Value on a particular day: Most mutual funds will calculate the NAV of the fund at the end of each business or working day, so, there is a specified frequency at which this particular exercise takes place. An important point is that since it represents the value at a specific point of time, there is no long-term validity for the figure that is represented here. A change in the value of the underlying assets results in a change in NAV. Thus, if there is a figure of the NAV that has been declared for a particular day, then it will be relevant for all transactions or dealings on that particular day only.

Value of assets: A major component of the entire process of the NAV is the valuation of the assets that are held by the fund. Value of all the holdings of the mutual fund taken together will comprise the bulk of the total valuation of the fund.

So, for example, if there is an equity-oriented fund that holds shares in various companies, then the value of all these shares as on a particular date will comprise the bulk of the total valuation. When there are changes in the share prices, then there will also be a change in the total assets and, hence, this will impact the way in which the NAV will change.

Value of liabilities: Another component of the entire calculation is the value of the various liabilities that are held by the fund and the expenses that are incurred for various purposes. These figures are the amounts that are generated in the course of the day-today dealings and, hence, will have to be reduced from the value of the assets to get the net value of the fund.

The final holdings value should be considered for calculations because there are chances where several current liabilities of the fund would reduce the assets value in the NAV calculation. Also, the expenses that are incurred by the fund would be reduced from this.

Number of units: The NAV of the fund, by itself, has no meaning because this has to be calculated on a per units basis. Only when this is done, would the investor get a correct picture of the present value of their unit. This is the reason why the final part of the calculation of the NAV will involve dividing the value of the assets less the value of the liabilities by the number of units that are outstanding.

The number of units here will also change on a daily basis in an open ended fund, as there are purchases and sales that are taking place each day. So, this will also be a factor that impacts the calculation.

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