load-balance of etherchannel in Cat3550

i don't understand the following explanation. what does this mean?

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http://www.cisco.com/en/US/tech/tk389/tk213/technologies_tech_note09186a0080094714.shtml#cat2950_3550

For the 3550 series switch, when source-MAC address forwarding is used, load
distribution based on the source and destination IP address is also enabled for
routed IP traffic. All routed IP traffic chooses a port based on the source and
destination IP address. Packets between two IP hosts always use the same port in
the channel, and traffic between any other pair of hosts can use a different
port in the channel.

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For traffic being switched, it will use the src-mac.

For traffic being routed, it will use source and destination IP.

Anyone correct me if I am wrong.

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