2016 MUTUAL FUND & ETFS PROPRIETARY STUDY

Online study with WSJ Opinion Leaders Reader Panel, in field June 1–July 3, 2016; respondents screened for ownership of mutual funds and/or ETFs.

Note: Due to a change in methodology, we cannot trend results from prior studies.

Goals:

Understand current mutual fund & ETF investment strategies among different generations, [Millennials, Gen X and Baby Boomers] and DIY investors vs. those that use a financial adviser

Measure perceptions (familiarity/reputation) and usage of 48 mutual fund/ETF brands

2

METHODOLOGY, GOALS & DEMO PROFILE

Respondents 3,208

Average Age 59

Employed 67%

Average HHI $287,391

3 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208

Even those that use an FA are highly involved in mutual fund/ETF decisions

FINANCIAL PROFILE

2016

Avg. value of portfolio $2,128,687

On average, % of portfolio in employer-sponsored plan 31%

On average, % of portfolio privately purchased 69%

Mutual funds/ETF purchases : (Base: Those that use an FA)

Entirely self-directed 8%

FA & I collaborate 77%

FA handles completely 15%

I use a financial adviser for all or some of my portfolio

My investments are entirely self-directed, I do not use

a financial adviser

54% 57%

46% 43%

Total Own ETF

4 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,202; Millennials age 18-39 n=262, Gen X age 40-54 n=560 Boomers age 55+ n=2386 Q3. Do you currently use a professional financial adviser for all or any portion of your investments?

But not surprisingly, younger generations are less likely to use an adviser

OVERALL, HALF USE AN FA

54% 36% 43%

59%

46% 64% 57%

41%

Total Millennials Gen X Boomers

4

I use a financial adviser for all or some of my portfolio

My investments are entirely self-directed, I do not use

a financial adviser

5 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208; DIY Investor n=1,476, Use an FA n=1,732 Q5. Approximately what % of your mutual funds/ETFs (in dollar value) are invested in index funds vs. actively managed funds?

ACTIVELY MANAGED FUNDS ARE OVER 50% OF PORTFOLIO

5

43%

54%

34%

57%

46%

66%

Total

DIY Investor

Use an FA

OWNERSHIP OF INDEX VS. ACTIVELY MANAGED FUNDS

Index Funds Actively Managed

6 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents own that asset class, base sizes vary; Q19 What is the approximate asset value of your household’s investments in each of the following financial instruments/investments now held by you or other members of your households, including employer-sponsored and privately held?

Average value of portfolio: $2,128,687

INVEST ACROSS MULTIPLE ASSETS

81%

43%

86%

61% 64%

86%

60%

28%

$357,799 $237,344 $369,712

$231,433 $232,848 $182,615

$255,487 $261,418

$100,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Individual Stocks Individual Bonds Pure Stock Mutual Funds

Hybrid Mutual Funds

Pure Bond Mutual Funds

Money Market Funds

ETFs Annuities

2016 2016 Avg. $

73% agree

“I invest in mutual funds/ETFs because it is easier

than selecting individual stocks”

7 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q6.. How much do you agree or disagree with the following statements about investing in mutual funds and ETFs? Agree Strongly/Somewhat

Employer-sponsored plan 48.7%

Mutual fund company 40.8% 49%

45%

30%

27%

24%

5%

4%

Mutual Fund Company

Employer-Sponsored Plan

Online Brokerage

Full-Service Broker

Independent Financial Adviser

Insurance Company

Bank

SOURCES USED TO OBTAIN CURRENTLY OWNED MUTUAL FUNDS/ETFS

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q14. How did you obtain the mutual funds and/or ETFs currently owned by your household?

DIRECT PURCHASE & EMPLOYER PLANS TOP LIST WHEN INVESTING

8

Employer-sponsored plan 48.7%

Mutual fund company 40.8%

59%

47%

37%

15%

15%

60%

40%

49%

19%

19%

40%

26%

50%

30%

26%

Employer-Sponsored Plan

Online Brokerage (Scottrade, E*Trade)

Mutual Fund Company

Full-Service Broker (Morgan Stanley, Raymond James)

Independent Financial Adviser

Millennials Gen X Baby Boomers

SOURCES USED TO OBTAIN CURRENTLY OWNED MUTUAL FUNDS/ETFS

BOLD= Statistical Significance

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Millennials n=262, Gen X n=560, Baby Boomers n=2,386 Q14. How did you obtain the mutual funds and/or ETFs currently owned by your household?

