A mutual fund dividend is income earned by the fund from dividends and interest paid by the fund’s holdings. A capital gain distribution occurs when the fund sells assets during the year and the gains on those sales exceed the losses.

Shareholders may elect to receive cash or reinvest in additional shares of the fund.

Mutual fund shareholders in tax-sheltered accounts such as IRAs (Individual Retirement Accounts), 401(k) and 403(b) accounts do not pay taxes on distributions. Shareholders with taxable accounts are required to pay taxes on distributions, whether the distributions are paid out in cash or reinvested in additional shares. These gains are classified as long or short-term gains and are taxed differently. Gains on the sale of investments owned for more than one year are taxed at long-term capital gains tax rates. Gains on the sale of investments owned for one year or less are considered short-term capital gains and are taxed as ordinary income. Interest and dividends are also taxed at ordinary income tax rates which generally are higher than long-term capital gains tax rates.

U.S. tax law requires that mutual funds pay substantially all net investment income and net capital gains to their shareholders once a year.

Because the gains relate to the securities owned by the fund, a distribution of long-term gains by the fund is subject to long-term capital gains tax rates, even if you held the shares for less than a year.

Yes. Distributions of dividends and capital gains in non-retirement accounts are subject to income tax regardless of whether you receive them in cash or reinvest them in additional shares. Distributions in retirement accounts are not taxed.

The fund will mail you a Form 1099-DIV in mid-February, identifying all the distributions paid to you during the tax year, with a breakdown between ordinary income dividends and long-term capital gains distributions.

Capital gains and dividend distributions will reduce the fund's net asset value per share (NAV) by the amount of the distribution on the ex-dividend date. For example, if a mutual fund were to pay a distribution of $1.00 per share and the fund's net asset value (NAV) was $10.00 per share prior to the distribution, on the ex-dividend date the NAV would be reduced by $1.00 per share. Market activity may also impact the fund's NAV on the ex-dividend date, so the total change in a fund's NAV may be more or less than the dividend and capital gain distributions.

Distributions do not impact total return.

Generally, the Funds have made capital gains distributions every year. A ten year history of distributions and dividends is available on the Funds’ website under each Fund’s Distribution History page.

View Growth Fund, Balanced Fund, and Small Cap Fund.

Mairs & Power has always managed investments with tax efficiency in mind. Our basic long-term investment philosophy helps limit the amount of gains realized in any period. In addition, the firm utilizes available tax-minimizing strategies allowed by law. While taxes are an important consideration, securities will be sold when it is appropriate for investment reasons.