Download Wave 6 - BetterInvesting

Voice of the American Shareholder
Quarterly Poll – Wave 6
Prepared for:
BetterInvesting
Final Report
June 8, 2005
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
2
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.
3
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.
4
Executive Summary
5
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.

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).
6
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%).
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.
7
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.
8
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.



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.


One in five (21%) think the market will worsen.
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.
9
Perceptions of the Global Market

Shareholders agree that international investments will be important in the future and are
part of a diversified portfolio.



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.


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.


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%).

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 10
are less comfortable.
Perceptions of the Global Market

Investors have mixed views about the impact foreign economies will have on the United
States.



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.



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.
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.
11
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%).
12
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%).
13
Detailed Findings
14
What Does the Typical American Shareholder Look
Like, and How Do They Behave?
15
The typical investor has more money invested in stock mutual funds than
individual stocks.
Total Amount Invested in Individual Stocks and Stock Mutual Funds
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
$108,900
$64,200
$63,400
$156,200
$146,200
$84,100
$56,300
$67,900
$94,400
$103,000
$7,000
$8,350
$5,700
$8,700
$14,000
$19,000
$14,640
$16,160
$17,400
$35,000
MEAN
MEDIAN
Q1441: You mentioned that you have the following investments. About how much do you have invested in the following…?
Base: All Shareholders
16
Shareholders maintain a wide variety of investments.
Types of Investments Owned
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
Q430: Please indicate which types of investments or investment accounts you personally have. Do you currently have . . .?
Base: All shareholders
17
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 (%)
2004
Make No Change (%)
2005
2004
Decrease (%)
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
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
18
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
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)
19
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
Have $100,000 to Invest
Total (Mean)
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 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.
20
Shareholders investments are a mix of risk levels but, on average,
are moderately risky.
Risk Level of Current Investments
MEAN =
Sept ‘03 Jan ’04
4.0
4.1
May ’04
3.9
38%
36%
35%
Nov ’04 Feb ’05
3.9
3.9
Feb ‘05
4.0
37%
36%
34% 34%
32%
31%
30%
34% 34% 34%
33%
32%
30%
30%
28%
Very Risky (5, 6, 7 Net)
Sept '03
Moderately Risky (4)
Jan '04
May '04
Nov '04
Not Risky (1, 2, 3 Net)
Feb '05
May '05
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
21
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
Sept ’03
Jan ’04
May ’04
Nov ‘04
Feb ‘05
May ‘05
%
%
%
%
%
%
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
33
30
37
34
34
34
Men
28
27
33
29
30
32
Women
41
33
41
41
39
33
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
Very Risky (5, 6, 7) (Net)
Not Risky at All (1, 2, 3)
(Net)
Mean
Q505: How would you characterize most of your investments on a scale from “not risky at all” to “very risky”?
Base: All shareholders
22
How Do Shareholders Feel about the
Economy and Stock Market?
23
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
71%
57%
60%
54%
55%
51%
49%
46%
43%
45%
40%
29%
A Great Deal/A Fair Amount (Net)
Sept '03
Jan '04
Not Much/None At All (Net)
May '04
Nov '04
Feb '05
May '05
Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?
Base: All shareholders
24
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
75%
71%
57%
62%
60%
65%
63%
57% 57%
54% 55%
55%
50%
49%
53%
50%
53%
40%
Sept '03
Jan '04
April '04
Nov '04
Feb '05
May '05
Q410: How much confidence do you have that the United States’ economy is generally moving in the right direction?
Base: All shareholders
25
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.”
62%
51% 50% 50%
45%
27%
24% 25%
30%
26%
23% 24%
15%
Strongly/ Somewhat Agree
Jan. '04
Neither agree nor disagree
May '04
Nov '04
Feb '05
Q501: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
29%
20%
Strongly/ Somewhat Disagree
May '05
26
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.”
66%
62%
56% 54%
51% 50% 50%
56%
50% 49%
45%
Total
Men
Jan. '04
April '04
Nov '04
Q502: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
50%
44% 45%
40%
Women
Feb '05
May '05
27
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.”
