Eaton Vance 2010 Tax Guide

aton Vance 2010 Tax uide aton Vance nvestment Managers

o n t e n t s aton Vance unds P.O. ox 9653 Provience, R 02940 (800) 262-1121 www.eatonvance.com 2010 orm 1099-V 2 2010 orm 1099-NT 4 2010 orm 1099-6 2010 orm 1040 Schedule 8 2010 ost asis Statement 10 2010 orm 1099-R 14 2010 orm 5498 16 nswers to ommonly sked Questions 18 ear Shareholder: We are pleased to provide you with the aton Vance unds 2010 Tax uide. This valuable resource was established to help you understand the various documents required to prepare your tax filing. You may also access your tax information by securely logging into your account on our website: www.eatonvance.com. Please look through this information carefully and share it with your tax advisor when preparing your 2010 tax filings. Should you have any questions, please don t hesitate to contact an aton Vance representative at 1-800-262-1122 or consult your tax advisor. Mutual fund shares are not insured by the and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested. 2010 aton Vance Two nternational Place oston, M 02110 www.eatonvance.com 1

2 0 1 0 o r m 1 0 9 9 - V MNMNTS MY O UNS P.O. OX 9999 YOUR TY UN NM OMPNY ST 99999-9999 P.O. ox 9999 TY ST 12345-9999 ividend and apital ain istributions very shareholder, with certain exceptions defined by the nternal Revenue ode, who has received $10 or more in taxable dividends or distributions receives a orm 1099-V. orm 1099-V is also sent to account holders for whom backup withholding was taken on certain reportable transactions. Your orm 1099-V lists all federally taxable dividend and capital gain distributions of $10 or more paid to your mutual fund accounts. f your account is invested in more than one fund, the 1099-V information for each fund has been consolidated and mailed to you in a single package. owever, shareholders with more than one type of account for example, an individual account and another account that is jointly owned will receive a separate package of tax forms for each account. The dividends and capital gains shown on orm 1099-V must be reported on your 2010 federal income tax return, even if you reinvested your distributions in additional fund shares instead of receiving them in cash. To ensure accurate reporting, be sure your correct social security number or taxpayer identification number is listed on your orm 1099-V, since this will be used for all federal and state reporting. Please contact us at the telephone number shown on your orm 1099-V if this number is incorrect. f you have one of the following types of accounts, you will not receive orm 1099-V: ndividual Retirement ccounts and other tax-deferred accounts (including Roth and Traditional Rs, Rollover Rs, SP and SMP Rs, overdell ducation Savings ccounts and qualified tuition plan accounts) Pension, 403(b), profit sharing and money purchase plans ccounts owned by corporations, certified nonresident aliens and certain tax-exempt organizations ccounts invested in federally tax-exempt securities, such as municipal bond mutual funds (this income is now reported on orm 1099-NT) oreign nvestment istributions orm 1099-V may list a foreign tax credit the und paid with gross distributions. f an amount is shown in box 6, please refer to the instructions for filing your personal income tax return. The und s mailing address ccount registration and address Your Taxpayer dentification ; this information may or may not be masked The und s name The und s ederal Taxpayer dentification Your und and account number (s that may appear to the right of your account number are for RS use only) ORRT (if checked) OSTX1TX=555555555;MT=V;RPT=1099V;R=099259;R=X002; OSTX2RP=50461;TYR=2010;RT=20100930;ON=12345678; OSTX2=99;OR=; Recipient s Name and ddress: -1-V-1 ON Q PU 1234 STRT NM OMTOWN ST 99999-9999 Payer s Name MNMNTS NOM UN-SS 1a. Total Ordinary ividends 3. Nondividend istributions OSTX2N=0514;T=5555555555 1b. Qualified ividends $1,642.36 4. ederal ncome Tax Withheld Payer s ederal 2a. Total apital ain istributions Total amount of qualified and nonqualified dividends and short-term capital gains distributed in 2010 mount of qualified dividends distributed in 2010 Total amount of longterm capital gains distributed in 2010 Shows unrecaptured Section 1250 gain from certain depreciable real property or additional information, please call: 1-800-999-9999 2010 ORM 1099-V ividends and istributions opy for Recipient RPNT S NTTON NUMR 111-22-3333 und & ccount 0514-5555555555 - 001 2b. Unrecaptured Sec. 1250 ain $16.87 6. oreign Tax Paid 8. ash iquidation istributions ists any part of your distribution that is nontaxable because it is a return of your cost or other basis mount of taxes withheld if you were subject to backup withholding ox 6 lists your proportionate share of any foreign taxes you paid in 2010 Total amount of liquidation distributions paid to you in 2010 The information on your orm 1099-V is reported to the RS. M M N N *0410001M* 2 3

