voice of the american shareholder quarterly poll – wave 6 prepared for: betterinvesting final...

Voice of the American Shareholder Voice of the American Shareholder Quarterly Poll – Wave 6Quarterly Poll – Wave 6

Prepared for:Prepared for:

BetterInvestingBetterInvesting

Final ReportFinal Report

June 8, 2005June 8, 2005

2

Table of Contents

Study Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Overview of Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Detailed Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

What Does A Typical Shareholder Look Like, and How do they Behave?. . . . . . . . . . . . . . . . . . . 15

How Do Shareholders Feel about the Economy and Stock Market? . . . . . . . . . . . . . . . . . . . . . . .23

How Do Shareholders Feel about Second Half of 2005?.................. . . . . . . . . . . . . . . . . . . . . . . .40

What Do Shareholders Feel about Investing in the Global Marketplace? . . . . . . . . . . . . . . . . . . . . 46

How Do Shareholders Feel about Investing in the Chinese Market? . . . . . . . . . . . . . . . . . . . 69

How Do Shareholders View the European Union and the US Market?. . . . . . . . . . . . . . . . . . . . . . .82

Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Detailed Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

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Study Objectives

BetterInvesting commissioned Harris Interactive to conduct a series of research studies to better understand the attitudes and behaviors of American investors. This study represents the sixth wave of research conducted for BetterInvesting. The previous waves were conducted in September 2003, January 2004, May 2004, November 2004, and February 2005.

By regularly reporting on these findings, BetterInvesting expects to capture the voice of the American shareholder.

The survey questions are designed to measure a few key trends in shareholders’ portfolios and investing behavior as well as to understand shareholders’ attitudes and views toward current issues. Specifically, this wave of research focused on the following topics:

Investment profile, goals, strategy, and future plans;

Views toward the stock market and outlook for the second half of 2005;

Perceptions of international markets including reasons for and against investing in the growing Chinese market; and,

Views toward the European Union and the U.S. marketplace.

4

Overview of Methodology

Sample includes 1,002 shareholders defined as U.S. adults aged 18 or older who currently own individual stocks or stock mutual funds.

Interviewing was conducted between April 26 - May 6, 2005.

The interview averaged 10 minutes in length.

All interviewing was conducted online using the Harris Poll Online (HPOL) database consisting of several million members who have agreed to participate in survey research.

5

Executive SummaryExecutive Summary

6

Current Investment EnvironmentCurrent Investment Environment

The typical American investor continues to be somewhat cautious in today’s marketplace. However, they are in it for the long term and recognize that stocks can yield the greatest returns.

In each wave of data, the majority of investors indicate that they plan to make no changes to their portfolios in the near future (the next six months).

The average risk level of investor’s portfolios is steady at about 4 on a 7 point scale where 1 is not at all risky and 7 is very risky.

When asked, how they would invest either $10,000 or $100,000, half indicate that they would put that money in either individual stocks or stock mutual funds.

Investors’ overall level of confidence in the economy and stock market continues to wane.

The NAIC Investor Confidence Index has declined again to its lowest level at +5.0 from a high of +19.3 in January 2004.

There is a great deal of fluctuation in the components that make up the Index and the data shows that investors are increasingly thinking that it’s a good time to move into safer investments.

Belief that the overall direction of the US economy is going in the right direction has declined to its lowest level since measurement began. Less than half (49%) think the economy is headed in the right direction.

Since February women have shown a considerable drop in confidence in the US economy.

Men’s views of the economy are consistent since November 2004.

Half of men still feel that it’s a good time for new investors to get involved in the stock market. In comparison, the proportion of female shareholders who feel this way has decreased since February (40% vs. 50%).

The proportion of men who feel that it’s a good time to move into safer investments has steadily increased from a low of 29% in January 2004 to 46% in May 2005. Women, on the other hand, have increased in their agreement of this statement (rising from 44% to 49% today).

7

Views toward the economy and stock marketViews toward the economy and stock market

Shareholders’ confidence in the direction of the U.S. economy continues to fall, reaching its lowest levels in this series of research.

When asked about confidence in the United States economy, 49% of shareholders indicate that they have “a fair amount” or “a great deal” of confidence that it is moving in the right direction – down from 55% in February 2005 and a high of 71% in January 2004.

Women (40%) have significantly less confidence than do men (55% a great deal/fair amount).

Despite the fact that many shareholders have not made changes to their portfolios, they are lukewarm in their overall view of the market.

Fewer than half of shareholders (45%) believe it’s a good time for new investors to get involved in the stock market, down from 50% in February 2005 and a high of 62% in January 2004.

Agreement that most stocks are a better bargain now than they were a year ago has risen by eight percentage points (37% now versus 29% in February 2005).

However, shareholders increasingly agree that it’s a good time to move money into safer, lower risk investments from higher return/higher risk investments, with 47% who now hold this view.

Male and female shareholders are showing similar levels of agreement (46% of males versus 49% of females).

The proportion who agree that it’s a good time to move money into less risky investments has steadily increased since January 2004.

8

Views toward the economy and stock marketViews toward the economy and stock market

The BetterInvesting Shareholder Confidence Index has dropped again from +7.8 in February

2005 to +5.0 today. Currently the BetterInvesting Index is +5.0, down from +19.3 in January 2004. On a scale from -100 to +100 (where zero indicates a neutral attitude towards the stock market), an Index of +5.0 shows trace levels of optimism tempered by concern about the direction of the economy.

Men(+8.6) are more confident than women (-0.4) and confidence declines with age.

Among those 65 and older, the index is -4.9.

The Index has also decreased by region with those in the West (-2.0) currently having the most negative view of the stock market.

9

Outlook for Second Half of 2005Outlook for Second Half of 2005

Despite lower levels of confidence and concerns about the economy, the majority of shareholders think the market will stay the same or improve in the second half of 2005.

One in five (21%) think the market will worsen.

Men are more optimistic than women with 42% believing the market will improve.

Investors continue to think that the best industries to invest in are real estate, pharmaceutical and technology.

Roughly the same proportion of investors consider these among the best investments now as they did in November 2004.

There has been more fluctuation among industries considered poor investments.

Automotive now tops the list of the worst industries to invest in followed by travel and education, which were both viewed differently in November.

More than half of shareholders feel that oil prices will continue to increase and they most commonly mention international politics as the primary reason.

10

Perceptions of the Global MarketPerceptions of the Global Market

Shareholders agree that international investments will be important in the future and are part of a diversified portfolio.

Shareholders residing in the West feel that international investments will be important in the future (65%), used to guard against a weak economy (53%) and tend to yield larger returns (45%).

Just one-third (33%) feel comfortable making international investments.

Further, majorities of shareholders feel that the declining value of the US dollar, outsourcing, strong economic growth abroad, high oil prices and slow domestic economic growth have at least somewhat contributed to international funds outperforming domestic US funds.

Female shareholders tend to attribute this trend to US companies moving operations overseas (89%), slow economic growth (87%) and high oil prices (85%) than males (81%, 75%, and 78% respectively).

Overall, shareholders still have the majority of their investments within the US. However, they indicate their plan to increase their investments in international markets.

Those who are under the age of 35 indicate they will have a higher percentage of international investments in the next five years.

Nearly half (45%) have no international investments and are fully invested in domestic markets.

When it comes to investing internationally, there is a greater likelihood of shareholders investing in individual stocks in US based companies with a global presence than shares in international stock funds, individual stocks in foreign based companies, and shares in international bond funds.

