Re: Exchange of Mutual Fund Shares

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In Reply to: Re: Exchange of Mutual Fund Shares posted by Glenn Golden on November 24, 2004 at 12:11:33:

: : : Mark:

: : : I have some (but not all, due to different purchase dates) Class B shares in an AIM fund that automatically convert to Class A Shares. How do I record the exchanges. I do not believe the Split function is the answer. The specific details are as follows on one of the transactions:

: : : AIM Select Equity Partial Exchange
: : : From Class B to Class A Shares
: : :
: : : Per Share Quantity Value
: : : Class A 7/26/2002 $11.82 225.47 $2,665.06
: : :
: : : Class B 7/26/2002 $10.75 247.91 $2,665.03 $25.6616

: : : Cost Basis (Avg Method)of B Shares Exchanged $6,361.77

: : :
: : :

: : Hi Glenn,

: : I didn't quite follow the specifics? Do you have your Class B shares in
: : a different investment file from your Class A shares? It sounds like
: : your Class B shares got converted to Class A shares, and you got a different
: : number of Class A shares in exchange for your Class B shares? If so, that
: : would be handled like a merger, where you record a split, and change the
: : name/symbol.

: : Was your table showing what you had before in B, and what you ended up with in
: : A? If so, why do you have an extra value on the "B" line?

: : Thanks,
: : Mark
: : --
: : Mark Beiley
: : Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP/2003
: :

:
: Mark:

: Only SOME of the B shares, not all, were exchanged for A Shares. Therefore, I need a new file for the A shares. Additionally, the cost basis info needs transferred over as well. That is why the extra value is on the "B" line. It is the cost basis of the Class B shares exchanged for A Shares. My problems are:

: 1) When shares are exchanged they utilize a carryover cost basis and holding period for tax purposes.
: 2) There was a difference in the number of shares exchanged to the NAV of the funds being different. Split or merge function does not appear to solve my problem.
: 3) I initially recorded it as a sale, but for purposes of the Gain/Loss report, I do not want to show a sale of something that wasn't sold.
: 4) I would presume that numerous FundManager users make this or similar type exchanges on a regular basis. Specifically, tax free exchanges of B shares to A. Or, exchanges of funds within a fund family. I am suprised there is not a more efficient method to handle these type of transactions.

: Hope this gives you a better idea of my problem.

: Thanks for any further assistance.

: Glenn

Hi Glenn,

If all of your shares had been transferred, then a split/merger would
seem appropriate. Can you break apart your investment into 2 investments,
one that was exchanged, and one that you still own? This way you could
use the split/merger method on only the 1. I believe exchanges seem to most often happen
on a whole investment, not just some shares, which is why the split/merger
method usually works fine.

Thanks,
Mark
--
Mark Beiley
Fund Manager, portfolio management software for Windows 95/98/ME/NT/00/XP/2003

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