2015 Investment Company Fact Book (pdf)

2014 Facts at a Glance Total worldwide assets invested in mutual funds and exchange-traded funds

$33.4 trillion

U.S. investment company total net assets

$18.2 trillion

Mutual funds

$15.9 trillion

Exchange-traded funds

$2.0 trillion

Closed-end funds

$289 billion

Unit investment trusts

$101 billion

U.S. investment companies’ share of: U.S. corporate equity

30%

U.S. municipal securities

26%

Commercial paper

46%

U.S. government securities

11%

U.S. household ownership of mutual funds Number of households owning mutual funds

53.2 million

Number of individuals owning mutual funds

90.4 million

Percentage of households owning mutual funds Median mutual fund assets of fund-owning households Median number of mutual funds owned

43.3% $103,000 4

U.S. retirement market Total retirement market assets Percentage of households with tax-advantaged retirement savings IRA and DC plan assets invested in mutual funds

$24.7 trillion 63% $7.3 trillion

2015

Investment Company Fact Book

2015

Investment Company Fact Book A Review of Trends and Activities in the U.S. Investment Company Industry 55th edition WWW.ICIFACTBOOK.ORG

The Investment Company Institute (ICI) is the national association of U.S. investment companies. ICI seeks to encourage adherence to high ethical standards, promote public understanding, and otherwise advance the interests of funds, their shareholders, directors, and advisers. Although information or data provided by independent sources is believed to be reliable, ICI is not responsible for its accuracy, completeness, or timeliness. Opinions expressed by independent sources are not necessarily those of the Institute. If you have questions or comments about this material, please contact the source directly. Fifty-fifth edition ISBN 1-878731-57-2 Copyright © 2015 by the Investment Company Institute. All rights reserved.

Contents Letter from the Chief Economist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii ICI Research Staff and Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Part 1: Analysis and Statistics List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Chapter 1: U.S.-Registered Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Chapter 2: Recent Mutual Fund Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Chapter 3: Exchange-Traded Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Chapter 4: Closed-End Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Chapter 5: Mutual Fund Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Chapter 6: Characteristics of Mutual Fund Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Chapter 7: Retirement and Education Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Part 2: Data Tables List of Data Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Section 1: Mutual Fund Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173 Section 2: Closed-End Funds, Exchange-Traded Funds, and Unit Investment Trusts . . . . . . . . . . . .181 Section 3: Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Section 4: Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Section 5: Additional Categories of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214 Section 6: Institutional Investors in the Mutual Fund Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 Section 7: Worldwide Mutual Fund Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 Appendix A: How U.S.-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240 Appendix B: Significant Events in Fund History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

LETTER FROM THE CHIEF ECONOMIST

Brian Reid Chief Economist of the Investment Company Institute

This year marks the 75th anniversary of the Investment Company Act and the Investment Advisers Act—the key statutes under which mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts are regulated and governed. In the same year that Congress enacted these laws, 1940, the fund industry formed the National Committee of Investment Companies, the trade group that became the Investment Company Institute (ICI). Shortly after its formation, ICI began to collect mutual fund asset and flow data, launching a statistical and research program that remains one of the Institute’s core activities and central strengths. This data collection program has expanded greatly over time, with ICI currently managing 18 different fund surveys. Our historical data, some extending back nearly threequarters of a century, provide perspective about funds and their investors across changing market cycles and an evolving investor base. One of the first projects I worked on when I joined ICI in 1996—a study showing how bond fund investors react during bond market downturns—introduced me to this historical record. At the time, there was an ongoing debate about how fund investors would react to market declines, because fund assets had risen from about $1 billion in 1940 to $3.5 trillion in 1996. Commentators and researchers were concerned that fund investors would leave the markets en masse during a downturn, destabilizing a financial system in which funds were playing a larger role. If this reminds you of today’s debates about financial stability and the fund industry, you are right. But as ICI economists Sean Collins and Chris Plantier recently wrote, this debate did not first appear in the 1990s. About once every decade since the 1920s, fears resurface that fund investors will redeem heavily from stock and bond funds and cause markets to crash. These concerns typically appear after a period of rapid fund growth. And so now, after nearly a decade of strong inflows to bond funds, some regulators, researchers, and commentators are once again raising concerns about how fund investors will react when interest rates begin to rise and bond funds report losses. Almost daily, a story shows up in the media highlighting fears of large, destabilizing outflows from bond mutual funds and ETFs that will ignite or accelerate a financial crisis. Yet every time I explore this topic I return to the same conclusion: stock and bond funds are a remarkably stable source of capital to the U.S. and global economies. As we discuss in chapter 2, outflows from bond funds, even at the height of a market downturn, amount to only 1 or 2 percent of bond fund assets in a month. And even when bond funds have net outflows, investors do not all move for the exits. As some investors sell shares in bond funds, others continue to buy; a substantial portion of individual funds have net inflows; and fund managers are both buyers and sellers of securities. All of this means that funds continue to operate on both sides of the markets, rather than engaging in the one-sided trading that is often predicted. (See Figure 2.7 on page 39.) viii


Despite this historical evidence of stability, these concerns regularly resurface—and so ICI Research continues to explore and explain this issue. During the past year, we have written and contributed to white papers, comment letters, and blog posts, explaining how fund investors behave during periods of stress. Chris Plantier has examined this for funds investing in emerging markets, while ICI economist Shelly Antoniewicz and our ICI legal colleague Jane Heinrichs have studied investor behavior in ETFs. The natural question is, why do we see such stable investor behavior? Certainly one aspect is that most fund investors typically invest for the long term. As we discuss in chapter 6, 91 percent of mutual fund investors indicate that saving for retirement is one of their savings goals. These investors have embraced the guidance of financial planners, academics, fund companies, and journalists—that timing the market is most likely to leave them worse off than remaining invested and continuing to make regular contributions to their funds. Of course, shareholder stability also depends crucially on the strength of regulations that protect investors. The core features of regulated funds—such as limitations on fund leverage, mark-to-market pricing of fund portfolios, portfolio diversity, and liquidity management—have provided important shareholder protections and helped maintain investor confidence during periods of market stress over the past 75 years. These protections help ensure that investors who stay in a fund are shielded from harm caused by investors leaving the fund. Industry leaders, the Securities and Exchange Commission, and members of Congress who worked to craft the statutes that serve as the foundation for regulated funds all understood how investor protections are interwoven with investor confidence and capital formation. Gathering and analyzing data about funds, their investors, and the markets—and using those data to inform and educate regulators, policymakers, and other stakeholders—are critical to ICI’s service to funds and their investors. The months of effort that ICI staff dedicate to publishing the Fact Book contribute significantly to that mission. This volume is a continuation of nearly 75 years of effort to facilitate sound, well-informed public policies affecting investment companies, their investors, and financial markets.


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ICI Research Staff and Publications ICI Senior Research Staff Chief Economist Brian Reid leads the Institute’s Research Department. The department serves as a source for statistical data on the investment company industry and conducts public policy research on fund industry trends, shareholder demographics, the industry’s role in U.S. and international financial markets, and the retirement market. Prior to joining ICI in 1996, Reid served as an economist at the Federal Reserve Board of Governors. He has a PhD in economics from the University of Michigan and a BS in economics from the University of Wisconsin–Madison.

Senior Director of Industry and Financial Analysis Sean Collins heads ICI’s research on the structure of the mutual fund industry, industry trends, and the broader financial markets. Collins, who joined ICI in 2000, is responsible for research on the flows, assets, and fees of mutual funds, as well as a research initiative to better understand the costs and benefits of laws and regulations governing mutual funds. Prior to joining ICI, Collins was an economist at the Federal Reserve Board of Governors and at the Reserve Bank of New Zealand. He has a PhD in economics from the University of California, Santa Barbara, and a BA in economics from Claremont McKenna College.

Senior Director of Retirement and Investor Research Sarah Holden leads the Institute’s research efforts on investor demographics and behavior and retirement and tax policy. Holden, who joined ICI in 1999, heads efforts to track trends in household retirement saving activity and ownership of funds as well as other investments inside and outside retirement accounts. Prior to joining ICI, Holden served as an economist at the Federal Reserve Board of Governors. She has a PhD in economics from the University of Michigan and a BA in mathematics and economics from Smith College.

Senior Director of Statistical Research Judy Steenstra oversees the collection and publication of weekly, monthly, quarterly, and annual data on open-end mutual funds, as well as data on closedend funds, exchange-traded funds, unit investment trusts, and the worldwide mutual fund industry. Steenstra joined ICI in 1987 and was appointed director of statistical research in 2000. She has a BS in marketing from The Pennsylvania State University.

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ICI RESEARCH STAFF AND PUBLICATIONS

ICI Research Staff The ICI Research Department consists of 42 members, including economists and research analysts. This staff collects and disseminates data for all types of registered investment companies, offering detailed analyses of fund shareholders, the economics of investment companies, and the retirement and education savings markets.

2014 ICI Research and Statistical Publications ICI is the primary source of analysis and statistical information on the investment company industry. In 2014, the Institute’s Research Department released more than 180 statistical reports examining the broader investment company industry as well as specific segments of the industry: money market funds, closed-end funds, exchange-traded funds, and unit investment trusts. In addition to the annual Investment Company Fact Book, ICI released 21 research and policy publications in 2014, examining the industry and its shareholders.

