how distributions work
in finance a distribution can mean many things however the term is used most commonly to describe the following situations regardless of the situation distributions can generally be regarded as cash that goes straight into your pocket distributions from mutual fundswith mutual funds distributions represent the allocation of capital gains and dividend or interest income generated by the fund for the investors periodically during a calendar year one common type is the net capital gains distributions that come from profits on the sale of a mutual fund s holdings for example if a stock is bought for 75 and later sold for 150 the capital gains are 75 minus the fund s operating expenses the exact amount of the distribution is tallied after the subtraction of these operating expenses once dividends and distributions are disbursed the fund s share price declines by the total of the per share distribution to the fund s shareholders the price falls because the distribution is withdrawn from the fund s assets which decreases the net asset value nav stock and bond distributionswith securities like stocks or bonds a distribution is a payment of interest principal or dividend by the issuer of the security to the shareholders or bondholders 