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Basically payout/distribution is a cash reward of sorts that the fund gives out to investors based on the profit generated from the fund.

When you see the NAV of your units climb (gaining interest), that's actually the potential dividends you're earning slowly increasing over time. Which is why when dividends are paid out, NAV drops (and your versa balance might become negative or seemingly make a loss during distribution day).

For people who invest directly with mutual fund companies typically you can decide to get this distribution credited into your linked bank account, or the fund will use it to buy more units at no sales charge. In Versa this distribution gets automatically reinvested to buy more units.

This rise and dip in NAV is also a reason to actually time when you put additional money into money market funds as distribution is paid out on a regular basis, you'd ideally want to put in additional investment soon after distribution (when NAV is lower) and avoid investing the days just before estimated distribution date (NAV will be higher)