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One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and...

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One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and 40% ABC Bond Fund. Since equities were performing much better than fixed income, he had increased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABC Bond Fund to 30% of his portfolio.

After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh is uncomfortable with this heavy exposure to equity funds and decides to rebalance his portfolio back to 60% of ABC Equity Fund and 40% of ABC Bond Fund.

He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC Bond Fund.

Which of the following statements is CORRECT?

A.

Rakesh will not be subjected to a switch fee if it is outlined in the prospectus.

B.

Rakesh will not be subjected to a switch fee if his equity fund is a no-load fund.

C.

Rakesh will not be subjected to a switch fee if his original units were purchased with a sales charge.

D.

Rakesh will not be subjected to a switch fee if his equity fund is a low-load fund.

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