The Securities and Exchange Commission voted 5 to 0 last week to require target-date funds to do a better job of explaining the purpose of their retirement date, how their asset allocation glide paths change over time and, in a new twist, to include easy-to-understand visuals in ads.

"Many individual investors are understandably overwhelmed by multiple investment choices and increasingly complex investment products," the SEC's chairman, Mary L. Schapiro, said.

The disclosures are designed to better illuminate target-date funds for investors, in light of target-date funds' status as the primary defaults for 401(k) plans.

The disclosures also reflect the market crash of 2008, which was behind a 41% decline in one 2010 target-date fund, the Oppenheimer Transition 2010 Fund, for example.

"Target-date funds are designed for investors who do not routinely monitor market movements or realign personal investment allocations," Schapiro said. "However, the experience of 2008 revealed that target-date funds did not perform as many retail investors expected."

SEC analysis has shown target-date-fund equity performance, over the life of their investments, to date to range from 20% to 65%.

"Given the variability of returns of target-date funds in 2008, and again in 2009, it is clear that investors need more information than just the date in a fund's name. They need to connect in order to evaluate what the date means and what the fund's projected investment glide path is," Schapiro said.

The new requirement to explain the purpose of the target date is simply whether that year is the retirement goal or 20 to 30 years of living beyond that time. By requiring investment advisers to do a better job of explaining a fund's holdings, asset allocation strategy and investment philosophy, the goal is to better meet an investor's conservative, moderate or aggressive expectations.

The "tag line" proposal, for instance, would permit an investment advisory firm to say "40% to 45% in equity." Also, the SEC would encourage investment advisers and 401(k) sponsors to remind investors to periodically revisit their holdings and personal financial goals. While target-date funds are designed as set-it-and-forget-it options, people's lives change over time, as do their financial needs.

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