. The 11/05/95 income balance is the result of accumulating
5 additional days of income onto the 57,242.49 balance at 10/31/95 resulting from adding the
100.00 adjustment amount to the 57,142.29 pre-adjustment balance (at the contractual settle
date of the adjustment), where the calculation is approximated as follows:

(10,137,242.49 * ((1+.069)^(5/366)) - 10,237,142.49 = 9,244.57
57,142.49 + 100.00 + 9,244.57 = 66,487.06 income balance at 11/05/95 (after
adjustment)
The adjustment affects the position and account valuation at and beyond 11/05/95 as though
it had been in effect since 10/31/95. Once the adjustment is applied in the manner shown
above it is treated as an integral component of the income balance. The general ledger effects
of the above transaction would therefore not be seen in detail but would be reflected in the
general ledger entries made to account for the change in accumulated income for the day at
which the adjustment went into effect (11/05/95). Prior to having made the above adjustment
the Accumulated Income Entry for 11/05/95 would have been derived from the change in the
balance from 11/04 to 11/05 (i.e. from 64,537.39 to 66,386.96) and would have been
reported as follows:
The 11/05/95 Accumulated Income Entry:

After making the adjustment the Accumulated Income Entry for 11/05/95 would be derived
from the change in the balance from 11/04 to 11/05 (i.e. from 64,537.39 to 66,487.06) and
would be reported as follows:
The 11/05/95 Accumulated Income Entry:

The difference in the Accumulated Income Entries seen before and after the adjustment is due
to the adjustment amount itself (100.00) and the additional income accumulation based on
daily compounding of interest on the adjustment amount for the 5 days since the contractual
settle date of the adjustment (.10).
40
5.3 INVESTMENT CONTRACT CONVERSION CONSIDERATIONS

There are several methods available for the establishment of a fund and related Investment
Contract position in the InvestOne Enterprise® system. Variables to consider when choosing a
method include:
• Whether the contract has a fixed or variable interest rate.

• How frequently the rate has changed since the payment date prior to the conversion date
(or since the opening date of the contract, if there have been no payments).
• Which compounding option (if any) has been defined to the contract.
• How much deposit or withdrawal activity has taken place against the position since the
payment date prior to the conversion date (or since the opening date of the contract, if
there have been no payments).
In view of these considerations the user may select from the following methods:
WHERE THE CONTRACT HAD A RECENT PAYMENT AND/OR HAD FEW RATE CHANGES
Where the contract had a recent payment and/or had few rate changes this may prove to be
an efficient option and should result in the correct principal and income (and, therefore,
contract value) balances at the conversion date:
Establish the principal balance remaining at the payment date on or prior to the
conversion date via an OPNIC transaction. Enter the history of interest rates
since the payment date on or prior to the conversion date and through the
conversion date itself.
Discrepancies in the accumulated income balance at conversion date can be adjusted via
CFIC+ or CFIC- transactions having contractual settle and effective dates equal to the
conversion date. Where monthly compounding is elected and the conversion date is not a
month end, a discrepancy in accumulated income at the conversion date may be due to the
wrong prior month end balance in income being arrived at via the internal calculations (as the
monthly compounding calculation uses the contract value at the prior month end as the basis
for income in the current month). If this is suspected a CFIC+ or CFIC- transaction having
contractual settle date equal to the prior month end date may be required to arrive at the
correct balance at conversion date.
IF THE INTEREST RATE IS VARIABLE

For a variable rate contract that has not had a recent payment and/or has had many rate
changes this may prove to be an efficient option and should result in the correct principal and
income (and, therefore, contract value) balances at the conversion date:
If the interest rate is variable do not enter the initial rate via BOSB, rather, enter
the schedule of rates in effect only since the conversion date via DECR. Then,
establish the principal balance remaining at the conversion date itself via an
OPNIC transaction. Enter a CFIC+ transaction having contractual settle date
equal to the conversion date to establish the income balance at the conversion
date.
Where monthly compounding is elected (and the conversion date is not itself a month end) and
a payment date has not been encountered on or since the prior month end, enter the schedule
of rates in effect only since the prior month end date via DECR.
41
Then, establish the principal balance remaining at the prior month end date via an OPNIC
transaction. A CFIC+ should then be entered having contractual settle date equal to the prior
month end date and the amount of the transaction should correspond with the accumulated
income balance at that date (as the monthly compounding calculation uses the contract value
at the prior month end as the basis for income in the current month).
IF THE INTEREST RATE IS FIXED

