From June 2013 to August 2014, NAB offered the NAB Annuity Term Deposit to retail investors, including people who had retired or were approaching retirement, ASIC said.
The PDS, dated 17 June 2013, contained statements about the investment return on the NAB Annuity Term Deposit, said ASIC.
"ASIC was concerned the statements may have misled consumers by representing that the interest rate, known in the PDS as the 'Fixed Interest Rate', was calculated on the entire principal amount invested," ASIC said.
"In reality, the rate only applied to the balance of the principal which reduced throughout the term of the investment."
"ASIC will continue to take action where we believe entities are not accurately promoting the product they offer," ASIC deputy chairman Peter Kell said.
ASIC's concerns led to NAB issuing a new PDS and promotional materials.
"The payment of an infringement notice is not an admission of a contravention of the ASIC Act consumer protection provisions," ASIC said.
"ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws."