Post-effective Amendment (investment Company, Rule 485(a)) (485apos)

More Information About Principal Risks

The Adviser evaluates the risks and rewards presented by all securities purchased by a Fund and how they advance the Fund’s investment objective.  It is possible, however, that these evaluations will prove to be inaccurate.  No matter how well an investment manager does in performing and executing on its assessments, you could lose money on your investment in a Fund, just as you could with other investments.

The value of your investment in a Fund is based primarily on the market prices of the securities the Fund holds.  These prices change daily due to economic and other events that affect particular companies and other issuers.  These price movements, sometimes called volatility, may be greater or lesser depending on the types of securities a Fund owns and the markets in which it trades.  The effect on a Fund of a change in the value of a single security will depend, among other things, on how widely the Fund diversifies its holdings.

This section provides additional information about the principal risks of investing in the Funds.

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Derivatives Risk .  Derivative instruments include, but are not limited to, options, swaps, forward currency contracts, futures and options on futures. Derivatives are financial instruments whose values depend upon, or are derived from, the value of a reference asset, such as one or more underlying assets, indexes or currencies.  A small investment in derivatives could have a potentially large impact on a Fund’s performance.  The use of derivatives involves risks different from the risks associated with investing directly in the underlying assets.  Derivatives can be volatile, illiquid and difficult to value, and an imperfect correlation may exist between changes in the value of a derivative held by the Fund and the value of the reference asset.  In addition, there is also the risk that a Fund may be unable to terminate or sell a derivatives position.  Certain Funds may engage in a variety of transactions using “derivatives,” such as futures, options, forward currency contracts, warrants and swaps.  The successful use of derivatives requires sophisticated management, and to the extent that derivatives are used, a Fund will depend on the Adviser’s ability to analyze and manage derivatives transactions.  The prices of derivatives may move in unexpected ways, especially in abnormal market conditions.  Some derivatives are “leveraged” and therefore may magnify or otherwise increase investment losses to a Fund, as even a small investment in derivatives can have a significant impact on the Fund’s exposure to, among other things, securities’ market values, interest rates or currency exchange rates.  A Fund’s use of derivatives may also increase the amount of taxes payable by shareholders.  If a Fund enters into a derivatives transaction as a substitute for taking a position in an underlying asset, the Fund is subject to the risk that the derivatives transaction may not provide a return that corresponds with the reference asset.  Derivatives are also subject to operations risk, which is the risk that loss will occur as a result of inadequate systems and controls, human error, or otherwise.

Other risks arise from the potential inability to terminate or sell derivatives positions.  A liquid secondary market may not always exist for a Fund’s derivatives positions at any time.  In fact, many over-the-counter derivative instruments will not have liquidity beyond the counterparty to the instrument.  Over-the-counter derivative instruments also involve the risk that derivative counterparties may suffer financial difficulties and may not fulfill their contractual obligations to a Fund.

If a Fund sells protection on credit default swaps relating to debt securities, the Fund would be required to pay the par (or other agreed-upon) value of a referenced debt security to the counterparty in the event of a default by a third party, the debt security issuer, or the debt security.  In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default had occurred.  If no default occurred, the Fund would keep the stream of payments.  Writing credit default swaps effectively adds leverage to a Fund’s portfolio because, in addition to its net assets, the Fund would be subject to investment exposure on the notional amount of the swap.

Focused Investment Risk .  To the extent that a Fund focuses its investments in the securities of a particular issuer or companies in a particular country, group of countries, region, market, industry, group of industries, sector or asset class, a Fund’s exposure to various risks may be heightened, including price volatility and adverse economic, market, political or regulatory occurrences affecting that issuer, country, group of countries region, market, industry, group of industries, sector or asset class.

Index Tracking Risk .  A Fund’s return may not match the return of its index for a number of reasons.  For example, a Fund incurs a number of operating expenses not applicable to the index and incurs costs associated with buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the index.  The Fund will also have to incur transaction costs and adjust its portfolio in connection with raising cash to meet redemptions or deploying cash in connection with new subscriptions.  In addition, a Fund’s use of a representative sampling approach may cause the Fund’s returns to not be as well correlated with the return of the index as would be the case if the Fund merely purchased all of the securities in the index in the precise proportions in which they are represented in such index.  The Fund may not be able to invest in certain securities included in the index, or invest in them in the exact proportions in which they are represented in the index, due to legal restrictions, limitations or a lack of liquidity in markets in which such securities trade.

