What Is a Distribution Notice?

A distribution notice is the notification a general partner sends a limited partner when capital or investment proceeds are being returned to the LP. It typically specifies the amount, the payment date, the source (for example realized gains, income, or return of capital), and how the distribution should be treated. Distributions are the counterpart to capital calls: calls draw committed capital in, distributions send capital and returns back out.

In open-ended vehicles such as hedge funds and other public or evergreen funds, the equivalent event is a redemption, where an investor withdraws capital and the fund issues a redemption notice or confirmation stating the redeemed amount, the effective date, any holdback or gating provisions, and the remaining balance. Whether a document is labeled a distribution or a redemption, the operational task is the same: capture it accurately, classify it correctly, and reflect it in the investor's position and cash records.

Why it matters: Distributions and redemptions directly change an LP's capital account, unfunded commitment, and cash position, so a missed or misclassified notice throws off reconciliation and reporting immediately. As manager count grows, keeping every distribution and redemption captured and correctly categorized is what keeps an LP's records trustworthy.