Essay

From PLI’s Course Handbook

ABCs of Mutual Funds 2009

#18809

2

Pricing and valuation of mutual fund shares

Allen M. Goldstein

PricewaterhouseCoopers LLP

Prepared March 26, 2009

The sections below, “Net Asset Value Calculation” and “Valuation” are excerpted from Chapter 30 “Mutual Fund Accounting and Financial Reporting” of the Practising Law Institute Publication “Mutual Fund Regulation”; this chapter was authored by Martin Jennings and Richard Grueter, Partners and Allen Goldstein, Managing Director at PricewaterhouseCoopers LLP.

The ABCs of Mutual Funds 2009

Pricing and Valuation of Mutual Fund Shares

June 10, 2009 ( Prepared March 26, 2009)

Allen M. Goldstein, PricewaterhouseCoopers LLP

The sections below "Net Asset Value Calculation" and "Valuation" are exerpted from Chapter 30 " Mutual Fund Accounting and Financial Reporting" of the Practicing Law Institute Publication " Mutual Fund Regulation"; this chapter was authored by Martin Jennings and Richard Grueter, Partners and Allen Goldstein, Managing Director at PricewaterhouseCoopers LLP.

Net Asset Value Calculation

An open-end investment company stands ready to redeem its capital shares as described in its prospectus and in accordance with Rule 2a-4 (and, for money market funds, Rule 2a-7), normally on business days when the New York Stock Exchange is open.

Rule 2a-4 defines “current net asset value” for use in computing the current price of a redeemable security as follows:

|Net Asset Value |= |(market value in dollars of fund’s assets minus fund’s | |

|(NAV) | |liabilities) | |

| | |number of investor shares outstanding | |

The Rule specifies that current NAV be an amount that reflects the following...