What is a capital gain?

Capital gains are profits from the sales of securities. A mutual fund investor may realize capital gains when a fund sells securities and/or you sell shares of a fund. When the fund sells securities, the net capital gains realized by the fund are passed through to shareholders as distributions. These amounts are reported to you and the IRS on Form 1099-DIV.

When you sell or exchange mutual fund shares, you may also realize a short- or long-term taxable capital gain or capital loss. This gain or loss will depend on the cost basis of the shares that were sold. The proceeds of these sales are reported to you and the IRS on Form 1099-B for non-retirement accounts and 1099-R for retirement accounts.

Current federal tax laws require that shares held for more than one year receive long-term capital gain or loss treatment, while shares held for less than one year receive short-term capital gain or loss treatment. Please consult your tax advisor for information regarding state-specific information. Capital gains are distributed to shareholders according to the distribution schedule outlined in the prospectus for the fund, generally near calendar year end. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.

What are the key dates for PNC Funds capital gain distributions?

Record Date - All Fund shareholders as of close of business on this date will be included in the Fund's distribution calculations.

Ex-Date and Reinvestment Date - Each Fund's net asset value (NAV) is reduced by the amount of the per share distribution. The closing NAV on this date is used in determining the additional shares to be received by the shareholders who have elected to reinvest their distribution.

Payable/Payment Date - Date on which distributions are paid in cash and/or reinvested for additional shares.

Distribution dates are outlined in the prospectus for the fund and generally are scheduled near calendar year end. The most current dates can be found in the Distributions tab above in the tax center.

How are capital gains determined?

The fiscal year-end for PNC Funds is May 31, and the excise tax date is October 31. The Fund is required to distribute the greater of the capital gains incurred at the end of these two periods. For example, if a fund had a capital gain of $3.00 per share on May 31 and a $2.50 per share capital gain on October 31, a minimum distribution of $3.00 per share would be required prior to December 31.

Do I pay taxes on the capital gains even if they are reinvested?

Unless shares are held in an IRA, 401(k) or other tax-deferred investment, capital gain distributions are taxable, even if reinvested in additional fund shares. You can change the manner in which you receive capital gains by accessing your PNC account online or notifying the Fund in writing prior to the record date. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.

How are interest and dividends taxed?

Mutual funds hold securities that may pay interest and/or dividends. Mutual fund dividends are paid according to the distribution schedule as outlined in the prospectus for a fund, generally on a monthly, quarterly or annual basis. You can choose to receive dividends as cash or reinvest the funds to buy additional shares. These distributions are taxed as ordinary income. Ordinary income distributions also may include short-term capital gains realized by the fund. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.

What is the difference between a long-term gain and a short-term gain?

Long-term gains are gains on securities that are held by the fund for more than 12 months. Long-term capital gains are taxed at long-term capital gains rates. Short-term gains are gains on securities that are held for one year or less. Short-term gains are taxed as ordinary income at the taxpayer’s appropriate ordinary income tax rate. Ordinary income tax rates are generally higher than long-term capital gains rates. Shareholders should consult a tax advisor to determine the tax implications for their situation. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.

How do distributions affect a fund’s Net Asset Value (NAV)?

When distributions are paid out to shareholders, a fund’s NAV will be reduced by the amount of the distribution. However, for shareholders receiving such a distribution, the drop in NAV is offset by the distribution received in the form of either cash or as a reinvestment into additional shares of a fund.
Example: A shareholder owns 100 shares valued at $10/share on the record date. Thus the account is worth $1,000. The fund distributes capital gains equal to $2 per share (a total distribution of $200). As a result of the cash distribution to shareholders, the fund’s NAV will fall to $8 per share on the ex-dividend date. The shareholder still owns 100 shares but they now are valued at $8 per share (a total value of $800). When the $800 account value is added to the $200 in capital gains received, the total account value is $1,000. If you reinvest the distribution, as many shareholders do, the number of shares in your account will increase, while the total value of your account will remain constant. Capital gains are reinvested automatically unless you have specified otherwise. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.

If I am not a shareholder of record on the record date, will I still be entitled to the fund’s capital gain?

No. Only shareholders of record on the record date are entitled to a fund’s capital gain.

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. Select a Fund to view the most recent month-end performance information or go to each fund's snapshot page to view most recent month-end performance as well as any waiver or expense reimbursement information.

The information contained in this piece should not be considered legal or tax advice; questions regarding your specific situation should be directed to your legal or tax advisor.

NOT FDIC INSURED | NO BANK OR FEDERAL GOVERNMENT GUARANTEE | MAY LOSE VALUE

You should consider the investment objectives, risks, charges, and expenses of the PNC Funds carefully before investing. A prospectus or summary prospectus with this and other information may be obtained at 800-622-FUND (3863) or pncfunds.com. Please read it carefully before investing.

PNC Capital Advisors, LLC, a subsidiary of The PNC Financial Services Group Inc., serves as investment adviser and co-administrator to PNC Funds and receives fees for its services. PNC Funds are distributed by PNC Funds Distributor, LLC, which is not affiliated with the adviser and is not a bank.

This site shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of shares of the PNC Funds in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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