Maybe it has always been this way, or maybe the tax laws changed, but when I got my 1099 from my broker I was a bit surprised to see them reporting over $3000 in capital gains income (line 2a on 1099-DIV) despite the fact that I held those funds for the entire year and didn't sell any of it.
My understanding is that capital gains are realized when you sell an investment and only dividend income is taxable while you are still holding it. What am I missing here?
If it matters, the funds were PRSVX, VIPSX, and WMFAX.