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Greg, this is not something peculiar to ETF YCS (ProShares UltraShort Yen).The same is true of investing in any partnership vehicle. INCOME AND CASH FLOW DO NOT COINCIDE. And it can work the other way, too. Many publicly-traded partnerships are in the real estate and energy sectors, where hefty deductions for depreciation and depletion cause the distributions to partners to exceed taxable income. But nobody ever complains about that.

In your case, I gather you have now disposed of the YCS shares, so you're sure you won't be getting more cash (or K-1 income, for that matter.) Otherwise, these things tend to even out in the long run, which can be a very long time.

You got a K-1 representing YOUR SHARE OF THE FUND'S INCOME WHILE YOU OWNED IT. Somebody has to pay tax on that, and that somebody would be you. Your distributions didn't equal that amount. Well, that's how partnerships - all partnerships - work.

Equally shocking - and more unfair, in my view- to some people is making the mistake of buying a mutual fund late in the year, and being hit with big taxable dividend and/or capital gain distributions, that were reflected in the fund's net asset value when they bought it. In recent years, the lower tax rates on those distributions make those easier to take. And at least it adds to your basis, which is some small consolation.

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