Shareholders who indicate they are comfortable with international investments are significantly more likely to diversify their foreign investments through shares in international stock funds (37%), US based companies with a global presence (24%), and shares in international bond funds (21%) than those who are less comfortable.

11

Perceptions of the Global MarketPerceptions of the Global Market

Investors have mixed views about the impact foreign economies will have on the United States.

Fewer than half think any economy examined in the survey (Russia, China, Japan, India and the European Union) will have a positive impact on the US economy, though current international investors are more likely to perceive a positive impact.

China is viewed most negatively; 50% of shareholders think China will have a negative impact on the US economy.

India, China and especially Russia are viewed as risky investments by majorities of shareholders.

On average, Japan and the European Union are rated about as risky as investors’ current portfolio (roughly 4 on a 7 point scale where 7 is very risky).

Interestingly, current international investors are more likely to think investments in each of these areas are risky as compared to those fully invested in domestic markets.

Majorities of investors report that they are not likely to invest in the countries or regions explored in the survey.

Between 61% (Russia) and 90% (Russia) are not likely to invest in these international markets (69% China, 65% Japan and 75% India).

Women are even less likely than men to invest in these areas as are those 65 and older.

12

Feelings About the Marketplace in ChinaFeelings About the Marketplace in China

Although one half of shareholders say they do not plan to invest in China, a third say they are taking the “wait and see approach” before they decide to invest.

Nearly six in ten shareholders say the largest barrier to invest in China is lack of confidence in the communist government. Three in ten feel that human rights violations and corporate/government corruption are deterrents.

Current international investors are more likely to cite human rights violations (36%) as an obstacle to investing in the Chinese economy, while non-international investors are deterred by corporate and government corruption (34%).

In order to understand possible motivators to investing in the Chinese market, shareholders were asked to identify the biggest opportunities in that market. Half of shareholders view the supply of workers (50%) and the fast growing economy (48%) as the top opportunities in the market.

The fast growing economy (56%) is key for current international investors.

When looking at the various industries, manufacturing (59%) is considered by far the best investment in the Chinese market.

The perceived worst industry segments in which to invest include health care (36%), real estate (29%), insurance (28%) and media (25%).

While men view banking and finance as among the worst industries (28% vs. 14% females), women are more likely to mention the automotive industry (22% vs. 12%).

13

Views of the US and European Union MarketsViews of the US and European Union Markets

When evaluating the impact of EU’s economy on the US economy, most shareholders do not view the EU’s economy as a threat.

Among younger shareholders, there is less of a likelihood of viewing the European Union’s economy as a threat to the US’.

In order to understand the advantages of each market, shareholders were asked to evaluate which market has the advantage on a number of factors. Real estate, productivity, and supply of workers are viewed as US advantages. Conversely, shareholders feel the EU has an advantage when it comes to social programs and healthcare/retirement.

Females see the advantages of the EU market as healthcare/retirement (63% vs 54% males), effects of government regulations (52% vs. 43%), and productivity (40% vs. 24%).

On the other hand, males feel the US economy has the lead on productivity (76% vs. 60%), effects of government regulations (57% vs. 48%) and healthcare/retirement (46% vs. 37%).

14

Detailed FindingsDetailed Findings

15

What Does the Typical American Shareholder Look What Does the Typical American Shareholder Look Like, and How Do They Behave?Like, and How Do They Behave?

16

The typical investor has more money invested in stock mutual funds than individual stocks.

Total Amount Invested in Individual Stocks and Stock Mutual Funds

Q1441: You mentioned that you have the following investments. About how much do you have invested in the following…?Base: All Shareholders

Individual Stocks (%) Stock Mutual Funds (%)

Jan ‘04 May ‘04 Nov ’04 Feb ‘05 May ‘05 Jan ‘04 May ‘04 Nov ‘04 Feb ‘05 May ‘05

Less than $5,000

41 41 36 42 29 30 32 25 30 19

$5,000 - $9,999

10 9 12 9 8 8 10 6 5 7

$10,000 - $49,999

20 28 20 25 24 29 31 25 32 23

$50,000 - $99,999

9 7 6 7 10 9 11 13 14 16

More than $100,000

19 15 13 17 23 24 16 15 18 25

MEAN$108,90

0$64,20

0$63,40

0$156,20

0$146,200

$84,100

$56,300

$67,900

$94,400

$103,000

MEDIAN $7,000 $8,350 $5,700 $8,700 $14,000$19,00

0$14,64

0$16,16

0$17,40

0$35,000

17

Q430: Please indicate which types of investments or investment accounts you personally have. Do you currently have . . .?Base: All shareholders

Jan ‘04 May ‘04 Nov ‘04 Feb ‘05 May ‘05

% % % % %

Individual stocks (not including stock options or restricted stocks from the company that I work for)

71 67 66 67 69

Stock mutual funds 67 70 69 72 69

Individual retirement account that I control (i.e., IRA, KEOGH, SEP)

56 51 52 59 56

Individual retirement accounts through my employer (i.e., 401(k) retirement savings plan or 403(b) retirement savings plan, or profit sharing plan)

52 52 50 51 51

Bonds or bond funds 33 35 35 37 36

Stock options or restricted stocks from the company that I work for

15 17 12 12 15

Other type of investment not mentioned 21 21 25 25 26

Shareholders maintain a wide variety of investments.

Types of Investments Owned

18Q510: Again thinking about your investment portfolio, over the next six months, do you plan to increase, decrease or make no change in your investments in each of the following? Base: All shareholders

For the most part, shareholders plan to make no changes to their investments over the next six months.

Plans for Investments Over The Next Six Months

Increase (%) Make No Change (%) Decrease (%)

2004 2005 2004 2005 2004 2005

Jan May Nov Feb May Jan May Nov Feb May Jan May Nov Feb May

Individual stocks

34 26 29 28 25 62 67 63 64 67 5 7 8 8 8

Stock mutual funds

31 24 24 28 23 64 71 69 68 69 5 5 7 4 8

Individual bonds 6 8 8 8 11 89 88 85 87 84 5 3 6 5 5

Bond mutual funds

10 11 11 11 12 84 84 83 85 83 5 5 6 3 5

Cash 39 38 38 35 40 52 54 52 55 52 9 8 10 10 8

Alternative investments

8 5 7 8 8 90 92 89 88 87 2 2 4 4 5

Other investments not mentioned

15 16 15 15 17 83 81 81 82 81 2 3 3 3 3

19Q510: Again thinking about your investment portfolio, over the next six months, do you plan to increase, decrease or make no change in your investments in each of the following? Base: All shareholders (n=1,002; Male=547; Female=455)

Three in ten men plan to increase their investment in individual stocks and one in seven plan to increase their investment in bond mutual funds compared to only 19% and 8% of women respectively.

Plan to Increase Investments Over The Next Six Months By Gender

Increase (%)

Total Male Female

Individual stocks 25 30 19

Stock mutual funds 23 25 20

Individual bonds 11 12 9

Bond mutual funds 12 15 8

Cash 40 43 36

Alternative investments (such as hedge funds, private equity and managed futures)

8 9 6

Other investments not mentioned

17 17 16

20

Whether they have $10,000 or $100,000 to invest, shareholders would continue to invest half in stock mutual funds and individual stocks.

