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Formula sheet/NISM Series V-A: Mutual Fund Distributors/Fund Distribution and Channel Management Practices
[ FUND DISTRIBUTION AND CHANNEL MANAGEMENT PRACTICES ]

Daily Trail Commission Calculation

Daily Trail Commission=[Daily AUM Mobilised×(Annual Trail Commission Rate/365)]\text{Daily Trail Commission} = [ \text{Daily AUM Mobilised} \times (\text{Annual Trail Commission Rate} / 365) ]
Variables

Daily AUM: Units held by investor × Current day's NAV; Annual Trail Rate: Agreed commission % p.a.

Exam note

AMCs follow a full-trail commission model in all schemes. Upfront commission and investor transaction charges are strictly banned.

Worked example
Daily Trail Commission Calculation for MFDs

An MFD mobilises Rs 10 Lakhs in an equity mutual fund scheme on 1st August when the NAV is Rs 10.0000 (1,00,000 units allotted). The agreed annual trail commission rate is 1.00% p.a. If the scheme NAV rises to Rs 10.1522 on 10th August and falls to Rs 9.8527 on 22nd August, calculate the daily trail commission on both dates.