A small yearly share while the investor stays invested. Trail is ongoing and modest, aligned with keeping investors invested.

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Getting funds to investors · 6 min

How a distributor earns

Q: A distributor is mainly paid through:

A trail commission from the AMC. Trail commission from the AMC is the main model, paid while the investor stays.

Q: Passing commission back to the investor to induce a sale (rebating) is:

Not allowed. Rebating is prohibited under the code, whether disclosed or not.

Q: Distributor commission must be:

Disclosed to the investor. Disclosure of commission is a core conduct rule.

Commission, done right

Money shapes behaviour, so the exam checks you understand how a distributor is paid and the lines around it. The short version: mostly trail, always disclosed, never rebated.

1
A distributor is paid a commission by the AMC, mostly as trail: a small yearly share while the investor stays invested.
2
Commission must be disclosed to the investor. Hiding it breaks the code.
3
Passing part of the commission back to the investor as an inducement, called rebating, is not allowed.
4
Because pay is mostly trail, keeping investors happy and invested is what earns over time.

Rupee example

A distributor earns a little each year the money stays invested, so good service and the right fit pay better than a quick sale.

Practice

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Real exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.

A distributor is mainly paid through:

Trail commission from the AMC is the main model, paid while the investor stays.

SEBI does not pay distributors, and selling data is not a thing here.

Trail commission is:

Trail is ongoing and modest, aligned with keeping investors invested.

Upfront lump sums have largely been discontinued.

Passing commission back to the investor to induce a sale (rebating) is:

Rebating is prohibited under the code, whether disclosed or not.

It is never allowed as an inducement.

Distributor commission must be:

Disclosure of commission is a core conduct rule.

It is not secret, RBI-approved, or uniform across funds.

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NISM V-A syllabus

1 The investment landscape 2 What a mutual fund really is 3 How a fund is built 4 Who watches over it 5 The offer document, decoded 6 Getting funds to investors

The ways to invest Where a distributor fits How a distributor earns

7 Selling the right way 9 NAV, loads and the daily price 10 Types of schemes, and picking one 11 Return, risk and performance 12 How gains are taxed 13 Serving the investor See the full roadmap →

How a distributor earns

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NISM V-A syllabus

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