2 0 1 0 o r m 1 0 9 9 - N T MNMNTS MY O UNS P.O. OX 9999 YOUR TY UN NM OMPNY ST 99999-9999 P.O. ox 9999 TY ST 12345-9999 Tax-xempt ividends and Taxable nterest ncome orm 1099-NT reports the amount of taxable interest income paid to you or reinvested in your account in 2010. orm 1099-NT is also used to report tax-exempt dividend distributions paid to you by each of your mutual funds. f applicable, the amount of income subject to the lternative Minimum Tax (MT) is also provided on orm 1099-NT. You should review the instructions for your personal income tax return or consult with your tax advisor to determine how to use this information. orm 1099-NT contains similar characteristics to orm 1099-V or example: t lists all taxable interest or tax-exempt dividend distributions of $10 or more paid to you in cash or reinvested into your mutual fund account in 2010 t consolidates the tax reporting for all of your taxable interest or tax-exempt dividend distributions into a single package of tax forms, although shareholders with more than one type of account will receive separate packages for each account ertain types of accounts will not receive orm 1099-NT (please refer to page 2 for a list of these account types) The und s mailing address ccount registration and address Your Taxpayer dentification ; this information may or may not be masked The und s name ORRT (if checked) OSTX1TX=555555555;MT=V;RPT=1099NT;R=099259;R=X002; OSTX2RP=50461;TYR=2010;RT=20100930;ON=12345678; OSTX2=99;OR=; Recipient s Name and ddress: ON Q PU 1234 STRT NM OMTOWN ST 99999-9999 Payer s Name MNMNTS NOM UN-SS 1. nterest ncome OSTX2N=0514;T=5555555555 $1,642.36 The und s ederal Taxpayer dentification Your und and account number (s that may appear to the right of your account number are for RS use only) 4. ederal ncome Tax Withheld Shows taxable interest paid in 2010 ack up withholding; include this amount on your income tax return as tax withheld oreign tax paid Payer s ederal 6. oreign Tax Paid 8. Tax-xempt nterest mount of tax-exempt interest, including exempt interest dividends from a mutual fund, paid in 2010 or additional information, please call: 1-800-999-9999 2010 ORM 1099-NT nterest ncome opy for Recipient RPNT S NTTON NUMR 111-22-3333 und & ccount 0514-5555555555 - 001 9. Specified Private ctivity ond nterest *440001+* mount of tax-exempt interest subject to the lternative Minimum Tax (MT); this amount is included in the total shown in 4 The information on your orm 1099-NT is reported to the RS. 5

2 0 1 0 o r m 1 0 9 9 - P.O. OX 9999 TY NM ST 99999-9999 YOUR UN OMPNY P.O. ox 9999 TY ST 12345-9999 Proceeds from Redemption or xchange of Securities ll redemptions (sales) or exchanges made in non-retirement mutual fund accounts, except money market accounts, must be reported on orm 1099-. orm 1099- reports the gross proceeds from the sale or exchange of your mutual fund shares in 2010 less any contingent deferred sales charge deducted from the gross proceeds of the transaction. or tax purposes, an exchange of shares from one fund to another is treated as a redemption in the first fund and a purchase in the second fund. Your consolidated orm 1099- lists all sale or exchange transactions from your non-money market and non-retirement accounts. You should use the information on your orm 1099- to determine the amount of your gain or loss. To calculate your gain or loss, you must first determine the cost basis of the shares you sold. Under RS regulations, you may choose from three different methods to determine cost basis. RS Publications 550 (nvestment ncome and xpenses) and 544 (Sales and Other ispositions of ssets) contain additional information regarding cost basis. Your cost basis statement helps you calculate the cost of shares sold during the year. n some cases, such as the consolidation or merger of shares from other fund families into your mutual fund, a cost basis statement may not be produced. Please consult your tax advisor for advice on the cost basis information needed for Schedule. Note: Sales or exchanges in retirement accounts or money market mutual funds are not reported on orm 1099-. The und s mailing address ccount registration and address Your Taxpayer dentification ; this information may or may not be masked The und s name ORRT (if