To the extent the Fund calculates its net asset value per share based on fair value prices or prices that differ from those used in calculating the index, the Fund’s ability to track the index may be adversely affected. The need to comply with the tax diversification and other requirements of the Internal Revenue Code to qualify as a regulated investment company may also impact the Fund’s ability to replicate the performance of the index. In addition, if the Fund utilizes depositary receipts and derivative instruments as part of its investment strategies, the Fund’s return may not correlate as well with the returns of the index as would be the case if the Fund purchased all the securities in the index directly, especially if the Adviser’s judgments as to the correlation between the performance of the depositary receipts or derivative instruments and the performance of components of the index proves incorrect.

Unlike with an actively managed fund, the Adviser does not normally use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline.  Accordingly, the Fund’s performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline or a decline in the value of one or more issuers.

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Issuer Risk . The value of the Funds’ investments may decline for a number of reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services, in addition to the historical and prospective earnings of the issuer and the value of its assets.

Limited Operating History Risk . A newly formed Fund has no or a limited operating history for investors to evaluate. A newly formed Fund may not attract sufficient assets to achieve or maximize investment and operational efficiencies and remain viable. If a newly formed Fund fails to achieve sufficient scale, it may be liquidated.

Management Risk . The Funds are subject to management risk because they are actively managed. The Adviser will apply investment techniques and risk analysis in making investment decisions for the Funds, but there can be no guarantee that these decisions will produce the desired outcome. Additionally, legislative, regulatory or tax developments may affect the investment techniques available to the Adviser in managing the Funds and may also adversely affect the ability of the Funds to achieve their investment objectives.

Market Risk .  Market risk is the risk that securities prices will fall over short or extended periods of time.  Historically, the stock markets have moved in cycles, and the value of a Fund’s securities may fluctuate from day to day. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The prices of securities issued by such companies may decline in response. Each Fund is subject to the risk that the asset class(es) in which it invests primarily may underperform the asset class(es) in which it does not invest primarily.

Geopolitical and other events may disrupt markets and adversely affect global economies.  Likewise, natural and environmental disasters and systematic market dislocations of the kind surrounding the insolvency of Lehman Brothers in 2008, if repeated, would be highly disruptive to economies and markets.  Those events as well as other changes in foreign and domestic economic and political conditions also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment and other factors affecting the value of a Fund’s investments.  These events could also cause a Fund’s exposure to the risks described elsewhere in this prospectus to increase.  Market disruptions can also prevent a Fund from implementing its investment programs for a period of time and achieving its investment objective.

Mid Cap Company Risk . Mid capitalization companies may be more vulnerable to adverse business or economic events than larger, more established companies. As a result, mid cap company stocks may be more volatile than those of larger companies.

Small Companies Risk . Small capitalization companies may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these small companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group. Therefore, small cap stocks may be more volatile than those of larger companies. These securities may be traded over the counter or listed on an exchange. It may be harder to sell the smallest capitalization company stocks, which can reduce their selling prices.

Disclosure of Portfolio Holdings

Each Fund publishes on the Funds’ website (pncfunds.com) its complete portfolio holdings as of the end of each calendar quarter.  In addition, each Fund publishes on the Funds’ website portfolio holdings information as of each calendar month-end.  Portfolio holdings information is typically posted within 15 days after each calendar quarter or month, as applicable.  This information will be available on the Funds’ website until the date on which a Fund files its next quarterly portfolio holdings report with the SEC on Form N-CSR or Form N-Q.  For more information on the Funds’ policies and procedures with respect to the disclosure of portfolio securities, see the Funds’ Statement of Additional Information, which is available, free of charge, on the Funds’ website (pncfunds.com).

The table below shows the management fees the Adviser received for the PNC S&P 500 Index Fund for the fiscal year ended May 31, 2013 and the Funds’ contractual management fee:

*These funds are newly formed and thus did not have a management fee during the fiscal year ended May 31, 2013.

