An investor purchases $10,000 worth of Series A mutual fund units on January 15, 2023, while the DSC purchase option was prohibited. On March 10, 2024, they decide to redeem $5,000 worth of these units. What would be the associated sales charge on the redemption?

Question: An investor purchases $10,000 worth of Series A mutual fund units on January 15, 2023, while the DSC purchase option was prohibited. On March 10, 2024, they decide to redeem $5,000 worth of these units. What would be the associated sales charge on the redemption?

Answer options:

• A deferred sales charge of approximately $250 (5% of $5,000).
• A flat redemption fee of $50. ✅ No sales charge or redemption fee, as DSC options are prohibited for new purchases.
• A short-term trading fee, if the fund has one, but no DSC.

Correct answer: No sales charge or redemption fee, as DSC options are prohibited for new purchases.

Explanation: As of June 1, 2022, new purchases into mutual funds with DSC options are prohibited under CIRO MFD rules. Therefore, any units purchased after this date would not be subject to a deferred sales charge upon redemption.