Cost Basis Accounting Methods

Important Considerations When Choosing a Cost Basis Option:
The Cost Basis method you choose may result in redemption fees or Contingent Deferred Sales Charges (CDSC) on applicable shares. Please refer to “Sales Charge When You Redeem” in the applicable fund prospectus.

In addition, your selection may impact the gain/loss recognized on share sales.  Consult your tax preparer or financial advisor prior to choosing a Cost Basis method to discuss your specific situation and potential tax consequences.

Average Cost (ACST)
ACST calculates the adjusted cost basis for shares by totaling the dollar value invested in shares and dividing by the total shares held. The basis of the shares redeemed can then be determined by multiplying the shares redeemed by the resulting average cost per share.

ACST is Federated’s default accounting method, which may be changed or "revoked" before making your first redemption of covered shares. However, if you previously elected ACST, you must revoke your election in writing.

FIFO (First In First Out)
FIFO depletes the oldest available lots first.

HIFO (High Cost First Out)
HIFO depletes the available lots with the highest cost first.

LGUT (Lost/Gain Utilization)
LGUT depletes lots that result in losses first, beginning with those held short-term. Once all loss lots are depleted, lots resulting in a gain are sold, beginning with those held long-term.

LIFO (Last In First Out)
LIFO depletes the newest available lots first.

SLID (Specific Lot Identification)
SLID requires the shareholder to designate which specific shares to redeem prior to each sale. It may be beneficial to contact your tax preparer or financial advisor prior to redeeming shares if this method is selected. Note: If SLID is chosen as the primary method, any of the other methods except Average Cost can be chosen as a secondary method.

Low Cost First Out (LOFO)
LOFO depletes the available lots with the lowest cost first. 

Cost Basis Reporting

If you have questions, please contact a Federated Client Service Representative at 1-800-341-7400, Monday through Friday from 8:00 a.m. to 6:00 p.m. ET.