With respect to PNC S&P 500 Index Fund, a discussion regarding the basis for the Board’s approval of the investment advisory agreement is available in the semi-annual report to shareholders for the period ended November 30, 2012.  With respect to the PNC Mid Cap Index Fund and PNC Small Cap Index Fund, a discussion regarding the basis for the Board’s approval of the investment advisory agreement will be available in the Funds’ initial shareholder report covering the period in which the approval occurred.

Manager of Managers Structure

The Funds have received an exemptive order from the SEC to operate under a manager of managers structure that permits the Adviser, with the approval of the Board, to appoint and replace sub-advisers and materially amend existing sub-advisory agreements without shareholder approval (“Manager of Managers Structure”).  Under the Manager of Managers Structure, the Adviser has the ultimate responsibility, subject to oversight by the Funds’ Board, for overseeing the Funds’ sub-advisers, notifying them of their termination and recommending to the Board their hiring or replacement.  The Adviser may, in the future, recommend to the Funds’ Board the establishment of the Manager of Managers Structure for any of the Funds.

Currently, the Funds do not operate under a Manager of Managers structure.  Shareholders will be notified within 90 days of the hiring of a sub-adviser.

Portfolio Management Team

References to the “Adviser” in the portfolio manager descriptions below include the Adviser, the predecessor firm or affiliates.

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Additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and the portfolio managers’ ownership of shares of the Funds is described in the Statement of Additional Information.

PURCHASING, EXCHANGING AND REDEEMING FUND SHARES

This section tells you how to purchase, exchange and redeem Class I Shares of the Funds.  The Funds may accept or reject any purchase order.

Class I Shares have no sales charge and no minimum initial investment, except as described below.

Class I Shares may be purchased through the trust departments of financial institutions, or broker-dealers, or other financial institutions which have entered into a selling agreement with PNC Funds Distributor, LLC (the “Underwriter”) to place trades for institutional accounts, broker products or similar products.  In order to purchase Class I Shares through one of these entities, you must have an account with the entity. That account will be governed by its own rules and regulations that may be more stringent than the rules and regulations governing a direct investment in the Funds. The entity also may charge transaction fees. You should consult your account documents for full details. Your shares in the Funds may be held in an omnibus account in the name of that institution.  Class I Shares may be purchased directly by institutional investors including corporate investors, pension, retirement and profit sharing plans and foundations and any organization authorized to act in a fiduciary, advisory, custodial or agency capacity.

Employees, directors, officers and retirees of PNC Funds, investment companies sponsored or advised by the Adviser or its affiliates, The PNC Financial Services Group, Inc. or any of its affiliates, the Funds’ Co-Administrators, Underwriter or any investment sub-adviser to the Funds and their immediate families (spouse, parents, siblings, children and grandchildren) may purchase Class I Shares subject to a $1,000 minimum initial investment, whether purchasing shares directly or through a Planned Investment Program.  In addition to the $1,000 minimum initial investment, Planned Investment Programs are subject to a $50 monthly minimum investment.

The Adviser and its affiliates currently make payments from their own resources to financial intermediaries that generate purchase orders.  The Adviser or its affiliates may pay fees, from their own assets, to financial intermediaries for shareholder or administrative services in connection with investments in the Funds.  These fees are in addition to any fees that may be paid by the Funds for these types of services or other services.  The Adviser and its affiliates also participate in certain arrangements whereby the Adviser or its affiliates may pay from their own resources financial intermediaries for inclusion of the Funds on certain preferred sales lists or other similar programs intended to generate fund sales.  In some cases, these payments may create an incentive for a financial intermediary to recommend sales of Fund shares.  In addition, the Adviser or its affiliates may also share certain marketing support expenses for such intermediaries to raise awareness of the Funds.  Such payment may be in addition to, or in lieu of, sales- and asset-based payments.  The payment arrangements described herein will not change the price an investor pays for shares of the Funds nor the amount that a Fund receives to invest on behalf of the investor.  The Adviser or its affiliates may discontinue these payments at any time.  Investors should consider whether such arrangements exist when evaluating any recommendation from an intermediary to purchase or sell shares of a Fund.  Please see the Statement of Additional Information for more information on these payments and the programs described above.