Industry and Financial Analysis Research Publications »» “Globalisation and the Global Growth of Long-Term Mutual Funds,” ICI Global Research Perspective, March 2014

»» “The Closed-End Fund Market, 2013,” ICI Research Perspective, March 2014 »» “Trends in the Expenses and Fees of Mutual Funds, 2013,” ICI Research Perspective, May 2014 »» “Understanding Exchange-Traded Funds: How ETFs Work,” ICI Research Perspective, September 2014

Investor Research Publications »» “Americans’ Views on Defined Contribution Plan Saving,” ICI Research Report, January 2014 »» “Profile of Mutual Fund Shareholders, 2013,” ICI Research Report, February 2014 »» “The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007–2012,” ICI Research Report, March 2014

»» “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2012,” ICI Research Report, June 2014

»» “Characteristics of Mutual Fund Investors, 2014,” ICI Research Perspective, November 2014 »» “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014,” ICI Research Perspective, November 2014


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Retirement Research Publications »» “Defined Contribution Plan Participants’ Activities, First Three Quarters of 2013,” ICI Research Report, February 2014

»» “Defined Contribution Plan Participants’ Activities, 2013,” ICI Research Report, April 2014 »» “The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2013,” ICI Research Perspective, July 2014

»» “What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Account Balances, 2007–2012,” ICI Research Perspective, July 2014

»» “Defined Contribution Plan Participants’ Activities, First Quarter 2014,” ICI Research Report, August 2014

»» Inside the Structure of Defined Contribution/401(k) Plan Fees, 2013, August 2014 »» “Who Gets Retirement Plans and Why, 2013,” ICI Research Perspective, October 2014 »» “A Look at Private-Sector Retirement Plan Income After ERISA, 2013,” ICI Research Perspective, October 2014

»» “Defined Contribution Plan Participants’ Activities, First Half 2014,” ICI Research Report, November 2014

»» The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans, December 2014

»» “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2013,” ICI Research Perspective, December 2014 ICI’s research is available at www.ici.org/research. Find further analysis and commentary by ICI economists at ICI Viewpoints (www.ici.org/viewpoints).

Statistical Releases Trends in Mutual Fund Investing

»» A monthly report that includes mutual fund sales, redemptions, assets, cash positions, exchange activity, and portfolio transactions for the period. Estimated Long-Term Mutual Fund Flows

»» A weekly report that provides aggregate estimates of net new cash flows to equity, hybrid, and bond mutual funds. Money Market Fund Assets

»» A weekly report on money market fund assets by type of fund.

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Monthly Taxable Money Market Fund Portfolio Data

»» A monthly report based on data contained in SEC Form N-MFP that provides insights into the aggregated holdings of prime and government money market funds and the nature and maturity of security holdings and repurchase agreements. Retirement Market Data

»» A quarterly report that includes individual retirement account and defined contribution plan assets and mutual fund assets held in those accounts by type of fund. Closed-End Fund Data

»» A quarterly report on closed-end fund assets, number of funds, issuance, and number of shareholders. Exchange-Traded Fund Data

»» A monthly report that includes assets, number of funds, issuance, and redemptions of ETFs. Unit Investment Trust Data

»» A monthly report that includes the value and number of new trust deposits by type and maturity. Worldwide Mutual Fund Market Data

»» A quarterly report that includes assets, number of funds, and net sales of mutual funds in countries worldwide. These and other ICI statistics are available at www.ici.org/research/stats. To subscribe to ICI’s statistical releases, visit www.ici.org/pdf/stats_subs_order.pdf.

Acknowledgments Publication of the 2015 Investment Company Fact Book was directed by Chris Plantier, senior economist, and Judy Steenstra, senior director of statistical research, working with Miriam Bridges, editorial director, Candice Gullett, senior copyeditor, and Stephanie Lacasse, designer.


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PART ONE

Analysis and Statistics

Figures Chapter 1 U.S.-Registered Investment Companies Figure 1.1: Investment Company Total Net Assets by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.2: The United States Has the World’s Largest Mutual Fund and ETF Markets . . . . . . . . . . . . . . . . . . . . . . . .10 1.3: Share of Household Financial Assets Held in Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.4: Household Net Investments in Funds, Bonds, and Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.5: Mutual Funds in Household Retirement Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 1.6: Investment Companies Channel Investment to Stock, Bond, and Money Markets . . . . . . . . . . . . . . . . . . . .14 1.7: 80 Percent of Fund Complexes Were Independent Fund Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.8: Number of Fund Sponsors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.9: Fund Complexes with Positive Net New Cash Flow to Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . 17 1.10: Share of Mutual Fund and ETF Assets at the Largest Complexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.11: Number of Mutual Funds Entering and Leaving the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 1.12: Total Net Assets and Number of UITs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 1.13: Number of Investment Companies by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.14: Investment Company Industry Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 1.15: Investment Company Industry Employment by Job Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1.16: Investment Company Industry Employment by State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Chapter 2 Recent Mutual Fund Trends Figure 2.1: Equity Funds Held More Than Half of Total Mutual Fund Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.2: Institutional and Household Ownership of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.3: Net New Cash Flow to Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 2.4: Net New Cash Flow to Equity Funds Is Related to World Equity Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 2.5: Net New Cash Flow to Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 2.6: Turnover Rate Experienced by Equity Fund Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.7: Net New Cash Flow to Bond Funds Is Related to Bond Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.8: Bond Funds Have Experienced Net Inflows Through Most of the Past Decade . . . . . . . . . . . . . . . . . . . . . . . . 39 2.9: Willingness to Take Above-Average or Substantial Investment Risk by Age Group . . . . . . . . . . . . . . . . . . . . . 40 2.10: Mutual Fund Assets by Age Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.11: Investors Are Gravitating Toward Hybrid Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 2.12: Alternative Strategies Mutual Funds Have Grown Rapidly Since the 2008 Financial Crisis . . . . . . . . . . . . . . . . 44 2.13: Net New Cash Flow to Index Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.14: Funds Indexed to the S&P 500 Held 33 Percent of Index Mutual Fund Assets . . . . . . . . . . . . . . . . . . . . . . . 46 2.15: Index Equity Mutual Funds’ Share Continued to Rise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 2.16: Some of the Outflows from Domestic Equity Mutual Funds Have Gone to ETFs . . . . . . . . . . . . . . . . . . . . . . 47 2.17: Net New Cash Flow to Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 2.18: Net New Cash Flow to Retail and Institutional Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 2.19: Money Market Funds Managed 23 Percent of U.S. Businesses’ Short-Term Assets in 2014 . . . . . . . . . . . . . . . . 50 2.20: Net New Cash Flow to Taxable Retail Money Market Funds Is Related to Interest Rate Spread . . . . . . . . . . . . . . 51 2.21: Prime Money Market Fund Holdings of Treasury and Agency Securities and Repurchase Agreements . . . . . . . . . 53

FIGURES

3

Chapter 3 Exchange-Traded Funds Figure 3.1: The United States Has the Largest ETF Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3.2: Total Net Assets and Number of ETFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 3.3: Creation of ETF Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3.4: Most ETF Activity Occurs on the Secondary Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.5: Net Issuance of ETF Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 3.6: Net Issuance of ETF Shares by Investment Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 3.7: Total Net Assets of ETFs Were Concentrated in Large-Cap Domestic Stocks . . . . . . . . . . . . . . . . . . . . . . . . . 71 3.8: Number of ETFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 3.9: Types of Commodity and Domestic Sector Equity ETFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 3.10: ETF-Owning Households Held a Broad Range of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 3.11: Characteristics of ETF-Owning Households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 3.12: ETF-Owning Households Are Willing to Take More Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Chapter 4 Closed-End Funds Figure 4.1: Total Assets of Closed-End Funds Increased to $289 Billion at Year-End 2014 . . . . . . . . . . . . . . . . . . . . . . . 81 4.2: Equity Funds’ Growing Share of the Closed-End Fund Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 4.3: Closed-End Fund Net Share Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.4: Closed-End Fund Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 4.5: Closed-End Funds Employing Structural and Certain Types of Portfolio Leverage . . . . . . . . . . . . . . . . . . . . . 85 4.6: Preferred Shares Comprised the Majority of Closed-End Fund Structural Leverage . . . . . . . . . . . . . . . . . . . . 86 4.7: Use of Portfolio Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 4.8: Closed-End Fund Investors Owned a Broad Range of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 4.9: Closed-End Fund Investors Had Above-Average Household Incomes and Financial Assets . . . . . . . . . . . . . . . . 89

Chapter 5 Mutual Fund Expenses and Fees Figure 5.1: Expenses Incurred by Mutual Fund Investors Have Declined Substantially Since 2000 . . . . . . . . . . . . . . . . . . . 93 5.2: Mutual Fund Expense Ratios Tend to Fall as Fund Assets Rise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 5.3: Fund Shareholders Paid Below-Average Expenses for Equity Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 5.4: Assets Are Concentrated in Lower-Cost Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 5.5: Total Net Assets and Number of Index Mutual Funds Have Increased in Recent Years . . . . . . . . . . . . . . . . . . . 97 5.6: Expense Ratios of Actively Managed and Index Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 5.7: Expense Ratios for Selected Investment Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 5.8: Front-End Sales Loads That Investors Pay Are Well Below the Maximum Front-End Sales Loads That Funds Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 5.9: Nearly All Net New Cash Flow Was in No-Load Institutional Share Classes . . . . . . . . . . . . . . . . . . . . . . . . 106 5.10: Total Net Assets of Long-Term Mutual Funds Are Concentrated in No-Load Share Classes . . . . . . . . . . . . . . . 107 5.11: A Variety of Arrangements May Be Used to Compensate 401(k) Service Providers . . . . . . . . . . . . . . . . . . . 109 5.12: 401(k) Equity Mutual Fund Assets Are Concentrated in Lower-Cost Funds . . . . . . . . . . . . . . . . . . . . . . . . 111

4

2015 INVESTMENT COMPANY FACT BOOK

Chapter 6 Characteristics of Mutual Fund Owners Figure 6.1: 43 Percent of U.S. Households Owned Mutual Funds in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 6.2: Characteristics of Mutual Fund Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 6.3: Incidence of Mutual Fund Ownership Is Greatest Among 35- to 64-Year-Olds . . . . . . . . . . . . . . . . . . . . . . . 116 6.4: The Baby Boom Generation Is the Largest Shareholder Group and Holds the Most Mutual Fund Assets . . . . . . . . .117 6.5: Ownership of Mutual Funds Increases with Household Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 6.6: Most Households That Own Mutual Funds Have Moderate Incomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 6.7: Employer-Sponsored Retirement Plans Are Increasingly the Source of First Mutual Fund Purchase . . . . . . . . . . 121 6.8: 82 Percent of Mutual Fund–Owning Households Held Shares Inside Employer-Sponsored Retirement Plans . . . . . 122 6.9: Nearly Half of Mutual Fund–Owning Households Held Shares Through Multiple Sources . . . . . . . . . . . . . . . . . 123 6.10: Households’ Mutual Fund Assets by Type of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 6.11: Most Shareholders View the Mutual Fund Industry Favorably . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 6.12: Households’ Willingness to Take Investment Risk Tends to Move with the Stock Market . . . . . . . . . . . . . . . . 126 6.13: Households’ Willingness to Take Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 6.14: More Than Eight in 10 Mutual Fund–Owning Households Have Confidence in Mutual Funds . . . . . . . . . . . . . . 128 6.15: Internet Access Is Nearly Universal Among Mutual Fund–Owning Households . . . . . . . . . . . . . . . . . . . . . . 129

