INCOME ETF CHEAT SHEET: THE 4 WAYS YOUR DISTRIBUTIONS GET TAXED Every income ETF distribution just lands in a box on Form 1099-DIV. The box sets the tax rate, so two funds paying the same cash can be taxed very differently. Here is what each box means: 1. Box 1b, qualified dividends: taxed at 0%, 15% or 20% federal rates. You need to hold the shares more than 60 days in the 121-day window around the ex-dividend date. 2. Box 1a, ordinary dividends: taxed at your regular income tax rate. Includes interest from Treasury and money market funds and short-term gains passed through by the fund. 3. Box 2a, capital gain distributions: taxed at long-term rates, no matter how long you have owned the ETF. 4. Box 3, nondividend distributions (return of capital): not taxed when paid. It lowers your cost basis instead. The final split for 2026 arrives on your 1099-DIV after the year ends. Shares held inside an IRA do not get a 1099-DIV. Distribution rate is not total return.

INCOME ETF CHEAT SHEET: 3 YIELD NUMBERS THAT ARE NOT THE SAME One fund just lists 3 different yield figures on the same page. They are not interchangeable. Here is what each one measures on $XYLD Global X S&P 500 Covered Call ETF (October 26, 2026): 1. Distribution rate: 8.95%. Annualizes the latest distribution. This is the number most income posts quote. 2. Trailing 12-month distribution: 10.75%. Adds up what the fund actually paid over the last year. 3. 30-Day SEC yield: 0.48%. Measures net investment income only. It leaves out most option premium income. Same fund. Three answers. Read the label before you compare funds. Distribution rate is not total return.