43% 41%
38%
37%
35%
29%
41%
33%
26% 26%
Strongly/ Somewhat Agree
Neither agree nor disagree
Jan. '04
May '04
Nov '04
Feb' 05
Q502: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
31% 33%
26%
29% 30%
Strongly/ Somewhat Disagree
May '05
28
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.”
43% 41%
39%
38%
37%
35%
29%
26% 26%
Total
31% 33%
26%
Men
Jan. '04
May '04
Nov '04
Q502: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
33% 35%
26%
Women
Feb' 05
May '05
29
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.”
47%
34%
37%
40% 42%
32% 32%
Strongly/ Somewhat Agree
36%
32%
35%
Neither agree nor disagree
Jan. '04
May '04
30%
29%
Nov '04
Q501: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
24% 26% 24%
Strongly/ Somewhat Disagree
Feb '05
May '05
30
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.”
47%
46%
40% 42%
37%
34%
39% 40%
49%
44%
44%
41%
40%
33%
29%
Total
Men
Jan. '04
April '04
Nov '04
Women
Feb '05
Q502: How strongly do you agree or disagree with each of the following statements?
Base: All shareholders
May '05
31
The BetterInvesting Index of Shareholder Confidence continues to
fall, dropping to + 5.0.
100
May 2005
Component Scores for Each Item
Included in BetterInvesting Index
80
60
40
19.3
20
10.9 9.3
7.8
5.0
0
-20
-40
-60
Positive
Neutral
Negative
Component
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
Question
Jan May Nov Feb May
'04 '04 '04 '05 '05
May 2005
BetterInvesting
INDEX
+5.0
S=
35.1
BetterInvesting
Index =
5.0
-80
-100
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.
32
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
100
Female
100
80
80
60
60
40
24.3
40
19.8
20
13.9
8.6
8.6
0
-20
20
7.3
3.4
6.9
-0.4
0
Jan
'04
May
'04
Nov
'04
Feb
'05
May
'05
-20
-40
-40
-60
-60
-80
-80
-100
13.4
Jan May Nov Feb May
'04 '04
'04 '05 '05
-100
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 is much higher for
male shareholders.
May 2005
Component Scores by Gender
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
8.6
-0.4
S=
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.
34
The Index decreases with age and indicates a negative view of the
market for older shareholders.
Index Scores by Age Groups
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
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 BetterInvesting Index of Shareholder Confidence declines with age.
May 2005
Component Scores by Age Groups
Component Scores
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
15.1
8.5
1.1
-4.9
11.1
-3.8
Question
S=
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.
36
The Index has declined among Western region residents, but risen
among those in the Midwest.
Index Scores by Region
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
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 BetterInvesting Index of Shareholder Confidence is highest among
residents of the Midwest and South.
May 2005
Component Scores by Region
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
S=
44.2
55.8
50.5
-14.2
6.3
8.0
7.2
-2.0
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.
38
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
No
70%
Reliance on stock market indexes
Yes
30%
Not at all
29%
A great
deal
4%
A little
41%
Somewhat
26%
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)
39
What do Shareholders think about
the Second Half of 2005?
40
A third of shareholders are optimistic and see the market improving
in the second half of 2005.
Worsen
21%
Stay same
43%
Improve
36%
Q700: Thinking of the second half of 2005, how do you think the market will perform?
Base: All shareholders (n=1,002)
41
Men are more likely than women to think the market will improve in the
second half of 2005.
43%
42%
36%
45%
39%
26%
21%
Improve
Same the same
Total
Males
25%
19%
Worsen
Females
Q700: Thinking of the second half of 2005, how do you think the market will perform?
Base: All shareholders (n=1,002)
42
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
39%
39%
42%
38%
37%
35%
32%
34%
Real Estate
Pharmaceutical
Technology
Energy
Information
Technology
Health Care
21%
24%
27%
22%
19%
19%
20%
17%
17%
17%
Utilities
Telecommunications
Banking & Finance
Government
4%
15%
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)
43
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
21%
Automotive
Travel
26%
19%
Education
38%
25%
23%
21%
Healthcare
Retail
21%
21%
Transportation
21%
20%
Media
21%
18%
Government
17%
27%
20%
17%
Insurance
Energy
40%
9%
13%
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)
44
More than half of shareholders expect a continued increase in oil
prices. The most common reason cited for high oil prices is
international politics.