Chapter 7 Retirement and Education Savings Figure 7.1: Retirement Resource Pyramid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 7.2: Primary Reason for Household Saving Changes with Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 7.3: Social Security Benefit Formula Is Highly Progressive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 7.4: Near-Retiree Households Across All Income Groups Have Retirement Assets, DB Plan Benefits, or Both . . . . . . . 136 7.5: U.S. Retirement Assets Rose in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 7.6: Total U.S. Retirement Assets and Unfunded Pension Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 7.7: Many U.S. Households Have Tax-Advantaged Retirement Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 7.8: Rates of IRA or Defined Contribution Plan Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 7.9: Defined Contribution Plan Assets by Type of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141 7.10: Design of 401(k) Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 7.11: Employers with Simple Matches Use a Variety of Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 7.12: Incidence of Investment Options Offered in 401(k) Plans by Type of Investment . . . . . . . . . . . . . . . . . . . . 144 7.13: 401(k) Asset Allocation Varied with Participant Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 7.14: Asset Allocation to Equities Varied Widely Among 401(k) Plan Participants . . . . . . . . . . . . . . . . . . . . . . . 147 7.15: Target Date Funds’ 401(k) Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 7.16: 401(k) Balances Tend to Increase with Participant Age and Job Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . 149 7.17: IRA Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 7.18: Nearly 42 Million U.S. Households Owned IRAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 7.19: New Roth IRAs Often Are Opened with Contributions; New Traditional IRAs Often Are Opened with Rollovers . . . 153 7.20: Multiple Sources of Information Are Consulted for the Rollover Decision . . . . . . . . . . . . . . . . . . . . . . . . . 155 7.21: IRA Asset Allocation Varied with Investor Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 7.22: Roth IRA Investors Rarely Take Withdrawals; Traditional IRA Investors Are Heavily Affected by RMDs . . . . . . . . 158 7.23: Traditional IRA Withdrawals Among Retirees Often Are Used to Pay for Living Expenses . . . . . . . . . . . . . . . 159 7.24: Substantial Amount of Retirement Assets Are Invested in Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . 161 7.25: Majority of Mutual Fund Retirement Account Assets Were Invested in Equities . . . . . . . . . . . . . . . . . . . . . 162 7.26: Target Date and Lifestyle Mutual Fund Assets by Account Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 7.27: Section 529 Savings Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 7.28: Characteristics of Households Saving for College . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167

FIGURES

5

CHAPTER ONE

U.S.-Registered Investment Companies The largest segment of the asset management business in the United States is made up of registered investment companies. U.S.-registered investment companies play a major role in the U.S. economy and financial markets, and a growing role in global financial markets. These funds managed $18.2 trillion in assets at year-end 2014, largely on behalf of more than 90 million U.S. retail investors. The industry has experienced strong growth over the past quarter century from asset appreciation and strong demand from households due to rising household wealth, the aging U.S. population, and the evolution of employer-based retirement systems. Funds supplied investment capital in securities markets around the world and were among the largest groups of investors in the U.S. stock, commercial paper, and municipal securities markets.

The assets of U.S.-registered investment companies exceeded $18 trillion for the first time in 2014 More than

$18 trillion at year-end 2014

This chapter provides a broad overview of U.S.-registered investment companies—mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts—and their sponsors. Investment Company Assets in 2014................................................................................................................ 8 Americans’ Continued Reliance on Investment Companies......................................................................... 11. Role of Investment Companies in Financial Markets..................................................................................... 14 Types of Intermediaries and Number of Investment Companies................................................................. 15 Investment Company Employment.................................................................................................................. 23

Investment Company Assets in 2014 U.S.-registered investment companies* managed $18.2 trillion in assets at year-end 2014 (Figure 1.1), $1.1 trillion more than at year-end 2013. U.S. stocks returned more than 10 percent in 2014, contributing to the increase in total net assets of funds invested in domestic equity markets. International stock markets, by contrast, fell on average, putting downward pressure on the assets of funds invested in international equities. The strengthening of the U.S. dollar against the euro also lowered the dollar value of eurodenominated securities, and thus the value of equity and bond funds holding euro-denominated assets. The U.S. mutual fund and exchange-traded fund (ETF) markets—with $17.8 trillion in assets under management at year-end 2014—remained the largest in the world, accounting for 53 percent of the $33.4 trillion in mutual fund and ETF assets worldwide (Figure 1.2). The majority of U.S. mutual fund and ETF assets at year-end 2014 were in long-term funds, with equity funds comprising 56 percent (Figure 1.2). Within equity funds, domestic funds (those that invest primarily in shares of U.S. corporations) held 42 percent of total assets and world funds (those that invest primarily in shares of non-U.S. corporations) accounted for 14 percent. Bond funds held 21 percent of U.S. mutual fund and ETF assets. Money market funds, hybrid funds, and other funds—such as those that invest primarily in commodities—held the remainder (23 percent).

* The term investment companies or U.S. investment companies will be used at times throughout this book in place of U.S.-registered investment companies. U.S.-registered investment companies are open-end mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts.

8


FIGURE 1.1

Investment Company Total Net Assets by Type Billions of dollars; year-end, 1997–2014

Mutual funds1

Closed-end funds2

ETFs3

UITs

Total4

1997

$4,468

$152

$7

$85

$4,711

1998

5,525

156

16

94

5,790

1999

6,846

147

34

92

7,119

2000

6,965

143

66

74

7,247

2001

6,975

141

83

49

7,248

2002

6,383

159

102

36

6,680

2003

7,402

214

151

36

7,803

2004

8,096

253

228

37

8,614

2005

8,891

276

301

41

9,509

2006

10,398

297

423

50

11,168

2007

12,000

312

608

53

12,974

2008

9,603

184

531

29

10,347

2009

11,113

223

777

38

12,151

2010

11,833

238

992

51

13,113

2011

11,632

242

1,048

60

12,982

2012

13,052

264

1,337

72

14,725

2013

15,035

279

1,675

87

17,075

2014

15,852

289

1,974

101

18,217

1 Mutual

fund data include only mutual funds that report statistical information to the Investment Company Institute, and do not include mutual funds that invest primarily in other mutual funds. 2 Closed-end fund data include preferred share classes. 3 ETF data prior to 2001 were provided by Strategic Insight Simfund. ETF data include investment companies not registered under the Investment Company Act of 1940 and exclude ETFs that primarily invest in other ETFs. 4 Total investment company assets include mutual fund holdings of closed-end funds and ETFs. Note: Data are for investment companies that report statistical information to the Investment Company Institute. Assets of these companies are 98 percent of investor assets. Components may not add to the total because of rounding. Sources: Investment Company Institute and Strategic Insight Simfund

U.S.-REGISTERED INVESTMENT COMPANIES

9

FIGURE 1.2

The United States Has the World’s Largest Mutual Fund and ETF Markets Percentage of total net assets, year-end 2014

6% Other Americas

11% Africa and Asia-Pacific

42 Domestic equity funds 53% United States

14 World equity funds 21 Bond funds

29% Europe

15 Money market funds 8 Total worldwide mutual fund and ETF assets: $33.4 trillion

Hybrid and other funds*

Total U.S. mutual fund and ETF assets: $17.8 trillion

* Includes ETFs—both registered and not registered under the Investment Company Act of 1940—that invest primarily in commodities, currencies, and futures. Note: Components may not add to 100 percent because of rounding. Sources: Investment Company Institute and International Investment Funds Association

Mutual funds reported $102 billion in net inflows in 2014, while other registered investment companies also recorded positive net inflows. On net, investors added $96 billion to long-term mutual funds. Money market funds accounted for the other $6 billion. Mutual fund shareholders reinvested $216 billion in income dividends and $381 billion in capital gains distributions that mutual funds paid out during the year. Investor demand for ETFs continued to thrive with net share issuance (including reinvested dividends) totaling $241 billion in 2014. Unit investment trusts (UITs) had new deposits of $66 billion, up 18 percent from 2013, and closed-end funds issued $5 billion in new shares, on net. 100

80

60

40

20

0

10


Americans’ Continued Reliance on Investment Companies Households make up the largest group of investors in funds, and registered investment companies managed 24 percent of household financial assets at year-end 2014 (Figure 1.3). As households have come to rely more on funds over the past decade, their demand for directly held equities and bonds has fallen (Figure 1.4). Household demand for directly held bonds (which had outflows of $455 billion in 2014) has been weak since the financial crisis. Bond funds recorded moderate inflows in 2014, with investors injecting $44 billion. Overall, households invested an additional $416 billion in long-term registered investment companies in 2014. From 2005 to 2014, households invested an annual average of $379 billion, on net, in long-term registered investment companies, with net investments each year except 2008. In contrast, directly held equities and bonds had average annual net sales of $433 billion. FIGURE 1.3

Share of Household Financial Assets Held in Investment Companies Percentage of household financial assets; year-end, 1980–2014 24

2 1980

1985

1990

1995

2000

2005

2010

2014

Note: Household financial assets held in registered investment companies include household holdings of ETFs, closed-end funds, UITs, and mutual funds. Mutual funds held in employer-sponsored DC plans, IRAs, and variable annuities are included. Sources: Investment Company Institute and Federal Reserve Board


11

FIGURE 1.4

Household Net Investments in Funds, Bonds, and Equities Billions of dollars, 2005–2014

Long-term registered investment companies* Directly held bonds Directly held equities

470 335 33 392 -461

2005

497

-107

687 -348 -46

-654

-1,159

2006

2007

2008

595 -84

2009

60 455 -281 -82

2010

481

257 -210

-230

-364

-335

2011

2012

431

416

-533

-455

-144

-156

2013

2014

* Data for long-term registered investment companies include mutual funds, variable annuities, ETFs, and closed-end funds. Note: Household net investments include net new cash flow and reinvested dividends. Sources: Investment Company Institute and Federal Reserve Board

The growth of individual retirement accounts (IRAs) and defined contribution (DC) plans, particularly 401(k) plans, explains some of the increased household reliance on investment companies during the past two decades. At year-end 2014, households had 9.9 percent of their financial assets in 401(k) and other DC retirement plans, up from 7.0 percent in 1994. Mutual funds managed 55 percent of the assets in these plans in 2014, more than double the 22 percent in 1994 (Figure 1.5). IRAs made up 10.9 percent of household financial assets at year-end 2014, with mutual funds managing 48 percent of IRA assets that year. Mutual funds also managed $1.2 trillion in variable annuities outside retirement accounts, as well as $5.7 trillion of assets in taxable household accounts.

