An investor owns a mutual fund purchased in May 2021 with a Deferred Sales Charge (DSC) option. If the investor decides to redeem this fund in July 2023, what will be the implication for the DSC charge?

Question: An investor owns a mutual fund purchased in May 2021 with a Deferred Sales Charge (DSC) option. If the investor decides to redeem this fund in July 2023, what will be the implication for the DSC charge?

Answer options:

• No DSC will be charged because new DSC sales are prohibited as of June 2022. ✅ A DSC will be applied according to the original schedule, as the purchase occurred before the ban.
• A flat 1% redemption fee will be applied regardless of the original schedule.
• The investor will be eligible for a full rebate of any previously paid DSC.

Correct answer: A DSC will be applied according to the original schedule, as the purchase occurred before the ban.

Explanation: The DSC ban applies to new purchases made on or after June 1, 2022. For funds purchased before this date, the original DSC redemption schedule remains in effect, meaning a DSC would still be applicable if redeemed within the charge period.