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year. It is quite possible that fund still holds 80% of its original securities but replaced 20% of its portfolio enough times to reach the 200% turnover rate. Turnover rates by themselves may seem inconsequential to investors as long as the fund is delivering on its objectives. However, high turnover rates could have tax consequences due to higher distribution amounts (see Distribution). Some investors may not be comfortable with funds having high turnover rates. Remember that the turnover rate stated in the prospectus is historical. There are no promises that the fund will have the same turnover rate in the future but there a is good chance that it would.

Distribution - Most funds from time to time distribute cash to their investors. This could be in the form of income paid out regularly or in the form of capital gains paid out once or twice a year. This is important information to consider for an investor as it may have tax consequences. We will cover fund distribution a bit later.

Management - The prospectus also has information about who manages the fund. Just about all funds have a fund manager assigned by the investment company offering the fund. The fund manager could be thought of as the boss of the fund who makes final decisions on the fund's strategies and activities. The fund manager may not necessarily be a person. It could be another company that specializes in managing mutual funds, but even so there is most likely someone at the top who calls the shots. A fund manager usually has a team of professionals that assist her in making decisions about the fund. Moreover, a fund's board of trustees may see fit to hire outside advisers to help with parts of the fund's portfolio. For example, if the fund's portfolio contains foreign stocks, an adviser (which could be a company) with foreign stock proficiency may be retained to help with that portion of the fund. There are usually short biographies included on the key people or companies that help manage the fund. While not all investors may be interested in …