checked) OSTX1TX=555555555;MT=V;RPT=1099;R=099259;R=X002; OSTX2RP=50461;TYR=2010;RT=20100930;ON=12345678; OSTX2=99;OR= ; Recipient s Name and ddress: ON Q PU 1234 STRT NM OMTOWN ST 99999-9999 Payer s Name Payer s ederal dentification und & ccount MNMNTS NOM UN-SS 0514-5555555555 - 001 OSTX2N=0514;T=5555555555; MNMNTS NOM UN-SS 0514-5555555555 - 002 5555555; The und s ederal Taxpayer dentification 1a. ate of Sale or xchange 1b. USP 2. ross Proceeds (less commissions) Your und and account number (s that may appear to the right of your account number are for RS use only) ate of each transaction made during the year The und s USP number ross proceeds (less commissions) from each transaction made during the year or additional information, please call: 1-800-999-9999 2010 ORM 1099- Proceeds from roker and arter xchange Transactions. opy for Recipient RPNT S NTTON NUMR Share Price 111-22-3333 4. ederal ncome Tax Withheld 7. of Shares 06/29/2010 277923405 $4,000.00 $5.27 759.013 11/27/2010 277923405 $5,000.00 $4.94 1,012.146 *0420001N* NV or price per share redeemed for each transaction mount of federal taxes withheld if you were subject to backup withholding of shares sold for each reportable transaction 6 The information on your orm 1099- is reported to the RS. 7

2 0 1 0 o r m 1 0 4 0 S c h e d u l e apital ains and osses Schedule of orm 1040 is used to report capital gains and losses that may have resulted from the sale or exchange of your mutual fund shares in 2010, as well as any capital gain distributions paid by your mutual fund. You will receive orm 1099- if you sold or exchanged shares in your non-money market or non-retirement mutual fund account. The RS considers an exchange of shares to be the same as a sale of shares. apital gain distributions paid by your mutual fund are reported to you on orm 1099-V. nter capital gains and losses on Schedule, orm 1040. Part of the schedule is for short-term gains or losses and Part is for long-term gains or losses. ach sale must be reported separately. Mutual fund capital gain distributions generally are entered in Part of Schedule, but there are exceptions. s noted in the sample at right, enter the information from your orm 1099- or 1099-V in the appropriate areas of Schedule. or additional information about completing Schedule, please review the Schedule instructions issued by the RS or consult your tax advisor. olumn (a) nter your Program name and the number of shares sold or exchanged olumn (c) nter the trade date you sold or exchanged your shares (orm 1099-, olumn 1a) olumn (e) nter your cost basis olumn (b) nter the trade date you acquired your shares; use various for shares purchased on multiple dates olumn (d) nter the amount of your cash proceeds (orm 1099-, olumn 2) 8 9

2 0 1 0 o s t a s i s S t a t e m e n t MNMNTS MY O UNS YOUR P.O. OX UN 9999 OMPNY P.O. TY ox NM 9999 ST 99999-9999 TY ST 12345-9999 ost asis Transactions The cost basis statement helps you determine the cost of shares sold during the year. n some cases, such as the consolidation or merger of shares from other fund families into your und, a cost basis statement may not be produced. ost basis statements are not produced for redemption or exchange activity in money market or retirement accounts. ost basis statements are provided for informational purposes only and are not filed with the RS. f you sold shares in your mutual fund account and/or exchanged shares from one fund to another during 2010, you may have realized a capital gain or loss that must be reported on your tax returns. ny redemption or exchange that occurred in a non-money market or non-retirement account will be reported to you on RS orm 1099-. The cost basis statement gives you tax basis information needed to calculate capital gains (or losses), providing a chronological listing of all redemption or exchange transactions you executed in non-money market and non-retirement accounts for 2010. or your convenience, we have calculated your average cost per transaction using the average costsingle category cost basis method, one of three RS approved methods of accounting for redemption purposes. This method averages the price paid for all shares, regardless of the holding period. You are not required to use this particular method to calculate your cost basis, and we suggest you consult with your tax advisor to determine the method which is available and most advantageous to you. Using the average cost-single category method, the average cost column on the cost basis statement reflects the per share average cost for your account, calculated by dividing the total cost by the number of shares. Slight variations may result from