Dividend Allocations

[Guest Doug Lawrence]

I hope someone can point out where my thinking is incorrect about this!

The issue concerns a participant transaction in a fund on the record date of a dividend in that fund.

The settlement price for the sell part of the transaction reflects the dividend payment (the price would be lower).

When Relius allocates the dividend, the participant's share balance is less or 0 and the participant receives a reduced or no allocation of the dividend.

For example. Participant owns 50 shares of a fund and the share price on the day before the dividend record date is $150. The price on the record date drops to $125 per share because of the dividend distribution of .20 shares/ share. On the record date, participant requests a transfer of 100% of the fund balance to a different fund. The transaction is processed on the record date. On the settlement date the fund price is $125 and the 50 shares processed are worth $6,250. When the dividend is posted, the participant receives 0 shares because he is treated as having 0 shares.

Am I missing something here? Seems to me the participant just got ?X@!!'d.