For a fixed rate contract that has not had a recent payment, this may prove to be an efficient
option and should result in the correct principal and income (and, therefore, contract value)
balances at the conversion date:
If the interest rate is fixed enter the initial rate via BOSB. Then, establish the
principal balance remaining at the conversion date itself via an OPNIC
transaction. Enter a CFIC+ transaction having contractual settle date equal to
the conversion date to adjust the income balance to what it should be at the
conversion date.
Where monthly compounding is elected (and the conversion date is not itself a month end) and
a payment date has not been encountered on or since the prior month end, establish the
principal balance remaining at the prior month end date via an OPNIC transaction. A CFIC+
should then be entered having contractual settle date equal to the prior month end date and
the amount of the transaction should correspond with the amount needed to adjust the
accumulated income balance at that date to what it should be (as the monthly compounding
calculation uses the contract value at the prior month end as the basis for income in the
current month).
5.4 PROCESSING HELP
INTIC, PMTIC, AND SELIC

Variations on the transaction codes available for Investment Contract processing presented in
the examples in this section are found in Investment Contract Transaction Codes.
• The INTIC+ transaction code functions like INTIC, but is intended to increase an interest
payment amount. Similarly, the INTIC- transaction is intended to decrease an interest
payment amount.
• The PMTIC+ transaction code functions like PMTIC, but is intended to increase a principal
payment amount. Similarly, the PMTIC- transaction is intended to decrease a principal
payment amount.
• The SELIC transaction code functions like the WTHIC, but it is to be regarded as a sale
rather than a withdrawal.
ADJUSTMENTS TO PRINCIPAL PAYMENT, MATURITY AND ACCUMULATED INCOME

Principal payment, maturity and accumulated income adjustment transactions are to be used
for the current income accumulation period. The contractual settle date of a given transaction
may be backdated by up to a month to allow for:
• Late notification or acknowledgement of the payment, or

• Need for adjustment while providing control over the effective date (at which time the
accounting effects of the adjustment are taken).
These transactions may not be entered such that the period from contractual settle date to
effective date of a given transaction crosses a payment date, as scheduled via the BOPM
screen. That would imply that a previous income accumulation period was in error. If this
42
scenario occurs, handle the income adjustment for the previous accumulation period(s) via
INTIC, INTIC+ or INTIC- transaction codes - for the payment date for which that accumulation
of income applied. The principal adjustment(s) can then be handled via PMTIC, PMTIC+ or
PMTIC- transactions on or since the most recent payment date.
TRANSACTION/GNMA GENERATOR
Transactions expected at payment dates and at maturity date of an Investment Contract may
be generated by the optional Transaction Generator module of InvestOne Enterprise. For
further details see Section 5.220, Transaction/GNMA Generator.
The Transaction/GNMA Generator process relies on analyzing balances in principal,

accumulated income and contract value to build the transaction records it generates.
Realistically, these balances are not expected to be negative at any point in time, and the need
to generate transactions based on negative balances is not expected.
Negative Balances
The processing of an Investment Contract position includes an analysis of balances since the
prior payment date (or since the opening of the contract, if no prior payment date is
scheduled) to warn the user of negative balances during a current or future accumulation
period. Given daily account valuation cycles, transaction entries that would result in negative
balances are prevented via edits. Where a transaction already on file is reprocessed such that
a balance at the end of that day is negative, a warning is issued to identify the memo number
of the first of such transactions processed for that day.
Warning Messages
Additionally, security redefinition, variable rate maintenance, payment schedule maintenance
or account redefinition and resweep activities which result in negative balances during a
current or future accumulation period result in warnings for which the first nine positions of the
offending security number are identified in the warning message text. The various warnings
identify whether the contract value or only one of its components (principal or income) has
gone negative. The error conditions resulting in such warnings should be corrected such that
negative balances do not exist at the end of any day.
The edits and warnings are designed to facilitate the identification of negative balance
conditions for accounts valued daily. For accounts valued at cycles other than daily, if a
transaction or maintenance activity results in a negative income balance since the prior
valuation date but prior to a payment date that occurs before the next valuation date, the
condition will go undetected as such. This is because the accumulating income balance is
analyzed since the payment date prior to the first valuation date affected by the transaction or
other maintenance activity.
INTEREST AND INVESTMENT CONTRACTS

Interest is not purchased on or deposited into an Investment Contract position. Interest may
be sold or withdrawn from an Investment Contract position (via the SELIC or WTHIC
transaction codes) but is not anticipated by default (i.e. interest sold or withdrawn is not
calculated at transaction entry time, nor is it a projectable event). When a sale or withdrawal
transaction is entered the entire amount of contract value to be disposed of is entered as a
shares/par amount. Unless an income amount is also entered on the transaction the entire
contract value amount to be relieved is assumed to come out of the available principal balance.
To sell or withdraw a portion of the available income balance, enter the amount as an income
effect on the transaction. In doing so, the difference between the transaction shares/par (i.e.
contract value) and income amounts will determine the transaction cost amount (i.e. the
amount to be relieved from the available principal balance).
43
INVESTMENT CONTRACT REPORTING
6 INVESTMENT CONTRACT REPORTING

