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Introduction to Earnings from Mutual Funds

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Mutual fund investors earn money in several ways -- interest, dividends, capital gains -- which we detail here.

What you will learn

  • Mutual Fund Distributions from Earnings
  • Mutual Fund Dividends
  • Capital Gains in Mutual Funds
  • Mutual Fund Total Returns
  • Mutual Fund Return of Capital
  • Mutual Fund Dividend Reinvestment

What do you know?

Introduction to Earnings from Mutual Funds

As you invest in mutual funds, you will receive distributions of your funds' earnings in the form of dividends. Some of them may arrive in your mailbox on a regular basis, or you may elect to have them reinvested in additional shares of your funds. You may receive other earnings only when you sell your funds.

Fund dividends may represent distributions of interest and dividends from assets held by your fund, capital gains from the sale of assets, or even a return of principal. Understanding what these distributions are and how they were "earned" is important to monitoring your fund's performance as well as reporting them correctly for income taxes.

Wise investors pay particular attention to these details.