The Adviser will monitor each Fund’s asset size and, subject to approval by the Board, may decide to close a Fund at any time to new investments or new accounts if the Adviser believes that an increase in the asset size of a Fund may adversely affect the implementation of the Fund’s strategies.  If a Fund is closed, the Fund may continue to accept additional investments from existing shareholders.

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Financial Intermediary

·                   Contact your financial consultant, financial intermediary or institution to transact initial purchases or additional purchases of shares of PNC Funds. Your financial intermediary is responsible for transmitting all purchase and sale requests, investment information, documentation and money to PNC Funds’ transfer agent on time.

·                   Your financial consultant, financial intermediary or institution may set different minimum initial and additional investment requirements and may charge a fee for its services.

·                   In order for you to receive a Fund’s net asset value per share (“NAV”) determined on a business day when you purchase, redeem or exchange through an authorized financial intermediary, your authorized financial intermediary must receive your purchase, redemption or exchange request in good order before the close of trading on the NYSE (normally, 4:00 p.m., Eastern Time) and the authorized financial intermediary must subsequently communicate the request properly and timely to the Fund.

Note: If you recently purchased shares by check or through ACH, you may not be able to exchange your shares until your check or ACH transmission has cleared (which may take up to 15 business days from your date of purchase).

When you exchange shares, you are really selling your shares, which may subject you to tax, and buying other Fund shares.  Your sale price and purchase price will be based on the NAVs next calculated after a Fund receives your exchange request.

How We Calculate NAV

The price of Fund shares is based on the Fund’s NAV.  NAV for one Fund share is the value of that share’s portion of the assets of the Fund less liabilities and class expenses.

In calculating NAV, a Fund generally values its investment portfolio at market price. Market values for fixed income securities may be determined on the basis of valuations provided by an independent pricing service, which may use information such as the yields or prices of bonds of comparable quality, coupon, maturity and type; quoted bid prices or indications as to values from dealers; and general market conditions. The independent pricing service may also employ electronic data processing techniques and matrix systems to determine the values of the Funds’ fixed income securities. Certain short-term obligations with maturities of 60 days or less that are used to manage a Fund’s cash are valued on the basis of amortized cost.

Some Funds may hold securities that are listed on foreign exchanges.  Foreign securities are valued based on quotations from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates.  Foreign securities may trade on weekends or other days when the Fund does not calculate NAV.  As a result, the market value of these investments may change on days when you cannot buy or redeem shares of the Funds.

Futures contracts are valued at daily quoted settlement prices.

Forward currency contracts are valued based upon closing exchange rates from each respective foreign market.

If market prices are not readily available, including when quoted prices are considered to be unreliable by the Adviser, fair value prices will be determined in good faith by the Adviser, assisted by the Fund accountant, using methods approved by the Board.  A Fund will use fair value pricing if the value of a security it holds has been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchange on which the security is traded.  Significant events (e.g., movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets.  This most commonly occurs with foreign securities, but may occur in other cases as well.  In these cases, information furnished by an independent pricing service may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value.  The independent pricing service may draw upon, among other information, the market values of foreign investments.  Because the frequency of significant events is not predictable, fair valuation of certain common stocks may occur on a frequent basis.  A Fund will also use fair value pricing for domestic securities when a significant event (e.g., there is a “thin” market in the security or the security has not been traded for an extended period of time) impacts the value of such securities such that market quotations are not reliable or readily available.  When fair value pricing is employed, the prices of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same security.

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Investments by any Fund in any mutual fund are valued at their respective NAVs as determined by those mutual funds each Business Day.  The prospectuses for those mutual funds explain the circumstances under which those funds will use fair value pricing and the effects of using fair value pricing.

Investment transactions are recorded on trade date for financial statement preparation purposes. As is normal procedure in the mutual fund industry, for days other than financial reporting period ends, investment transactions not settling on the same day are recorded and factored into a Fund’s NAV on the Business Day following trade date (T+1). Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis.  Discounts and premiums are accreted and amortized, respectively, to interest income over the estimated lives of the respective investments. Expenses common to all the Funds in PNC Funds may be allocated among the Funds on the basis of average net assets. Expenses common to all Classes, investment income, and realized and unrealized gains and losses on investments are allocated to each Class based upon the relative daily net assets of each Class.

