Which of the following statements regarding the performance of a mutual fund would be permitted under current rules?

By Investopedia AAA
A:

A) Income and safety-oriented investors need look no further than the Muscat GNMA fund. Since the only investments held by the fund are GNMA certificates and short-term T-Bills, the fund is government-guaranteed for safety.

B) If an investor made a one-time deposit of $10,000 in the LIB Aggressive growth fund 5 years ago, and reinvested all dividends and gains, the total value today would be $26,230.75.

C)
The Fantastic Growth Fund has been paying regular dividends and capital gains for the past 6 years. Those who invest now may look forward to continued distributions from the fund in the future.

D) The XY Fund has been producing an average of a 15% total return for the past five years. If a person invested $10,000 today, in five years the total value of the investment would be approximately $21,000.






The correct answer is B.

A mutual fund may only use past performance in illustrations or presentations. Representations regarding future performance based on the fund's past performance are prohibited.



RELATED FAQS

  1. What are the risks involved in keeping my money in a money market account?

    Setting aside funds in a money market account can be a safe investment strategy, but investors should be aware of the risks ...
  2. Does it make sense for me to have a money market account if I don't want to buy any ...

    Saving funds within a money market account or mutual fund does not have to be limited to those wanting to buy or sell securities ...
  3. How much of my total assets should I be keeping in my money market account?

    Investing a portion of total assets in a cash position such as a money market account provides investors access to funds ...
  4. Why would you keep funds in a money market account and not a savings account?

    Read about the differences between money market accounts and savings accounts, and see why a depositor would elect a money ...
RELATED TERMS
  1. Historic Pricing

    A method for calculating the value of an asset using the last ...
  2. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  3. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  4. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  5. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
  6. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...

You May Also Like

Related Articles
  1. Stock Analysis

    Why This Bond Fund Should Be in Your ...

  2. Stock Analysis

    Is PIMCO's Commodity Strategy (PCRDX) ...

  3. Stock Analysis

    Time to Look at PIMCO's Total Return ...

  4. Economics

    Gary Gordon Positions Your Portfolio ...

  5. Professionals

    A Look At Pimco's Total Return Fund ...

Trading Center