Identify three ways in which you can receive income from your mutual fund investment?

Read the textbook, it will usually have the answer.

dividend distribution, distribution of capital, sale of shares resulting in capital gain.

1. You can withdraw the entire amount at 1 time.
2. You can opt for a monthly check each month.
3. You can receive the quarterly dividends in cash instead of reinvesting it.

First, a fund may receive income in the form of dividends and interest on the securities it owns. A fund will pay its shareholders nearly all of the income it has earned in the form of dividends.
Second, the price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, most funds distribute these capital gains (minus any capital losses) to investors.
Third, if a fund does not sell but holds on to securities that have increased in price, the value of its shares (NAV) increases. The higher NAV reflects the higher value of your investment. If you sell your shares, you make a profit (this is also a capital gain).
Usually funds will give you a choice: the fund can send you payment for distributions and dividends, or you can have them reinvested in the fund to buy more shares, often without paying an additional sales load.

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