Percentage Allocated to Each Investment

Have $10,000 to Invest

Total (Mean)

Have $100,000 to Invest

Total (Mean)

Jan ‘04

May ‘04 Feb ‘05 May ‘05 Jan ‘04

May ‘04 Feb ‘05 May ‘05

Individual stocks 32 26 26 26 27 25 24 24

Stock mutual funds 26 27 27 21 27 27 28 24

Cash 14 16 14 16 13 15 14 14

Bond mutual funds 10 10 10 10 9 10 10 12

Individual bonds 6 5 6 7 6 6 7 8

Alternative investments 3 3 4 3 5 5 5 5

Other investments 7 11 12 14 13 13 12 12

Q515: If you had $10,000/$100,000 to invest, how much would you invest in each of the following? Base: All shareholdersNote: For this question, half of all respondents were asked to allocate $10,000 across the investments listed above and the other half were asked to allocate $100,000 across the investments listed above.

21

Q505: Investment risk is typically defined as a greater likelihood that your portfolio may lose value but is often associated with higher returns. On a scale from 1 to 7, in which “1” represents “not risky at all” and a “7” represents “very risky”, how would you characterize most of your investments?Base: All shareholders

Risk Level of Current Investments

36%

33%

38%

32%30%

35%

28%

37%

34%

31%

34%34%32%

34%36%

30%

34%

30%

Very Risky (5, 6, 7 Net) Moderately Risky (4) Not Risky (1, 2, 3 Net)

Sept '03 Jan '04 May '04 Nov '04 Feb '05 May '05

Sept ‘03 Jan ’04 May ’04 Nov ’04 Feb ’05 Feb ‘05MEAN = 4.0 4.1 3.9 3.9 3.9 4.0

Shareholders investments are a mix of risk levels but, on average, are moderately risky.

22Q505: How would you characterize most of your investments on a scale from “not risky at all” to “very risky”? Base: All shareholders

Sept ’03 Jan ’04 May ’04 Nov ‘04 Feb ‘05 May ‘05

% % % % % %

Very Risky (5, 6, 7) (Net) 36 38 35 34 34 36

Men 42 45 41 43 40 40

Women 27 28 27 24 27 30

Moderately Risky (4) 30 32 28 31 32 30

Men 29 28 26 28 30 28

Women 31 38 32 35 35 32

Not Risky at All (1, 2, 3) (Net)

33 30 37 34 34 34

Men 28 27 33 29 30 32

Women 41 33 41 41 39 33

Mean 4.0 4.1 3.9 3.9 3.9 4.0

Men 4.2 4.2 4.0 4.2 4.1 4.0

Women 3.7 3.9 3.8 3.6 3.7 3.8

Risk Level of Current Investments By Gender

Four in ten male shareholders characterize their investments as risky while just 3 in 10 female shareholders do the same.

23

How Do Shareholders Feel about the How Do Shareholders Feel about the Economy and Stock Market?Economy and Stock Market?

24

Confidence in the U.S. economy has fallen in the past couple of months to it’s lowest level since the survey began.

Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?Base: All shareholders

57%

43%

71%

29%

60%

40%

54%

46%

55%

45%49% 51%

A Great Deal/A Fair Amount (Net) Not Much/None At All (Net)

Sept '03 Jan '04 May '04 Nov '04 Feb '05 May '05

Confidence in the U.S. Economy

25

Female shareholders have less confidence that the U.S. economy is moving in the right direction, falling 13% since February.

Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?Base: All shareholders

Confidence in U.S. Economy By Gender - A Great Deal/Fair Amount (Net)

Men Women

57%62%

50%

71%75%

63%60%

65%

53%57%

50%55%

57%53%

49%

55%

40%

54%

Sept '03 Jan '04 April '04 Nov '04 Feb '05 May '05

Total

26Q501: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

For the first time since January 2004, fewer than half of shareholders think it’s a good time for new investors to get involved in the stock market and three in ten disagree.

62%

24%

15%

51%

25% 23%

50%

27% 24%

50%

30%

20%

45%

26% 29%

Strongly/ Somewhat Agree Neither agree nor disagree Strongly/ Somewhat Disagree

Jan. '04 May '04 Nov '04 Feb '05 May '05

“It’s a good time for new investors to get involved in the stock market.”

27

Consistent with women’s views about the direction of the economy, they are also less likely than men to think it is a good time for new investors to get involved in the stock market.

Q502: How strongly do you agree or disagree with each of the following statements?Base: All shareholders

62%66%

56%51%

56%

44%

54%

45%50% 50% 50%

45%49%

40%

50%

Total Men Women

Jan. '04 April '04 Nov '04 Feb '05 May '05

% Strongly/Somewhat Agree:“It’s a good time for new investors to get involved in the stock market.”

28

Agreement has shifted in the past couple of months, with more agreeing today that stocks are a better bargain than one year ago.

43%

26%31%

41%

26%33%35% 38%

26%29%

41%

29%

37%33% 30%


Jan. '04 May '04 Nov '04 Feb' 05 May '05

“Most stocks are a better bargain now than they were one year ago.”


29

Male and female shareholders are equally likely to agree that stocks are a better bargain now than they are likely to a year ago.

43%

26%31%

41%

26%33%35% 38%

26%29% 26%33%

37% 39%35%

Total Men Women

Jan. '04 May '04 Nov '04 Feb' 05 May '05

%Strongly/Somewhat Agree:“Most stocks are a better bargain now than they were one year ago.”


30Q501: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

The proportion of shareholders who agree that it’s a good time to move money into safer investments has continued to increase, with nearly half of shareholders now holding this belief.

34% 32%35%37%

32% 30%

40%36%

24%

42%

32%26%

47%

29%24%


Jan. '04 May '04 Nov '04 Feb '05 May '05

“It’s a good time to move money into safer, lower risk investments from higher return/higher risk investments.”

31

Male and female shareholders again equally agree that it’s a good time to move money into lower risk investments.

34%29%

40%37%

33%

44%40% 39% 41%42% 40%

44%47% 46%

49%

Total Men Women

Jan. '04 April '04 Nov '04 Feb '05 May '05

% Strongly/Somewhat Agree:“It’s a good time to move money into safer, lower risk investments

from higher return/higher risk investments.”


32

May 2005BetterInvesting

INDEX+5.0

The BetterInvesting Index of Shareholder Confidence continues to fall, dropping to + 5.0.

May 2005Component Scores for Each Item Included in BetterInvesting Index

Note: The BetterInvesting Index was calculated based on 7 components that reflect shareholder confidence in the economy and stock market and is rated on a scale from -100 to +100 where 0 is the midpoint. A more detailed explanation of the Index is found in the Detailed Methodology.

19.310.9 9.3 7.8 5.0

-100

-80

-60

-40

-20

0

20

40

60

80

100

Jan'04

May'04

Nov'04

Feb'05

May'05

Question Positive Neutral NegativeComponent

Scores

Q410 11.1 78.2 10.7 0.5

Q511a1 25.4 66.7 7.9 17.5

Q511a2 23.2 69.0 7.9 15.3

Q505 35.7 30.0 34.3 1.4

Q502a1 23.8 29.2 47.0 -23.2

Q502a2 37.1 33.2 29.7 7.4

Q502a3 45.3 25.5 29.2 16.1

= 35.1

BetterInvesting

Index = 5.0

33

The BetterInvesting Index of Shareholder Confidence has declined significantly for women since February 2005 to -0.4 today. The Index for men has remained steady since February.


