Cap Stock Accounts

Cap Stock Accounts
DEFINITION
Capital Stock (Cap Stock), loosely defined, refers to the share base of a fund. Closed-end mutual funds, by definition, have a constant share base. For open-end mutual funds, changes to the share base can occur on a daily basis due to subscriptions and redemptions. Cap Stock activity is reported by the transfer agent to the Portfolio Administrator each morning.
CAPITAL SHARES
Capital shares are fund shares, which have been authorized and issued. This includes outstanding and treasury shares. For an open-end mutual fund there is generally no limit on the number of capital shares which can be authorized and issued. For a closed-end mutual fund the number of authorized shares is fixed. This is determined when the fund is chartered and is stated in the fund's prospectus.
OUTSTANDING SHARES
Outstanding shares are those which are currently being held by shareholders. The number of outstanding shares is the share base used for price and yield calculations.
TREASURY SHARES
Treasury shares are fund shares, which have been issued by the fund and later bought back. In the case of open-end funds, treasury shares occur as a result of shareholder redemptions. In the case of closed-end funds, treasury shares are those, which the fund has bought back from an underwriter or on the open market. Treasury shares are inactive. They are not used for price or yield calculations and do not receive distributions or dividends. Treasury shares are identified on the trial balance for record keeping purposes.
PAR VALUE
Par value (par) is a nominal value assigned to a fund share. It is designated when the fund is chartered and remains constant. It should not be confused with the actual value or market value of a fund share. Par plus paid-in surplus equal the fund's offering price per share. Management companies can charter funds with no-par value.
PAID-IN SURPLUS
Paid-in surplus is the amount over the par that makes up a fund's price per share. Like par, paid-in surplus should not be confused with the actual value or market value of a fund share.