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Let's say I have 100 shares of an actively managed mutual fund (this is hypothetical <g>). Each share is worth $10. Over the course of a year, I do not buy or sell any shares of this fund. There are no dividends, capital gains are not reinvested, and (amzingly) the value of all the fund's holding stay exactly the same (with one exception).

However, the fund sells one of the stocks in it's holdings, and generates $1 per fund share in capital gains. Thus, I get a check for $100, and I obviously have to pay taxes on these.

Now, let's pretend that instead the fund generates $1 in "losses" per fund share through internal turnover. Thus, there are $100 in "capital losses". Is this meaningful in anyway? It doens't really seem like a capital loss in the usual sense, but I don't recall seeing anything about it anywhere.

I do realize that if I personally buy or sell shares in a fund, I get the losses/gains from those. I'm asking about trades that are internal to the mutual funds.

Thanks!

--Jesse
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