Money paid to investors based on the performance of the investment. An income dividend distribution is paid to fund shareholders from dividends and interest earned from a mutual fund's holdings. Income that a fund earns must be paid to shareholders at least once per year. A capital gain is a profit that a mutual fund realizes by selling securities for a price higher than that at which they were purchased. Capital gains must also be paid to shareholders at least once per year. When distributed to shareholders, any realized capital gains are offset by any realized losses resulting in a distribution of the net capital gain. Unrealized gains on investments that have increased in value but have not been sold by the fund are not required to be distributed. The daily NAV includes unrealized gains.