: Making sense of mutual fund returns Looking at a mutual funds returns, sometimes I see a 5 year return of 20% and 1 year return of 100% (both annualized). Does that imply that the growth was 0 in the year n-5 to n-1, and

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A 5-year annualized return of 20% means that, if the returns in each year were a, b , c, d, e, then a*b*c*d*e = (1.2)^5 = 2.488.... A 1-year return of 100% means e = 2. So all you know is that a*b*c*d = 2.488/2 = 1.244 --- that is, that the total (non-annualized) return over the first four years combined was about 24%. You don't know what ups and downs happened in which years.

Four years of 0% returns followed by a year of 100% return would not result in a 20% annualized return over five years, because annualized returns use the geometric mean, not the arithmetic mean (see here for instance). That pattern of returns would give (1*1*1*1*2)^(1/5) = 1.148..., or an annualized 5-year return of about 15%.