rounding adjustments. n addition to calculating your average cost, we have also determined the net short-term and long-term gain or loss associated with each transaction. short-term gain or loss results if shares were held for one year or less. long-term gain or loss results from holding periods more than one year. The und s mailing address ccount registration and address The und s name The und s ederal Taxpayer dentification Your und and account number ORRT (if checked) OSTX1TX=555555555;MT=V;RPT=;R=099259;R=X002; OSTX2RP=50461;TYR=2010;RT=20100930;ON=12345678; OSTX2=9;OR=; Recipient s Name and ddress: ON Q PU 1234 STRT NM OMTOWN ST 99999-9999 ate of each transaction made during the year of shares in each transaction made during the year ollar amount of shares redeemed in 2010 verage cost of shares redeemed for each transaction or additional information, please call: 1-800-999-9999 2010 OST SS STTMNT This statement is for informational use only and is not being sent to the nternal Revenue Service W - ndicates a transaction that potentially qualifies as a Wash Sale. Payer s Name ate of Net apital ain (oss) Payer s ederal und & ccount MNMNTS NOM UN-SS 0514-5555555555 - 001 OSTX2N=0514;T=5555555555; MNMNTS NOM UN-SS 4-55555 5555-002 Sale or xchange of Shares Redemption mount verage ost Short Term ong Term 06/29/2010 759.013 $4,000.00 $4,032.74 ($30.26) W 11/27/2010 1,012.146 $5,000.00 $5,372.16 ($353.38) W apital gain or loss calculated for shares redeemed and held one year or less apital gain or loss calculated for shares redeemed and held more than one year isallowed wash sale or sales load deferral, indicated by letter W *0430001O* 10 The information on your ost asis Statement is not reported to the RS. 11

2 0 1 0 o s t a s i s S t a t e m e n t Methods of alculating ost asis Your cost basis statement calculates basis using the average costsingle category method, but you may choose among three methods. ach method may result in a different amount of tax owed, and we recommend that you consult your tax advisor before selecting a particular method. You must inform the RS on orm 1040 if you use either of the two average cost methods, and you must continue to use the same average cost method unless you get permission from the RS to revoke it. owever, you may use a different method of figuring the cost basis or average cost for shares in other funds, even if they are in the same family of mutual funds. The three methods of calculating your cost basis are outlined below. 1. Specific dentification hoosing specific shares to sell can offer you greater control over whether you realize a gain or a loss. With this method, the shareholder specifies to the broker or mutual fund company at the time of the sale the particular shares to be sold. The RS requires that notification be given in writing at the time of sale. f a shareholder does not specify which lot should be sold, the irst n irst Out method may be elected. This method assumes that the first group of shares to be purchased will be the first to be sold. 2. verage ost-single ategory With this method, at the time of each sale the cost of all shares in an account is averaged, regardless of the holding period. The total cost of all the shares in the account, divided by the total number of shares in that account, produce the average cost per share. f you use the average cost-single category method, you must state on your return that you have selected this method to report your gains and losses for the und. 3. verage ost-ouble ategory With this method, all shares in an account at the time of each sale are divided into two categories. The first category includes all shares which had a holding period of more than one year at the time of the sale. The second category includes those shares with a holding period of one year or less at the time of the sale. The cost of each share in a category is then determined to be an amount equal to the remaining total cost of all shares in that category, divided by the total number of shares in that category. Wash Sales ost djustments The nternal Revenue ode contains provisions commonly known as wash sales rules that are designed to discourage investors from selling securities to create a loss for tax purposes. wash sale occurs when an investor sells fund shares at a loss and also purchases shares in the same fund within the 30-day period, either before or after the sale. The wash sale rules do not apply to initial investment purchases. When a wash sale occurs, the full capital loss cannot be claimed for that tax year unless the replacement stock is also sold in the same year. partial wash sale occurs