12


FIGURE 1.5

Mutual Funds in Household Retirement Accounts Percentage of retirement assets in mutual funds by type of retirement vehicle, 1994–2014 DC plans*

43

43

1998

2000

2002

47

48

1998

2000

48

52

48

52

54

55

2010

2012

2014

47

48

2012

2014

37 29 22

1994

1996

2004

2006

2008

IRAs 49

51

43

42

46

49

34

1994

1996

2002

2004

2006

2008

2010

* DC plans include 401(k) plans, 403(b) plans, 457 plans, Keoghs, and other DC plans without 401(k) features. Sources: Investment Company Institute, Federal Reserve Board, Department of Labor, National Association of Government Defined Contribution Administrators, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division .

Businesses and other institutional investors also rely on funds. Many institutions use money market funds to manage some of their cash and shortterm assets. Nonfinancial businesses held 23 percent of their cash in money market funds at year-end 2014. Institutional investors also have contributed to growing demand for ETFs. Investment managers, including mutual funds and pension funds, use ETFs to manage liquidity—helping them manage their investor flows and remain fully invested in the market. Asset managers also use ETFs as part of their investment strategies, including as a hedge against their exposure to equity markets.


13

Role of Investment Companies in Financial Markets Investment companies have been among the largest investors in the domestic financial markets for much of the past 20 years. They held a large portion of the outstanding shares of U.S.-issued equities and money market securities at year-end 2014. Investment companies as a whole were one of the largest groups of investors in U.S. companies that year, holding 30 percent of their outstanding stock at year-end 2014 (Figure 1.6). FIGURE 1.6

Investment Companies Channel Investment to Stock, Bond, and Money Markets Percentage of total market securities held by investment companies, year-end 2014 Mutual funds Other registered investment companies

46

30

26 46

19 24 17 5 U.S. corporate equity

10 3 U.S. and international corporate bonds

23

11 1 percent. Primarily includes Class A shares; includes sales where front-end loads are waived. load = 0 percent and contingent deferred sales load (CDSL) > 2 percent. Primarily includes Class B shares. 3 Front-end load ≤ 1 percent, CDSL ≤ 2 percent, and 12b-1 fee > 0.25 percent. Primarily includes Class C shares; excludes institutional share classes. 4 All other load share classes not classified as front-end load, back-end load, or level load. 5 Front-end load = 0 percent, CDSL = 0 percent, and 12b-1 fee ≤ 0.25 percent. 6 “R” shares include assets in any share class that ICI designates as a “retirement share class.” These share classes are sold predominantly to employer-sponsored retirement plans. However, other share classes—including retail and institutional share classes—also contain investments made through 401(k) plans or IRAs. (*) = inflow or outflow of less than $0.5 billion Note: Components may not add to the totals because of rounding. Data exclude mutual funds that invest primarily in other mutual funds. Sources: Investment Company Institute and Lipper 1

2 Front-end

106


FIGURE 5.10

Total Net Assets of Long-Term Mutual Funds Are Concentrated in No-Load Share Classes Billions of dollars, 2005–2014

2005 2006 All long-term mutual funds Load Front-end1

2007

2008 2009

2010

2011

2012

2013

2014

$6,865 $8,060 $8,914 $5,771 $7,797 $9,029 $8,940 $10,359 $12,316 $13,127 2,313 2,630 2,795

1,722 2,185 2,352

2,176

2,362

2,658

2,634

1,728 2,027 2,190

1,374 1,750 1,882

1,751

1,893

2,148

2,116

Back-end2

271

241

204

102

98

78

50

39

32

24

Level3

287

340

379

237

328

381

367

417

459

480

Other4

17

15

10

7

8

8

7

11

10

11

9

8

13

2

2

4

2

2

8

3

Unclassified No-load5

3,427 4,073 4,587

3,055 4,255 5,091

5,224

6,262

7,594

8,366

Retail

2,404 2,799 3,091

1,940 2,666 3,069

2,991

3,469

4,144

4,625

Institutional

1,023 1,274 1,496

1,116 1,589 2,022

2,233

2,793

3,450

3,741

1,039 1,225 1,346

854 1,130 1,291

1,250

1,396

1,614

1,649

290

339

451

478

Variable annuities “R” share classes6

85

132

186

140

226

296

Front-end load > 1 percent. Primarily includes Class A shares; includes sales where front-end loads are waived. load = 0 percent and contingent deferred sales load (CDSL) > 2 percent. Primarily includes Class B shares. 3 Front-end load ≤ 1 percent, CDSL ≤ 2 percent, and 12b-1 fee > 0.25 percent. Primarily includes Class C shares; excludes institutional share classes. 4 All other load share classes not classified as front-end load, back-end load, or level load. 5 Front-end load = 0 percent, CDSL = 0 percent, and 12b-1 fee ≤ 0.25 percent. 6 “R” shares include assets in any share class that ICI designates as a “retirement share class.” These share classes are sold predominantly to employer-sponsored retirement plans. However, other share classes—including retail and institutional share classes—also contain investments made through 401(k) plans or IRAs. Note: Components may not add to the totals because of rounding. Data exclude mutual funds that invest primarily in other mutual funds. Sources: Investment Company Institute and Lipper 1

2 Front-end

By contrast, no-load share classes have seen net inflows and rising assets over the past 10 years. No-load share classes have accumulated the bulk of the inflows to long-term funds in the past decade. In 2014, no-load share classes accounted for 64 percent of long-term fund assets, up from 50 percent in 2005.

MUTUAL FUND EXPENSES AND FEES

107

Some of the shift toward no-load share classes can be attributed to do-ityourself investors. However, a larger factor is the growth of sales through DC plans as well as sales of no-load share classes through sales channels that compensate financial professionals with asset-based fees outside of funds (for example, mutual fund supermarkets, discount brokers, fee-based advisers, full-service brokerage platforms).

Services and Expenses in 401(k) Plans LEARN MORE The BrightScope/ ICI Defined Contribution Plan Profile: A Close Look at 401(k) Plans. Available at www.ici.org/ pubs/research/ reports.

Employers are confronted with two competing economic pressures: the need to attract and retain quality workers with competitive compensation packages and the need to keep their products and services competitively priced. In deciding whether to offer 401(k) plans to their workers, employers must decide if the benefits of offering a plan (in attracting and retaining quality workers) outweigh the costs of providing the plan and plan services. These costs are both the contributions the employer makes to an employee’s 401(k) account and the costs associated with setting up and administering the 401(k) plan on an ongoing basis. To provide and maintain 401(k) plans, employers are required to obtain a variety of administrative, participant-focused, regulatory, and compliance services. Employers offering 401(k) plans typically hire service providers to operate these plans, and these providers charge fees for their services.

108


As with any employee benefit, the employer generally determines how the costs of providing the benefit will be shared between the employer and employee. 401(k) plan fees can be paid directly by the plan sponsor (the employer), directly by the plan participant (the employee), indirectly by the participant through fees or other reductions in returns paid to the investment provider, or by some combination of these methods (Figure 5.11). FIGURE 5.11

A Variety of Arrangements May Be Used to Compensate 401(k) Service Providers Services provided Fee payment/Form of fee payment

Direct fees: dollar per participant; percentage based on assets; transactional fees

Recordkeeper/ Retirement service provider

Employer/Plan Recordkeeping and administration; plan service and consulting; legal, compliance, and regulatory

Direct fees: dollar per participant; percentage based on assets; transactional fees Participant service, education, advice, and communication Recordkeeping; distribution

Recordkeeping/ Administrative payment (percentage of assets)

Asset management; investment products

Participants Expense ratio (percentage of assets)

Investment provider(s)

Note: In selecting the service provider(s) and deciding the cost-sharing for the 401(k) plan, the employer/plan sponsor will determine which combinations of these fee arrangements will be used in the plan. Source: ICI Research Perspective, “The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2013”

MUTUAL FUND EXPENSES AND FEES

109

LEARN MORE Inside the Structure of Defined Contribution/ 401(k) Plan Fees, 2013. Available at www.ici.org/ pubs/research/ reports.

