How do mutual funds provide returns to their shareholders?

Question

Quizplus · Accepted Answer

Mutual funds can provide returns to their shareholders through income dividends, capital gain distributions, and capital gains. Income dividends are paid out by mutual funds to their shareholders when the underlying holdings of the fund generate income, such as interest or dividend payments from stocks or bonds. Capital gain distributions are paid out when the fund sells holdings for a profit and distributes the profits to shareholders. Capital gains occur when the value of the mutual fund holdings increases and the fund is sold for a profit. So, mutual funds provide returns to their shareholders through dividends, distributions, and gains.

How Do Mutual Funds Provide Returns to Their Shareholders