This case relates to CFA Institute Standard III(D): Performance Presentation, which states that CFA Institute members must make a reasonable effort to ensure that investment performance information is fair, accurate, and complete. Although the performance information presented by Jergens is calculated correctly and includes technically accurate data, Jergens’ failure to indicate clearly that the performance data applied to a period prior to registration of the VIM fund as a CIS had the potential to mislead investors into believing that the CIS fund had a long track record. To meet the “fair, accurate, and complete” requirement of the standard, Jergens should disclose that the 2010–16 performance history was that of a prior but similar entity and that the VIM fund, as a CIS, has been in existence only since 2017. Performance can be presented either net or gross of fees, as long as there is sufficient disclosure to inform investors about how the performance is calculated and what affect fees may have on the return figures. It is not inappropriate to present performance of a fund, account, or composite of accounts when the managers have changed, as long as the change of investment personnel during the period being presented is disclosed. Choice B is the best answer.
This case is based on an April 2018 Enforcement Action by the South African Financial Sector Conduct Authority.