It is possible that you could lose money. Distributions are taxable. Fees and expenses are involved. Check with your fund company to find out what kinds of fees might affect your investment. If you sell your shares for a price higher than you paid for them, your shares have appreciated in value.
Dividends are a payout of a portion of a company's earnings to a stockholder.
As a stockholder, a mutual fund receives these dividends and passes them on to you. You may receive them in cash or allow them to be reinvested in your fund account. Capital gain distributions. When a mutual fund sells a stock in its portfolio at a gain, the profit is passed on to fund shareholders as a capital gain distribution. As with dividends, you may either reinvest the distribution or receive it in cash.