Understanding Your Fidelity 2011 Tax Statement

Each year, we send tax statements to the Fidelity brokerage account customers our records indicate are subject to Internal Revenue Service (IRS) Form 1099 reporting. This web guide provides detailed information to help you understand your tax statement.

Tax Statement Highlights

Fidelity has Redesigned Your Tax Statement
Beginning in tax year 2011, the Internal Revenue Service (IRS) expanded the cost basis reporting requirements for the Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. As a result of these IRS requirements, you will receive a newly designed tax reporting statement from Fidelity. Key changes to the statement, which we plan to mail to all account owners no later than February 15, 2012, include the following:

• Additional information presented on Form 1099-B, that last year solely appeared in the Supplemental Realized Gain/Loss portion of the statement
• Presentation of the information in the Supplemental section, most notably in the detailed information sections for Forms 1099-DIV and 1099-INT
• A landscape orientation to help you more easily read the entire statement

Note: You may also access your tax reporting statement on Fidelity.com.

New Cost Basis Reporting Requirements Begin with Tax Year 2011
The objective of the new reporting requirements is to help ensure investors accurately report realized gains and losses on securities sold in their tax statements. As such, the IRS now requires brokerage firms and mutual fund companies, including Fidelity, to report the cost basis and gross proceeds of holdings the IRS classifies as covered securities. We are also required to identify whether the holding period for the security was short-term or long-term in nature. This reporting occurs on the Form 1099-B, which is included in the annual Fidelity tax reporting statement.

Generally, the IRS defines covered securities as follows:

• Stock in a corporation purchased on or after January 1, 2011
• Registered Investment Companies, including open-end mutual funds, and stocks acquired in dividend reinvestment plans purchased on or after January 1, 2012
• Additional types of securities, as determined by the Treasury Department, purchased on or after January 1, 2013

Note: We identify covered securities on Form 1099-B with the letter, P (P=Information provided to the IRS).

Completing Form 1040, Schedule D and the New Form 8949
In continuing with past practices, Fidelity will send customers, and the IRS, tax reporting on the gross proceeds of their brokerage account activities on Form 1099-B. Beginning with tax year 2011, Fidelity will report cost basis information for covered securities as described above on the Form 1099-B. In the past, only customers sent realized gain/loss information to the IRS.

This change in reporting does not mitigate the customer's responsibility to accurately complete all required tax forms, including Form 1040, Schedule D. In fact, the IRS is also asking customers to complete an additional IRS Form 8949, Sales and Dispositions of Other Assets, as part of the process of completing Schedule D. Form 8949 will require taxpayers to report their capital gains and losses in more detail than in previous years. For example, taxpayers must indicate whether cost basis was reported on the Form 1099-B (or that no 1099-B was received).

De Minimis Reporting

Fidelity continues to follow IRS rules governing de minimis reporting. This means that we are not required to send you a tax statement or report to the IRS if the amount on each of the Forms 1099-DIV, 1099-INT, 1099-MISC, or 1099-OID is less than $10.00. However, if you had any reporting on Form 1099-B, in any amount, we will send you a complete tax statement and report the regulatory information to the IRS. We will also send you a tax statement and report to the IRS if there was any 2011 withholding to report on your statement or if any foreign tax paid is reported.

Widely Held Fixed Investment Trusts

Due to IRS reporting requirements, Fidelity has enhanced tax reporting for holders of securities known as widely held fixed investment trusts (“WHFITs”). Generally securities in this category include:

• Mortgage pools (such as securities issued by agencies commonly known as Ginnie Mae, Fannie Mae, and Freddie Mac)
• Unit investment trusts (trusts holding a specified group of stocks, bonds, options, or other assets)
• Royalty trusts (such as trusts holding interests in properties producing gas, oil, or minerals)
• Commodity trusts (such as certain trusts that hold precious metals)
• HOLDRS (certain trusts which hold a specified group of stocks)

For all of these types of securities, we provide your prorated share of gross income and your prorated share of all expenses, as well as information you may need to accurately report sales and resulting realized gains and losses. For example, this means that we provide your share of all expenses incurred by the trust and your share of all income received by the trust before the trust has made any deductions for expenses. Throughout this guide, when applicable, we will describe how this information appears on your tax reporting statement.

Mortgage Pool Securities Information — We also wish to advise holders of mortgage pool securities, such as Ginnie Maes, Fannie Maes, and Freddie Macs, that we may mail you additional account tax information in a separate Mortgage Pool Statement by March 15th. Due to IRS deadlines, Fidelity does not receive this information in time to include it in your consolidated tax statement. This additional mortgage pool information may make it necessary for us to also send you a corrected tax form.

Royalty Trust Information — Also by March 15, if you owned a royalty trust, Fidelity may mail you additional information relayed to us by the trust. You may find this information useful as you complete your tax returns.

Transferred Accounts

If your account was transferred to Fidelity from another brokerage or clearing firm during 2011, your Fidelity tax statement will only include activity from the time you started conducting business with us. Your former brokerage or clearing firm should provide Forms 1099 and any other applicable tax reporting forms for 2011 activity that occurred prior to the transfer.