International
Politics
Increase
54%
Level Off
35%
32%
Oil
consumption
is too high
19%
Lack of viable
alternative
fuels
Not enough
oil produced
16%
13%
Decrease
11%
War in Iraq
Other factors
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)
9%
10%
45
What do Shareholders think about
Investing in a Global Marketplace?
46
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
% 100% Domestic investments
87.1%
84.2%
Five Years Ago
Currently
International
45%
81.4%
15.8%
12.9%
45%
18.6%
Five Years from Now
Domestic
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)
47
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 %
20.1
18.6
17.6
15.8
14.5
12.9
15.8
17.6
10.9
Total (n=1,002)
Five Years Ago
Male (n=547)
Currently
Female (n=455)
Five Years from Now
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
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 %
23.1
18.6
15.8
17.3
17.1
18.9
15.6
17.2
15.3
12.6
Total (n=1,002)
35 or less (n=202)
36 - 49 (n=249)
Currently
50 - 64 (n=294)
65+ (n=257)
Five Years from Now
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
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
56%
52%
46%
41%
37%
19%
22%
33%
19%
12%
Important in future
Diversified portfolio
Strongly/Somewhat Agree
Guard against weak
U.S economy
Larger returns
I am comfortable
Strongly/Somewhat Disagree
Q645: Please indicate your level of agreement or disagreement with the following statements about international
investments.
Base: All shareholders (n=1,002)
50
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.
Attitudes Towards International Investments By Gender
%Strongly/Somewhat Agree
56% 57% 55%
52%
56%
47%
Important in future
Diversified portfolio
Total (n=1,002)
46%
50%
42%
Guard against weak
U.S economy
Male (n=547)
37% 38%
34%
Larger returns
33%
36%
29%
I am comfortable
Female (n=455)
Q645: Please indicate your level of agreement or disagreement with the following statements about international
investments.
Base: All shareholders (n=1,002)
51
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.
Attitudes Toward International Investments By Age
% Strongly/Somewhat Agree
61%
57%
56%57%
48%
58%
52% 53% 52%
45%
52% 50%
49%
46%
33%
43%
40%
37% 35%36%
36%
33% 33%
32%
24%
Important in future
Diversified portfolio
Total (n=1,002)
Guard against weak
U.S economy
35 or less (n=202)
36 - 49 (n=249)
Larger returns
50 - 64 (n=294)
I am comfortable
65+ (n=257)
Q645: Please indicate your level of agreement or disagreement with the following statements about international
investments.
Base: All shareholders (n=1,002)
52
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.
Attitudes Toward International Investments By Region
% Strongly/Somewhat Agree
62%
65%
56%54%
47%
Important in future
58%
53%
52%
52%
47%
53%
46%46%47%
41%
Diversified portfolio
Total (n=1,002)
East (n=237)
Guard against weak
U.S economy
Midwest (n=242)
45%
37% 36%
33% 33%
Larger returns
South (n=293)
33%35%32%31%35%
I am comfortable
West (n=229)
Q645: Please indicate your level of agreement or disagreement with the following statements about international
investments.
Base: All shareholders (n=1,002)
53
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.
Likelihood of Making Various Kinds of International Investments
64%
63%
45%
38%
31%
31%
28%
27%
24%
17%
Individual stocks in US
based companies with a
global presence
Shares in international
stock funds
Extremely/Very Likely
19%
13%
Individual stocks in foreign
based companies
Likely
Shares in international
bond funds
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)
54
Those who are comfortable with international investments are not
surprisingly more likely to make international investments through
all these investment vehicles.
Likelihood of Making Various Kinds of International Investments By
Comfort Level with International Investments
% Extremely/Very Likely
43%
38%
37%
34%
28%
24%
17% 18%
10%
21%
17%
13%
7%
Individual stocks in US
based companies with a
global presence
Total (n=1,002)
31%
6% 6%
Shares in international
stock funds
Comfort w/ Int'l Investments (n=303)
Individual stocks in foreign
based companies
Neither (n=269)
Shares in international
bond funds
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)
55
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.
