Series 6 Mutual Fund Cheat Sheet
- April 1, 2025
- Posted by: 'FINRA Exam Mastery'
- Category: Finance
Series 6 Mutual Fund Cheat Sheet
Mutual funds are a core topic on the Series 6 exam, making up a significant portion of both product knowledge and suitability-based questions. This cheat sheet gives you a fast, organized reference to the most important mutual fund concepts, structures, fees, and sales rules you must know before exam day.
📦 What Is a Mutual Fund?
A mutual fund is a professionally managed investment company that pools money from investors to buy a diversified portfolio of securities.
| Feature | Details |
|---|---|
| Structure | Open-end investment company |
| Pricing | Based on NAV (Net Asset Value), calculated at market close |
| Liquidity | Shares are redeemed by the fund—not traded on secondary markets |
| Management | Active or passive portfolio management |
| Diversification | Built-in—spreads risk across assets |
💵 Share Classes & Fees
| Class | Sales Charge Type | Best For |
|---|---|---|
| A Shares | Front-end load | Long-term investors |
| B Shares | Back-end (CDSC); converts to A | Intermediate-term investors |
| C Shares | Level load (ongoing fees) | Short-term investors |
| No-Load | No sales charge, may have 12b-1 fees | Cost-conscious investors |
Note: 12b-1 Fees are marketing/distribution fees, capped at 1% annually.
🧮 Net Asset Value (NAV) Formula
NAV=Total Assets – LiabilitiesNumber of Outstanding Shares\text{NAV} = \frac{\text{Total Assets – Liabilities}}{\text{Number of Outstanding Shares}}
- Calculated once per day after market close
- Public Offering Price (POP) = NAV + sales charge (for load funds)
🛡 Suitability Questions – What to Know
Be ready to recommend mutual funds based on investor profile:
| Investor Profile | Recommended Share Class |
|---|---|
| Long-term horizon, large investment | A Shares (lower ongoing cost) |
| Moderate horizon, unsure of timeline | B Shares |
| Short-term needs or small investment | C Shares |
| Cost-sensitive, fee-averse | No-load fund |
📜 Important Regulations & Disclosures
- Prospectus Delivery: Must be delivered before or at the time of sale
- Breakpoint Discounts: Available for A shares at certain investment levels
- Breakpoint Sales: Prohibited practice—failing to inform clients of discounts
- Letter of Intent (LOI): Client plans to invest enough to qualify for a breakpoint within 13 months
- Rights of Accumulation: Allow investors to use prior purchases toward breakpoint eligibility
🔁 Mutual Fund Exchanges
- Exchanges between funds within the same family are not taxable if done in a retirement account.
- Still may trigger capital gains in a taxable account.
📌 Must-Know Terms for the Exam
- NAV
- POP
- 12b-1 Fee
- Load vs. No-Load Fund
- LOI (Letter of Intent)
- Rights of Accumulation
- Breakpoint / Breakpoint Sales
- Class A, B, C Shares
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