when the amount of the purchase that results in the wash sale is less than the value of the shares that are redeemed, and only part of the loss is disallowed. full wash sale, on the other hand, occurs when the value of the shares purchased is equal or greater than the value of the shares redeemed, and the entire loss is disallowed. The wash sale rules require that the disallowed portion of the loss be added back to the cost basis of the remaining shares in the account. When the remaining shares are sold, the average cost at that time will reflect the amount of the postponed loss. The capital loss is not permanently disallowed, but is instead postponed. Your cost basis statement identifies any transactions that fall under wash sale regulations and adjusts your total cost figure accordingly. ike other aspects of cost basis accounting, the wash sale rules can be complex, and we suggest that you consult with your tax advisor regarding any questions you might have. Please note that cost basis calculations are not applicable to retirement accounts. n addition, they are not reported to the nternal Revenue Service for any type of account. 12 13

2 0 1 0 o r m 1 0 9 9 - R YOUR M UN MY OMPNY O UNS P.O. P.O. ox OX 9999 9999 TY TY ST NM 12345-9999 ST 99999-9999 OM NO. 1545-0119 Page 1 of 1 istributions from Retirement Plans 14 orm 1099-R reports both full and partial distributions from your mutual fund retirement plan accounts. f you have more than one retirement plan account with a taxable distribution in our family of mutual funds, you will receive one consolidated orm 1099-R. f you have more than one type of retirement account with us for example, a Traditional R and a Roth R separate orms 1099-R will be produced for distributions from each type of retirement account. Please note that we do not report distributions from retirement accounts held by other custodians. You will receive a orm 1099-R if you withdrew assets from your retirement plan account, even if you rolled them over and reinvested them in another retirement plan account within 60 days. You will also receive a orm 1099-R if you took your retirement account dividend distributions in cash, but not if they are reinvested into your retirement account. f you took more than one distribution from your retirement account in 2010, the distributions have been aggregated according to the type of distribution as defined by the RS distribution code. You will receive a orm 1099-R if you converted your traditional R to a Roth R in 2010. You will not receive a orm 1099-R if you arranged to move your R account as a trustee-to-trustee transfer of assets directly to another R account without taking possession of the funds. You will receive a year-end statement in anuary 2011 that reports the value of your account as of ecember 31, 2010. Please consult your tax advisor for guidance on reporting the information from orm 1099-R on your tax return. The und s mailing address ccount registration and address Your Taxpayer dentification ; this information may or may not be masked The und s name ORRT (if checked) Recipient s Name and ddress: M TRUST O UST R O ON Q PU 1234 STRT NM OMTOWN ST 99999-9999 The und s ederal Taxpayer dentification Your und and account number (s that may appear to the right of your account number are for RS use only) Payer s Name M NOM UN-SS 1. ross istribution $1,800.00 7. istribution ode(s) 7 2a. Taxable mount 2b. Taxable mount Not etermined X R / SP / SMP X M Payer s ederal Total dollar amount of the distribution(s) from your retirement account in 2010 Taxable amount of your distribution(s) n x here indicates your unds are unable to determine the taxable amount of your distribution(s) n x here indicates a total distribution of account assets as of 12/31/2010 (There is no share balance left) mount of ederal taxes withheld from the distribution or additional information, please call: 1-800-999-9999 2010 ORM 1099-R istributions from Pensions, nnuities, Retirement or Profit-Sharing Plans, Rs, nsurance ontracts, etc. opy for Recipient s Records RPNT S NTTON NUMR Total istribution 10. State Tax Withheld 11. State / Payer s State / N O 111-11-1111 und & ccount 0514-1111111111 - 001 M N O 4. ederal ncome Tax Withheld istribution codes identify the type of distribution(s) you received ( complete list of distribution codes appears on the back of the form) ndicates if your account is a Traditional, SP, or SMP R *0320001M* mount of State taxes withheld from the distribution, if applicable The state that taxes were paid to The information on your orm 1099-R is reported to the RS. n some cases, a copy of orm 1099-R must be filed with your tax return. 15

