You can create fade or dissolve transitions between shots in the Sequencer editor.
The method for creating a transition depends on whether the shots are on multiple tracks or on a single track.
You can create a dissolve transition between shots on the same track using a drag operation.
To create a single-track transition:

A dissolve transition is created between the overlapping shots. You can adjust the length of the transition by sliding the shots along the track.
To create a transition:
The following transition types are available:
Creates a fade to or from black on the selected shot.
Creates a cross-dissolve between the selected shot and the next top-most shot on the track beneath it in the Sequencer editor.