Millennials more likely to utilize online brokers & obtain via employer, Older generations skew to mutual fund companies, Full Service Brokers

EMPLOYER PLANS & DIRECT PURCHASE TOP LIST WHEN INVESTING

9

MUTUAL FUNDS

10

93% agree

“I invest in mutual funds/ETFs because I feel it is more effective

in balancing risk”

11 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total Respondents n=3,208 Q6.. How much do you agree or disagree with the following statements about investing in mutual funds and ETFs? Agree Strongly/Somewhat

12 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents, own MF n=3,022 Q7. Please indicate which of the following types of mutual funds your household currently owns, including privately purchased and employer-sponsored?

Favor stocks funds over bonds, and among bond investments, corporate bonds are most likely

MUTUAL FUND HOLDINGS

62% 61% 57% 56% 54%

41% 38% 36%

32% 29% 27% 27% 25% 25% 24%

16% 10%

TOTAL

13

BOLD= Statistical Significance

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: own MF DIY Investor n=1,364 Use FA n=1,658 Q7. Please indicate which of the following types of mutual funds your household currently owns, including privately purchased and employer-sponsored?

Statistically significant differences on virtually all mutual fund types

MUTUAL FUND HOLDINGS

62% 63%

50% 51% 52%

37% 39% 33% 31%

27% 22% 24%

18% 20% 20% 14%

8%

63% 59%

64% 61%

57%

44%

37% 40%

33% 31% 32% 29% 31% 29% 28%

18% 13%

DIY INVESTOR/USE FA

DIY Investor Use FA

14 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: own MF Millennial Age 18-39 n=223, Gen X Age 40-54 n=535, Baby Boomer Age 55+ n=2,264 Q7. Please indicate which of the following types of mutual funds your household currently owns, including privately purchased and employer-sponsored?

Statistically significant differences on virtually all fund types

MUTUAL FUND HOLDINGS

50% 52%

38%

57%

36% 34%

48%

26% 29%

17% 17% 20%

14% 19%

10% 10% 9%

68% 64%

55% 54% 50% 48% 49%

31% 32% 27%

24% 26%

18% 24%

19% 14%

9%

60% 60% 62% 57%

61%

38%

29%

41%

32% 32% 30% 28% 30% 27%

30%

18% 12%

BY GENERATION

Millennials Gen X Baby Boomers

ETFS

15

16

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208; trending 2008-2012 shown for directional use only Q8. How would you gauge your knowledge of Exchange –Traded Funds (ETFs)?

Methodology change in 2016–use for directional purposes only FAMILIARITY WITH ETFS IS STRONG

57% 60%

69%

79% 83%

2008 2010 2012 2014 2016

I can confidently explain/I know more than most/I have some familiarity [Top 3 Boxes]

16

17 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total Respondents 2016 n=3,208, Millennials n=262, Gen X n=560, Baby Boomer n=2,386, DIY Investor n=1,475, Use FA n=1,733 Q8. How would you gauge your knowledge of Exchange –Traded Funds (ETFs)?

Younger investors more confident, those who do not use FA more confident about their knowledge CONFIDENCE WITH ETFS VARIES BY AGE & USAGE OF FA

24%

32%

25%

22%

32%

17%

Total 2016 Millennials Gen X Baby Boomers DIY Investor Use FA

I CAN CONFIDENTLY EXPLAIN [TOP BOX]

17

18 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents 2016: n=3,208 2014: n=479

Younger investors more confident, those who use an FA more confident about their knowledge CONFIDENCE WITH ETFS VARIES BY AGE & USAGE OF FA

54%

62%

55% 52%

62%

47%

Total 2016 Millennials Gen X Baby Boomers DIY Investor Use FA

I CAN CONFIDENTLY EXPLAIN/KNOW MORE THAN MOST [TOP 2 BOXES]

18

Average Value:

$143,000

19

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total Respondents n=3,208; among those investing in ETFs n=1909; Q19. What is the approximate asset value of your households' investments in each of the following financial instruments now held by your or other members of your households? Total should reflect the aggregate value of all the financial instruments listed below and should include employer-sponsored savings or retirement plan such as 401K or 403b. If unsure please give your best estimate.

