Money market funds are required to regularly calculate their portfolios' per-share value at market prices, which is known as a “shadow NAV.” Pursuant to new SEC money market fund regulations designed to further protect money market investors, money market funds must now disclose their shadow NAVs to the SEC on a monthly basis (with a 60-day lag) for public release. Under these new rules, November 30, 2010, shadow NAVs will become available publicly for the first time on January 31, 2011.
What Is a “Shadow NAV”?
A shadow NAV is the market-value-based NAV for a money market fund. The shadow NAV is calculated out to four decimal places and fluctuates daily, reflecting the small portfolio unrealized gains or losses. These small net gains and losses are typically rounded to $1.00 when a money market fund reports a $1 NAV calculated on an amortized cost basis.
By maintaining a shadow NAV in a range of $0.9950 to 1.0050, money market funds are allowed by SEC regulation to round the effective NAV to $1.00, allowing for transactions at $1.00. This allows money market funds to report a stable NAV, despite the small variations in the shadow NAV (which reflects market values). If a money market fund's shadow NAV moves outside the allowable range of $0.9950 to $1.0050, the fund must take immediate corrective actions to bring the shadow NAV back inside the range, or discontinue using amortized cost accounting.
The SEC has required money market funds to report semiannually their shadow NAVs for many years. But, the SEC now requires money market funds to disclose their shadow NAVs monthly in a new, public SEC filing called Form N-MFP.
The Northern Institutional Funds money market funds have filed Form N-MFP with shadow NAVs as of November 30, 2010.
Under Related Links on each fund's web profile page you can select the “View Fund's SEC Form N-MFP Filings” link to view the information reported to the SEC.
An investment in the Money Market Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Money Market Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Money Market Funds.