NAV

NAV per share is the value of a mutual fund share at any point in time. It is the price of a mutual fund share, exclusive of any sales charge or redemption charge that might be assessed by the company at time of purchase or sale. [4]

[4] The calculation of an actual NAV for Fidelity's Equity-Income Fund is explained later in this chapter.

To buy a mutual fund, an investor pays the current NAV plus any sales charge (explained later). When selling the shares back to the mutual fund company, the investor receives the current NAV less any redemption charges, which are relatively uncommon. [5]

[5] Under the Investment Company Act of 1940, forward pricing must be used for purchases and sales. This means that an investor who is either buying shares from the company or selling them back does so at the next computed share price following the receipt by the mutual fund of the order to buy or sell.

Insights

NAV is calculated by determining the current market value of all securities held by the mutual fund, subtracting any liabilities, and dividing by the number of shares of the mutual fund outstanding. In effect, it is the current per-share value of the mutual fund, or what each share of the fund is worth at any given point in time.



Mutual Funds(c) Your Money, Your Choice... Take Control Now and Build Wealth Wisely 2002
Mutual Funds(c) Your Money, Your Choice... Take Control Now and Build Wealth Wisely 2002
ISBN: N/A
EAN: N/A
Year: 2004
Pages: 94

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