Neuberger Next Generation Connectivity Fund Inc. Notice to Shareholders - Sources of Distribution Under Section 19(a)

NBXG's October payout is mostly long-term gains, with a small return of capital.

What the company is saying

Neuberger Next Generation Connectivity Fund Inc. (NYSE:NBXG) is informing shareholders about its October 2026 distribution, set at $0.132 per share for holders of record as of October 15, 2026, payable on October 30, 2026. The company highlights that this payout is made under a managed distribution policy, which aims for fixed monthly cash distributions. The announcement emphasizes that 96.0% of the October distribution comes from net realized long-term capital gains, with 4.0% from return of capital, and none from net investment income or short-term gains. Cumulatively for the fiscal year (November 1, 2025 to October 31, 2026), $1.1593 per share (79.8%) is from long-term gains and $0.2927 (20.2%) is return of capital, totaling $1.4520 per share. The company is explicit that these figures are estimates, not for tax reporting, and that actual sources may change. The tone is factual, with a clear caution that a portion of the distribution exceeds income and realized gains, thus representing a return of capital.

What the data suggests

The October 2026 distribution of $0.132 per share is comprised almost entirely of net realized long-term capital gains ($0.1267, 96.0%) and a small return of capital ($0.0053, 4.0%), with no contribution from net investment income or short-term gains. Year-to-date, cumulative distributions per share are $1.4520, with $1.1593 (79.8%) from long-term gains and $0.2927 (20.2%) from return of capital. The fund's average annual total return on NAV for the five years ending September 30, 2026 is 8.41%. The current fiscal period's annualized distribution rate as a percentage of NAV is 7.97%, and the cumulative total return on NAV from November 1, 2025 through September 30, 2026 is 13.78%. Fiscal year-to-date cumulative distributions as a percentage of NAV are 7.31%. The data shows the fund is distributing more than it earns in income and realized gains, with a portion of payouts classified as return of capital, which may not reflect ongoing investment performance.

Analysis

The announcement is a routine disclosure of a monthly distribution and the implementation of a managed distribution policy. All key claims are factual, realised, and supported by specific figures for distribution amounts, sources, and historical performance. The only forward-looking element is the standard disclaimer that amounts and sources are estimates and may differ for tax purposes, which is not promotional or exaggerated. There is no language inflating the Fund's performance or projecting future benefits beyond what is already realised. No large capital outlay or long-term, uncertain returns are discussed. The tone is factual and proportionate to the evidence provided.

Risk flags

• ●A portion of the distribution is classified as return of capital (4.0% for October, 20.2% year-to-date), indicating the fund is paying out more than it generates in income and realized gains. This can erode the fund's capital base over time if sustained.
• ●Distribution source figures are estimates and not for tax reporting purposes, so final tax treatment may differ from what is presented. Investors may face unexpected tax consequences if the return of capital portion is revised.
• ●No net investment income or short-term capital gains are being distributed, which may signal a reliance on asset sales for distributions. This could affect long-term sustainability if market conditions change or realized gains decline.

Bottom line

NBXG's October 2026 distribution is $0.132 per share, with nearly all of it sourced from realized long-term capital gains and a small portion from return of capital. Year-to-date, 20.2% of distributions have been classified as return of capital, which can reduce the fund's NAV if continued. The fund's five-year average annual total return on NAV is 8.41%, and the current annualized distribution rate is 7.97% of NAV, suggesting distributions are generally supported by performance but not fully covered by income and gains. Investors should recognize that part of their payout may represent a return of their own invested capital, not just profits, and that the disclosed figures are estimates subject to revision for tax purposes. The most important takeaway is that while the fund continues to deliver regular distributions, a non-trivial portion is not from ongoing investment returns, raising questions about long-term payout sustainability.

Disagree with this article?