Commonly if mutual funds are "exchanged" within the same fund family - fund manager is burying a poor-performing fund or your shares are exchanged for shares within the same fund but with a different class - those sort of exchanges are usually tax-free and your basis simply carries over to your new shares. But "cashing out" a fund is always a sale and needs to be reported on your income tax return.
You should receive a 1099-B from the fund manager for all sales. Whether you "owe taxes" or not depends on whether you report a gain or a loss.
