FYI: The Division of Investment Management has warned funds to verify the accuracy of their performance and fee disclosures prior to filing them with the SEC and providing them to investors. The warning was prompted by several disclosure issues observed by the staff, including funds:
- failing to reflect sales loads in the fund’s average annual returns table.
- making other performance errors in prospectuses, such as showing negative performance as positive and transposing performance of share classes or multiple indexes.
- incorrectly showing net expenses that exceed gross expenses in the expense table, resulting from the inaccurate reflection of fee waiver recoupments paid to the adviser as a positive fee waiver.
- failing to disclose the appropriate amount of Acquired Fund Fees and Expenses when a fund invests in other funds.
- failing to correctly calculate the expense example.
- failing to correctly tag the Risk/Return summary in XBRL. (Here, the staff reminded funds that tagged data carries the same liability as the related official filing.
Performance and Fee Issues (ADI 2019-09): https://www.sec.gov/investment/accounting-and-disclosure-information/performance/adi-2019-09-performance-and-fee-issues.
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