Legal Definitions - net asset value

Net asset value (NAV) is the market value of a share in a mutual fund. It is calculated by subtracting any liabilities of the fund from its total assets and dividing the difference by the number of outstanding fund shares. NAV is also known as asset value.

• Bond fund: A mutual fund that invests primarily in specialized corporate bonds or municipal bonds.
• Income fund: A mutual fund that typically invests in securities that consistently produce a steady income, such as bonds or dividend-paying stocks.
• Index fund: A mutual fund that invests in the stock of companies constituting a specific market index, such as Standard & Poor's 500 stocks, and thereby tracks the stock average.
• Money-market fund: A mutual fund that invests in low-risk government securities and short-term notes.
• No-load fund: A mutual fund that does not charge any sales commission (although it may charge fees to cover operating costs).

These examples illustrate how mutual funds can have different investment strategies and goals. For example, bond funds invest in bonds, income funds focus on generating income, index funds track a specific market index, money-market funds invest in low-risk securities, and no-load funds do not charge sales commissions. The NAV of each mutual fund reflects the value of its underlying assets and liabilities.