Reasons Why International Funds Outperform US Funds
86%
84%
81%
81%
80%
67%
28%
10%
Declining value of
U.S. dollar
11%
U.S. companies
moving
operations
overseas
15%
Strong economic
growth abroad
A lot/Some
17%
14%
High oil prices
Slow economic
growth in U.S.
Raising interest
rates in U.S.
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)
56
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.
Reasons Why International Funds Outperform US Funds By Gender
% A lot/Some Contribution
86% 87% 85%
89%
84%
81%
81% 80% 82%
81%
87%
85%
80%
78%
75%
67%
Declining value of
U.S. dollar
U.S. companies
moving
operations
overseas
Strong economic
growth abroad
Total
High oil prices
Male
Slow economic
growth in U.S.
71%
64%
Raising interest
rates in U.S.
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)
57
Majorities of investors report that they are not likely to invest in
Europe, China, Japan or India, and especially in Russia.
Likelihood of Investing in Specific Regions or Countries
90%
75%
69%
65%
61%
18%
22%
21%
14% 16%
12% 14%
13%
3%
European Union
China
Extremely/Very Likely
Japan
Likely
Q610: How likely are you to invest in the following regions or countries?
Base: All shareholders (n=1,002)
India
7%
Russia
Somewhat/Not at All Likely
58
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% 89%
Likelihood of Investing in Specific Regions or Countries By Gender
% Somewhat/Not at All Likely
92%
80%
75%
Russia
71%
India
Total (n=1,002)
75%
69%
66%
China
Male (n=547)
Q610: How likely are you to invest in the following regions or countries?
Base: All shareholders (n=1,002)
71%
65%
62%
Japan
68%
61%
57%
European Union
Female (n=455)
59
Older investors are the least likely to invest in Russia, China, Japan
or the European Union.
Likelihood of Investing in Specific Regions or Countries By Age
% Somewhat/Not at All Likely
94%
90% 90%90%
85%
80%
76%
75%73%
71%
80%
75%
69%
68%68%
61%
65% 63%64%
60%
74%
61%
62%62%
47%
Russia
Total (n=1,002)
India
35 or less (n=202)
China
Japan
35 - 49 (n=249)
50 - 64 (n=294)
Q610: How likely are you to invest in the following regions or countries?
Base: All shareholders (n=1,002)
European Union
65+ (n=257)
60
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.
Impact of Other Economies on the US Economy
51%
50%
41%
38%
34%
34%
28%
26%
36% 38%
32%
26%
18%
Japan
European Union
Very/Somewhat Positive
33%
China
Neither Positive/Negative
16%
India
Russia
Very/Somewhat Negative
Q620: 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)
61
Current international investors are more likely to feel these countries
will have a positive impact on the US economy.
Impact of Other Economies on the US Economy By International
Investors
% Very/Somewhat Positive
41%
44%
44%
36%
38%
37%
29%
32%
32%
25%
26%
19%
Japan
European Union
Total (n=1,002)
China
Current Int'l Investor (n=512)
16% 16% 15%
India
Russia
Non-International Investor (n=490)
Q620: 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)
62
Non-international investors are more likely to perceive a negative
impact on the US economy from these foreign economies.
Impact of Other Economies on the US Economy By International
Investors
% Very/Somewhat Negative
50%
53%
47%
38%
33%
28%
China
26%
24%
European Union
Total (n=1,002)
41%
35%
29%
33% 31%
36%
23%
Japan
Current Int'l Investor (n=512)
India
Russia
Non-International Investor (n=490)
Q620: 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)
63
Most do not see the European Union or Japanese markets as very
risky investments, however Russia is viewed as the riskiest
investment.
Risk Level of International Investments
Mean Scores
80%
59%
Russia
China
India
Japan
EU
5.7
4.8
4.8
3.8
3.8
56%
45%
30%
19%
22%
25%
24%
45%
28% 28%
19%
14%
6%
Russia
China
Very Risky (5,6,7 Net)
India
Moderately Risky (4)
Japan
European Union
Not Risky (1,2,3 Net)
Q625: 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)
64
Men are more likely to see Russia as risky, while women view Japan as
riskier than men.
