Calculation
of a NAV
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Objectives
Define Net Asset Value
(NAV)
Define Net Assets
Formulate the NAV equation
Explain how each transaction
impacts the NAV
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What is a NAV?
NAV = price per share
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NAV Equation
NAV = Net Assets
Outstanding Shares
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Net Assets
Net Assets = Assets – Liabilities
Net Assets = Owner’s Equity
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Net Assets Defined
Net Assets = Prior Day Ending Net Assets
+/- Capital Stock Activity
+ Income
- Expenses
+/- Realized Gain/Loss
+/- Unrealized
Appreciation/Depreciation
- Distributions to Shareholders
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Daily Fund Transactions
Capital Stock Activity
Portfolio Activity
Unrealized Appreciation / Depreciation
Corporate Actions
Investment Income
Distribution to shareholders
Realized Gain / Loss
Foreign Exchange Gain / Loss.
Fund Expenses
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Capital Stock Activity
Purchases, transfers and redemptions
of a fund’s shares.
Impact on NAV
Purchases – No impact
Transfers – No impact
Redemptions – No impact
“As-of” Capital Stock – Impact
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Example 1
Fund A: Net Assets = $100,000
O/S = 10,000 shares
NAV = $10.00
Sold 1,000 shares of Fund A for $10,000
(at a NAV of $10.00)
Result: ($100,000 + $10,000)
------------------------- = $10.00
(10,000 + 1,000)
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Example 2
Fund A: Net Assets = $100,000
O/S = 10,000 shares
NAV = $10.00
“As-of” sale of 1,000 shares of Fund A for
$10,500 (at a NAV of $10.50)
Result: ($100,000 + $10,500)
------------------------- = $10.04
(10,000 + 1,000)
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Portfolio Activity
Purchase and sales of securities
Impact on NAV
Purchases – No impact
Sales – Potential impact
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Unrealized Appreciation
/ Depreciation
The daily fluctuation of a investments
market value.
Impact on NAV
Appreciation – Increases
Depreciation – Decreases
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Corporate Actions
Any event initiated by a corporation which
impacts its shareholders.
Impact on NAV
Stock splits – No impact
Name change – No impact
CUSIP Swing – Potential impact
Mergers – Potential impact 13
Investment Income
Income earned from investment activity,
such as, interest and dividends.
Impact on NAV
Interest Income – Increases
Dividend Income – Increases
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Dividend Distribution
Distributions to shareholders of a funds
net investment income and net realized
capital gains.
Impact on NAV
Income distribution– decrease
Capital gains distribution– decrease
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Realized Gain / Loss
A gain resulting from selling an asset
at a price higher than the original
purchase price and loss from selling an
asset at a price lower than the original
purchase price.
Impact on NAV
Realized Gain – Increases
Realized Loss – Decreases
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Foreign Exchange Gain / Loss
Difference or movement in foreign
currency to the base currency between
transaction dates.
Impact on NAV
Foreign Exchange Gain – Increases
Foreign Exchange Loss – Decreases
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Fund Expenses
Miscellaneous costs associated with running a
mutual fund.
For example custodian fees, management fees,
administrative fees, transfer agent fees, 12b-1 fees,
other expenses.
Impact on NAV
Fund expenses – Decreases
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How to calculate the NAV?
Prior Days ending Net Assets
+ Income
+/- Capital Stock Activity
+/- Realized Gain/Loss
+/- Unrealized Gain/Loss
- Expenses
-Distributions to Shareholders
= Current Days Net Assets
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How to calculate the NAV contd..
Current day’s NAV =
Current Days Ending Net Assets
Current days ending O/S Shares
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Wrap-Up
Define Net Asset Value (NAV)
Define Net Assets
Define Outstanding shares
Formulate the NAV equation
Explain how each transaction
impacts the NAV
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Questions?
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Thank You!!
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