Answer: All portfolios with the same investment mandate are aggregated into a composite.

**Explanation:** - **Option A** is incorrect because the GIPS standards require that only fee-paying discretionary accounts managed by the firm must be included in at least one composite. Non-discretionary portfolios, even if fee-paying, should not be included in the composites. - **Option B** is correct. According to the GIPS standards, a composite is defined as an aggregation of one or more portfolios managed under a similar investment mandate, objective, or strategy. This ensures consistency and comparability in performance reporting. - **Option C** is incorrect because the GIPS standards mandate that the inclusion of portfolios in a composite should be based on pre-established criteria (ex-ante basis), not on actual performance. Basing it on performance would require aggregation after the fact, which is not compliant with the standards.

Author: LeetQuiz Editorial Team