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18.115. Portfolio Turnover Risk

The Investment Compartment’s annual portfolio turnover rate may vary greatly from year to year, as well as within a given year. Portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for the Investment Compartment. A higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by the Investment Compartment. High portfolio turnover may result in an increased realization of net short-term capital gains by the Investment Compartment which, when distributed to common shareholders, will be taxable as ordinary income. Additionally, in a declining market, portfolio turnover may create realized capital losses.