Risk Level of International Investments – By Gender
% Very Risky (5, 6, 7 Net)
85%
80%
73%
59%
61%
55%
56%
59%
52%
35%
30%
Russia
China
Total
India
Male(n=547)
32%
27%
28%
Japan
European Union
25%
Female (n=455)
Q625: 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)
65
Investors age 65+ are more likely to categorize Japan and the European
Union as risky investments than those under 65.
Risk Level of International Investments – By Age
% Very Risky (5, 6, 7 Net)
84%
80% 78%82%
77%
59%59%61%61%
54%
61%
56% 55%57%
52%
44%
39%
30%28%
25%27%
Russia
Total
China
35 or less (n=202)
India
36 - 49 (n=249)
Japan
50 - 64 (n=294)
28%
28%
24%22%
European Union
65+ (n=257)
Q625: 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)
66
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.
Risk Level of International Investments – By Comfort Level
% Very Risky (5, 6, 7 Net)
80%
84%
83%
70%
69%
59%
53% 51%
67%
56%
52%
47%
36%
31%
30%
24%
Russia
Total
China
Comfort w/ Int'l Investments (n=303)
India
Neither (n=269)
Japan
35%
28%
27%
20%
European Union
Uncomfortable w/ Int'l Investments (n=430)
Q625: 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)
67
Among non-international investors all countries are seen as more risky
compared to current int’l investors.
Risk Level of International Investments – By International Investors
% Very Risky (5, 6, 7 Net)
80% 78% 82%
64%
59%
54%
63%
56%
51%
35%
30%
Russia
Total
China
India
Current Int'l Investor (n=512)
26%
Japan
35%
28%
22%
European Union
Non-Int'l Investor (n=490)
Q625: 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)
68
How do Shareholders Feel About
Investing in the Chinese Market?
69
Although half of shareholders say they do not plan to invest in
China, a third indicate they are taking the “wait and see” approach.
Current Investment in China
I am taking a “wait
and see” approach
32%
I do not plan to
invest in China
51%
9%
8%
I am already investing in
China and will continue
to do so
I am planning to
invest in China in
the next 2-3 years
70
Q680: Which of the following best describes your current belief as it relates to investing in China?
Base: All shareholders (n=1,002)
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.
Obstacles to Investing In China
No confidence in communism
58%
31%
Human rights violations
Corporate/Govt corruption
30%
18%
Economy growing too fast
13%
Lack of strong financing system
12%
China's reliance on imports
Banking crisis
Other
None
5%
4%
5%
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)
71
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.
Obstacles to Investing In China By Current International Investors By Gender
58%
57%
59%
No confidence in communism
25%
Human rights violations
18%
20%
16%
Economy growing too fast
13%
16%
10%
Lack of strong financing system
12%
13%
10%
China's reliance on imports
Other
None
40%
30%
32%
28%
Corporate/Govt corruption
Banking crisis
31%
5%
6%
3%
3%
3%
2%
5%
5%
6%
Total (n=1,002)
Male (n=547)
Female (n=455)
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)
72
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.
Obstacles to Investing In China By Current International Investors
58%
57%
59%
No confidence in communism
26%
Human rights violations
36%
30%
Corporate/Govt corruption
25%
34%
18%
20%
15%
Economy growing too fast
13%
13%
14%
Lack of strong financing system
12%
12%
11%
China's reliance on imports
5%
6%
4%
Banking crisis
Other
31%
3%
3%
2%
None
Total (n=1,002)
5%
5%
6%
Current Int'l Investor (n=512)
Non-Int'l Investor (n=490)
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)
73
Despite the barriers, shareholders see the biggest opportunities as the
supply of workers, a fast growing economy, and outsourcing of
manufacturing to China.
Opportunities to Invest in China
50%
Supply of workers
48%
Fast growing economy
Outsourcing of
manufacturing to China
Other
None
45%
4%
12%
Q660: Which of the following do you see as the biggest opportunities as it relates to investing in China? Please select
up to two responses
Base: All shareholders (n=1,002)
74
Men are more likely to see China’s fast growing economy as an
opportunity for investing than women.
