Daily Market Value of Money Market Fund Shares

Money market mutual funds calculate the current market value of the securities in their portfolios using available market quotations (or an appropriate substitute that reflects current market conditions). The market value per share of a fund is computed by adding the total market value of the fund's investments, cash and other assets, subtracting the fund's total liabilities, and dividing the result by the total number of shares outstanding.

Market values differ from net asset value (NAV), which is the price at which shareholders purchase and redeem money market fund shares. The NAV of one share of a fund is determined by taking the total amortized cost of the fund's assets, subtracting the fund's total liabilities, and dividing by the total number of shares outstanding.

Regulations permit money market mutual funds to value their securities at cost, and spread out (or amortize) any discounts given or premiums paid on the securities when the fund acquired them. Regulations also permit a fund to round the cost-based NAV to the nearest penny per share. Both of these provisions, combined with strict limits on the types of securities in which money market funds are permitted to invest, enable them to maintain a stable NAV.