One key driver of 401(k) plan fees is plan size. A Deloitte/ICI study of 361 DC plans in 2013 created and analyzed a comprehensive plan fee measure, the “all-in fee.” The study found that plans with more participants and larger average account balances tended to have lower all-in fees than plans with fewer participants and smaller average account balances. This observed effect likely results in part from fixed costs required to start up and run the plan, much of which are driven by legal and regulatory requirements. It appears that economies of scale are gained as a plan grows because these fixed costs can be spread across more participants, a larger asset base, or both. Plans with a higher percentage of their assets in equity investments tended to have higher all-in fees, reflecting the higher expense ratios associated with equity investing compared with fixed-income investing. The study also examined types of service providers, automatic enrollment, the number of investment options, and variables relating to plans’ relationships with their service providers—but found little impact on fees. More than 60 percent of 401(k) assets at year-end 2014 were invested in mutual funds. Participants in 401(k) plans holding mutual funds tend to invest in lower-cost funds and funds with below-average portfolio turnover. Both characteristics help to keep down the costs of investing in mutual funds through 401(k) plans. For example, at year-end 2013, 38 percent of 401(k) equity mutual fund assets were in funds that had total annual expense ratios of less than 50 basis points, and another 47 percent had expense ratios between 50 basis points and 100 basis points (Figure 5.12). On an asset-weighted basis, the average total expense ratio incurred on 401(k) participants’ holdings of equity mutual funds through their 401(k) plans was 58 basis points in 2013, less than the asset-weighted average total expense ratio of 74 basis points for equity mutual funds industrywide. Similarly, equity mutual funds held in 401(k) accounts tend to have lower turnover in their portfolios. The asset-weighted average turnover rate of equity funds held in 401(k) accounts was 35 percent in 2013, less than the industrywide assetweighted average of 41 percent.

110


FIGURE 5.12

401(k) Equity Mutual Fund Assets Are Concentrated in Lower-Cost Funds Percentage of 401(k) equity mutual fund assets, 2013 47 38

13 1 40 to 60 percent >20 to 40 percent >0 to 20 percent Zero

22 65

18 26

2

19 4 1 10

Participants in their twenties

13 6 15 Participants in their sixties

Note: Equities include equity funds, company stock, and the equity portion of balanced funds. Funds include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product invested primarily in the security indicated. Components do not add to 100 percent because of rounding. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. See ICI Research Perspective, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2013.”

RETIREMENT AND EDUCATION SAVINGS

147

Target Date Funds Target date funds, introduced in the mid-1990s, have grown rapidly in recent years. A target date fund (including both target date mutual funds and other pooled target date investments) follows a predetermined reallocation of assets over time based on a specified target retirement date. Typically the fund rebalances its portfolio to become less focused on growth and more focused on income as it approaches and passes the target date, which is usually indicated in the fund’s name. Since 2006, the share of 401(k) plans that offer target date funds, the share of 401(k) plan participants offered target date funds, and the share of 401(k) participants holding target date funds all have increased (Figure 7.15). At year-end 2013, target date funds accounted for 15 percent of 401(k) assets, up from 5 percent at year-end 2006. In 2013, 71 percent of 401(k) plans offered target date funds, and 66 percent of 401(k) plan participants were offered target date funds (Figure 7.15). Because not all plan participants choose to allocate assets to these funds, the percentage of 401(k) participants with target date fund assets was lower than the percentage of participants who were offered the option. At year-end FIGURE 7.15

Target Date Funds’ 401(k) Market Share Percentage of total 401(k) market; year-end, 2006 and 2013

2006 2013 71 57

62

66

41 19

15 5

Plans offering target date funds

Participants offered target date funds

Participants holding target date funds

Target date fund assets

Note: Funds include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. See ICI Research Perspective, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2013.”

148


2013, 41 percent of 401(k) participants held at least some plan assets in target date funds. In addition, because not all participants with assets in target date funds allocated 100 percent of their holdings to these funds, and because participants with assets in these funds were more likely to be younger or recently hired and have lower account balances, the share of 401(k) assets invested in target date funds was lower than the share of participants invested in these funds. Account Balances Account balances tended to be higher the longer 401(k) plan participants had been working for their current employers and the older the participant. Participants in their sixties with more than 30 years of tenure at their current employer had an average 401(k) account balance of $248,397 at year-end 2013 (Figure 7.16). Participants in their forties with five to 10 years of tenure at their current employer had an average 401(k) balance of $62,087. The median 401(k) plan participant was 46 years old at year-end 2013, and the median job tenure was eight years. FIGURE 7.16

401(k) Balances Tend to Increase with Participant Age and Job Tenure Average 401(k) account balance by participant age and tenure, 2013

$300,000 50s 60s

$250,000 $200,000 40s

$150,000 $100,000 30s

$50,000 $0

20s 0 to 2

>2 to 5

>5 to 10

>10 to 20

>20 to 30

>30

Participant job tenure (years) Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. See ICI Research Perspective, “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2013.”


149

Plan Loans Most 401(k) participants do not borrow from their plans, although the majority have access to loans. At year-end 2013, 21 percent of participants eligible for loans had loans outstanding, the same rate as over the previous four years. However, not all participants have access to 401(k) plan loans— factoring in all 401(k) participants with and without loan access in the EBRI/ ICI 401(k) database, only 18 percent had loans outstanding at year-end 2013. The average unpaid loan balances among participants with loans represented about 12 percent of their 401(k) account balances (net of the unpaid loan balances). In aggregate, U.S. Department of Labor data indicate that outstanding loan amounts were less than 2 percent of 401(k) plan assets in 2012.

Individual Retirement Accounts LEARN MORE Ten Important Facts About IRAs. Available at www.ici. org/pdf/ten_ facts_iras.pdf.

150

Traditional IRAs, the first type of IRA, were created in 1974 under the Employee Retirement Income Security Act (ERISA). IRAs provide all workers with a contributory retirement savings vehicle and, through rollovers, give workers leaving jobs a means to preserve the tax benefits and growth opportunities that employer-sponsored retirement plans provide. Roth IRAs, first available in 1998, were created to provide a contributory retirement savings vehicle on an after-tax basis with qualified withdrawals distributed tax-free. In addition, policymakers have added employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs) to encourage small employers to provide retirement plans by simplifying the rules applicable to tax-qualified plans.


Total IRA assets, $7.4 trillion at year-end 2014, accounted for 30 percent of U.S. retirement assets. Mutual funds accounted for $3.5 trillion of IRA assets at year-end 2014, up from $3.3 trillion at year-end 2013 (Figure 7.17). Assets managed by mutual funds were the largest component of IRA assets, followed by other assets, which include ETFs, individual stocks and bonds, and other securities held through brokerage accounts ($3.0 trillion at year-end 2014). The mutual fund industry’s share of the IRA market was 48 percent at year-end 2014, the same as at year-end 2013. FIGURE 7.17

IRA Assets Trillions of dollars; year-end, selected years

Other assets 1 Life insurance companies2 Bank and thrift deposits 3 Mutual funds

7.0 e 5.9 e 5.0

4.7

1.3 0.1 0.5 0.3 0.5 1995

2.6

2.5

0.9 0.2 0.3

0.9 0.3 0.3

1.3

1.1

2000

2002

7.4 e

1.6

3.7

1.1 0.3 0.3

0.3 0.3

1.3

1.8 2005

2007

3.0 e

2.3 e

3.4

2.5

2.8 e

0.3 0.4 1.7 2008

1.8 0.3 0.5 2.4 2010

0.3 0.5 2.8

2012

0.3 0.5

0.4 0.5

3.3

3.5

2013

2014

1 Other

assets include individual stocks, individual bonds, closed-end funds, ETFs, and other assets held through brokerage or trust accounts. 2 Life insurance company IRA assets are annuities held by IRAs, excluding variable annuity mutual fund IRA assets, which are included in mutual funds. 3 Bank and thrift deposits include Keogh deposits. e Data are estimated. Note: Components may not add to the total because of rounding. Sources: Investment Company Institute, Federal Reserve Board, American Council of Life Insurers, Internal Revenue Service Statistics of Income Division, and Government Accountability Office. See Investment Company Institute, “The U.S. Retirement Market, Fourth Quarter 2014.”


151

IRA Investors More than three out of 10 U.S. households, or nearly 42 million, owned at least one type of IRA as of mid-2014 (Figure 7.18). Traditional IRAs—those introduced under ERISA—were the most common type, owned by 31 million U.S. households. Roth IRAs, first available in 1998 under the Taxpayer Relief Act of 1997, were owned by 19 million U.S. households. Seven million U.S. households owned employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, or SIMPLE IRAs). Although most U.S. households are eligible to make contributions to IRAs, few do so. Indeed, only 12 percent of U.S. households contributed to any type of IRA in tax year 2013. In addition, very few eligible households made “catch-up” contributions to traditional or Roth IRAs. FIGURE 7.18

Nearly 42 Million U.S. Households Owned IRAs

Year created Traditional IRA SEP IRA

1974 (Employee Retirement Income Security Act)

Assets in IRAs (billions of dollars, yearend 2014)

31.1 million

25.3%

$6,421e

7.4 million

6.0%

$472e

19.2 million

15.6%

$550e

41.5 million

33.7%

$7,443e

1978 (Revenue Act)

SAR-SEP IRA

1986 (Tax Reform Act)

SIMPLE IRA

1996 (Small Business Job Protection Act)

Roth IRA

1997 (Taxpayer Relief Act)

Any IRA

Number of U.S. Percentage of U.S. households with households with type of IRA type of IRA (mid-2014) (mid-2014)

e Data

are estimated. Note: Households may own more than one type of IRA. SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs are employersponsored IRAs. Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2014” and “The U.S. Retirement Market, Fourth Quarter 2014.”

152


Instead, investment returns and rollovers from employer-sponsored retirement plans have fueled the growth of IRAs. In any given year, a small portion of traditional IRA investors make rollovers, but analysis of The IRA Investor Database—which contains information on more than 15 million IRA investors— finds that, for the most part, the groups that make rollovers differ from year to year. Rollovers play an important role in opening traditional IRAs. With the availability of retirement accumulations that can be rolled over, whether from DC accounts or as lump-sum distributions from DB plans, most (87 percent) new traditional IRAs in 2012 were opened only with rollovers (Figure 7.19). By contrast, in 2012, 11 percent of Roth IRAs were opened only with rollovers; instead, the majority (71 percent) of Roth IRAs were opened only with contributions.

LEARN MORE The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007–2012. Available at www.ici.org/ ira.

