The Road Ahead: US Markets and the Investment Management Industry Boston Financial Client Forum Brian Reid September 15, 2009

Total Fund Assets Up 9 Percent from Year-End 2008 * Data for 2009 is as July 31, Source: Investment Company Institute Mutual Funds Closed-End Funds ETFs (Billions of Dollars) 7,174 7,199 11,117 9,483 8,589 7,779 6,651 10,321 12,921 11,280 * 1

Net New Cash Flows into U.S. Stock and Bond Mutual Funds 2 Dollars in Billions * Data for August 2009 are estimated through August 19, Source: Investment Company Institute *

Flows to Equity Funds Related to Global Stock Price Performance * 3 Billions of Dollars Percentage Points * Data are through July The return on equities is measured as the year-over-year change in the MSCI All Country World Index. 2 Net new cash flow to equity funds is plotted as a six-month moving average. Sources: Investment Company Institute and Morgan Stanley Capital International. Net new cash flow 2 Total Return on Equities 1

Flows to Bond Funds Related to Bond Returns 4 1 The total return on bonds is measured as the year-over-year change in the Citigroup Broad Investment Grade Bond Index. 2 Net new cash flow to bond funds is plotted as a three-month moving average of net new cash flow as a percentage of previous month-end assets. The data exclude flows to high-yield bond funds. Sources: Investment Company Institute and Citigroup. ( 1994–July 2009)

Flows to Taxable Retail Money Market Funds Related to Interest Rate Spread (1989–July 2009) Interest Rate Spread 2 Percentage points * Data are through July Net new cash flow is a percent of previous month-end taxable retail money market fund assets and is shown as a six-month moving average. 2 The interest rate spread is the difference between the taxable retail money market fund yield and the average interest rate on money market deposit accounts. Sources: Investment Company Institute, iMoneyNet, and Bank Rate Monitor. Net New Cash Flow 1 Percent of total net assets 5

Net Issuance of ETF Shares * * Data are through July Sources: Investment Company Institute and Strategic Insight. Billions of Dollars 6

Household Net Worth and Personal Savings as a Multiple of Disposable Personal Income 7 Source: Federal Reserve Board Net Worth Savings ( )

Fund Complexes with Net Inflows to Stock and Bond Funds* 8 * Data are through July Source: Investment Company Institute (Percent of Complexes)

Number of Fund Sponsors Fund Sponsors Leaving Total Number of Sponsors at Year-End Fund Sponsors Entering Source: Investment Company Institute 9

10 * Excludes load fees and 12b-1 fees. Also excludes funds of funds and variable annuities. Sources: Investment Company Institute; Lipper; ValueLine Publishing, Inc.; CDA/Wiesenberger Investment Companies Service; © CRSP University of Chicago, used with permission, all rights reserved ( / and Strategic Insight Simfund. Estimated Stock Mutual Fund Fees Collected and Stock Fund Net Assets* Estimated Fees Collected Total Net Assets Billions of Dollars

Major Regulatory, Legislation, and Legal Issues SEC Proposals for Money Market Funds Retirement Policy  Retirement Plan Coverage  401(k) Tax Incentives  “Reform” Efforts Jones v. Harris and Fund Fees Financial Regulatory Reform 11