Share value (aka, Net Asset Value) is calculated by dividing the total Market Value of the Merged Pool by the Number of Shares. Stanford calculates a share value for a given month at two points in time:
An Ending Share Value is known for a given month following month-end close, usually mid-way into the following month. The Ending Share Value incorporates market performance, earnings and the impact of payout on share value.
An Interim Share Value is immediately calculated for the current month once the Ending Share Value is known for the prior month. Interim Share Value is calculated as follows:
- Prior month Ending Share Value minus current month Payout per Share
The Ending Share Value of the prior month is used to evaluate Payout Resources for the current month's payout (e.g., the March Ending Share Value is used to calculate Payout Resources for April). Ending Share Value is also used to determine the market value of the endowment in prior (i.e., already closed) fiscal periods.
Interim Share Value is used for all transactions because:
- Payout is made based on shares held on the first of the month (prior to any transactions for that month).
- Shares purchased with new gifts do not generate payout in the month of investment (and therefore buy into the Merged Pool using the "after payout" Interim Share Value).
- Withdrawn shares do generate payout in the month they are withdrawn (and so are valued at the "after payout" Interim Share Value).
Transactions in/for a current month always occur after the current month Interim Share Value has been calculated.
Interim Share Value, because it is calculated as soon as Ending Share Value is known, is the most recently calculated share value, and will represent current Market Value.