Methodology change in 2016–use for directional purposes only

ETFS ARE A GROWING PART OF THEIR PORTFOLIO

19%

33%

42% 46%

64%

60%

$136,000

$126,000

$151,000 $143,000

$205,000

$255,487

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

0%

10%

20%

30%

40%

50%

60%

70%

2005 2008 2010 2012 2014 2016

% Investing in ETFs Average Value of ETFs

19

20 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents, own ETF n=1,651 Q7. Please indicate which of the following types of ETFs your household currently owns?

Favor stock funds over bonds

ETF HOLDINGS

91%

36%

26% 20%

Stock Bond Commodity Asset Allocation

21

BOLD= Statistical Significance

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Among those investing in ETFs n=1,647 Millennials 18-39 n=157 Gen X n=276, Baby Boomers n=1,218; Q10. Which of the following are among your reasons for investing in ETFs?

Transparency more important to Millennials, FA recommendation key for Boomers

DIVERSIFICATION & LOWER COSTS MOST IMPORTANT TO INVESTORS

76% 75%

43% 39%

31% 29% 24%

12%

70% 70%

34%

45%

33% 33%

19% 18%

69% 70%

28%

45%

31% 31%

13%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Diversification Lower Costs/Expenses

Transparency (know what I own)

Market Liquidity Intra-Day Trading Tax Efficiency Versatility Rec. by FA

Millennials Gen X Baby Boomers

22

BOLD= Statistical Significance

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Among those investing in ETFs n=1,647 DIY Investor n=749, Use an FA n=902 Q10. Which of the following are among your reasons for investing in ETFs?

Lower expenses, liquidity, taxes, transparency more important to DIY investors, FA recommendation key for those who use an FA

DIVERSIFICATION & LOWER COSTS MOST IMPORTANT TO INVESTORS

74% 69%

2%

49%

31%

38% 40%

18%

68% 70%

52%

41%

31% 25% 24%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Lower Costs/Expenses

Diversification Rec. by FA Market Liquidity Tax Efficiency Transparency (know what I own)

Intra-Day Trading Versatility

DIY Investor Use an FA

ACTIVITY

23

Contribute to Mutual Fund/ETFs

8x Annually

Re-balance Mutual Fund/ETFs

5.5x Annually

24 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total Respondents n=3,208 Q11. Approximately how frequently do you re-balance/ move and contribute to investments within your mutual fund/ETF portfolio (including any employer sponsor portfolios)?

On average

ACTIVE & INVOLVED WITH INVESTMENTS

25 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q22. Which of the following actions does your household plan to take, (excluding employer contributions to retirement programs) in the next 12 months?

More than 2 in 3 will make a move with their mutual funds/ETF investments

ANTICIPATED INVESTMENT ACTIVITIES NEXT 12 MONTHS

77%

54%

30%

21% 20% 13% 14%

11%

Any (net)

Contribute to MF I Own

Contribute to ETF I Own

Purchase New MF/Current Co.

Purchase New ETF/Current Co.

Purchase New ETF/New Co.

Move Out of Current Co.

Purchase New MF/New Co.

TOTAL

26

BOLD= Statistical Significance

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Millennials Age 18-39 n=262, Gen X Age 40-54 n=560, Baby Boomer n=2,386 Q22. Which of the following actions does your household plan to take, (excluding employer contributions to retirement programs) in the next 12 months?

Statistically significant differences for virtually all proposed investment activities

ANTICIPATED FINANCIAL ACTIVITIES BY AGE

91%

62%

49%

22% 29%

23%

9% 13%

90%

73%

38%

25% 21%

14% 13% 14%

73%

48%

26% 20% 18%

11% 14% 10%

Any (net)

Contribute to MF I Own

Contribute to ETF I Own

Purchase New MF/Current Co.

