Voice of the American Shareholder Quarterly Poll – Wave 6 Prepared for: BetterInvesting Final Report June 8, 2005

1. Voice of the American Shareholder Quarterly Poll – Wave 6 Prepared for: BetterInvesting Final Report June 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

3. 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 Summary

6. Current 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 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 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 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 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 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 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 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 Findings

15. What Does the Typical American Shareholder Look 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

17. Shareholders maintain a wide variety of investments. Types of Investments Owned Q430: Please indicate which types of investments or investment accounts you personally have. Do you currently have . . .? Base: All shareholders

18. 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 Q510: 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

19. 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 Q510: 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)

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 Q515: If you had $10,000/$100,000 to invest, how much would you invest in each of the following? Base: All shareholders Note: 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. Shareholders investments are a mix of risk levels but, on average, are moderately risky. Risk Level of Current Investments Sept ‘03Jan ’04May ’04Nov ’04Feb ’05Feb ‘05 MEAN = 4.0 4.1 3.9 3.9 3.9 4.0 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

22. Four in ten male shareholders characterize their investments as risky while just 3 in 10 female shareholders do the same. Risk Level of Current Investments By Gender Q505: How would you characterize most of your investments on a scale from “not risky at all” to “very risky”? Base: All shareholders

23. How Do Shareholders Feel about the 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. Confidence in the U.S. Economy Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction? Base: All shareholders

25. Female shareholders have less confidence that the U.S. economy is moving in the right direction, falling 13% since February. Confidence in U.S. Economy By Gender - A Great Deal/Fair Amount (Net) Total Men Women Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction? Base: All shareholders

26. 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. “It’s a good time for new investors to get involved in the stock market.” Q501: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

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. % Strongly/Somewhat Agree: “It’s 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

28. Agreement has shifted in the past couple of months, with more agreeing today that stocks are a better bargain than one year ago. “Most stocks are a better bargain now than they were one year ago.” Q502: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

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. %Strongly/Somewhat Agree: “Most stocks are a better bargain now than they were one year ago.” Q502: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

30. 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. “It’s a good time to move money into safer, lower risk investments from higher return/higher risk investments.” Q501: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

31. Male and female shareholders again equally agree that it’s a good time to move money into lower risk investments. % Strongly/Somewhat Agree: “It’s a good time to move money into safer, lower risk investments from higher return/higher risk investments.” Q502: How strongly do you agree or disagree with each of the following statements? Base: All shareholders

32. The BetterInvesting Index of Shareholder Confidence continues to fall, dropping to + 5.0. May 2005 Component Scores for Each Item Included in BetterInvesting Index May 2005 BetterInvesting INDEX +5.0 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.

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. Male Female 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.

34. The BetterInvesting Index of Shareholder Confidence is much higher for male shareholders. May 2005 Component Scores by Gender 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.

35. The Index decreases with age and indicates a negative view of the market for older shareholders. Index Scores by Age Groups 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.

36. The BetterInvesting Index of Shareholder Confidence declines with age. May 2005 Component Scores by Age Groups 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.

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

38. The BetterInvesting Index of Shareholder Confidence is highest among residents of the Midwest and South. May 2005 Component Scores by Region 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.

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. Benchmarking to S & P 500 Index Reliance on stock market indexes 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)

40. What do Shareholders think about the Second Half of 2005?

41. A third of shareholders are optimistic and see the market improving 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)

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)

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

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

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. 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)

46. What do Shareholders think about Investing in a Global Marketplace?

47. The majority of shareholders have most of their portfolio in domestic markets but plan to increase their investment in international markets slightly. Proportion of Domestic vs. International Investments Mean % Currently % 0 International Investments 45% % 100% Domestic investments 45% Q600: 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)

48. 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. Proportion of International Investments by Gender Mean % Q600: 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)

49. 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. Proportion of International Investments by Age Mean % Q600: 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)

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