Cohen & Steers’ FOF Signals Distribution Sources — What shareholders were told and why it matters

FOF issues Section 19(a) notice — payment set for year‑end

Cohen & Steers Closed‑End Opportunity Fund, Inc. (FOF) issued a Section 19(a) notification tied to its announced distribution. The press release, dated December 18, 2025, confirms that the distribution that shareholders will receive on the declared payment date will be paid on December 31, 2025. The notice is the fund’s formal statement of how that cash payment is sourced for tax and accounting purposes.

The announcement is procedural but important: closed‑end funds like FOF regularly separate the declaration of a distribution from the later disclosure of its tax character under Section 19(a). Investors were told when the cash hits accounts and that the fund has filed the required breakdown describing what portion—if any—comes from ordinary income, capital gains, or a return of capital.

How the distribution is funded: the fund’s Section 19(a) breakdown

Under Section 19(a), closed‑end funds must tell shareholders the tax character of distributions after the fiscal year ends and the fund tallies income and gains. FOF’s notice includes that breakdown and language required by the rule: it states the dollar amounts and percentages allocated to ordinary income, capital gains, and return of capital for the distribution being paid on December 31, 2025.

At the time of this write‑up I do not have the verbatim numbers from the Section 19(a) filing embedded here. The fund’s release explicitly lists the components and the specific dollar and percentage figures; that is the authoritative source for how much of the payment is taxable as income and how much is treated as a return of capital (ROC). If the notice shows a material ROC portion, that indicates the distribution is funded in part by a return of past invested capital rather than current taxable earnings. If the notice lists mostly ordinary income or long‑term capital gains, the cash will be taxed in the year received.

Readers should look for three lines in the Section 19(a) text: (1) ordinary income (taxable now at ordinary rates), (2) long‑term capital gains (taxed at favorable capital gains rates for most investors), and (3) return of capital (not taxed when distributed but reduces cost basis). That exact wording and the accompanying amounts are what the fund has filed to comply with the rule.

Tax and NAV implications for FOF shareholders

How the payment is labeled matters. If the distribution is mostly ordinary income or capital gains, shareholders will recognize taxable income in the year received. If a sizeable share is classified as return of capital, shareholders generally won’t pay tax on that portion immediately; instead, the fund reduces each shareholder’s cost basis in their shares by the ROC amount. That lower cost basis matters when shares are later sold because it raises the taxable gain on any future sale.

On the fund accounting side, a cash distribution reduces net asset value (NAV) by the amount paid. ROC does not arise from the fund suddenly having less economic value; it’s an accounting label that shifts tax treatment to shareholders. A stream of ROC‑heavy distributions can be a warning sign if they persist without corresponding earnings: it suggests the fund is returning principal rather than distributing realized investment income.

Where FOF stands in the market — NAV, price, yield and sustainability cues

Section 19(a) disclosures should be read alongside recent NAV and market price behavior. A one‑off ROC component is less worrying than repeated ROC payments that erode NAV. For FOF shareholders, the two key market cues are: whether the fund is trading at a persistent discount or premium to NAV, and whether recent distributions exceed net investment income.

If the fund’s market price has been drifting lower while NAV is falling because of repeated ROC, that signals erosion of underlying capital and raises sustainability concerns. Conversely, if NAV is steady and the distribution is powered mainly by realized income or occasional capital gains, the payment looks healthier. Also watch the current yield versus recent distribution history: a spike in payout without matching realized gains or income can presage further ROC usage.

From an investor’s point of view, an ROC‑heavy pattern often positions the fund as riskier for income seekers who want distributions supported by real earnings. A distribution funded largely by income or capital gains is usually a better sign for durability, even if income taxes on that portion are higher.

What shareholders should check and consider doing next

Shareholders should examine the fund’s Section 19(a) notice text in the press release or in year‑end tax documents to see the exact split between ordinary income, capital gains and return of capital. Check your brokerage account for the December 31 payment and watch for an adjusted cost basis statement if ROC is reported.

Practical moves include: confirming how the payment will be reported on your 1099, verifying any change to your cost basis, and reviewing the fund’s recent distribution history and NAV trend to judge sustainability. For investors focused on durable income, an ROC‑heavy pattern is a clear flag to reassess the position’s fit in a portfolio.

Why Section 19(a) disclosures matter for closed‑end fund investors

Section 19(a) exists so closed‑end funds must tell investors, after the fact, what a distribution actually was for tax purposes. It is an important transparency tool: the declaration date tells you when cash will be paid; Section 19(a) tells you whether that cash represents taxable earnings or a return of your capital.

FOF’s notice is routine in form but crucial in substance. Read the fund’s precise Section 19(a) language in the release to know your tax outcome and to judge whether the distribution pattern is sustainable or a signal the fund is dipping into capital. If you’d like, I can pull the exact numbers from the fund’s filing and update this piece with the precise dollar and percentage breakdowns and a short, plain‑spoken tax table for retail investors.