FIGURE 7.19

New Roth IRAs Often Are Opened with Contributions; New Traditional IRAs Often Are Opened with Rollovers Percentage of new IRAs opened in 2012 by type of IRA Combination of activities Contribution only Conversion only Rollover only

5

3 10

71 87

12 11 Roth IRAs

Traditional IRAs

Note: New IRAs are accounts that did not exist in The IRA Investor Database in 2011 and were opened by one of the paths indicated in 2012. The calculation excludes IRAs that changed financial services firms. The samples are 0.2 million new Roth IRA investors aged 18 or older at year-end 2012 and 0.7 million new traditional IRA investors aged 25 to 74 at year-end 2012. Components may not add to 100 percent because of rounding. Source: The IRA Investor Database™. See ICI Research Report, “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2012.”


153

LEARN MORE “The Role of IRAs in U.S. Households’ Saving for Retirement, 2014.” Available at www.ici.org/ perspective.

Traditional IRA–owning households generally researched the decision to roll over money from their former employer’s retirement plan into a traditional IRA. The most common source of information was professional financial advisers. Advisers were consulted by 61 percent of traditional IRA–owning households with rollovers, with half indicating they primarily relied on financial professionals (Figure 7.20). Older households were more likely to consult professional financial advisers than younger households. Ten percent of traditional IRA–owning households with rollovers indicated their primary source of information was online materials from financial services firms, with younger households more likely to rely on online resources than older households. Households owning IRAs generally are headed by middle-aged individuals (median age of 52 years) with moderate household incomes (median income of $80,500). These households held a median of $50,000 in IRAs. In addition, many households held multiple types of IRAs. For example, 36 percent of households with traditional IRAs also owned Roth IRAs, and 13 percent also owned employer-sponsored IRAs.

154


FIGURE 7.20

Multiple Sources of Information Are Consulted for the Rollover Decision Percentage of traditional IRA–owning households with rollovers, mid-2014 Source1 Primary source

61

A financial professional

50 Employer (printed or online materials, seminars, workshops) Printed materials provided by financial services firms

38 11 38 4 35

Seminars, workshops, or phone representatives from financial services firms

6 35

Spouse or partner

5 28

Online materials from financial services firms

10 26

IRS rules or publications

3 20

Coworker, friend, or family member

6 9

Other2

5

1 Multiple

responses are included. responses given included: myself, other online information, bank, and books and magazines. Source: Investment Company Institute IRA Owners Survey. See ICI Research Perspective, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2014.” 2 Other


155

IRA Portfolios LEARN MORE “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2012.” Available at www.ici.org/ ira.

At year-end 2012, younger IRA investors tended to have more invested in equities, equity funds, and target date funds, on average, than older investors, according to The IRA Investor Database. Older investors were invested more heavily in non–target date balanced funds and fixed-income investments. For example, traditional IRA investors in their thirties had, on average, 50 percent of their assets in equities and equity funds and another 17 percent in target date funds (Figure 7.21). Traditional IRA investors in their sixties held 46 percent and 5 percent of their traditional IRA assets, respectively, in these two asset categories. By contrast, traditional IRA investors in their sixties had nearly half of their assets in money market funds (13 percent), bonds and bond funds (23 percent), and non–target date balanced funds (11 percent). Traditional IRA investors in their thirties held about 29 percent of their assets in these three asset categories. Roth IRA investors display a similar pattern of investing by age, although Roth IRA investors of all ages tended to have higher allocations to equities and equity funds compared with traditional IRA investors. Roth IRA investors in their thirties had, on average, 62 percent of their assets in equities and equity funds and another 16 percent in target date funds, while Roth IRA investors in their sixties held 59 percent and 4 percent of their Roth IRA assets, respectively, in these two asset categories (Figure 7.21). By contrast, Roth IRA investors in their sixties had more than a third of their assets in money market funds (10 percent), bonds and bond funds (13 percent), and non–target date balanced funds (13 percent). Roth IRA investors in their thirties held about 21 percent of their assets in these three asset categories.

156


FIGURE 7.21

IRA Asset Allocation Varied with Investor Age Average asset allocation of IRA balances, percentage of assets, year-end 2012 Other investments1 Money market funds Bonds and bond funds2 Non–target date balanced funds3 Target date funds4 Equities and equity funds5 Traditional IRA investors

2.5

4.0 13.8

13.0

6.9 7.9

22.7

17.0

11.3 4.9

50.4

45.6

Investors in their thirties

Investors in their sixties

Roth IRA investors 7.0 4.4 9.2

1.8

1.0

16.2

10.2 13.3 12.6

3.7

62.2

58.5

Investors in their thirties

Investors in their sixties

Other investments include certificates of deposit and unidentifiable assets. funds include bond mutual funds, bond closed-end funds, and bond ETFs. 3 Balanced funds invest in a mix of equities and fixed-income securities. 4 A target date fund typically rebalances its portfolio to become less focused on growth and more focused on income as it approaches and passes the target date of the fund, which is usually included in the fund’s name. 5 Equity funds include equity mutual funds, equity closed-end funds, and equity ETFs. Note: Percentages are dollar-weighted averages. Components may not add to 100 percent because of rounding. Source: The IRA Investor Database™. See ICI Research Report, “The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007–2012,” and ICI Research Report, “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2012.” 1

2 Bond


157

Distributions from IRAs Withdrawals from IRAs tend to occur later in life, often to fulfill required minimum distributions (RMDs). An RMD is equal to a percentage of the IRA balance, based on remaining life expectancy. Traditional IRA owners aged 70½ or older generally must withdraw at least the minimum amount each year or pay a penalty. In tax year 2013, 65 percent of individuals who took traditional IRA withdrawals stated they calculated the withdrawal amount based on RMD rules. In contrast to traditional IRAs, Roth IRAs have no RMDs (unless they are inherited Roth IRAs). As a result, withdrawal activity is much lower among Roth IRA investors. In 2012, only 4 percent of Roth IRA investors aged 25 or older made withdrawals, compared with 22 percent of traditional IRA investors (Figure 7.22). Early withdrawal penalties can apply to both Roth and traditional IRA investors younger than 59½, and withdrawal activity is lower among investors younger than 60 compared with investors aged 60 or older. FIGURE 7.22

Roth IRA Investors Rarely Take Withdrawals; Traditional IRA Investors Are Heavily Affected by RMDs Percentage of IRA investors with withdrawals by type of IRA and investor age, 2012

Roth IRA investors Traditional IRA investors

80

22

20 3

9

25 to 59

5 60 to 69

5 70 or older

4 All (25 or older)

Age of IRA investor Note: The samples are 4.9 million Roth IRA investors aged 25 or older at year-end 2012 and 10.4 million traditional IRA investors aged 25 or older at year-end 2012. Source: The IRA Investor Database™. See ICI Research Report, “The IRA Investor Profile: Roth IRA Investors’ Activity, 2007–2012.”

158


Withdrawals from IRAs tend to be retirement related. Of the 20 percent of traditional IRA–owning households who reported taking withdrawals in tax year 2013, 75 percent reported that the head of household, the spouse, or both were retired. Of retired households that took traditional IRA withdrawals in tax year 2013, 41 percent reported using some or all of the withdrawal amount to pay for living expenses (Figure 7.23). Other uses included reinvesting or saving in another account (38 percent), paying for a healthcare expense (22 percent), and buying, repairing, or remodeling a home (22 percent).

LEARN MORE Individual Retirement Account Resource Center. Available at www.ici.org/ iraresource.

Traditional IRA–owning households that reported taking withdrawals in tax year 2013 and were not retired indicated a slightly different pattern for the withdrawals. The nonretired households with withdrawals were less likely to indicate using some or all of the money for living expenses (36 percent) or a healthcare expense (17 percent) than the retired households (Figure 7.23). Nonretired households were more likely than retired households to indicate that they needed to use some or all of the withdrawal for an emergency (20 percent) or for home purchase, repair, or remodeling (28 percent). FIGURE 7.23

Traditional IRA Withdrawals Among Retirees Often Are Used to Pay for Living Expenses Percentage of traditional IRA–owning households with withdrawals by retirement status, 1 mid-2014

Retired 1, 2

Not retired 3

Purpose of traditional IRA withdrawal Took withdrawals to pay for living expenses

41

36

9

8

Spent it on a healthcare expense

22

17

Used it for an emergency

12

20

Used it for home purchase, repair, or remodeling

22

28

Reinvested or saved it in another account

38

28

6

7

13

10

Spent it on a car, boat, or big-ticket item other than a home

Paid for education Some other purpose

The household was considered retired if either the head of household or spouse responded affirmatively to the question: “Are you retired from your lifetime occupation?” 2 The base of respondents includes the 15 percent of traditional IRA–owning households that were retired in mid-2014 and took withdrawals in tax year 2013. 3 The base of respondents includes the 5 percent of traditional IRA–owning households that were not retired in mid-2014 and took withdrawals in tax year 2013. Note: Multiple responses are included. Source: ICI IRA Owners Survey. See ICI Research Perspective, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2014.” 1


159

Because current withdrawal activity might not be a good indicator of future withdrawal activity, ICI also asked about plans for future traditional IRA withdrawals. Among traditional IRA–owning households in 2014 that did not take a withdrawal in tax year 2013, 69 percent said that they were not likely to take a withdrawal before age 70½. Traditional IRA–owning households that were either (1) retired and did not take withdrawals in tax year 2013 or (2) not retired reported a pattern for the expected role of their future IRA withdrawals in retirement that is consistent with those that withdrew in tax year 2013. Sixty percent of these households reported they plan to use IRA withdrawals to pay for living expenses in retirement, and 42 percent reported they plan to reinvest or save their IRA withdrawals in another account.

The Role of Mutual Funds in Retirement Savings At year-end 2014, mutual funds held in DC plans and IRAs accounted for $7.3 trillion, or 29 percent, of the $24.7 trillion U.S. retirement market. The $7.3 trillion in mutual fund retirement assets made up 46 percent of all mutual fund assets at year-end 2014. Mutual funds accounted for 55 percent of DC plan assets and 48 percent of IRA assets (Figure 7.24). Additionally, retirement investors tend to hold long-term mutual funds. At year-end 2014, DC plans and IRAs held 53 percent of equity, balanced, and bond mutual funds, but only 13 percent of money market funds.