The Statement of Additional Information contains more detailed information concerning how the Funds value their investments.

General Information Regarding Purchases

You may purchase shares on any day that the NYSE is open for business (Business Day).  Shares cannot be purchased by wire transactions on days when banks are closed.

PNC Funds may reject any purchase order if it is determined that accepting the order would not be in the best interests of a Fund or its shareholders. A Fund seeks to make these decisions to the best of its abilities in a manner that it believes is consistent with shareholder interests. A Fund may reject, cancel or revoke the purchase on the following Business Day, or as soon thereafter as possible.

The price per share (the offering price) will be the NAV next determined after a Fund receives your purchase order in good order.  In order for you to receive a Fund’s NAV determined on a business day when you purchase through an authorized financial intermediary, your authorized financial intermediary must receive your purchase request in good order before the close of trading on the NYSE (normally, 4:00 p.m., Eastern Time) and the authorized financial intermediary must subsequently communicate the request properly and timely to the Fund.  Daily NAV is calculated for each of the Funds each Business Day at the close of trading on the NYSE (normally 4:00 p.m. Eastern time).  NAV is not calculated on holidays when the NYSE is closed for trading.

Certain shareholders may also purchase shares of the money market funds of PNC Advantage Funds (together with PNC Funds, the “Fund Complex”), investment portfolios of another registered investment company for whom the Adviser provides investment advisory services.  PNC Advantage Funds’ minimum initial investment is $3 million, subject to certain exceptions.  There is no minimum subsequent investment.  PNC Advantage Funds, at their discretion, may reduce the minimum initial investment for specific shareholders whose aggregate relationship with the Fund Complex is substantially equivalent to the $3 million minimum and warrants this reduction.  The minimum initial investment also may be waived if the investor has, in the opinion of PNC Advantage Funds, adequate intent and availability of assets to reach a future level of investment of $3 million in the Fund Complex.  Please see PNC Advantage Funds’ prospectus for more information.

General Information Regarding Exchanges

You may exchange Class I Shares of one Fund for Class I Shares of another Fund.  You may exchange your shares on any Business Day.  The deadline for submitting same day exchange orders to PNC Funds’ transfer agent is 4:00 p.m. Eastern time.

When you exchange shares, you are really selling your shares, which may subject you to tax, and buying other Fund shares.  Your sale price and purchase price will be based on the NAVs next calculated after a Fund receives your exchange request.

PNC Funds reserves the right to revise or terminate the exchange privilege at any time, for any reason.  You will be provided 60 days’ written notice before any material change to the exchange privilege is made.

You may also exchange Class I Shares of the Funds for Institutional Shares of the money market funds of PNC Advantage Funds.  Exchanges into Institutional Shares of the money market funds of PNC Advantage Funds are subject to certain minimum initial and subsequent investment requirements.  Please see PNC Advantage Funds’ prospectus for more information.

Sales Charges

There are no sales charges on the purchase of Class I Shares.

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Signature Guarantee

The use of a signature guarantee is common in the securities industry. Its purpose is to authenticate the signature and capacity of a person requesting the redemption or transfer of securities and is for your protection as well as the Fund’s.

We will accept only STAMP2000 New Technology Medallion Signature Guarantee stamps from eligible guarantors.  These include banks, broker/dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations. The signature guarantee must appear on the same document as the signature(s) being guaranteed and as close as practicable to the endorsement.

To obtain the signature guarantee, you must take your unsigned document to the guaranteeing institution. Most institutions will not guarantee your signature unless you sign in their presence. Be sure to bring the kind of personal identification with you that the guaranteeing institution requires.  The guaranteeing institution must use a STAMP2000 New Technology Medallion Signature Guarantee stamp. A stamp that is not in this format is NOT an acceptable substitute. A witnessed, verified, or certified signature or a notarization by a notary public is NOT an acceptable substitute for a Medallion Signature Guarantee, nor can we accept a comparison signature guarantee, a handwritten signature guarantee, or a non-Medallion Signature Guarantee stamp.

