Mutual fund shares are obligations issued by mutual funds, which are investment companies that are registered with the Securities and Exchange Commission and regulated under the Investment Company Act of 1940. Mutual funds are "open end" investment companies; that is, they are permitted to issue an unlimited number of shares and are required by law to redeem the shares at the net asset value (NAV). The NAV of each share of a mutual fund reflects the market value of the fund's holdings less any expenses charged by the fund.
Mutual fund shares in the financial accounts exclude money market mutual fund shares (shown on tables F.206 and L.206). Mutual fund shares are distinct from corporate equities (shown on F.213 and L.213). Thus, although some mutual funds hold corporate equities, mutual funds' holdings of equities do not result in double counting in the financial accounts.
Mutual fund share values are determined by the market value of the underlying assets held by the funds. Mutual fund shares held by the sector for households and nonprofit organizations are calculated residually from total liabilities.