160


FIGURE 7.24

Substantial Amount of Retirement Assets Are Invested in Mutual Funds Assets, billions of dollars, year-end 2014 Other investors DC plans and IRAs

Other investments Mutual funds

13,127

6,222 7,443

6,765

3,897

3,042 3,723

e

55%

DC plans

3,546 IRAs

48%

6,905

2,725

53% 364

Equity, balanced, and bond mutual funds

2,361

13% Money market funds

e Data

are estimated. Sources: Investment Company Institute, Federal Reserve Board, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division. See Investment Company Institute, “The U.S. Retirement Market, Fourth Quarter 2014.”

Across the entire U.S. retirement market, mutual funds play a major role in IRAs and employer-sponsored DC plans, such as 401(k) plans. At yearend 2014, investors held slightly more mutual fund assets in DC plans ($3.7 trillion, or 55 percent of total DC plan assets) than in IRAs ($3.5 trillion, or 48 percent of total IRA assets) (Figure 7.25). Among DC plans, 401(k) plans held the most assets in mutual funds, with $2.9 trillion, followed by 403(b) plans ($456 billion), other private-sector DC plans ($287 billion), and 457 plans ($112 billion).


161

Types of Mutual Funds Used by Retirement Plan Investors LEARN MORE For ICI resources on 401(k) plans, visit www.ici.org/ 401k.

Retirement investors tend to hold equity investments. At year-end 2014, 58 percent of the $7.3 trillion in mutual fund retirement assets held in DC plans and IRAs were invested in domestic or world equity funds (Figure 7.25). By comparison, about 52 percent of overall fund industry assets—retirement and nonretirement accounts—were invested in domestic or world equity funds. Domestic equity funds alone constituted about $3.2 trillion, or 45 percent, of mutual fund assets held in DC plans and IRAs. Retirement investors also gain exposure to equities and fixed-income securities through balanced funds. At year-end 2014, 23 percent of mutual fund assets held in DC plans and IRAs were held in balanced funds, which invest in a mix of equity, bond, and money market securities (Figure 7.25). At year-end 2014, the remaining 19 percent of mutual fund assets held in DC plans and IRAs were invested in bond funds and money market funds. Bond funds held $1.0 trillion, or 14 percent, of mutual fund assets held in DC plans and IRAs, and money market funds accounted for $364 billion, or 5 percent.

FIGURE 7.25

Majority of Mutual Fund Retirement Account Assets Were Invested in Equities Billions of dollars, year-end 2014

Equity Domestic

World

Balanced 1

Bond

Money market

Total

$1,484

$465

$783

$593

$221

$3,546

1,763

500

873

444

143

3,723

401(k) plans

1,312

406

730

321

99

2,868

403(b) plans

284

37

79

37

20

456

62

16

19

14

2

112

105

41

46

72

23

287

3,248

965

1,656

1,037

364

7,269

IRAs 2 DC plans

457 plans Other privatesector DC plans3 Total

Balanced funds invest in a mix of equities and fixed-income securities. Most target date and lifestyle funds are counted in this category. 2 IRAs include traditional IRAs, Roth IRAs, and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs). 3 Other private-sector DC plans include Keoghs and other private-sector DC plans without 401(k) features. Note: Components may not add to the total because of rounding. Source: Investment Company Institute, “The U.S. Retirement Market, Fourth Quarter 2014” 1

162


Target Date and Lifestyle Mutual Funds Target date and lifestyle mutual funds, generally included in the balanced fund category, have grown more popular among investors and retirement plan sponsors over the past decade. A target date fund follows a predetermined reallocation of assets over time based on a specified target retirement date. Typically the fund rebalances its portfolio to become less focused on growth and more focused on income as it approaches and passes the target date, which is usually indicated in the fund’s name. A lifestyle fund maintains a predetermined risk level and generally uses words such as “conservative,” “moderate,” or “aggressive” in its name to indicate the fund’s risk level.

LEARN MORE For ICI resources on target date funds, visit www.ici.org/ trdf.

Assets in target date and lifestyle mutual funds totaled $1.1 trillion at yearend 2014, up from $977 billion at year-end 2013 (Figure 7.26). Target date mutual funds’ assets were up 14 percent in 2014, increasing from $618 billion to $703 billion. Assets in lifestyle mutual funds grew 10 percent in 2014, rising from $359 billion to $394 billion. The bulk (89 percent) of target date mutual fund assets was held in retirement accounts, compared with 43 percent of lifestyle mutual fund assets.


163

FIGURE 7.26

Target Date and Lifestyle Mutual Fund Assets by Account Type Billions of dollars; year-end, 2004–2014

703

Other investors IRAs1 DC plans2

618 63

Target date mutual funds3 481 45

183 115 9 26 80

71 44 5 16 7 29 9 49 2004 2005 2006

40

15 160 11 32

128

116

2007

2008

340 33 256 21 66 49 186 2009

241

2010

376 36 74

2011

149

128

96

427 266

77

477

340

2012

2013

2014

394 359

Lifestyle mutual funds4

262

145

145

43

50

50

58

49

62

70

67

2008

2009

2010

2011

238 189 131 85

63

46 16 24 2004

21 47 2005

120 94 34 61

72

2006

2007

206

231 176 127 93

46

292

264

33

224

161

71

93

73

81

78

2012

2013

2014

IRAs include traditional IRAs, Roth IRAs, and employer-sponsored IRAs (SEP IRAs, SAR-SEP IRAs, and SIMPLE IRAs). plans include 401(k) plans, 403(b) plans, 457 plans, Keoghs, and other DC plans without 401(k) features. 3 A target date mutual fund typically rebalances its portfolio to become less focused on growth and more focused on income as it approaches and passes the target date of the fund, which is usually included in the fund’s name. 4 A lifestyle mutual fund maintains a predetermined risk level and generally contains “conservative,” “moderate,” or “aggressive,” in the fund’s name. Note: Components may not add to the total because of rounding. Source: Investment Company Institute, “The U.S. Retirement Market, Fourth Quarter 2014” 1

2 DC

164


The Role of Mutual Funds in Education Savings Twenty-three percent of households that owned mutual funds in 2014 cited education as a financial goal for their fund investments. Nevertheless, the demand for education savings vehicles has been historically modest since their introduction in the 1990s, partly because of their limited availability and investors’ lack of familiarity with them. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA), enacted in 2001, enhanced the attractiveness of Section 529 plans and Coverdell Education Savings Accounts (ESAs)—two education savings vehicles—by allowing greater contributions to them and making them more flexible. The Pension Protection Act (PPA), enacted in 2006, made the EGTRRA enhancements to Section 529 plans permanent. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the EGTRRA enhancements to Coverdell ESAs for two years; the American Taxpayer Relief Act of 2012 made these enhancements permanent.


LEARN MORE 529 Plan Program Statistics. Available at www.ici.org/ research/ stats/529s.

165

Assets in Section 529 savings plans increased 9.6 percent in 2014, with $224.7 billion at year-end 2014, up from $205.1 billion at year-end 2013 (Figure 7.27). As of year-end 2014, there were 11.0 million 529 savings plan accounts, with an average account size of approximately $20,500. FIGURE 7.27

Section 529 Savings Plan Assets Billions of dollars; year-end, selected years

205.1

224.7

144.9 116.9

112.5 89.4 68.7 35.1 8.5 2001

2003

2005

2007

2008

2009

2011

2013

2014

Note: Data were estimated for a few individual state observations in order to construct a continuous time series. Sources: Investment Company Institute and College Savings Plans Network. See Investment Company Institute, “529 Plan Program Statistics, December 2014.”

In mid-2014, as a group, households saving for college through 529 plans, Coverdell ESAs, or mutual funds held outside these accounts tended to be headed by younger individuals, with half younger than 45 (Figure 7.28). Heads of households saving for college had a range of education attainment: 47 percent had less than four years of college and 53 percent had four years or more. These households also had a range of incomes: 39 percent earned less than $75,000; 16 percent earned between $75,000 and $99,999; and 45 percent earned $100,000 or more. About two-thirds of these households had children (younger than 18) in the home, and 39 percent had more than one child in the home.

166


FIGURE 7.28

Characteristics of Households Saving for College Percentage of U.S. households saving for college, 1 mid-2014

Age of head of household 2 Younger than 35

23

35 to 44

27

45 to 54

28

55 to 64

13

65 or older

9

Education level High school diploma or less

20

Associate’s degree or some college

27

Completed college

22

Some graduate school or completed graduate school

31

Household income 3 Less than $25,000

5

$25,000 to $34,999

4

$35,000 to $49,999

11

$50,000 to $74,999

19

$75,000 to $99,999

16

$100,000 or more

45

Number of children in home 4 None

35

One

26

Two

25

Three or more

14

Households saving for college are households that own education savings plans (Coverdell ESAs or 529 plans) or that said paying for education was one of their financial goals for their mutual funds. 2 Age is based on the sole or co-decisionmaker for saving and investing. 3 Total reported is household income before taxes in 2013. 4 The number of children reported is children younger than 18 living in the home. 1


167

PART TWO

Data Tables

Data Section 1

2014 Fund Reclassification To help members, analysts, the media, and the public understand trends in mutual fund investing, ICI reports data on open-end mutual funds at several levels. From the broadest to the most detailed, those are:

»» Level 1: Long-term and money market »» Level 2: Equity, hybrid, bond, and money market »» Level 3: Domestic equity, world equity, hybrid, taxable bond, municipal bond, taxable money market, and tax-exempt money market

»» Level 4: Thirteen composite investment objectives (for example, capital appreciation, world equity, hybrid, and investment grade bond)

»» Level 5: Forty-two investment objectives (for example, growth, alternative strategies, global equity, flexible portfolio, and investment grade–short term) Thus, investment objectives (IOBs) offer the greatest level of detail on trends in net assets, flows, and liquidity in mutual funds. To reflect changes in the marketplace, ICI modernized its IOB classifications for openend mutual funds. While the macro-level classifications—levels 1 through 3—are unchanged, the data at a detailed level are affected. The new IOBs and composite IOBs have changed significantly and data reported at these detailed levels are now only available beginning in January 2000. Although some of these category names are unchanged, the new categories are not comparable to previous categories, since the definitions of these categories were changed. In addition, as a result of the fund reclassification, many funds were moved from one category to another. For more information

