YBIT distributions: return of capital and the reverse split

How YBIT generates the payment

YBIT is an actively managed ETF. It seeks income with indirect exposure to one or more US-listed products that hold bitcoin or track it through derivatives [1]. The prospectus says the fund does not invest directly in bitcoin and does not seek exposure to the spot price [1].

The strategy is a synthetic covered call. The fund buys call options and sells put options on the underlying ETP at about the same strike, with terms of one month to one year [1]. That position is meant to replicate 100% of the ETP’s price movements [1]. Against it, the fund sells call options that generally expire in one month or less, struck approximately 0%-15% above the then-current share price [1].

The premium on those sold calls is the income. If the ETP rises past the strike, the fund loses money on the short calls, and that caps its share of the gain [1]. If it falls 5%, the fund should be expected to fall approximately 5% before fees, beyond the premiums received [1]. Short-term Treasury securities are held as collateral and generate interest [1].

The fee table lists a management fee of 0.99% and total annual fund operating expenses of 1.02% [1]. The fund page names the underlying ETP today as the iShares Bitcoin Trust ETF, IBIT, and its holdings list IBIT call options [2]. One risk paragraph on the same page still says the only eligible ETP is a bitcoin futures fund. That is stale boilerplate, conflict ledger row 6, and this page does not quote it.

The weekly estimate and why it is not final

The fund page prints a distribution table with an estimated return-of-capital share beside each payment. The payment declared on August 26, 2026 was $0.2712 per share, listed as 96.65% estimated return of capital and 3.35% income [2]. The page says the figures are estimates [2]. They may later be determined to be taxable net investment income, gains, or return of capital [2].

The distribution rate on the page annualizes that one payment against the most recent NAV. The page says the rate does not represent the fund’s total return [2].

The statute is why the estimate cannot be final. Under section 316, a dividend is a distribution out of earnings and profits of the taxable year [4]. Those earnings are computed as of the close of the year, without regard to the earnings at the time the distribution was made [4]. Return of capital is the residual, and the 1099-DIV instructions say to enter it in box 3 if determinable [6].

What the audited statements say

The annual report states the tax character for two closed years. For the fiscal year ended October 31, 2024, YBIT’s distributions were $687,940 of ordinary income and $15,428,412 of return of capital [3]. For the fiscal year ended October 31, 2025, they were $13,243,337 of ordinary income, $10,428,946 in the capital gains column, and $54,152,615 of return of capital [3]. Most of the money in both years was return of capital.

That capital gains figure is one of a kind here. Of the eight audited periods this site prints across four funds, it is the only one that reports one. The report’s column is headed capital gains, not long-term, and the fund’s undistributed long-term capital gain line is a dash [3]. Whether that figure reached box 2a of a 1099-DIV is not something the report states, and this page does not infer it.

The percentage of ordinary dividends designated as qualified dividend income was 0.00% [3]. The table under this page prints both audited periods. The return-of-capital share is computed from the row’s own figures and labelled computed.

The reverse split and what it did to every per-share figure

After the fiscal year ended October 31, 2025, the fund effected a 1 for 5 reverse stock split on November 28, 2025 [3]. The report says all historical per-share information has been retroactively adjusted to reflect it [3]. That is the basis note. Every NAV and every distribution per share in the report is on the post-split basis, so a figure read off an old statement will be one fifth of the report’s.

On that basis, the highlights read as follows. From inception on April 22, 2024 to October 31, 2024, NAV per share went from $100.00 to $63.75 [3]. The fund distributed $27.25 per share, of which $26.10 was return of capital, and the reported total return was negative 7.26% [3].

For the fiscal year ended October 31, 2025, NAV went from $63.75 to $44.02 [3]. The fund distributed $36.66 per share, of which $25.51 was return of capital, and the reported total return was 31.22% [3]. A positive return and a share worth a third less are the same row, because total return assumes the distributions were reinvested.

A reverse split changes the share count and the per-share basis together. A holder’s total basis does not change on the split date; the number of shares it is spread over does. What the return-of-capital payments did to that basis is the return of capital tax page’s subject. The NAV erosion page puts every fund’s audited series side by side.

Taxable account, traditional IRA, Roth IRA

In a taxable account, the character decides the tax. The ordinary slice is income in the year paid. The return-of-capital slice reduces the basis of the shares under section 301, and once basis reaches zero the rest is treated as gain from a sale [5]. A capital gain distribution, when one is reported, is its own line on the 1099-DIV.

In a traditional IRA, the character is erased. Publication 590-B says distributions from a traditional IRA are taxed as ordinary income, apart from any nondeductible contributions [7]. Nothing the fund reports reaches the return. The account owns the shares.

In a Roth IRA, a qualified distribution is not taxed. Publication 590-B sets two conditions: the 5-year period from the first Roth contribution, and one of the qualifying events it lists [7]. A separate 5-year period applies to each conversion [7]. Which account a fund like this sits in is the holder’s decision, and this page describes the mechanics only.

The calculator and the receipts

The ETF income calculator runs a position through the arithmetic. Shares, cost basis, a return-of-capital range the reader sets, and the account type go in. It reads the same figures this page prints, dated. Nothing on it predicts the next payment.

The estimate on the fund page is a book-basis number. The annual report is the character for a closed year, on a split-adjusted basis it states. The 1099-DIV is what reaches the return. Three documents, and the report is the only one that explains the share count.