Receiving Your Money

If you would like the proceeds of your redemption to be sent to an address, or made payable to a payee which is different from the address or payee information we have on record, please notify PNC Funds in writing and include a Medallion Signature Guarantee from a bank or other financial institution (see “Signature Guarantee” above).

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Redemption requests will be processed at the next NAV determined after the Fund receives your request in good order.  Good order means, among other things, that your request includes complete information.

Normally, we will send your redemption proceeds within seven days after we receive your request in good order.  Your proceeds can be wired to your bank account or sent to you by check.  PNC Funds does not charge a fee to wire your funds; however, your financial intermediary may charge a fee.

If you recently purchased your shares by check or through ACH, redemption proceeds may not be available until your check or ACH transmission has cleared (which may take up to 15 business days from your date of purchase).  If you recently changed your address, you will not be able to redeem your shares within 30 days after the change without a signature guarantee.

Redemptions in Kind

We generally pay redemption proceeds in cash.  Redemption proceeds may be paid all or in part in liquid securities (redemptions in kind) with a market value equal to the redemption price rather than cash when the Fund determines that it is in the best interests of the Fund and its shareholders.   It is highly unlikely that your shares would ever be redeemed in kind, but if they were you would have to pay transaction costs to sell the securities distributed to you, as well as taxes on any capital gains from the sale as with any redemption. Shareholders remain responsible for any loss in their accounts or any applicable taxes until their shares are redeemed.

Involuntary Sale of Your Shares

If your account balance drops below $1,000, you may be required to redeem your shares.  But, we will give you or your financial intermediary at least 60 days’ written notice to give you time to add to your account and avoid the sale of your shares.

Suspension of Your Right to Redeem Your Shares

PNC Funds may suspend the right of redemption or postpone the date of payment for shares redeemed during any period when:

(a)                                  trading on the NYSE is restricted by applicable rules and regulations of the SEC;

(b)                                  the NYSE is closed for reasons other than customary weekend and holiday closings;

(c)                                   the SEC has by order permitted the Fund’s suspension;

(d)                                  an emergency exists, as determined by the SEC, as a result of which: (i) disposal by PNC Funds of securities owned by it is not reasonably practicable, or (ii) it is not reasonably practicable for PNC Funds to determine the fair market value of its net assets; or

(e)                                  permitted by applicable law.

Telephone and Internet Transactions

Purchasing, exchanging and redeeming Fund shares over the telephone or via the Internet is extremely convenient, but not without risk.  Although the Funds’ transfer agent has certain safeguards and procedures to confirm the authenticity of instructions, neither the Funds nor their transfer agent are responsible for any losses or costs incurred by following telephone or Internet instructions we reasonably believe to be genuine.  If you or your financial institution transact with the Funds’ transfer agent over the telephone or via the Internet, you will generally bear the risk of any loss.

Customer Identification Program

Federal regulations require the Funds to obtain your name, your date of birth (for a natural person), your residential address or principal place of business (as the case may be) and (if different) mailing address, and your Social Security number, employer identification number or other government-issued identification when you open an account.  Additional information may be required in certain circumstances.  Purchase applications without such information may not be accepted.  If you have applied for an identification number, the application must be provided and the number submitted within a time period after the establishment of the account deemed reasonable by the Funds.  To the extent permitted by applicable law, the Funds reserve the right to place limits on transactions in your account until your identity is verified.

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Cost Basis Reporting

When you redeem or exchange Fund shares that are held in a taxable account, the Fund or, if you purchase your shares through a financial intermediary, your financial intermediary generally is required to report to you and the Internal Revenue Service on an Internal Revenue Service Form 1099-B cost-basis information with respect to those shares, as well as information about whether any gain or loss on your redemption or exchange is short- or long-term and whether any loss is disallowed under the “wash sale” rules.  This reporting requirement is effective for Fund shares acquired by you (including through dividend reinvestment) on or after January 1, 2012, when you subsequently redeem or exchange those shares.  Such reporting generally is not required for shares held in a Qualified Plan or other tax-advantaged account.  Cost basis is typically the price you pay for your shares (including reinvested dividends), with adjustments for certain commissions, wash-sales, organizational actions, and other items, including any returns of capital paid to you by the Fund in respect of your shares.  Cost basis is used to determine your net gains and losses on any shares you redeem or exchange in a taxable account.

