There has been some confusion of late, concerning the difference between a shadow NAV and a floating NAV. The reporting of the shadow NAV becomes effective on Monday, February 7, 2011. The floating NAV is a concept that the SEC is currently discussing and has asked the public to comment on.

Money market funds (MMFs) pay dividends that reflect prevailing short-term interest rates and, unlike other investments, maintain a stable net asset value per share (NAV), typically $1.00 per share.

All MMFs are subject to rule 2a–7 under the Investment Company Act. Some money market-like funds i.e. enhanced cash, liquidity-plus and cash-plus are technically not MMFs and are not subject to rule 2a-7. Rule 2a–7, among other things, facilitates MMFs' ability to maintain a stable NAV by permitting them to use the amortized cost method of valuation and the penny-rounding method of pricing. MMFs normally pay redeeming shareholders $1.00 per share even if their market-based NAV is less than $1.00.

A shadow NAV requires a MMF to calculate its current NAV by valuing portfolio securities at their current value (‘‘mark-to-market''). This rule change has no impact on the price one pays or receives for a MMF share.

Under rule 30b1– 7, and to become effective on February 7, 2011 to reflect November 30, 2010 information, MMFs will be required to provide their shadow NAV in the information contained in the portfolio reports that MMFs file with the SEC. This information will be available to the public 60 days after the end of the month to which the information pertains.