The Investment Company Act of 1940 requires that funds use fair value pricing' when the market quotation for a security is not readily available. Of course, that doesn't affect the vast majority of securities in mutual funds because their market prices are widely available.

However, if there is a thin market in a security or sales have been infrequent, or if the security in question is traded on a foreign market that has different standards and is in a different time zone, prices may not be pure. Consequently, funds that are affected are usually those with high risk. It affects bond funds that hold illiquid bonds, funds with very small equities, and global and international funds.

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