24.319.8

13.98.6 8.6

-100

-80

-60

-40

-20

0

20

40

60

80

100

Jan'04

May'04

Nov'04

Feb'05

May'05

13.47.3 3.4 6.9

-0.4

-100

-80

-60

-40

-20

0

20

40

60

80

100

Jan'04

May'04

Nov'04

Feb'05

May'05

FemaleMale

34


Component Scores

Question Male Female

Q410 4.5 -6.8

Q511a1 21.7 11.3

Q511a2 15.7 14.7

Q505 8.0 -8.4

Q502a1 -20.0 -27.8

Q502a2 9.4 4.4

Q502a3 20.2 9.8

= 59.5 -2.8

BetterInvesting Index = 8.6 -0.4

May 2005Component Scores by Gender

The BetterInvesting Index of Shareholder Confidence is much higher for male shareholders.

35


Index Scores

Question Jan. ‘04 May ‘04 Nov. ‘04 Feb. ‘05 May ’05

35 or less 22.5 18.8 17.0 16.5 15.1

36-49 24.0 15.9 15.6 7.8 8.5

50-64 18.5 14.1 6.8 4.6 1.1

65+ 13.9 2.1 -1.7 3.7 -4.9

Less than 55 23.2 16.5 14.8 10.3 11.1

55+ 14.4 9.8 1.4 4.2 -3.8

Index Scores by Age Groups

The Index decreases with age and indicates a negative view of the market for older shareholders.

36


May 2005Component Scores by Age Groups

The BetterInvesting Index of Shareholder Confidence declines with age.

Component Scores

Question 35 or less 36-49 50-64 65+

Less than 55 55+

Q410 2.8 -5.6 4.1 1.5 -1.1 2.7

Q511a1 25.2 22.1 13.6 8.4 23.6 8.7

Q511a2 26.0 26.7 7.5 -0.6 24.3 2.3

Q505 2.4 23.8 3.3 -30.5 15.1 -18.4

Q502a1 -13.1 -16.7 -32.0 -31.0 -17.0 -32.1

Q502a2 24.7 -2.7 5.8 4.8 9.8 4.0

Q502a3 37.5 11.6 5.0 13.2 22.6 6.5

= 105.5 59.4 7.4 -34.1 77.4 -26.4

BetterInvesting Index = 15.1 8.5 1.1 -4.9 11.1 -3.8

37


Index Scores by Region

The Index has declined among Western region residents, but risen among those in the Midwest.

Jan. ‘04 May ‘04 Feb. ‘05 May ’05

East 16.8 9.0 7.1 6.3

Midwest 21.3 14.2 4.1 8.0

South 20.3 16.8 9.8 7.2

West 21.2 18.0 9.3 -2.0

38


May 2005Component Scores by Region

The BetterInvesting Index of Shareholder Confidence is highest among residents of the Midwest and South.

Component Scores

Question East Midwest South West

Q410 1.1 2.4 2.7 -5.1

Q511a1 16.6 21.3 23.4 6.8

Q511a2 11.2 18.3 11.9 22.2

Q505 -1.8 4.8 9.3 -8.7

Q502a1 -11.2 -20.3 -24.7 -36.5

Q502a2 13.0 6.7 9.8 -0.7

Q502a3 15.3 22.6 18.1 7.9

= 44.2 55.8 50.5 -14.2

BetterInvesting Index = 6.3 8.0 7.2 -2.0

39

The majority of shareholders say they do not benchmark their investments against the S & P 500 index. A quarter of shareholders say they rely a great deal or somewhat on the stock market indexes to make decisions.

Yes30%

No70%

Q715: How much do you rely on stock market indexes to make decisions about your investment strategy?

Q720: Do you benchmark your investments against the S & P 500 Index? Base: All shareholders (n=1,002)

Benchmarking to S & P 500 Index

Not at all29%

A little41%

Somewhat26%

A great deal4%

Reliance on stock market indexes

40

What do Shareholders think aboutWhat do Shareholders think aboutthe Second Half of 2005?the Second Half of 2005?

41

A third of shareholders are optimistic and see the market improving in the second half of 2005.

Improve36%

Stay same43%

Worsen21%

Q700: Thinking of the second half of 2005, how do you think the market will perform? Base: All shareholders (n=1,002)

42

Men are more likely than women to think the market will improve in the second half of 2005.

Q700: Thinking of the second half of 2005, how do you think the market will perform?Base: All shareholders (n=1,002)

36%43%

21%

42%39%

19%26%

45%

25%

Improve Same the same Worsen

Total Males Females

43

Similar to investors’ outlook in November 2004, they think that the best investments for the second half of 2005 include real estate, pharmaceuticals, and technology.

39%

42%

37%

32%

21%

27%

19%

20%

17%

4%

39%

38%

35%

17%

17%

15%

19%

22%

24%

34%

Real Estate

Pharmaceutical

Technology

Energy

InformationTechnology

Health Care

Utilities

Telecommunications

Banking & Finance

Government

Nov '04 May '05

Q705: Thinking of the current economy, please indicate which three of the following industries you think are the best for investing for the second half of 2005. Please indicate your first choice, second choice and third choice. Base: All shareholders (n=1,002)

Best Investments For the Second Half of 2005 – Top 3 Best Industries Top 10 Mentions

44

When thinking about the worst industries in which to invest in the second half of 2005, the automotive industry tops all, which is a significant increase from November 2004.

21%

38%

19%

23%

21%

21%

21%

27%

20%

9%

40%

26%

25%

17%

17%

13%

18%

20%

21%

21%

Automotive

Travel

Education

Healthcare

Retail

Transportation

Media

Government

Insurance

Energy

Nov '04 May '05

Q710: Once again, thinking of the current economy, please indicate which three of the following industries you think are the worst for investing for the second half of 2005. Please indicate your first choice, second choice and third choice. Base: All shareholders (n=1,002)

Worst Investments For the Second Half of 2005 – Top 3 Worst Industries Top 10 Mentions

45

More than half of shareholders expect a continued increase in oil prices. The most common reason cited for high oil prices is international politics.

Decrease11%

Level Off35%

Increase54%

Q635: Do you expect oil prices to continue to increase, level off or decrease?

Q640: Which of the following best describes why you think oil prices are at their current levels?Base: All shareholders (n=1,002)

32%

19%

16%

13%

9%

10%

InternationalPolitics

Oilconsumption

is too high

Lack of viablealternative

fuels

Not enoughoil produced

War in Iraq

Other factors

46

What do Shareholders think aboutWhat do Shareholders think aboutInvesting in a Global Marketplace?Investing in a Global Marketplace?

47Q600: Please indicate the actual or expected percentage of your portfolio in the following types of investment markets for each time frame below. Base: All shareholders (n=1,002)

The majority of shareholders have most of their portfolio in domestic markets but plan to increase their investment in international markets slightly.

18.6%15.8%

12.9%

81.4%84.2%

87.1%

Five Years from NowCurrentlyFive Years Ago

International Domestic

Proportion of Domestic vs. International InvestmentsMean %

Currently

% 0 International Investments 45%

% 100% Domestic investments 45%


Women are more likely to have had a higher percentage of international investments in the past than men. That gap persists through to their projected percentage in five years.

12.910.9

15.815.814.5

17.618.6 17.620.1

Total (n=1,002) Male (n=547) Female (n=455)

Five Years Ago Currently Five Years from Now

Proportion of International Investments by GenderMean %


While investors of all ages expect to increase their percentage of international investments, younger shareholders anticipate that international investments will comprise nearly ¼ of their portfolio.

