The payment of income (e.g., interest, dividends) generated by a fund to its investors.
The cash-flow ceremony in which a collective investment vehicle migrates earnings from its internal ledger to the outside pockets that supplied the capital. Coupon streams, stock dividends, option premia, rental accruals, and realised gains all funnel toward a staging account until board resolutions or partnership clauses unlock the gate. Fund accountants sweep the pot, segregating amounts that tax codes treat as ordinary income from those crowned as capital gain, because withholding tables and investor elections hinge on that split. Ex-date, record date, and payable date fall into crisp sequence: the net asset value shears off the distribution on the morning of the ex-date, transfer agents freeze the shareholder roster at record close, and cash (or additional units for reinvestors) drops on payable day.
Closed-end trusts may route a slice of return-of-capital through the same channel, softening payout volatility but stealthily lowering cost basis. Real-estate investment trusts and master limited partnerships ratchet the stakes higher—regulations compel them to disgorge a statutory share of taxable earnings, so treasury desks choreograph credit-line draws and drip-feed disposals to keep the cadence unbroken even when cash generation lags GAAP income. Analysts watch coverage ratios like hawks, knowing an over-distributed fund can drift into asset-sale quicksand just to maintain its track record, while an under-distributed one risks alienating income-targeted allocators who anchor its investor base.