A Fund or your financial intermediary, as applicable, will permit you to select from a list of alternative cost basis reporting methods to determine your cost basis in Fund shares acquired on or after January 1, 2012.  If you do not select a particular cost basis reporting method, the Fund or financial intermediary will apply its default cost basis reporting method to your shares.  If you hold your shares directly in a Fund account, the Fund’s default method (or the method you have selected by notifying the Fund) will apply; if you hold your shares in an account with a financial intermediary, the intermediary’s default method (or the method you have selected by notifying the intermediary) will apply.  Please see the Funds’ website at: pncfunds.com or contact the Funds at 1-800-622-FUND (3863) or consult your financial intermediary, as appropriate, for more information on the available methods for cost basis reporting and how to select or change a particular method.  You should consult your tax advisor concerning the application of these rules to your investment in a Fund, and to determine which available cost basis method is best for you.  Please note that you are responsible for calculating and reporting your cost basis in Fund shares acquired prior to January 1, 2012 as this information will not be reported to you by the Fund and may not be reported to you by your financial intermediary.

Limitations on Purchases, Exchanges and Redemptions

The Board has adopted policies and procedures that impose limits on purchases, exchanges and redemptions to discourage excessive short-term (market timing) trading by shareholders.  Under the policies and procedures, a Fund or its delegate shall request representations of compliance with the Fund’s market timing procedures from parties involved in the distribution of Fund shares and administration of shareholder accounts.

There is no guarantee that PNC Funds or its agents will be able to detect frequent trading activity, identify the shareholders engaged in such activity, or, if it is detected, prevent its recurrence.  The ability of PNC Funds and its agents to monitor trades that are placed through omnibus or other nominee accounts, where the holdings of multiple shareholders are aggregated, is limited. Omnibus accounts, in which shares are held in the name of a financial intermediary on behalf of multiple investors, are a common form of holding shares among retirement and college saving plans and financial intermediaries such as brokers, advisers, and third-party administrators.  Omnibus accounts aggregate purchase or redemption and exchange requests on a daily basis and the identity of individual investors may not be known to the Fund.  With respect to suspected market timing by investors who acquire shares through omnibus accounts, different purchase and exchange limitations may apply.  These limitations may be more or less restrictive than those imposed on direct and fully disclosed accounts.  Investors who hold Fund shares through a financial intermediary are advised to consult the intermediary to determine what purchase and exchange limitations apply to their accounts.

Short-term trading creates transaction costs that are borne by all shareholders and disrupts the orderly management of a Fund’s portfolio investments.  Funds that invest in overseas securities markets are particularly vulnerable to market timers who may take advantage of time zone differences between the foreign markets on which these Funds’ portfolio securities trade and the U.S. markets which generally determine the time as of which NAV is calculated (“time-zone arbitrage”).  For additional information on time zone arbitrage, see the Statement of Additional Information.  Further, Funds that invest in small-cap securities and other types of investments which are not frequently traded, including high-yield bonds, also can be the targets of market timers.

General Trading Limits :  Fund shareholders are limited to no more than one “round trip” during a 60-day period.  A round trip occurs when a shareholder purchases or exchanges-in shares and then subsequently sells or exchanges-out shares within a short period of time of the original purchase or exchange-in date. A Fund may restrict or refuse purchase and exchange orders into the Fund if a shareholder has made two or more round trips, during a 60-day period.

PNC Funds reserves the right to notify shareholders who violate PNC Funds’ general trading limits as such violations may constitute market timing activities. If a shareholder continues such deemed market timing activities after being notified, the account may be closed to new purchases or exchanges of Fund shares.

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If any transaction is deemed to have the potential to adversely impact a Fund, the Fund reserves the right to:

PNC Funds reserves the right to revise or terminate the exchange privilege at any time, for any reason. You will be provided 60 days’ written notice before any material change to the exchange privilege is made.