15.817.3 17.1

15.612.6

18.6

23.1

18.917.2

15.3

Total (n=1,002) 35 or less (n=202) 36 - 49 (n=249) 50 - 64 (n=294) 65+ (n=257)

Currently Five Years from Now

Proportion of International Investments by AgeMean %

50

Shareholders agree that international investments will be important in the future and are part of a diversified portfolio. However, just one third feel comfortable making these investments.

Q645: Please indicate your level of agreement or disagreement with the following statements about international investments.Base: All shareholders (n=1,002)

56%52%

46%

37%33%

12%

19%22%

19%

41%

Important in future Diversified portfolio Guard against weakU.S economy

Larger returns I am comfortable

Strongly/Somewhat Agree Strongly/Somewhat Disagree

Attitudes Towards International Investments

51

Men are more likely than women to agree that international investments are part of a diversified portfolio and that they are comfortable making these investments.


56%52%

46%

37%33%

57% 56%50%

38% 36%

55%

47%42%

34%29%




Attitudes Towards International Investments By Gender%Strongly/Somewhat Agree

52

Those under the age of 50 are more likely to agree that international investments guard against a weak US economy, and say they are comfortable with international investments.


56%52%

46%

37%33%

57% 58%52%

43%40%

61%

53%49%

35% 36%

50%

36%32%

45%

57%52%

24%

33%33%

48%




Attitudes Toward International Investments By Age% Strongly/Somewhat Agree

53

Those in the West agree international investments will be important in the future, used to guard against a weak US economy, and yield larger returns.


56%52%

46%

37%33%

54% 53%

46%

33% 35%

62%58%

47%

36%32%

47% 47%41%

33% 31%

65%

52% 53%

45%

35%



Total (n=1,002) East (n=237) Midwest (n=242) South (n=293) West (n=229)

Attitudes Toward International Investments By Region% Strongly/Somewhat Agree

54

Shareholders are most likely to invest in individual stocks in US based companies with a global presence. However, nearly two-thirds indicate they are not likely to invest in individual stocks in foreign companies or international bond funds.

38%

28%

17%13%

31%27%

19%24%

31%

45%

64% 63%

Individual stocks in USbased companies with a

global presence

Shares in internationalstock funds

Individual stocks in foreignbased companies

Shares in internationalbond funds

Extremely/Very Likely Likely Somewhat/Not at All Likely

Q605: Thinking about the international investments that you have or expect to make in the future, how likely are you to make these investments through the following vehicles? Base: Currently have or expect to have international investments (n=580)

Likelihood of Making Various Kinds of International Investments

55

Those who are comfortable with international investments are not surprisingly more likely to make international investments through all these investment vehicles.

38%

28%

17%13%

24%

37%43%

21%

10%17%

34%

6%7%

18%

31%

6%

Individual stocks in USbased companies with a

global presence

Shares in internationalstock funds

Individual stocks in foreignbased companies

Shares in internationalbond funds

Total (n=1,002) Comfort w/ Int'l Investments (n=303) Neither (n=269) Uncomfortable w/ Int'l Investments (n=430)

Q605: Thinking about the international investments that you have or expect to make in the future, how likely are you to make these investments through the following vehicles? Base: Currently have or expect to have international investments (n=580)

Likelihood of Making Various Kinds of International Investments By Comfort Level with International Investments

% Extremely/Very Likely

56

US companies moving operations oversees and the declining value of the US dollar are viewed as the most contributing factors for why international funds have recently begun to outperform domestic funds.

86% 84% 81% 81% 80%

67%

10% 11%15% 14%

17%

28%

Declining value ofU.S. dollar

U.S. companiesmoving

operationsoverseas

Strong economicgrowth abroad

High oil prices Slow economicgrowth in U.S.

Raising interestrates in U.S.

A lot/Some A Little/Not at All

Q630: Some data suggests that international funds have recently begun to outperform domestic U.S. funds. How much do you think each of the following contributes to this? Base: All shareholders (n=1,002)

Reasons Why International Funds Outperform US Funds

57

Women are more likely than men to attribute the shift in international fund performance to slow economic growth in the US, high oil prices, and US companies moving operations overseas.

86% 84% 81% 81% 80%

67%

87%81% 80% 78%

75%

64%

85%89%

82%85% 87%

71%

Declining value ofU.S. dollar

U.S. companiesmoving

operationsoverseas

Strong economicgrowth abroad

High oil prices Slow economicgrowth in U.S.

Raising interestrates in U.S.

Total Male Female

Q630: Some data suggests that international funds have recently begun to outperform domestic U.S. funds. How much do you think each of the following contributes to this? Base: All shareholders (n=1,002)

Reasons Why International Funds Outperform US Funds By Gender% A lot/Some Contribution

58Q610: How likely are you to invest in the following regions or countries? Base: All shareholders (n=1,002)

Majorities of investors report that they are not likely to invest in Europe, China, Japan or India, and especially in Russia.

18%14% 13% 12%

3%

21%16%

22%

14%

7%

61%

69%65%

75%

90%

European Union China Japan India Russia

Extremely/Very Likely Likely Somewhat/Not at All Likely

Likelihood of Investing in Specific Regions or Countries


Women are far less likely to say they will invest in India, China, Japan or the European Union. There are no gender differences in likelihood to invest in Russia.

90%

75%69%

65%61%

89%

71%66%

62%57%

92%

80%75%

71%68%

Russia India China Japan European Union


Likelihood of Investing in Specific Regions or Countries By Gender% Somewhat/Not at All Likely


Older investors are the least likely to invest in Russia, China, Japan or the European Union.

90%

75%69%

65%61%

85%

73%

61% 60%

47%

90%

76%

68%63% 62%

90%

71%68%

64% 62%

94%

80% 80%75% 74%

Russia India China Japan European Union


Likelihood of Investing in Specific Regions or Countries By Age% Somewhat/Not at All Likely

61Q620: In the long run, do you think the following economies will have a positive or negative impact on the United States’ economy?Base: All shareholders (n=1,002)

Investors have mixed views about the impact of Japan and the European Union on the US economy. Conversely, half of investors feel China will have a negative impact on the US economy.

41%38%

32%26%

16%

34% 34%

18%

36%

51%

26% 28%

50%

38%33%

Japan European Union China India Russia

Very/Somewhat Positive Neither Positive/Negative Very/Somewhat Negative

Impact of Other Economies on the US Economy


Current international investors are more likely to feel these countries will have a positive impact on the US economy.

41%38%

32%26%

16%

44% 44%

37%32%

16%

36%

29%25%

19%15%

Japan European Union China India Russia

Total (n=1,002) Current Int'l Investor (n=512) Non-International Investor (n=490)

Impact of Other Economies on the US Economy By International Investors

% Very/Somewhat Positive


Non-international investors are more likely to perceive a negative impact on the US economy from these foreign economies.

50%

28% 26%

38%33%

47%

24% 23%

35%31%

53%

33%29%

41%36%

China European Union Japan India Russia

Total (n=1,002) Current Int'l Investor (n=512) Non-International Investor (n=490)

Impact of Other Economies on the US Economy By International Investors

% Very/Somewhat Negative

64Q625: Regardless of where you may invest or the risk level of your investments, please indicate your current view about the risk level of domestic and international markets. Please use a scale of 1 to 7 in which “1” represents “not risky at all” and “7” represents “very risky.”Base: All shareholders (n=1,002)

Most do not see the European Union or Japanese markets as very risky investments, however Russia is viewed as the riskiest investment.