Purchase New ETF/Current Co.

Purchase New ETF/New Co.

Move Out of Current Co.

Purchase New MF/New Co.

Millennials Gen X Baby Boomers

27

WHAT MATTERS WHEN CHOOSING A COMPANY TO INVEST WITH

27

90%

“I feel more secure diversifying my portfolio

across multiple companies”

28 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents 2016: n=3,208 Q6.. How much do you agree or disagree with the following statements about investing in mutual funds and ETFs? Agree Strongly/Somewhat

5 Different Fund Companies

9 Different Funds

29 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q15. Including both funds/ETFs privately purchased in addition to any employer sponsored, how many different companies and how many different mutual/ETF funds are you invested in?

DIVERSIFIED OVER SEVERAL COMPANIES & FUNDS

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total Respondents n=3,208 Q12. How important are the following factors when selecting a company for your mutual fund/ETF investments?

Ranked by Very/Somewhat Important

COMPANIES WITH HIGH REGARD/ETHICS & LOW FEES MOST COMPELLING

69%

73%

68%

49%

52%

61%

59%

39%

27%

25%

12%

28%

21%

27%

43%

39%

30%

31%

41%

38%

29%

23%

2%

4%

4%

7%

6%

6%

7%

15%

25%

16%

28%

1%

1%

1%

1%

3%

3%

3%

4%

11%

29%

36%

Reputation

High Ethical Standards

Commissions/Fees

Well-Known

Diversity of Funds

Quality of Fund Managers

Confident Safe from Cyber-Threat

Customer Service

Online/Mobile Capabilities

Rec. by FA

Provider Past/Present Employer Plan

TOTAL

Very Important Somewhat Important Not Very Important Not At All Important

30

64% agree

“It is difficult to decide which funds to invest in with so many available funds

and companies”

31 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents 2016: n=3,208 Q6.. How much do you agree or disagree with the following statements about investing in mutual funds and ETFs? Agree Strongly/Somewhat

32 Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q13. What would make you move your mutual/ETF investments to a different company?

CATALYST TO MOVE MUTUAL FUND/ETF INVESTMENTS TO A DIFFERENT COMPANY

Multiple years of lower than anticipated returns 63%

Lower fees/commissions 54%

Unhappy with customer service 40%

Consolidating into fewer firms 31%

Read an article/saw an ad 19%

Lower than anticipated returns this year 16%

33

BRAND RESULTS

33

34

Alliance Bernstein

AB Allianz

American Funds

BlackRock

BNY Mellon

Columbia

Cullen

Eaton Vance

Fidelity

Federated

Franklin Templeton

Global X

Goldman Sachs

Invesco

Janus John Hancock

The Hartford, Putnam

JP Morgan

Legg Mason Lord Abbett

MassMutual Merrill Lynch MFS

Morgan Stanley

Nationwide

Nuveen

OppenheimerFunds

PIMCO PowerShares

Principal

ProShares

Prudential Russell

Charles Schwab

SSgA

TIAA-CREF

T.Rowe Price

Transamerica

UBS

Vanguard

Wells Fargo

FlexShares

iShares Select Sector

SPDR SPDRs

WisdomTree

35%

45%

55%

65%

75%

85%

95%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

MUTUAL FUNDS FAMILIARITY & REPUTATION OVERVIEW

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,202; Q16: How familiar are you with each of the following mutual fund/ETF companies? Q17: How would you rate each company’s overall reputation on a scale of 5-1 where 5 = excellent and 1= poor? Base: very/somewhat familiar with each company, base sizes vary

% Familiarity (Very/Somewhat)

34

Repu

tatio

n (To

p 2 bo

xes o

ut of

5) %

Familiarity & reputation are highly correlated

34

56%

50%

35%

22% 22% 21% 20% 18% 17%

15% 14% 12% 11% 11% 10% 9%

Source: WSJ. Insights 2014, 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents, n=3,208 Q18. In which companies do you or other household members currently own mutual or ETF funds?