A portion of the Funds’ dividends paid to corporate shareholders may be eligible for the dividends-received deduction, provided holding period and other requirements are met at both the shareholder and Fund levels.  Certain of a Fund’s investment activities, such as securities lending activities, if any, high portfolio turnover rate, or investments in debt securities or foreign corporations will result in a smaller portion of the Fund’s distributions qualifying for the dividends-received deduction than if the Fund had not conducted such activities.  No substantial portion of the distributions from the International Equity Fund will be eligible for the dividends-received deduction.

A 3.8% Medicare contribution tax will be imposed on the “net investment income” of individuals, estates and trusts whose income exceeds certain threshold amounts. Net investment income generally includes for this purpose dividends paid by a Fund, including any capital gain dividends and net capital gains recognized on the sale, redemption or exchange of shares of a Fund. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in a Fund.

You should note that if you purchase shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution.  However, you will be taxed on the entire amount of the distribution received, even though, as an economic matter, all or a portion of the distribution constitutes a return of capital.  This tax result is known as “buying into a dividend.”

Redemptions or Exchanges

You will generally recognize taxable gain or loss for federal income tax purposes on a sale, exchange, or redemption of your shares in any Fund, including an exchange for shares of another Fund, based on the difference between your tax basis in the shares and the amount you receive for them.  Generally, you will recognize long-term capital gain or loss if you have held your Fund shares for over twelve months at the time you dispose of them.  As described under “Cost Basis Reporting” above, upon the sale, exchange, or redemption of Fund shares, the Fund or, in the case of shares purchased through a financial intermediary, the financial intermediary may be required to provide you and the Internal Revenue Service with cost basis and certain other related tax information about the Fund shares you sold, redeemed or exchanged. To aid in computing your tax basis, you generally should retain your account statements for the periods during which you held shares.

Any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.  Additionally, all or a portion of any loss realized on a disposition of shares of a Fund will be disallowed under the “wash sale” rules if other shares of the same Fund are purchased within 30 days before or after the disposition, such as pursuant to a dividend reinvestment in shares of a Fund.  If disallowed, the loss will be reflected in an upward adjustment to the basis of the shares purchased.

Investments in Foreign Securities

A Fund’s investments in foreign securities may be subject to foreign withholding taxes, which can decrease the Fund’s yield on such securities.  If more than 50% of the value of a Fund’s total assets at the close of a taxable year consists of securities of foreign corporations, the Fund will be eligible to elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portion of qualified taxes paid by the Fund to foreign countries in respect of foreign securities the Fund has held for at least a minimum period specified by the applicable tax rules.  The Funds do not expect to be eligible to make such an election.  Even if a Fund qualifies to make such an election for any year, it may determine not to do so.  See the Statement of Additional Information for additional information regarding such credits.

Investments in Certain Derivatives

Certain of a Fund’s investments in derivatives could affect the amount, timing and character of distributions you receive.

Backup Withholding

A Fund may be required in certain cases to withhold and remit to the Internal Revenue Service a percentage of taxable distributions or gross proceeds realized upon redemption of Fund shares payable to shareholders who fail to provide to the Fund a correct tax payer identification number in the manner required, who have under-reported dividend or interest income, or who fail to certify to the Fund that they are not subject to backup withholding.  The backup withholding rate is 28%.

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IRAs and Other Tax-Advantaged Accounts

Fund distributions on, and sales, exchanges and redemptions of, shares held through a tax-advantaged retirement account, such as an IRA or other tax-qualified plan, will not be currently taxable.  Special tax rules apply to investments through such accounts. You should consult your tax advisor regarding the tax treatment of distributions from such a tax-advantaged account.

U.S. Federal Tax Treatment of Foreign Shareholders

Investors that are not U.S. citizens or residents should consult their own tax advisors regarding the U.S. and non-U.S. tax consequences of an investment in a Fund.

State and Local Taxes

You may also be subject to state and local taxes on distributions and redemptions.  State income taxes may not apply, however, to the portions of each Fund’s distributions, if any, that are attributable to interest on U.S. government securities or interest on securities of the particular state or localities within the state.  You should consult your tax adviser regarding the tax status of distributions in your state and locality.

More information about taxes is in the Statement of Additional Information.

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