80%

59%56%

30% 28%

14%19%

25% 24%28%

6%

22%19%

45% 45%

Russia China India Japan European Union

Very Risky (5,6,7 Net) Moderately Risky (4) Not Risky (1,2,3 Net)

Risk Level of International Investments

Mean Scores

Russia China India Japan EU

5.7 4.8 4.8 3.8 3.8

65Q625: Regardless of where you may invest or the risk level of your investments, please indicate your current view about the risk level of domestic and international markets. Please use a scale of 1 to 7 in which “1” represents “not risky at all” and “7” represents “very risky.” Base: All shareholders (n=1,002)

Men are more likely to see Russia as risky, while women view Japan as riskier than men.

80%

59%56%

30% 28%

85%

61% 59%

27% 25%

73%

55%52%

35%32%


Total Male(n=547) Female (n=455)

Risk Level of International Investments – By Gender% Very Risky (5, 6, 7 Net)


Investors age 65+ are more likely to categorize Japan and the European Union as risky investments than those under 65.

80%

59%56%

30% 28%

77%

59% 61%

28%24%

78%

61%55%

25%22%

82%

61%57%

27% 28%

84%

54% 52%

44%39%


Total 35 or less (n=202) 36 - 49 (n=249) 50 - 64 (n=294) 65+ (n=257)

Risk Level of International Investments – By Age% Very Risky (5, 6, 7 Net)


While Russia is seen as a risky investment among large majorities of investors, this is particularly true among those who say they are comfortable with international investments.

80%

59%56%

30% 28%

84%

53%47%

24%20%

70%

51% 52%

31%27%

83%

69% 67%

36% 35%


Total Comfort w/ Int'l Investments (n=303) Neither (n=269) Uncomfortable w/ Int'l Investments (n=430)

Risk Level of International Investments – By Comfort Level% Very Risky (5, 6, 7 Net)


Among non-international investors all countries are seen as more risky compared to current int’l investors.

80%

59%56%

30% 28%

78%

54%51%

26%22%

82%

64% 63%

35% 35%


Total Current Int'l Investor (n=512) Non-Int'l Investor (n=490)

Risk Level of International Investments – By International Investors% Very Risky (5, 6, 7 Net)

69

How do Shareholders Feel About How do Shareholders Feel About Investing in the Chinese Market?Investing in the Chinese Market?

70

Although half of shareholders say they do not plan to invest in China, a third indicate they are taking the “wait and see” approach.

9%8%

51% 32%

Q680: Which of the following best describes your current belief as it relates to investing in China? Base: All shareholders (n=1,002)

I do not plan to invest in China

I am taking a “wait and see” approach

I am planning to invest in China in the next 2-3 years

I am already investing in China and will continue to do so

Current Investment in China

71

The largest barrier to investing in China is the lack of confidence in the communist government, followed by human rights violations and corporate and government corruption.

58%

31%

30%

18%

13%

12%

5%

4%

5%

No confidence in communism

Human rights violations

Corporate/Govt corruption

Economy growing too fast

Lack of strong financing system

China's reliance on imports

Banking crisis

Other

None

Q650: Now we have a few questions specifically about the Chinese economy. Which of the following do you see as the biggest obstacles to investing in China? Please select up to two responses. Base: All shareholders (n=1,002)

Obstacles to Investing In China

72

Females are more likely to see human rights violations as an obstacle, while men are more likely to see China’s lack of a strong financial system as a barrier.

58%

31%

30%

18%

13%

12%

5%

3%

5%

57%

25%

32%

20%

16%

13%

6%

3%

5%

59%

40%

28%

16%

10%

10%

3%

2%

6%







Banking crisis

Other

None



Obstacles to Investing In China By Current International Investors By Gender

73

While there is agreement that lack of confidence in communism is the primary obstacle to investing in China, current international investors are more concerned about corporate/government corruption, while non-international investors are concerned about human rights violations.

58%

31%

30%

18%

13%

12%

5%

3%

5%

57%

26%

34%

20%

13%

12%

6%

3%

5%

59%

36%

25%

15%

14%

11%

4%

2%

6%







Banking crisis

Other

None

Total (n=1,002) Current Int'l Investor (n=512) Non-Int'l Investor (n=490)


Obstacles to Investing In China By Current International Investors

74

Despite the barriers, shareholders see the biggest opportunities as the supply of workers, a fast growing economy, and outsourcing of manufacturing to China.

50%

48%

45%

4%

12%

Supply of workers

Fast growing economy

Outsourcing ofmanufacturing to China

Other

None

Q660: Which of the following do you see as the biggest opportunities as it relates to investing in China? Please select up to two responsesBase: All shareholders (n=1,002)

Opportunities to Invest in China

75

Men are more likely to see China’s fast growing economy as an opportunity for investing than women.

50%

48%

45%

4%

12%

49%

52%

44%

3%

12%

52%

43%

46%

1%

14%

Supply of workers



Other

None



Opportunities to Invest in China By Gender

76

The fast growing economy is key for current international investors.

50%

48%

45%

4%

12%

51%

56%

43%

3%

7%

48%

39%

46%

1%

19%

Supply of workers



Other

None

Total (n=1,002) Current Int'l Investors (n=512) Non-Int'l Investors (n=490)


Opportunities to Invest in China By Current International Investors

77

By far, manufacturing is considered the best investment in the Chinese economy.

59%

39%

31%

13%

12%

11%

14%

18%

20%

25%

Manufacturing

Technology

Telecommunications

Information Tech

Retail

Automotive

Travel

Energy

Pharmaceutical

Banking & Finance

Q670: Which segments of the Chinese economy do you see as the best investments? Please indicate your first choice, second choice and third choice. Base: All shareholders (n=1,002)

Best Investments in China – Top 3 Best IndustriesTop 10 Mentions

78

Women are more likely to say technology is one the best segments of the Chinese economy to invest in, while male shareholders are more likely to see the automotive industry as among the best investments.

59%

39%

31%

25%

20%

18%

14%

13%

12%

11%

61%

34%

30%

15%

13%

10%

56%

45%

33%

28%

22%

14%

16%

11%

9%

14%

12%

21%

19%

23%

Manufacturing

Technology

Telecommunications

Information Tech

Retail

Automotive

Travel

Energy

Pharmaceutical

Banking & Finance



Best Investments in China – Top 3 Best Industries By GenderTop 10 Mentions

79

Current int’l investors are more likely to see the telecommunications industry as one of the best. However, non-international investors are more likely to think technology and travel are among the best industries.

59%

39%

31%

25%

20%

18%

14%

13%

12%

11%

56%

40%

35%

15%

13%

13%

63%

38%

26%

31%

19%

16%

18%

12%

10%

10%

10%

19%

22%

21%

Manufacturing

Technology

Telecommunications

Information Tech

Retail

Automotive

Travel

Energy

Pharmaceutical

Banking & Finance

Total (n=1,002) Current Int'l Investors (n=547) Non-Int'l Investors (n=455)


Best Investments in China – Top 3 Best Industries By International InvestorsTop 10 Mentions

80

Health care, real estate, insurance and media are viewed as the worst segments of the Chinese economy in which to invest.

