On June 16, 2010, the SEC proposed amendments to Rule 34b-1 under the 1940 Act and Rule 482 under the 1933 Act that would:
require a target date retirement fund whose name includes the target date to disclose the fund’s asset allocation at the target date immediately adjacent to the first use of the fund’s name in marketing materials;
require target date retirement fund marketing materials to include a table, chart, or graph depicting the fund’s asset allocation over time, together with a statement that would highlight the fund’s final asset allocation;
require a statement in marketing materials to the effect that a target date retirement fund should not be selected based solely on age or retirement date, is not a guaranteed investment, and the stated asset allocations may be subject to change; and
provide additional guidance regarding statements in marketing materials for target date retirement funds and other investment companies that could be misleading.
The SEC closed the comment period on August 23, 2010 but did not adopt the amendments. The SEC did, however, engage a consultant to conduct empirical research on individual investors’ understanding of target date retirement funds and marketing materials related to those funds. Investors participating in an online survey were asked questions about, among other things, documents containing information about a hypothetical target date retirement fund, including information that would be required by the proposed amendments, if adopted. The SEC placed the consultant’s report in the comment file for the proposed rule amendments.
The SEC has now decided to re-open the comment period to allow persons to submit comments on the results of investor testing.
Click here for the SEC release.