Beginning with this tax statement, National Financial Services LLC (NFS) is adopting IRS rules regarding de minimus 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 2009 withholding to report on your statement or if any foreign tax paid is reported. All statements, including statements that were not mailed due to de minimus reporting rules, will be viewable online.

Due to IRS reporting requirements, NFS 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 new information appears on your tax reporting statement.

We also wish to advise holders of mortgage pool securities, such as Ginnie Maes, Fannie Maes, and Freddie Macs, that we may not have provided all mortgage pool information for this tax year on your consolidated tax statement. We may mail separate Mortgage Pool Statements to you by March 15^th. Due to IRS deadlines, NFS does not receive this information in time to include it on your consolidated tax statement. It is also possible that the information in this statement may require us to subsequently send you a corrected tax form.

Also by March 15, if you owned a royalty trust, NFS may mail you additional information relayed to us by the royalty trust. In the past you would have received this booklet directly from the trust. Due to the IRS reporting requirements, we must now print and mail those booklets.

As part of NFS's enhancements designed to assist customers trading on foreign exchanges and in foreign currencies, we have enhanced our tax reporting. For example, if you sold a security in a currency other than U.S. dollars (USD), the Realized Gain/Loss sections now provide both the foreign currency proceeds and the USD equivalent of those foreign currency proceeds (as of the trade date of the sale) in the "Proceeds" column. Similarly, if you had previously purchased a security in a currency other than USD, the Realized Gain/Loss sections now provide both the foreign currency cost and the estimated USD cost basis (determined based on the USD equivalent of the foreign currency cost as of the trade date of purchase) in the "Cost Basis" column.

In addition, a new supplemental Currency Realized Gain/Loss section provides realized gain or loss information for certain transactions in which a customer disposed of foreign currency. Those transactions are exchanges of foreign currency for USD, exchanges of foreign currency for another foreign currency, and exchanges of foreign currency for a security.

See the following descriptions of the Short Term Realized Gain/Loss, Long Term Realized Gain/Loss, and Currency Realized Gain/Loss sections for more information.

• How do I determine which of the dividends reported as qualified dividends on Form 1099-DIV are eligible to be taxed at one of the lower federal long-term capital gain tax rates of 15% or 0%?
  
  
• Which mutual fund dividends do not qualify for the lower tax rates?
  
  
• Do I use trade date or settlement date when determining my holding period for sales?