Growth + Income. Tax‑Efficient.
What a fund distributes matters. How that distribution is taxed matters, too. Here is how TDAQ's 2025 distributions were classified.
TappAlpha Innovation 100 Growth & Daily Income ETF
TDAQ generated zero ordinary income in 2025. Over 70% was tax-deferred return of capital, with the remaining 26% receiving favorable Section 1256 contract treatment (60% long-term / 40% short-term).
Source: 2025 IR Data Browser, Distribution Allocation (final 01/21/26). CUSIP 26923N546. Total distributions $1.125650 per share across 3 monthly distributions (the Fund launched September 4, 2025). Basis allocation factor 1.00000. 60/40 index option income = non-qualified dividend ($0.106772) + long-term gain ($0.186150), both from Section 1256 index option contracts.
How these distributions were classified
Three sources make up the distributions above. Each is taxed differently.
Return of capital
The portion of a distribution that exceeds the Fund's current and accumulated earnings and profits. ROC is generally not taxable when received. Instead, it reduces an investor's cost basis in the Fund.
60/40 index option income
Income from Section 1256 index options, such as NDX options, generally receives blended tax treatment: 60% long-term and 40% short-term capital gains, regardless of how long the position is held.
Qualified dividends
Dividend income from the Fund's underlying equity holdings that generally qualifies for long-term capital gains tax rates rather than ordinary income tax rates.
What return of capital means for you
Return of capital does not mean “free money.” ROC generally reduces an investor's cost basis in Fund shares, which may increase the taxable capital gain, or reduce the capital loss, when those shares are eventually sold.
These classifications are determined at the Fund level based on actual activity for the tax year. They are not projections and should not be viewed as an indication or guarantee of how future distributions will be classified. Final tax character is reported annually on Form 1099-DIV. TappAlpha does not provide tax advice, and investors should consult their own tax advisors regarding their individual circumstances.
Tax documents
Official forms and notices for this tax year.
Disclosures: The Fund currently expects, but does not guarantee, to make distributions on a monthly basis. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next. These distributions may exceed the Fund's income and gains for the Fund's taxable year. Distributions in excess of the Fund's current and accumulated earnings and profits will be treated as a return of capital. Monthly distributions, if any, may consist of returns of capital, which would decrease the Fund's NAV and trading price over time. As a result, an investor may suffer significant losses to their investment.
Past performance does not guarantee future results.
ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF's shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a Fund's ability to sell its shares. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Investing involves risk. Principal loss is possible. The Fund's shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve its investment objectives. The Fund invests in options contracts that are based on the value of the Index, including SPX and NDX options. This subjects the Fund to certain of the same risks as if it owned shares of companies that comprised the Index, even though it does not own shares of companies in the Index. The Fund will have exposure to declines in the Index. The Fund is subject to potential losses if the Index loses value, which may not be offset by income received by the Fund. By virtue of the Fund's investments in options contracts that are based on the value of the Index, the Fund may also be subject to an indirect investment risk, an index trading risk and an S&P 500 (NASDAQ) Index Risk.
Investors should carefully consider the investment objectives, risks, charges and expenses of the ETFs identified on this site. This and other important information about the Fund are contained in the prospectus, which can be obtained on this site or by calling (844) 403-2888. The prospectus should be read carefully before investing.
Investing in securities involves risk, including the potential loss of principal.
Distributor: Foreside Fund Services, LLC, Member FINRA.
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