Beginning January 1, 2012, Baron Funds will provide cost basis to our direct shareholders and the IRS. You can accept the default method – average cost basis – or choose a different method.
On October 3, 2008, the Emergency Economic Stabilization Act, HR 1424, was signed into law requiring mutual funds to provide cost basis reporting to their customers and the IRS.
The Baron Funds will provide cost basis information to you and the IRS for shares purchased on and after January 1, 2012 (covered shares) using the IRS Tax Form 1099-B. The elected method will be used for all current accounts and any future accounts established.
The Baron Funds default accounting method is Average Cost. If you are currently using the Average Cost calculation provided to you, and you would like to continue receiving Average Cost, NO ACTION is required.
If you do not utilize the Average Cost calculation provided, you may elect to utilize a different accounting method for your future depletion activity. This method may be elected by utilizing our website (beginning in late October 2011) at www.baronfunds.com/myaccount, or by sending your written request to:
PO Box 219946
Kansas City, MO 64121-9946
Note: The Baron Funds will satisfy any of your future redemptions by depleting all uncovered shares first according to the cost basis method elected for the account.
Cost Basis Accounting Methods Baron Funds offers:
• Average Cost – Calculates the cost of shares in an account by averaging the cost of all purchases made after January 1, 2012. Shares will be redeemed in a first-in first-out order.
• First-In First-Out – Shares acquired first in the account are the first shares depleted.
• Last-In First-Out – Shares acquired last in the account are the first shares depleted.
• High Cost – Shares acquired with the highest cost per share are the first shares depleted.
• Low Cost – Shares acquired with the lowest cost per share are the first shares depleted.
• Loss/Gain Utilization – Depletes shares with losses before gains, consistent with the objective of minimizing taxes. For shares that yield a loss, shares owned one year or less (short-term) will be redeemed before shares owned more than one year (long-term). For gains, long-term shares will be redeemed before short-term gains. With favorable long-term gains rates, long-term gains are given priority over short-term gains to reduce tax liability.
• Specific Lot – Shareholder selects which lots to deplete at time of each depletion.
Note: When selecting Specific Lot, please choose a secondary method to be used as an alternate for systematic withdraws, in the event specific lot depletion information is not provided.
o First-In First-Out
o Last-In First-Out
o High Cost
o Low Cost
o Loss/Gain Utilization
Please contact Baron Funds' Shareholder Services at 1-800-442-3814 should you have any questions.