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Yes, the wikipedia page was the first thing I read. I don't have a problem with the ETN concept per se, I just can't comprehend how they can skirt the taxes.

An investment house issues the note. This institution is a C-Corp, not a pass-through. As per the ETN prospectus, they hedge their obligation on the note. At some point, a note holder redeems the note to realize the gain on the index it's tracking. The issuer -- a C-Corp -- cashes out the hedge to pay the note holder. So far, so good.

The problem: It seems corporate taxes are due on the hedge as well as on the individual capital gains tax on the note. Double taxation. Further, wouldn't the corporate tax be passed on to the note holder? Doesn't that kill the efficiency of the index tracking?
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