• MATUIC, PMTIC, SELIC and WTHIC transaction codes are considered sell-like for reporting
purposes. OPNIC and DEPIC are considered buy-like.
• Changes in contract value that relate to the accumulation of income on an Investment

Contract are not transaction driven. Therefore, the Security Holdings Ledger (R053) will
include an additional 'Accumulated Income Entry' line in order to reflect these changes as
part of the position roll forward.
• Income accumulated on an Investment Contract will be reported as income received, even

though there is no effect on total cash. These amounts would normally be reflected as
accrued income for a bond-like security; but for an Investment Contract, the daily
accumulation of income becomes part of the total contract value.
• Price per share information being reported on Investment Contract transactions will not be
computed using the standard shares/par amount, as shares/par on SELIC and WTHIC
transactions include any income effect. Therefore, in order to arrive at a meaningful price
per share, the total principal associated with the transaction is utilized.
• Estimates of annual income will use current contract value for reporting purposes.
44

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SYSTEM MANUAL - SECTION 5.

610 - INVESTMENT CONTRACTS PROCESSING

5.610 Investment Contracts Processing

The schedule may indicate that:

INVESTMENT CONTRACTS MAY BE OPENED IN ONE OF TWO FORMS.

• INTIC, PMTIC, and SELIC

2 INVESTMENT CONTRACT SECURITY DEFINITION ACTIVITIES

2.1 BOBD: SECURITY DEFINITION SCREEN

2.2 BOSB: SECURITY DEFINITION - BOND SCREEN

Field Description. Fields Shaded Gray are Required.

Field Description. Fields Shaded Gray are Required.

2.3 BODE: SECURITY DESCRIPTION SCREEN

2.4 BOPM: PAYMENT SCHEDULE SCREEN

BOPM Screen: Payment Schedule

Field Description. Fields Shaded Gray are Required.

TYPE AND PRINCIPAL AMOUNT%

3 VARIABLE RATES MAINTENANCE ACTIVITIES

ADD, CHANGE OR DELETE A RATE

4 INVESTMENT CONTRACT TRANSACTION CODES

TRAN CODE PROCESSING REQUIREMENTS

SECURITY NO. includes security DATE and QUALIFIER, if applicable.

5 INVESTMENT CONTRACT PROCESSING EXPLANATION AND EXAMPLES

• Demonstrate the influence of security and account definition characteristics on processing

The characteristics of a given contract are determined based on:

Example 1: Fixed Rate Investment Contract Using Daily Compounding Option.

5.1 FORMULAS USED FOR EXAMPLES

EXAMPLE 1: FIXED RATE INVESTMENT CONTRACT USING DAILY COMPOUNDING OPTION.

NEXT BOBD MODE VIEW FDMP43

SECURITY NO IC001 SHORT NAME IC #001 SHORT NAME

NEXT BOSB MODE VIEW FDMP46

SECURITY NO: IC001 IC #001 SHORT NAME

NEXT BOPM MODE ADD FDMP253

SECURITY NO: IC001 IC #001 SHORT NAME

• The 10/01/95 OPNIC (Open Investment Contract):

• The 10/07/95 DEPIC (Investment Contract Deposit):

• The 10/15/95 WTHIC (Investment Contract Withdrawal):

(Entries for 01/05/96) -

• The 01/31/96 INTIC (Interest Payment for Investment Contract):

(Entries for 02/05/96) -

• The 01/31/96 PMTIC (Principal Payment for Investment Contract):

(Entries for 02/05/96) -

• The 03/25/96 WTHIC (Investment Contract Withdrawal):

• The 03/31/96 INTIC (Interest Payment for Investment Contract):

• The 03/31/96 MATUIC (Maturity of Investment Contract):

ACCOUNT NO: ...... 000000000016998 INVESTMENT CONTRACT FUND

PRICE CODE .................... F COMMITMENT FLAG.................... N

The contract value at 10/31/95 is 10,137,142.49 and is comprised of 10,080,000.00 in

10/01 through 10/06 = 6 days of income:

10/07 through 10/14 = 8 days of income:

10/15 through 10/31 = 17 days of income:

The contract value at 11/30/95 is 10,192,735.94 and is comprised of 10,080,000.00 in

11/01 through 11/30 = 30 days of income:

12/01 through 12/30 = 30 days of income:

The contract value at 12/31/95 is 10,081,837.80 and is comprised of 10,080,000.00 in

12/31 through 12/31 = 1 day of income:

01/01 through 01/30 = 30 days of income:

The contract value at 01/31/96 is 4,032,735.12 and is comprised of 4,032,000.00 in principal

01/31 through 01/31 = 1 day of income:

The contract value at 02/29/96 is 4,541,112.03 and is comprised of 4,032,000.00 in principal

01/31 through 02/29 = 30 days of income: