Performance Report

Performance Calculation

As noted in the glossary:

"performanceCalculation" as applied by HIMIPref™ follows the following principles:

• An evaluation of value is made on every cash inflow and outflow date
  For instruments, this is considered to be the ex-date
  • For accounts for which tax accruals are explicitly recorded, special treatment is possible - see taxCalculationEffectType
• Dividends are accrued on the ex-date
• computations may be made on the basis of tradeDate or valueDate (note that tradeDate is preferable)
• Shares held long are valued at the recorded bid price; shorts are valued at the ask

See also performanceInitialization and turnover

The HIMIPref™ Performance Calculation is performed in accordance with the highest industry standards: every cash flow date is explicitly valued and trade date evaluation is recommended. To understand the calculation process, it may be useful to consider the following scenario, in which the investment could, for instance be a mutual fund:

• At the start of the process, $100 is deposited and the account value is $100.
• At the end of the first period, $10 is withdrawn and the account value is $100. following the withdrawal
• At the end of the second period, the value of the account is $110.00

To analyze the return for this situation, we construct the following table:

Time	Value of account before cash flow	Cash Flow	Value of account after cash flow	Return for period
Start	0.00	+ 100.00	100.00	N/A
End of Period 1	105.00	- 10.00	95.00	+5%
End of Period 2	110.00	0.00	110.00	+15.78%

To determine the rate of return in any period during which there are no cash-flows, we simply divide the value of the account at the end of the period by its value at the end of the period. Since the periods may be arbitrary we may select periods so that each period has no cash flows. Such a period could be of any length - a day, a week or five centuries - as long as there are no cash flows during the period, the period's return may be computed by simple division. There is no need at this stage even to require that each period be of equal length. Therefore, in order that the computations may proceed simply and accurately, we simply define the periods so that cash flows occur only at the beginning and end of any period.

In order to determine total return for multiple periods, the return factors are simply multiplied: in this case, the computation is: