FAQs

Like many mutual funds and ETFs these funds may issue dividends.  Each of the funds listed above have a monthly dividend distribution schedule but may or may not issue a dividend each month.

All 1940 Act registered mutual funds and ETFs are required to distribute nearly all their taxable income by the end of each calendar year as dividends to avoid excise taxes. 

Each of the funds gets exposure to futures contracts by investing in a wholly-owned subsidiary organized under the laws of the Cayman Islands.  The net income of the subsidiary, which includes mark-to-market gains on the futures contracts, is recognized by the fund, for tax purposes, which is then passed through to shareholders as a dividend[1]. 

The monthly dividend is intended to estimate the funds’ current required year-end distribution allocated over the remaining months of the year.

The dividend amount will change each month and may change significantly, or it may go to zero if the subsidiary has had significant recent losses and/or previously paid dividends have already covered the expected required dividend.

The approach described below to calculate the monthly dividend amounts is subject to change at any time with no notice and should not be relied on as a definitive indicator of what, if any, dividends will occur in these funds. 

The amount of each month’s dividend is calculated near to the dividend ex-date. The monthly dividend amount is expected to be approximately (a) the previous month’s net investment income[2], (b) plus the current YTD Net Income of the wholly-owned subsidiary reduced by previously paid dividends in the current year divided by the number of dividend dates remaining in the calendar year.  This amount divided by the outstanding shares one day before the ex-dividend date will be that month’s dividend per share. 

Generally, the Fund’s dividends will be taxed as ordinary dividends, not qualified dividend income. Due to the approach described above, these distributions ultimately may be recharacterized as non-taxable distributions (i.e., return-of capital distributions).

The dividend schedule can be found here: Distribution Schedules. Dividend rates are posted after the market close the evening prior to ex-date on each fund’s product page: BITO  BITI  OILK.  For 1099 purposes, the character of each dividend can be viewed on the ICI Primary Report posted in the Tax Supplement section here: Tax Supplements.