We investigate the interplay between topological charge and the spectr
um of the fermion matrix in lattice QED(2) using analytic methods and
Monte Carlo simulations with dynamical fermions. A new theorem on the
spectral decomposition of the fermion matrix establishes that its real
eigenvalues (and corresponding eigenvectors) play a role similar to t
he zero eigenvalues (zero-modes) of the Dirac operator in continuous b
ackground fields, Using numerical techniques we concentrate on studyin
g the real part of the spectrum. These results provide new insights in
to the behavior of physical quantities as a function of the topologica
l charge, In particular we discuss the fermion determinant, the effect
ive action and pseudoscalar densities. (C) 1997 Elsevier Science B.V.