Opportunities to Invest in China By Gender
50%
49%
52%
Supply of workers
48%
52%
Fast growing economy
43%
45%
44%
46%
Outsourcing of
manufacturing to China
Other
4%
3%
1%
12%
12%
14%
None
Total (n=1,002)
Male (n=547)
Female (n=455)
Q660: Which of the following do you see as the biggest opportunities as it relates to investing in China? Please select
up to two responses
Base: All shareholders (n=1,002)
75
The fast growing economy is key for current international
investors.
Opportunities to Invest in China By Current International Investors
50%
51%
48%
Supply of workers
48%
Fast growing economy
56%
39%
45%
43%
46%
Outsourcing of
manufacturing to China
Other
None
4%
3%
1%
7%
12%
19%
Total (n=1,002)
Current Int'l Investors (n=512)
Non-Int'l Investors (n=490)
Q660: Which of the following do you see as the biggest opportunities as it relates to investing in China? Please select
up to two responses
Base: All shareholders (n=1,002)
76
By far, manufacturing is considered the best investment in the
Chinese economy.
Best Investments in China – Top 3 Best Industries
Top 10 Mentions
Manufacturing
59%
Technology
39%
Telecommunications
31%
25%
Information Tech
20%
Retail
Automotive
18%
Travel
Energy
Pharmaceutical
Banking & Finance
14%
13%
12%
11%
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)
77
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.
Best Investments in China – Top 3 Best Industries By Gender
Top 10 Mentions
59%
61%
56%
Manufacturing
34%
Technology
25%
23%
28%
Information Tech
Automotive
Travel
Energy
Pharmaceutical
Banking & Finance
45%
31%
30%
33%
Telecommunications
Retail
39%
20%
19%
22%
18%
21%
14%
14%
12%
16%
13%
15%
11%
12%
13%
9%
11%
10%
14%
Total (n=1,002)
Male (n=547)
Female (n=455)
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)
78
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.
Best Investments in China – Top 3 Best Industries By International Investors
Top 10 Mentions
59%
56%
Manufacturing
39%
40%
38%
Technology
Telecommunications
Information Tech
Retail
Automotive
Travel
Energy
Pharmaceutical
Banking & Finance
Total (n=1,002)
63%
31%
26%
25%
21%
35%
31%
20%
22%
19%
18%
19%
16%
14%
10%
18%
13%
15%
12%
12%
13%
10%
11%
13%
10%
Current Int'l Investors (n=547)
Non-Int'l Investors (n=455)
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)
79
Health care, real estate, insurance and media are viewed as the
worst segments of the Chinese economy in which to invest.
Worst Investments in China – Top 3 Worst Industries
Top 10 Mentions
Health Care
36%
29%
Real Estate
Insurance
28%
Media
26%
Banking & Finance
23%
Education
23%
Food & Beverage
Pharmaceutical
Energy
Automotive
21%
18%
17%
16%
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)
80
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 Gender
Top 10 Mentions
36%
35%
36%
Health Care
29%
29%
29%
28%
29%
26%
26%
Real Estate
Insurance
Media
Banking & Finance
Education
Food & Beverage
Pharmaceutical
Energy
Automotive
21%
23%
30%
28%
14%
23%
24%
20%
21%
19%
24%
18%
16%
21%
17%
17%
18%
16%
12%
22%
Total (n=1,002)
Male (n=547)
Female (n=455)
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)
81
How do Shareholders View the European
Union and US Markets?
82
Most shareholders do not perceive the European Union’s economy
as being a threat to the US economy.
EU’s Degree of Threat to US Economy
A great deal
9%
Not at all
26%
38%
62%
Great Deal/
Somewhat
A Little/
Not at All
Somewhat
29%
A little
36%
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)
83
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.
EU’s Degree of Threat to US Economy By Age
74%
65%
62%
58%
50%
51%
43%
38%
34%
26%
Total
35 or less
36 - 49
A great deal/Somewhat
50 - 64
65+
A little/Not at All
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)
84
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.
Economic Advantage – US vs. EU
84%
70%
63%
60%
58%
53%
47%
42%
37%
40%
30%
16%
Value of real
estate
Productivity
Supply of workers
U.S.A.