36%

29%

28%

18%

17%

16%

21%

23%

23%

26%

Health Care

Real Estate

Insurance

Media

Banking & Finance

Education

Food & Beverage

Pharmaceutical

Energy

Automotive

Q675: Which segments of the Chinese economy do you see as the worst investments? Please indicate your first choice, second choice and third choice. Base: All shareholders (n=1,002)

Worst Investments in China – Top 3 Worst Industries Top 10 Mentions

81

36%

29%

28%

26%

23%

23%

21%

18%

17%

16%

35%

29%

29%

16%

17%

12%

36%

29%

26%

21%

14%

20%

24%

21%

18%

22%

19%

24%

28%

30%

Health Care

Real Estate

Insurance

Media

Banking & Finance

Education

Food & Beverage

Pharmaceutical

Energy

Automotive


While there is general agreement about the worst investments, men are more likely to think that media and banking/finance are among the worst investments. For women, automotive is among the worst.


Worst Investments in China – Top 3 Worst Industries By GenderTop 10 Mentions

82

How do Shareholders View the European How do Shareholders View the European Union and US Markets?Union and US Markets?

83

Most shareholders do not perceive the European Union’s economy as being a threat to the US economy.

Not at all26%

A little36%

Somewhat29%

A great deal9%

Q685: To what degree do you see the European Union’s economy as a threat to the United States’ economy? Base: All shareholders (n=1,002)

62%

A Little/ Not at All

38%

Great Deal/ Somewhat

EU’s Degree of Threat to US Economy

84

As age increases so does the belief that the EU economy poses a threat to the US economy. Younger shareholders are least likely to believe this.

Q685: To what degree do you see the European Union’s economy as a threat to the United States’ economy? Base: All shareholders (n=1,002)

38%

26%

34%

43%

50%

62%

74%

65%

58%

51%

Total 35 or less 36 - 49 50 - 64 65+

A great deal/Somewhat A little/Not at All

EU’s Degree of Threat to US Economy By Age

85

As compared to the EU, shareholders feel the US economy has the advantages of real estate values, productivity and supply of workers. On the other hand the European Union has the advantage of social programs and healthcare.

Q690: Please indicate which economy you currently think has the advantage given each of the following factors. Base: All shareholders (n=1,002)

84%

70%

63%

53%

42% 40%

16%

30%

37%

47%

58% 60%

Value of realestate

Productivity Supply of workers Effects of govtregulation

Healthcare &retirement

Social programs

U.S.A. European Union

Economic Advantage – US vs. EU

86

Women are more likely to feel the EU economy has an advantage over the US economy with regards to productivity, effects of gov’t regulation, and healthcare/retirement.

Q690: Please indicate which economy you currently think has the advantage given each of the following factors. Base: All shareholders (n=1,002)

16%

30%

37%

47%

58% 60%

15%

24%

35%

43%

54%58%

16%

40% 40%

52%

63% 64%

Value of realestate



Social programs

Total Male Female

Economic Advantage by Gender% European Union

87

Men, however, are more likely to feel the US economy has an advantage over the EU economy with regards to productivity, effects of gov’t regulation, and healthcare/retirement.

Q690: Please indicate which economy you currently think has the advantage given each of the following factors.Base: All shareholders (n=1,002)

84%

70%

63%

53%

42% 40%

85%

76%

65%

57%

46%42%

84%

60% 60%

48%

37% 36%

Value of realestate



Social programs

Total Male Female

Economic Advantage by Gender% United States

88

DemographicsDemographics

89

Shareholder DemographicsShareholder Demographics

GenderTotal

%

Male 60

Female 40

GenderTotal

%

Male 60

Female 40

Age

Total

%

35 years old or less 2336-49 2950-64 2765+ 22

MEAN 49.4

Age

Total

%

35 years old or less 2336-49 2950-64 2765+ 22

MEAN 49.4

Marital Status

Total

%

Single, never married 16

Married 64Divorced 10Separated 1Widowed 5Living with partner 4

Marital Status

Total

%

Single, never married 16

Married 64Divorced 10Separated 1Widowed 5Living with partner 4Children in Household Under 18

Total

%

0 711 152 103+ 4MEAN 0.5

Children in Household Under 18

Total

%

0 711 152 103+ 4MEAN 0.5

Race/Ethnicity

Total

%White 79Black/African-American 8

Asian or Pacific Islander 2Native American or Alaskan Native *Mixed racial background 1Other race *Hispanic 8Decline to answer 2

Race/Ethnicity

Total

%White 79Black/African-American 8

Asian or Pacific Islander 2Native American or Alaskan Native *Mixed racial background 1Other race *Hispanic 8Decline to answer 2

90

Shareholder Demographics (Cont’d)Shareholder Demographics (Cont’d)

Education

Total%

High school graduate or less 27Some college 28College (e.g., B.A., B.S.) 33Graduate school (e.g., M.S., M.D., Ph.D.) 12

Education

Total%

High school graduate or less 27Some college 28College (e.g., B.A., B.S.) 33Graduate school (e.g., M.S., M.D., Ph.D.) 12

Party Identification

Total

%

Republican 37Democrat 31Independent 32

Party Identification

Total

%

Republican 37Democrat 31Independent 32

Political Philosophy

Total

%

Conservative 33Moderate 48Liberal 20

Political Philosophy

Total

%

Conservative 33Moderate 48Liberal 20

Employment

Total%

Employed full-time 43Employed part-time 8Self-employed 12Not employed, but looking for work 3Not employed and not looking for work 1Retired 30Student 6Homemaker 7

Employment

Total%

Employed full-time 43Employed part-time 8Self-employed 12Not employed, but looking for work 3Not employed and not looking for work 1Retired 30Student 6Homemaker 7

91


Household’s Total Net Worth

Total%

Less than $50,000 13$50,000 to $99,999 12$100,000 - $249,999 17$250,000 or more 36Not sure 3Decline to answer 19

Household’s Total Net Worth

Total%


Investable Assets

Total%


Investable Assets

Total%


Household Income

Total%

Less than $50,000 22$50,000 to $99,999 33$100,000 to $149,999 22$150,000 or more 11

Decline to answer 12

Household Income

Total%

Less than $50,000 22$50,000 to $99,999 33$100,000 to $149,999 22$150,000 or more 11

Decline to answer 12

Member of Investment Club

Total%

Current Member 3Former Member 6Never a Member 91

Member of Investment Club

Total%

Current Member 3Former Member 6Never a Member 91

Heard of National Association of Investors Corporation (NAIC)

Total%

Yes 33No 67

Heard of National Association of Investors Corporation (NAIC)

Total%

Yes 33No 67

Knowledge of Investing

Total%

Not at all Knowledgeable 14Somewhat Knowledgeable 68Very Knowledgeable 14Extremely Knowledgeable 3

Knowledge of Investing

Total%

Not at all Knowledgeable 14Somewhat Knowledgeable 68Very Knowledgeable 14Extremely Knowledgeable 3

92


Region

Total%

East 25Midwest 21South 32West 22

Region

Total%

East 25Midwest 21South 32West 22

93

Detailed MethodologyDetailed Methodology

94

Detailed Methodology

The Voice of the American Shareholder Quarterly Poll Wave 6 was conducted by Harris Interactive on behalf of BetterInvesting. Interviewing was conducted between April 26 and May 6, 2005 among a nationally representative sample of 1,002 U.S. adults aged 18 and older who currently have investments in individual stocks or stock mutual funds. The length of the questionnaire was 10 minutes in length, not including the demographics.

SAMPLE SELECTION

Harris Interactive maintains the Harris Poll Online database (HPOL) comprised of several million respondents who have agreed to participate in survey research. The HPOL database was used as the sample source for this study. E-mail addresses for respondents in the database have been obtained from over 100 sources, including the HPOL registration site, Yahoo!, HPOL banner advertisements, and MSN/Hotmail.