TOP MUTUAL FUND/ETF HOLDINGS BY COMPANY

35

MEDIA

36

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Total respondents n=3,208 Q23. Which media/content sources do you rely on to learn more about mutual funds, ETFs, mutual fund/ETF companies?

WSJ PRINT IS HIGHLY RELIED ON, AND LOW DUPLICATION WITH OTHER MEDIA/CONTENT SOURCES

70% 66%

34%

14%

25%

9%

23% 21%

11% 16%

11% 10% 6%

37

Source: WSJ. Insights 2016 Mutual Fund & ETF Proprietary Investors Study; Base: Millennials Age 18-39 n=262, Gen X Age 40-54 n=560, Baby Boomer n=2,386 Q23. Which media/content sources do you rely on to learn more about mutual funds, ETFs, mutual fund/ETF companies?

WSJ PRINT IS HIGHLY RELIED ON, AND LOW DUPLICATION WITH OTHER MEDIA/CONTENT SOURCES

54%

81%

33%

11%

40%

12%

20% 17%

11%

27%

8%

23%

8%

65% 70%

38%

14%

28%

10%

25% 20%

13% 16%

10% 11% 7%

76%

61%

33%

15% 20%

9%

22% 22%

9% 13% 13%

7% 5%

Millennials Gen X Baby Boomers

38

APPENDIX

39

Familiarity Very/Somewhat

Reputation [Top 2 out of 5]

2016 %

2016 %

1 Fidelity 92 86 2 Vanguard 89 91 3 T. Rowe Price 74 76 3 Merrill Lynch 74 53 5 Charles Schwab Funds 72 73 6 Morgan Stanley 68 59 6 JP Morgan 66 64 6 PIMCO 66 61 9 Goldman Sachs 64 57 9 Janus 64 58 9 Franklin Templeton Investments 64 72 12 BlackRock 61 74 13 OppenheimerFunds 59 62 14 Prudential 57 54 15 John Hancock 54 55

16 TIAA-CREF 52 68 17 SPDRs 51 71 18 Putnam 50 50 18 The Hartford 50 52

20 American Funds 49 70 21 Wells Fargo Advantage Funds 48 58

22 UBS 47 47

22 iShares 47 75 24 Invesco 44 52

TOTAL RESULTS

40

Familiarity Very/Somewhat

Reputation [Top 2 out of 5]

2016 %

2016 %

25 Legg Mason 42  56

26 Select Sector SPDRs 41 68 

26 BNY Mellon 41 55 

26 SSgA/State Street Global Advisors 41  58

29 Nationwide 40 44

30 MassMutual 38 51 

30 Nuveen 38  58

32 PowerShares 36  58

32 Transamerica 36 43 

34 MFS Investment Management 30 53 

35 Allianz 29 52 

36 Russell Investments 27 54

37 Lord Abbett 26  55

38 Eaton Vance 25 59 

38 ProShares 24 55

40 Principal Funds 24 47 

41 Alliance Bernstein 23 52 

42 WisdomTree 21 60

42 Federated Investors 21 53 

44 Columbia Management 18 46 

45 Flexshares 11 39 

46 AB 9 44

47 Global X 7 42 

48 Cullen 5 40 41

TOTAL RESULTS

41

Alliance Bernstein FlexShares MassMutual Putnam Investments

AB iShares Merrill Lynch Russell Investments

Allianz Franklin Templeton MFS Investments State Street Global Advisors (SSgA)

American Funds Global X Morgan Stanley Select Sector SPDR

BlackRock Goldman Sachs Nationwide SPDRs

BNY Mellon (The Bank of NY Mellon) Invesco Nuveen TIAA-CREF

Charles Schwab Janus OppenheimerFunds T. Rowe Price

Columbia Management John Hancock PIMCO Transamerica

Cullen The Hartford PowerShares UBS

Eaton Vance JP Morgan Principal Funds Vanguard

Fidelity Legg Mason ProShares Wells Fargo

Federated Investors Lord Abbett Prudential WisdomTree

48 MEASURED BRANDS

42