I answer one question and I get six more.

Last week I wrote a column explaining how the new Nasdaq 100 tracking stock (QQQ:AMEX - news) works. As I have explained before, this trust lets you invest in a collection of stocks -- the Nasdaq 100 -- through a single share of a unit investment trust. But this vehicle is different from other UITs -- or mutual funds for that matter. The shares trade on the American Stock Exchange throughout the course of each trading day, just like a stock.

I covered most of these details in last week's piece, but obviously I left some ground uncovered. I received a handful of questions that were all worth answering. So let's take another look.

Buying Units

You buy units or shares of the trust through a broker, like you would a stock. It costs whatever your broker charges.

The commission you pay will vary depending on the type of broker you use. You certainly can count on paying more if you are using a full-service broker.

Cost of Administering Trust

Normally expenses come out of the dividends. To the extent that dividends don't cover these expenses, the money will come out of the trust, says Michael Bickford, senior vice president in derivatives research and marketing for Amex. Since the trust doesn't carry cash, it would have to sell some securities.

Doesn't this mean that QQQ shares will lag the index over time?

As I said above, if the dividends don't cover the expenses, the money will come out of the trust. As a result, "there will be slippage," says Bickford. Slowly but surely, the trust will lose assets to the expenses, which will result in a performance difference between the underlying index and the tracking stock. "There should be a small effect," says Bickford.

How are Shares Priced?

"Yes to both," says Bickford.

The price of the Nasdaq 100 tracking stock does trade on supply and demand in the market -- again, just like a stock -- but the shares should track the performance of the underlying index, which is reflected in the net asset value, or NAV.

Closed-end funds can trade at discount or a premium, but the Nasdaq 100 tracking stock is quite different. For the QQQ shares, a process exists that allows investors to arbitrage any price difference that might occur between the NAV and share price. The process should keep the two in line with one another. (For more details, see a previous Fund Forum .)

The price of a QQQ share won't always be the same as the NAV of the trust. "Imbalances will happen," says Bickford. Think of it this way: "It is easier for one security to react to a news event than 100.".

You will see points in time when investors express an opinion in the QQQ shares, while the underlying index takes time to catch up. "But it comes pretty fast," Bickford adds.

Trading Places

The Nasdaq 100 tracking stock trades in the specialist auction market rather than the Nasdaq market, even though it's a Nasdaq product. This surprised one reader.

The Nasdaq and the American Stock Exchange recently merged to form the Nasdaq-Amex Market Group. The intent before the merger was to trade the QQQ shares on the Nasdaq. But the Amex already offered several products similar to this Nasdaq 100 product, such as its array of Standard & Poor's Depositary Receipts (known as SPDRs, or Spiders).

It made sense for the Nasdaq 100 product to trade on the Amex with other similar products. "That was the reason why the product began to trade here," says Bickford.

Splits

What happens when a Nasdaq 100 stock splits?

Some events will affect the trust, and some won't. With a market-capitalization-weighted index like the Nasdaq 100, a split doesn't affect it.

Send your questions and comments to fundforum@thestreet.com, and please include your full name.