TAX NEWS - 2010

SEC Proposes New Measures to Help Investors in Target Date Funds

Washington, D.C., June 16, 2010 — The Securities and Exchange Commission today voted unanimously to propose rule amendments to help clarify the meaning of a date in a target date fund's name and enhance the information provided to investors in these funds as they invest for retirement.

Target date funds are designed to make it easier for Americans to invest for retirement by providing the simplicity for which many investors yearn. They've been marketed as a "set it and forget it" approach to investing. The name of these funds usually includes a date that represents the year in which the investor intends to retire.

The rule changes proposed by the SEC would enable investors to better assess the anticipated investment glide path and risk profile of a target date fund by, for example, requiring graphic depictions of asset allocations in fund advertisements. The rules also would require an asset allocation "tag line" adjacent to a target date fund's name in an advertisement.

"These proposed rule changes would help clarify the meaning of the date in a target date fund and improve the information provided when these funds are advertised and marketed to investors," said SEC Chairman Mary L. Schapiro. "Together these rule amendments are designed to foster investor understanding of target date funds and reduce the possibility that investors will be confused or misled."

Last month, as a first step to address potential investor misunderstanding of target date funds, the SEC issued an Investor Bulletin jointly with the Department of Labor explaining target date funds and various aspects that an investor should consider before investing in one.

The Securities and Exchange Commission is seeking public comment on the rule amendments proposed today for a period of 60 days following their publication in the Federal Register.