Qualified respondents for this study were U.S. adults age 18+ who identified themselves as currently having investments in individual stocks or stock mutual funds in response to the question “Please indicate which types of investments or investment accounts you personally have.”

ONLINE INTERVIEWING PROCEDURES

Interviews were conducted using a self-administered, online questionnaire, via proprietary, web-assisted interviewing software. The HPOL interviewing system permitted online data entry of interviews by the respondents. Questionnaires were programmed into the system with the following checks: 1. Question and response series2. Skip pattern3. Question rotation4. Range checks5. Mathematical checks6. Consistency checks7. Special edit procedures

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Detailed Methodology (cont’d)

ONLINE INTERVIEWING PROCEDURES (cont’d)

To maintain the reliability and integrity in the sample, each invitation contained a password that is uniquely assigned to that e-mail address. A respondent was required to enter the password at the beginning of the survey to gain access into the survey. Password protection ensured that a respondent completed the survey only one time.

To increase the number of respondents in the survey and to improve overall response rates, up to two additional reminder invitations are typically mailed at 2-4 day intervals to those respondents who have not yet participated in the survey. For this study, one reminder was sent to potential respondents.

To increase the number of respondents in the survey and to improve overall response rates, respondents were provided with a summary of some of the survey responses. This too was done via the Internet. Respondents were sent an email that provided them access to a web site that contained the survey findings. As with the survey itself, this was a password protected site that was accessible for a limited period (1-2 weeks).

All data were then tabulated, checked for internal consistency and processed by computer. A series of computer-generated tables were produced for each of the key sample groups that showed the results of each survey question, both by the total number of respondents and by the key subgroups.

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WEIGHTING

Completed interviews were weighted to figures obtained from the Current Population Survey (CPS). Harris used several demographic variables (e.g., sex, age, education, race and ethnicity and income) to generalize survey results to the population at large. In addition, Harris Interactive applied a proprietary technique to the data called "propensity weighting" that essentially balanced all the characteristics (e.g., demographic, attitudinal, and behavioral) of online respondents. It is no surprise that certain kinds of people have a greater or lesser likelihood to be online and therefore to reply to our surveys. To account for this, Harris gave each individual a “propensity weight” which corresponded to their likelihood to be online. This ensured that the sample represented the general shareholder population at large and was not skewed toward more active online users or survey takers. In addition, people who had a lesser likelihood to be online acted as a proxy for those who are not online at all. Typical propensity weights that were used included measures of activity (our online respondents do more things), knowledge (our online samples are better informed), and attitudes (our online samples are more skeptical or cynical).

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WEIGHTING (CONT’D)

It is also worth mentioning that Harris conducts parallel telephone and online research on a regular basis through The Harris Poll, our monthly omnibus survey. By conducting this research, Harris is able to track results to make comparisons between data collected online and by phone, closely examine the biases and most importantly, develop strategies for correcting these biases. In fact, Harris has an internal department that is entirely focused on conducting this “research on research.”

EDITING AND CLEANING THE DATA

The data-processing staff performed machine edits and additional cleaning for the entire data set. Our edit programs acted as a verification of the skip instructions and other data checks that were written into the online program. The edit programs listed any errors by case number, question number and type. These were then resolved by senior personnel, who inspected the original file and made appropriate corrections. Complete records were kept of all such procedures.

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CALCULATION FOR BETTERNVESTING INDEX

The BetterInvesting Index measured shareholders’ overall perspective in the stock market from three different vantage points or categories: 1) overall confidence in the stock market and economy, 2) personal investment behaviors and 3) attitudes about risk and the value of stocks.

Within each of these vantage points, the Index was derived from component items from the BetterInvesting Voice of the American Shareholder January 2004, May 2004, November 2004, February 2005, and May 2005 surveys. The component items are as follows:

1) Overall confidence in the stock market and economy:Q410: How much confidence do you have the U.S. economy is generally moving in the right direction?

2) Personal investment behaviorQ511 a, b: Thinking about your investment portfolio, over the next six months, do you plan to increase, decrease, or make no change in your investments in (individual stocks; stock mutual funds)?

Q505: Investment risk is typically defined as a greater likelihood that your portfolio may lose value but it often associated with higher returns. How would you characterize most of your investments on a scale from “not risky at all” to “very risky”

3) Attitudes towards investment risk and the value of stocks:Q502: How strongly would you agree or disagree with the following statements:

It’s a good time to move money into safer, lower risk investments from higher return/higher risk investments.

Most stocks are a better bargain now than they were a year ago. It’s a good time for new investors to get involved in the stock market.

99


CALCULATION FOR BETTERINVESTING INDEX – (cont’d)

For each component item within the three overall categories, a ‘component score’ was calculated by taking the difference of the percentage of positive responses and the percentage of negative responses.

For example, in May 2005, Q410: “How much confidence do you have that the United States’ economy is generally moving in the right direction?”

14% responded that they have a great deal of confidence in the direction of the economy, 77% responded that they had a fair amount or not much confidence and 9% indicated they had no confidence at all.

This yielded a component score of 14% - 9% = 5.0%

To calculate the BetterInvesting Shareholder Index, we then took the mean of the 7 component scores.

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The following table shows the component scores for each item used in calculating the Index for September 2003, January 2004, May 2004, November 2004, February 2005, and May 2005.

Please note that since the three statements that make up Q502 were not asked in the September 2003 survey, the scores below should only be used to get a general sense of how the scores have changed on the other items that were repeated between September 2003 and November 2004.

Component Scores

Component Item Sept ’03 Jan ’04 May ’04 Nov ’04 Feb ’05 May ‘05

Confidence that US economy is moving in right direction 5.9 15.2 10.6 6.5 -2.5 0.5

Increase, decrease, or make no change in individual stock investments, next 6 months 24.0 27.3 18.6 20.8 19.5 17.5

Increase, decrease, or make no change in stock mutual funds, next 6 months 21.8 25.8 19.3 17.5 23.5 15.3

How would you characterize most of your investments (1=not risky, 7=very risky) -- 7.0 -1.1 0.0 0.2 1.4

Good time to move money into safer, lower risk investments -- 3.3 -6.7 -15.5 -16.0 -23.2

Most stocks are a better bargain now than they were a year ago -- 9.8 7.7 9.2 -0.2 7.4

Good time for new investors to get involved in the market -- 47.0 27.6 26.3 30.1 16.1

Index Score -- 19.3 10.9 9.3 7.8 5.0

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Validating the Index

In order to measure the validity of the BetterInvesting Index, an investment allocation exercise question was included in the January 2004, May 2004, February 2005, and May 2005 surveys. The purpose of this question was to be able to link the “attitudinal” nature of the NAIC Index to observable behavior in future waves of this research.

The question (Q515) asked: “If you had ($10,000/$100,000) to invest, how much would you invest in each of the following?

Individual stocks Stock mutual funds Individual bonds Bond mutual funds Cash Alternative Investments

This question was structured so that half of all shareholders interviewed were shown $10,000 in the question and the other half were shown $100,000.

The idea was that changes in shareholder confidence, as measured by the Index, should be reflected in changes in portfolio allocation. As confidence improves, we would expect that shareholders would become growth-oriented and conversely as confidence weakens, we would expect that shareholders would allocate money towards safer investments.

voice of the american shareholder quarterly poll – wave 6 prepared for: betterinvesting final...

Documents

stock market

shareholders portfolios

shareholders attitudes

wave of research

us market

stock mutual funds

survey research

wave of data