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

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