Effects of govt
regulation
Healthcare &
retirement
Social programs
European Union
Q690: Please indicate which economy you currently think has the advantage given each of the following factors.
Base: All shareholders (n=1,002)
85
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.
Economic Advantage by Gender
% European Union
63%
58%
52%
47%
40%
37% 35%
40%
54%
60% 58%
64%
43%
30%
24%
16% 15% 16%
Value of real
estate
Productivity
Supply of workers
Total
Effects of govt
regulation
Male
Healthcare &
retirement
Social programs
Female
Q690: Please indicate which economy you currently think has the advantage given each of the following factors.
Base: All shareholders (n=1,002)
86
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.
Economic Advantage by Gender
% United States
84% 85% 84%
76%
70%
60%
63% 65%
60%
53%
57%
48%
42%
46%
37%
Value of real
estate
Productivity
Supply of workers
Total
Effects of govt
regulation
Male
Healthcare &
retirement
40% 42%
36%
Social programs
Female
Q690: Please indicate which economy you currently think has the advantage given each of the following factors.
Base: All shareholders (n=1,002)
87
Demographics
88
Shareholder Demographics
Gender
Total
%
Male
Female
60
40
35 years old or less
36-49
50-64
65+
MEAN
Marital Status
Single, never married
Married
Divorced
Separated
Widowed
Living with partner
Total
%
16
64
10
1
5
4
Children in Household Under 18
0
1
2
3+
MEAN
Age
Total
%
71
15
10
4
0.5
Total
%
23
29
27
22
49.4
Race/Ethnicity
White
Black/African-American
Asian or Pacific Islander
Native American or Alaskan Native
Mixed racial background
Other race
Hispanic
Decline to answer
Total
%
79
8
2
*
1
*
8
2
89
Shareholder Demographics (Cont’d)
Education
High school graduate or less
Some college
College (e.g., B.A., B.S.)
Graduate school (e.g., M.S., M.D., Ph.D.)
Party Identification
Total
%
27
28
33
12
Republican
Democrat
Independent
Total
%
37
31
32
Employment
Employed full-time
Employed part-time
Self-employed
Not employed, but looking for work
Not employed and not looking for work
Retired
Student
Homemaker
Total
%
43
8
12
3
1
30
6
7
Political Philosophy
Conservative
Moderate
Liberal
Total
%
33
48
20
90
Shareholder Demographics (Cont’d)
Household’s Total Net Worth
Less than $50,000
$50,000 to $99,999
$100,000 - $249,999
$250,000 or more
Not sure
Decline to answer
Investable Assets
Total
%
13
12
17
36
3
19
Household Income
Less than $50,000
$50,000 to $99,999
$100,000 to $149,999
$150,000 or more
Decline to answer
Member of Investment Club
Total
%
22
33
22
11
12
Heard of National Association of Investors
Corporation (NAIC)
Yes
No
Less than $50,000
$50,000 to $99,999
$100,000 - $249,999
$250,000 or more
Not sure
Decline to answer
Total
%
26
15
16
17
6
20
Total
%
33
67
Current Member
Former Member
Never a Member
Total
%
3
6
91
Knowledge of Investing
Not at all Knowledgeable
Somewhat Knowledgeable
Very Knowledgeable
Extremely Knowledgeable
Total
%
14
68
14
3
91
Shareholder Demographics (Cont’d)
Region
East
Midwest
South
West
Total
%
25
21
32
22
92
Detailed Methodology
93
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.
2.
3.
4.
5.
6.
7.
Question and response series
Skip pattern
Question rotation
Range checks
Mathematical checks
Consistency checks
Special edit procedures
94
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 computergenerated 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.
95
Detailed Methodology (cont’d)
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).
96
Detailed Methodology (cont’d)
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.
97
Detailed Methodology (cont’d)
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 behavior
Q511 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.
98
Detailed Methodology (cont’d)
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.
99
Detailed Methodology (cont’d)
CALCULATION FOR BETTERINVESTING INDEX – (cont’d)
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
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
Component Item
100
Detailed Methodology (cont’d)
CALCULATION FOR BETTERINVESTING INDEX – (cont’d)
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.
101