2 0 1 0 o r m 5 4 9 8 M MY O UNS P.O. OX 2222 YOUR UN OMPNY TY NM ST 01234-9999 P.O. ox 9999 TY ST 12345-9999 R ontribution nformation orm 5498 reports all contributions to R accounts for tax year 2010. Since contributions can be made until pril 15, 2011 for 2010, your form will be mailed to you by May 31, 2011. The information is reported to the RS, but you don t have to file it with your 2010 tax return. orm 5498 also reports the fair market value of your R account as of ecember 31, 2010. This information may be reported to you on your year-end transaction history statement instead of orm 5498, since orm 5498 will not be generated if you did not make any contributions to your R accounts. Note: direct trustee-to-trustee transfer will not generate a orm 5498. OSTX1TX=397163509;MT=;RPT=5498R;R=000069;R=301; OSTX2RP=301007;TYR=2010;RT=20101202;ON=11111111; OSTX2=547;OR=; ORRT (if checked) Participant s Name and ddress: -1-V-1 M TRUST O UST R O ON Q. PU 123 STRT NM OMTOWN ST 99999-9999 ssuer s Name M UR UN-SS 1. R ontributions 2. Rollover (other than amounts in boxes ontributions 2-4 and 8-10) $8,585.95 7. Plan Type 0-0000111111; R ssuer s ederal 99-9999999 3. Roth R onversion mount or additional information, please call: 1-800-999-9999 2010 ORM 5498 R ONTRUTON NORMTON opy for Participant PRTPNT S SO NTTON SURTY NUMR 4. Recharacterized ontributions 8. SP ontributions 9. SMP ontributions 10. Roth R ontributions 111-11-1111 und & ccount 0030-0000111111 - 001 5. air Market Value of ccount $0.00 11. heck if RM for 2011 X *1100010* M N O P The und s mailing address ccount registration and address Your Taxpayer dentification ; this information may or may not be masked The und s name The und s ederal Taxpayer dentification Your und and account number (s that may appear to the right of your account number are for RS use only) Shows contributions to your traditional R made in 2010 for 2010 or through pril 15, 2011 for 2010 Shows any rollover made in 2010, including direct rollovers made to an R mount converted to a Roth R ontributions (plus earnings) recharacterized from one type of R to another in 2010 air market value of R account on the last business day of 2010 (fair market value is determined by multiplying the number of shares in your accounts by the net asset values on the last business day of the year) M N O P The type of R account ontributions made to a SP R in 2010 ontributions made to a SMP R in 2010 Shows contributions to your Roth R made in 2010 for 2010 or through pril 15, 2011 for 2010 n x here indicates you must take a required minimum distribution (RM) for 2011 16 17

nswers to ommonly sked Questions Q. Why are my tax-exempt dividend distributions being reported to the RS?. Tax-exempt dividend distributions paid to you in 2010 are required to be reported on orm 1099-NT, even though these distributions may be excludable from your gross income. Prior to 2006, you may have received this dividend information on a Statement of Tax-xempt ividends, which was not filed with the RS. You should also be aware that in some cases the calculation of a mutual fund s income distributions cannot be completed until the end of a fund s fiscal year. Occasionally, these year-end calculations result in reclassifying income distributions made during the year to a different type of income. One possible effect of income reclassification is that income originally thought to be 100% tax-exempt (and thus only reportable on orm 1099-NT) may be reclassified as a type of income that is reported on orm 1099-V. or this reason, the amount of tax-exempt dividends reported in box 8 of orm 1099-NT may be different than the amounts previously reported on your transaction confirmations or periodic statements. f it is necessary to reclassify a tax-exempt dividend distribution, portions of that distribution may be split between orms 1099-NT and 1099-V. or these reasons, you should use only the amounts reported to you on orm 1099-NT and/or orm 1099-V when preparing your income tax return. Q. am taking periodic distributions from my retirement account that are part of a series of substantially equal periodic payments. ow is this being reported to the RS?. Under current RS requirements and guidance for orm 1099-R, payments from a retirement account that are part of a series of substantially equal periodic payments are reportable using distribution code 1 (for shareholders under age 59 1 2) or distribution code 7 (for shareholders over age 59 1 2) in box 7 of orm 1099-R. Previously, these types of payments may have been reported to you and the RS using distribution code 2. f you are under