A Transaction is any activity which affects a mutual fund.

A transaction,, as far as you are concerned, occurs when WSS moves a stock from one fund to another, removes a stock from a fund, or adds a stock to a fund. An IPO falls into the latter category.

No single event, with the exception of stock splits, has more effect on a mutual fund than does a transaction. If the price of an added player's stock is less than the fund price, the new fund price will drop, and vice versa. If the price of the removed player's stock is less than the fund price, the revised fund price will be higher, and vice versa. Determining the extent of the change in revised price is the key to profiting from transactions, or at least, to avoid a loss.

Tip:Typically, an IPO will have a negative effect on a Mutual Fund, as most IPO's are around $25-$30, while the fund prices are well above that.

Tip: If there is an IPO or Stock Split coming for a fund you own, sell the mutual fund just prior to it, and re-buy if you are so inclined.

Transactions occur, or register, at 4:30pm Eastern Time Monday through Friday, and are posted on the Transactions page at WSS.

Tip: Buy a mutual fund that is going to benefit from a transaction just after 4:00 pm Eastern Time, then sell just after 4:30 pm, to maximize your gain and to eliminate the 4:00 reset tax which occurs, should you otherwise own the stock prior to then.

To calculate the effect of a transaction on a mutual fund, you will need to perform a couple simple mathematical operations. Here is what I do:

I will use the simple example of a single player moving from one fund to another.

1. I first check the Market Listings page at WSS to see the current prices of (A) the player involved and (B) the involved Mutual Funds.
2. Next, I check each Mutual Fund involved to see how many players are in each fund PRIOR to the transaction occurring.
3. The number of players currently in a fund times the current price of the fund equals the Pre-Transaction Value (PTV) of the Fund. So, I take the PTV of the fund he is leaving, and subtract the player's stock price to get the After-Trade Value (ATV) of the fund.
4. I divide the ATV by the revised number of players in the fund to get the After-Transaction Price.The difference divided by the Pre-Transaction Price is the percentage change (%).
5. I repeat the process for the New Fund.