As part of the Emergency Economic Stabilization Act (the "Act") passed by Congress in 2008, all mutual fund companies will be required to report to shareholders and the Internal Revenue Service (IRS) cost basis and holding period information.

Beginning with the 2012 tax year, Form 1099-B provides shareholders and the IRS with cost basis information and the character (i.e. short-term vs. long-term) of any gains/losses generated. The reporting requirements apply only to what is defined as “covered shares.” Covered shares are shares acquired on or after January 1, 2012. Mutual fund shares acquired before that date are not covered by the new legislation and are deemed “non-covered shares.” PNC Funds will continue to provide its shareholders with the adjusted cost basis of any non-covered shares redeemed or exchanged. This information is provided as a courtesy to our shareholders and will not be reported to the IRS.

What is cost basis?

Cost basis is the price paid to acquire mutual fund shares, adjusted for stock splits, reinvested dividends, capital gains distributions, etc. The cost basis is used to calculate the capital gain or loss, or the difference between the proceeds received less the cost basis, on the sale of the shares. If shares are sold for more than the original cost, the difference is a capital gain, whereas if shares are sold below the original cost, the difference is a capital loss.

Shareholders pay taxes on capital gains. Capital losses may be used to offset other taxable investment gains. Therefore having an accurate record of the cost basis is important in calculating a shareholder's tax liability.

What cost basis methods does PNC Funds support?

Default Method Description
Average Cost Cost basis is calculated by taking the shares redeemed multiplied by the average cost per share.

Note:  This is the method we have historically used in reporting cost basis information to shareholders annually for non-covered shares. Average cost will now be calculated separately for covered and non-covered shares.

Other Methods Description
FIFO (First In, First Out) Shares acquired first are sold first.
LIFO (Last In, First Out) Shares acquired last are sold first.
HIFO (Highest Cost, First Out) Shares with the highest cost basis are sold first
LOFO (Lowest Cost, First Out) Shares with the lowest cost basis are sold first.
Specific Lot Identification Shareholder identifies the specific shares to be sold or exchanged at the time of each sale or exchange on the trade request.  The original purchase dates and prices of the shares chosen will determine the cost basis and holding period.

PNC Funds does not provide tax advice and recommends that shareholders consult a tax professional.

After a cost basis method is selected, can a shareholder change his/her election?

A shareholder may change his/her elected methodology at any time by completing a Cost Basis Election Form or by providing a written letter of instruction to: PNC Funds, c/o BNY Mellon Investment Servicing, P.O. Box 9795 Providence, RI 02940-9795.

Please note that if the cost basis method is changed after a sale or exchange of covered shares, the new cost basis method will be applied only to shares acquired after the date the change request is processed. Also, updating a cost basis election either to or from Average Cost must be done in writing, and a shareholder will only be permitted to revoke this method retroactively until the first covered shares subject to Average Cost are redeemed. Under the IRS regulations, any revocation of Average Cost after that time may only be applied prospectively for covered shares acquired in the future.

For all other cost basis methods, a shareholder may change his/her cost basis method on existing covered shares at any time.

It is important to consider the tax implications and select a method prior to redeeming shares of any mutual fund. Again, PNC Funds recommends consulting a tax professional.

Can a shareholder choose different cost basis accounting methods in the same or multiple accounts?

A different cost basis method can be chosen for different funds, regardless of whether they are held in a single or multiple accounts. Any fund within an account(s) for which a shareholder does not make an election will default to the Average Cost method.

Does this change how shareholders should file tax returns?

No, the new requirements do not change a shareholder’s obligation to accurately report capital gains and losses in their annual tax filings. The cost basis information PNC Funds provides should make that task easier for shareholders and their tax and financial professionals.

What do I need to calculate a cost basis for the mutual fund shares that I sold during 2012?

Cost basis is the asset price used to determine capital gains or losses. New requirements beginning in 2012 will lead to additional cost basis information being provided to shareholders and the IRS. If you sold shares from a cost basis eligible account held in a non-money market mutual fund in 2012, you will receive IRS Form 1099-B in early 2013. This form may contain information reported to you the shareholder, the IRS, or both, and should be used to assist you in filing your tax return.

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.


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 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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