age 59 1 2 you should review the instructions for RS orm 5329 to see if you qualify for an exception to the RS s 10% additional tax that may be imposed in certain circumstances. Q. oes information on my tax forms get reported to the RS?. Yes, tax reporting information is reported to the RS using the appropriate forms. enerally, orms 1099-V, 1099-, 1099-NT, and 1099-R will be reported on or before March 31, 2011 orm 5498 will be reported on or before May 31, 2011. The information on the cost basis statement will not be reported to the RS. Q. What do do if my Tax printed on the form is incorrect?. To change your Tax number please send us a orm W-9 with your correct Tax number. You can obtain orm W-9 at your local post office, online at www.irs.gov or by calling your nvestment Program s toll-free telephone number shown on your tax forms. Q. What is a capital gain?. There are two types of capital gains: apital ain (Personal) results when an individual sells mutual fund shares for a profit and is the difference between an asset s purchase price and selling price. apital ain istribution (Portfolio) results when a net profit is made by the mutual fund in buying and selling portfolio holdings during a given year. The RS considers capital gains distributions from a mutual fund as a taxable activity, even if the shareholder reinvests the proceeds back into the fund. Q. What do need to calculate a cost basis for the mutual fund shares that sold during 2010?. ost basis is the price of an asset used to determine capital gains. f you sold or exchanged shares from your non-money market, non-retirement mutual fund in 2010, you may receive a cost basis statement to assist you in calculating the capital gain or loss that must be reported to the RS. owever, there may be circumstances in which you will not receive a cost basis statement. f you did not receive the cost basis statement and would like to determine your own cost basis, please refer to your statements for each year since the inception of your account. 18 19

nswers to ommonly sked Questions Q. ow are my R contributions reported to the RS?. f you are an R shareholder, orm 5498 will be mailed to you under separate cover no later than May 31, 2011. Q. Will my conversion from a Traditional R to a Roth R affect my tax return?. Yes, converting from a Traditional R to a Roth R is reportable to the RS. Please consult your tax advisor for assistance. Q. Why don t the income amounts on my orm 1099-V or orm 1099-NT match the amounts on my year-end or quarterly statements?. Occasionally, mutual funds determine that income previously distributed to shareholders as one type of income may need to be reclassified into a different category of income for tax reporting purposes. or example, qualified dividend income is not segregated from nonqualified dividend income on your periodic statements, but it is correctly broken out in box 1b on your 2010 orm 1099-V. nother example is if a tax-exempt dividend distribution (normally reported on orm 1099-NT) must be reclassified as a taxable distribution (reported on orm 1099-V). Q. have an rcher Medical Savings ccount/ealth Savings ccount. ow are my contributions and distributions reported to me and to the RS?. ontributions to an rcher Medical Savings ccount or a ealth Savings ccount are reported on orm 5498-S, which will be mailed to account holders no later than May 31, 2011. istributions made in 2010 from an rcher Medical Savings ccount or ealth Savings ccount will be reported on orm 1099-S, which is mailed to account holders no later than anuary 31, 2011. or more information regarding rcher Medical Savings ccounts, please consult your tax advisor or review RS Publication 969 (Medical Savings ccounts). Q. Why does my account number look different on my tax forms when compare it to my periodic statements?. eginning in 2004, the RS has required payers, including mutual funds, to provide a unique payee account number on recipient tax forms and information returns in order to more clearly distinguish between tax forms when more than one tax form is filed by the same mutual fund payer for the same recipient. To do this, we have included an additional sequence number following your account number on your tax forms. f you sold or exchanged your nonretirement account shares more than once in 2010, or had more than one type of retirement account distribution in 2010, this sequence number will be most apparent on orms 1099- or 1099-R. Please be assured that this does not affect your actual account number, which has remained the same, and has no other effect on either your mutual fund account or with the RS. 20 21