1.3.3 Arrive at Load Return Value and Load Amounts
Arriving at the Return Value
Using the Basis Amount and the Basis Units, the actual applicable return values and load amounts are calculated by the allocation process.
The return value is calculated using the load calculation method defined for the load. This could be Slab Basis, Weighted Average or Linear Interpolation.
For ageing loads, the return value is arrived at by considering the link transaction that is being aged.
- Any allocation loads that were overridden at the time of transaction entry
- Any deals maintained for the unit holder that has entered into the transaction, or for the CIF customer account, for the fund or load group.
- Any return value details maintained for the load in the Load Details record.
Table 1-13 Conditions and Validations
| Conditions | Validations |
|---|---|
| Price-add In for LTP (loaded to price) loads |
If the installation has a price add-in definition, the return value for loaded to price loads is interpreted further using the expression Return Value = b / {1 – b - bc} where b = return value (without the add-in factor), and c = the applicable VAT percentage, if any. The return value that results from the above expression is used as the final return value. |
| Price-add in for NLTP (not loaded to price loads) |
If the installation has a price add-in definition, the return value for loads independent of price is interpreted further using the expression Return Value = b / {1 + b + bc} where b = return value (without the add-in factor), and c = the applicable VAT percentage, if any. The return value that results from the above expression is used as the final return value. |
| Price Add-on for loads |
If the installation has a price add-on definition, the return values arrived at after applying the load calculation method (either Slab Basis, Weighted Average or Linear Interpolation) need not be interpreted further, and are considered the final return values. |
| Arriving at the load amounts |
After the final return values are computed as explained earlier, the load amounts are arrived at by applying the return values as follows: For loads with the return value as a
percentage:
For loads with the return value as an amount:
|
| Capital Gains Tax as an allocation time load |
If the Capital Gains Tax is defined as an allocation time load and is applicable for the transaction, it is applied on the price as follows: The average cost of units held by the unit holder in the fund is calculated. If this is lower than the base price of the transaction (net of all other loads), the CGT is applied on the difference. |
| Load amounts for CDSC loads |
In the case of Contingent Deferred Sales
Charge (CDSC) loads, the loading is based on the
order of computation defined for the fund in the General
Operating Rules, of the following:
For reinvestment units, the load applied is always zero. Loads are applied on units in the other two categories based on the order of processing defined for the fund. |
| CDSC Computation |
FCIS allows you to
compute the Contingent Deferred Sales Charge (CDSC)
in one of three ways;
Refer to the topic Contingent Deferred Sales Charge (CDSC) Computation Method for computation methods on CDSC. |
| Rounding off the load amounts |
For LTP load amounts, the rounding rules defined in the Fund Load Setup for the fund are applied, to arrive at the rounded-off load amount. For NLTP load amounts, the currency rounding rules are applied to arrive at the rounded-off load amount. The VAT amounts are also computed and rounded off as follows: For LTP loads, VAT amount = Vat percentage * rounded-off load amount. The rounding rules defined in the Fund Load Setup for the fund are applied, to arrive at the rounded-off VAT amount For NTLP loads, VAT amount = Vat percentage * rounded-off load amount. The currency rounding rules are applied, to arrive at the rounded-off VAT amount |
| The final load amount |
The final load amount is arrived at by summing the rounded-off load amounts and the rounded-off VAT amounts. |
Applying entry-time loads for outflow transactions
Typically, during allocation of outflow transactions such as redemption, switch out and transfer, when the loads are being computed, the system applies load values that are current at the time of the exit transaction. You can, however, configure the system to apply those load values that were prevalent at the time of initiation of the inflow transaction that is being aged. These are known as entry-time loads. If you have opted for entry-time loads, you would have indicated this in the Transaction Processing Rules for the fund.
For details, refer topic Setting Up Fund Rules II of Fund Setup User Manual.
The example given below illustrates how entry-time loads are applied.
For example, your AMC floats the Citadel Growth Fund, effective from 1st January 2002 (the Rule Effective Date), with the following exit charges:
Table 1-14 Rule Effective Date with exit charges
| Days Slab | Return Value (Percentage) |
|---|---|
| 1 – 30 days | 3% |
| 30 – 60 days | 2% |
| 60 – 90 days | 1% |
| > 90 days | 0% |
Holdings in the fund are aged on a FIFO (first in, first out) basis.
With effect from 1st March 2002, you change the exit charges for the fund, as follows:
Table 1-15 Rule Effective Date with exit charges
| Days Slab | Return Value (Percentage) |
|---|---|
| 1 – 30 days | 2.5% |
| 30 – 60 days | 1.5% |
| 60 – 90 days | 0.5% |
| > 90 days | 0% |
Holdings in the fund continue to be aged on a FIFO (first in, first out) basis.
- Through subscription S1, on 10th January 2002, 1000 units
- Through subscription S2, on 25th February 2002, 2500 units
- Through subscription S3, on 5th March 2002, 1400 units
Mrs. Crenshaw redeems her investment in the Citadel fund to the tune of 1800 units, on 20th March 2002. Since holdings are aged on FIFO basis for the Citadel fund, 1000 units from subscription S1 and 800 units from subscription S2 would be validated for exit fee computation.
Taking the rule effective from 1st March 2002 into account, since it is the current rule, 0.5% exit fees will be applied on S1 and 2.5 % will be applied on the 800 units.
However, Mrs. Crenshaw requests that the exit fees that were prevalent on the date she subscribed into the fund, through S1 and S2, be applied. This would mean applying the exit fees applicable for the rule effective from 1st January 2002 to 1st March 2002. Therefore, 1% exit fees will be applied on S1 and 3% exit fees will be applied on the 800 units of S2.
Again, on 01st April 2002, Mrs. Crenshaw redeems another 2000 units. If she opts for entry time loads, 1700 units of S2 will be redeemed with 2% exit fees and 2.5% of exit fees will be applied on the 300 units of S3, according to the rule effective between 1st January 2002 and 1st March 2002. If she does not opt for entry-time loads, 1.5% exit load will be applied on 1700 units of S2 and 2.5% exit load will be applied on 300 units of S3, in accordance with the rule effective from 1st March 2002.
If entry time loads are being applied as specified in the transaction processing rules for the fund, and the loads are overridden at the time of transaction entry, the overridden load values are applied.
Similarly, if entry time loads are being applied, and a unit holder deal has been specified for the unit holder, the deal values are applied.
Note:
This feature is only available if your installation has specifically requested for it.- Contingent Deferred Sales Charge (CDSC) Computation Method
This topic explains the Contingent Deferred Sales Charge (CDSC) computation methods.
Parent topic: Workflow of Allocation Process