Just getting started in mutual funds, and wondering about all those numbers you see, and wondering what they all mean? In this article, we'll go through the basics.

First, though, you should know that there is no intrinsic value to a fund. For example, you might look up the value of a used car in a reference book and see a price range for it. That's a relatively stable price, and you can predict what the price will be 3 months, one year, and maybe even three years from now.

But, fund prices aren't at all predictable. They're based on the value of the stocks or bonds held by that particular mutual fund. And those prices vary according to market sentiment, or more specifically, according to the collective expectations of all investors at any one point in time. You'll get a sense of those expectations when you watch the daily ups and downs of the Dow Jones Index and similar indices.

If you see a pure equity fund, one that's made up entirely of stocks (shares in corporations), then those prices will reflect the value of those stocks. Let's be more specific again: Mutual fund prices are the total amount of all stocks bought for the fund, divided by the number of units sold.

Consider an equity fund that is made up of exactly 100 stocks, and say the cost of those stocks right now is exactly $1-million dollars. Let's also say that 100-thousand units of the mutual fund have been sold to investors like us. Dividing that $1-million value of the stocks by 100-thousand units gives us a price of $10.00 per unit. If, six months from now, the price of the stocks making up the fund increase in value to $1.5 million, then the price would increase to $15.00.

The price of the fund always goes up and down with the prices of the stocks. Some stocks may go up in price and others may go down, but the mutual fund's price will always be the combined value of all the stocks owned by the fund.

There's a technical name is Net Asset Value or Net Asset Value per Share. Normally you'll see those abbreviated to NAV and NAVPS. And, that's what you'll be looking for when you go online or open your newspaper to see whether you're winning or losing at the mutual fund investment game.