1.3.3.1 Contingent Deferred Sales Charge (CDSC) Computation Method

This topic explains the Contingent Deferred Sales Charge (CDSC) computation methods.

You can define the CDSC computation method while designating the rules that will govern the operation of the fund in the General Operating Rules screen. In addition, you can also specify whether the holding period should be considered while calculating the age of investments during computation of Contingent Deferred Sales Charge.

CDSC Calculation Method - LOCOM

If CDSC calculation method at Fund level is selected as LOCOM, Contingent Deferred Sales Charge is computed as follows:

• The price associated with the transaction (subscription, Reinvestment or Switch-In transaction) is obtained and the transaction is aged to the redemption transaction under consideration.
• The least of the subscription, Reinvestment or Switch-In transaction and the Redemption Base Price to calculate CDSC chargeable to the Unit holder.

L = Least of subscription, Reinvestment or Switch-In transaction Price and the Redemption Base Price

Market Appreciated Units is calculated using following formula:

((Redemption Base Price – L) / (Redemption Base Price)) * Redemption Units

Normal Units would be calculated using following formula:

Redemption Units – Market Appreciated Units

CDSC Calculation Method - Inheritance Fee Structure

Contingent Deferred Sales Charge (CDSC) is computed based on the Inheritance Fee Structure as follows:

• If the Fund ID and Rule Effective Date associated with first subscription for a unit holder are available for a transaction which is aged against the redemption, system uses CDSC load details available for the Fund ID and Rule Effective Date.
• If Fund ID and Rule Effective Date associated with first subscription for a unit holder are not available for a transaction which is aged against redemption, system uses the CDSC load details available for Redemption Fund.
• Load Computation will then be carried out using existing computation methods.

CDSC Calculation Method - Class B

If CDSC calculation method at Fund level is selected as Class B, Contingent Deferred Sales Charge is computed as follows.

During computation of allocation, CDSC fees is picked up based on the Dealing Date of the Redemption, whichever slab it fits into.

For example, CDSC Fee Structure for Schroder Guaranteed Return Fund VIII (Class B) 006- 120802-479 is as follows:

Table 1-16 Dealing Days between the following Period

From	To	CSDC Rate
02-Nov-02	01-Nov-03	2.85%
02-Nov-03	01-Nov-04	2.25%
02-Nov-04	01-Nov-05	1.65%
2-Nov-05	01-Nov-06	1.05%
02-Nov-06	01-May-07	0.45%
Maturity	Maturity	0%

Based on the CDSC Fees the Dealing Price would be calculated by the following Formula:

Dealing Price = TRUNC (Redemption Base Price – (Price for Investment in IPO/Subscription Period * CDSC Fee% derived from above Table), Rounding Precision for NAV from General Operating Rules)

The Round Of Truncate for this calculation will be always Truncate and number of decimals will be equal to the number of decimals specified for NAV in the General Operating Rules screen. This Price will also be stored as Allocation Price.

CDSC Fees will be calculated using the following Formula:

CDSC Fees = ROUND ((NAV-Dealing Price)* No. Of Units Redeemed, No. Of Decimals from Fund Load)

The RoundOfTruncate for this Fund Load will be R and No. Of Decimals will be 2.

If CDSC calculation method at Fund level is selected as redemption value, then while computing Contingent Deferred Sales Charge the system will always consider the free shares first. Only once the free shares get exhausted the system will consider the other transactions on FIFO basis.