»» 2014 Open-End Mutual Fund Reclassification FAQs, available at www.ici.org/ research/stats/iob_update/iob_faqs

»» Open-End Investment Objective Definitions, available at www.ici.org/research/ stats/iob_update/iob_definitions

170


Data Section 1

Data Tables Section 1 Mutual Fund Totals Table 1: Total Net Assets, Number of Funds, and Number of Share Classes of the Mutual Fund Industry . . . . . . . . . . 173 2: Total Sales, New Sales, Exchange Sales, Redemptions, and Exchange Redemptions of the Mutual Fund Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 3: Total Net Assets of the Mutual Fund Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 4: Total Net Assets of the Mutual Fund Industry by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . 176 5: Number of Funds of the Mutual Fund Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 6: Number of Funds of the Mutual Fund Industry by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . 178 7: Number of Share Classes of the Mutual Fund Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 8: Number of Share Classes of the Mutual Fund Industry by Composite Investment Objective . . . . . . . . . . . . . .180

Section 2 Closed-End Funds, Exchange-Traded Funds, and Unit Investment Trusts Table 9: Closed-End Funds: Total Assets and Number of Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 10: Closed-End Funds: Gross Issuance, Gross Redemptions, and Net Issuance by Type of Fund . . . . . . . . . 182 11: Exchange-Traded Funds: Total Net Assets by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 12: Exchange-Traded Funds: Number of Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 13: Exchange-Traded Funds: Net Issuance by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 14: Unit Investment Trusts: Total Net Assets, Number of Trusts, and New Deposits by Type of Trust . . . . . . 186

Section 3 Long-Term Mutual Funds Table 15: Liquid Assets and Liquidity Ratio of Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 16: Liquidity Ratio of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . . 188 17: Net New Cash Flow of Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 18: Net New Cash Flow and Components of Net New Cash Flow of Equity Mutual Funds . . . . . . . . . . . . . . . . . .190 19: Net New Cash Flow and Components of Net New Cash Flow of Hybrid Mutual Funds . . . . . . . . . . . . . . . . .191 20: Net New Cash Flow and Components of Net New Cash Flow of Bond Mutual Funds . . . . . . . . . . . . . . . . . . .192 21: Net New Cash Flow of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . . . . 193 22: New Sales of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . . . . . .194 23: Exchange Sales of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . .195 24: Redemptions of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . . . . . . . . .196 25: Exchange Redemptions of Long-Term Mutual Funds by Composite Investment Objective . . . . . . . . . . . . . . . 197 26: Annual Redemption Rates of Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198 27: Portfolio Holdings of Long-Term Mutual Funds and Percentage of Total Net Assets . . . . . . . . . . . . . . . . . . .199 28: Portfolio Holdings of Long-Term Mutual Funds as a Percentage of Total Net Assets by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 29: Paid and Reinvested Dividends of Long-Term Mutual Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . 201 30: Paid and Reinvested Capital Gains of Long-Term Mutual Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . 202 31: Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Long-Term Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 32: Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Equity Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204 33: Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Hybrid Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 34: Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Bond Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

DATA TABLES

171

Data Section 1

Section 4 Money Market Funds Table 35: Money Market Funds: Total Net Assets, Number of Funds, and Number of Share Classes by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 36: Total Net Assets of Money Market Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .208 37: Net New Cash Flow of Money Market Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .209 38: Net New Cash Flow and Components of Net New Cash Flow of Money Market Funds . . . . . . . . . . . . . . . . . . 210 39: Paid and Reinvested Dividends of Money Market Funds by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . .211 40: Asset Composition of Taxable Government Money Market Funds as a Percentage of Total Net Assets . . . . . 212 41: Asset Composition of Taxable Prime Money Market Funds as a Percentage of Total Net Assets . . . . . . . . . . 213

Section 5 Additional Categories of Mutual Funds Table 42: Alternative Strategies Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 43: Emerging Markets Debt Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 44: Floating-Rate High-Yield Bond Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 45: Funds of Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 46: Funds of Funds: Components of Net New Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218 47: Index Mutual Funds: Total Net Assets and Net New Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 48: Index Mutual Funds: Number of Funds and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .220 49: Index Mutual Funds: New Sales and Exchange Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221 50: Index Mutual Funds: Redemptions and Exchange Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .222 51: Inflation-Protected and Treasury Inflation-Protected Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .223 52: Mutual Funds by Market Capitalization: Total Net Assets and Net New Cash Flow by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 53: Mutual Funds by Market Capitalization: Number of Funds and Number of Share Classes by Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225 54: Retirement Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 55: Retirement Mutual Funds: Components of Net New Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 56: Sector Mutual Funds: Total Net Assets and Net New Cash Flow by Type of Fund . . . . . . . . . . . . . . . . . . . . . .228 57: Sector Mutual Funds: Number of Funds and Number of Share Classes by Type of Fund . . . . . . . . . . . . . . . . .229 58: Target Date and Lifestyle Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230 59: Target Date and Lifestyle Mutual Funds: Components of Net New Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . 231 60: Variable Annuity Mutual Funds: Total Net Assets, Net New Cash Flow, and Number of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232 61: Variable Annuity Mutual Funds: Components of Net New Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233

Section 6 Institutional Investors in the Mutual Fund Industry Table 62: Total Net Assets of Mutual Funds Held in Individual and Institutional Accounts . . . . . . . . . . . . . . . . . . . . . . .234 63: Total Net Assets of Institutional Investors in Mutual Funds by Type of Institution and Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 64: Total Net Assets of Institutional Investors in Taxable Money Market Funds by Type of Institution and Type of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .236

Section 7 Worldwide Mutual Fund Totals Table 65: Worldwide Total Net Assets of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237 66: Worldwide Number of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 67: Worldwide Net Sales of Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

172


TABLE 1 Data Section 1

Total Net Assets, Number of Funds, and Number of Share Classes of the Mutual Fund Industry Year-end Year 1940 1945 1950 1955 1960 1965 1970 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total net assets Billions of dollars

$0.45 1.28 2.53 7.84 17.03 35.22 47.62 45.87 51.28 48.94 55.84 94.51 134.76 241.37 296.68 292.99 370.68 495.39 715.67 769.17 809.37 980.67 1,065.19 1,393.19 1,642.54 2,069.96 2,155.32 2,811.29 3,525.80 4,468.20 5,525.21 6,846.34 6,964.63 6,974.91 6,383.48 7,402.48 8,095.80 8,891.38 10,398.16 12,000.17 9,602.89 11,112.62 11,832.99 11,631.89 13,052.23 15,034.78 15,852.34

Number of funds 68 73 98 125 161 170 361 426 452 477 505 526 564 665 857 1,026 1,243 1,528 1,835 2,312 2,737 2,935 3,079 3,403 3,824 4,534 5,325 5,725 6,248 6,684 7,314 7,791 8,155 8,305 8,243 8,127 8,045 7,977 8,123 8,041 8,039 7,666 7,554 7,587 7,588 7,713 7,923

Number of share classes – – – – – – – – – – – – – – – – 1,243 1,528 1,835 2,312 2,737 2,935 3,177 3,587 4,208 5,562 7,697 9,007 10,352 12,002 13,720 15,262 16,738 18,022 18,983 19,321 20,041 20,554 21,264 21,638 22,262 21,651 21,910 22,282 22,635 23,386 24,222

Note: Data for funds that invest primarily in other mutual funds were excluded from the series.

MUTUAL FUND TOTALS

173

Data Section 1

TABLE 2

Total Sales, New Sales, Exchange Sales, Redemptions, and Exchange Redemptions of the Mutual Fund Industry Billions of dollars, annual Year 1945 1950 1955 1960 1965 1970 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total sales1 $0.29 0.52 1.21 2.10 4.36 4.63 10.06 13.72 17.07 37.16 119.32 247.42 472.13 626.94 547.77 680.12 953.85 1,204.90 1,251.19 1,176.81 1,444.84 1,564.81 2,037.64 2,749.68 3,187.49 3,075.63 3,600.62 4,671.44 5,801.23 7,230.40 9,043.58 11,109.54 12,866.21 13,168.76 12,393.59 12,191.21 13,939.33 17,409.26 23,470.65 26,346.73 20,679.71 18,209.76 17,836.92 17,022.02 18,157.31 18,715.54

New sales – – – – $3.93 3.84 8.94 11.92 14.75 35.40 115.66 238.96 452.42 604.09 532.04 661.74 933.37 1,179.40 1,220.27 1,143.62 1,401.21 1,517.41 1,990.53 2,704.69 3,137.76 3,019.76 3,526.00 4,586.71 5,704.83 7,126.92 8,922.96 10,970.50 12,747.53 13,084.32 12,315.40 12,101.07 13,812.50 17,228.70 23,236.42 26,132.96 20,528.31 18,052.99 17,660.78 16,830.75 17,967.72 18,499.61

Exchange sales2 – – – – – – – $1.52 2.24 3.97 5.83 10.10 14.44 28.25 35.67 36.66 46.55 107.75 205.68 134.28 130.66 138.79 155.75 197.43 248.79 317.55 351.53 504.73 613.44 742.97 949.96 1,149.75 797.34 747.34 572.50 409.00 420.84 487.72 606.47 733.84 529.97 420.18 448.06 422.03 517.69 425.48

Redemptions $0.11 0.28 0.44 0.84 1.96 2.99 9.57 16.41 16.69 31.53 86.74 216.08 362.44 588.35 565.83 607.02 864.88 1,015.64 1,178.75 1,166.67 1,327.05 1,470.83 1,879.69 2,548.28 2,904.44 2,928.62 3,314.86 4,266.20 5,324.29 6,649.27 8,562.10 10,586.59 12,242.32 13,011.36 12,361.66 12,038.96 13,546.81 16,751.98 22,352.20 25,725.70 20,680.23 18,319.72 17,738.34 16,620.55 17,779.44 18,389.31

Exchange redemptions3 – – – – – – – $1.44 2.31 3.94 5.89 9.94 14.59 27.86 36.03 37.11 46.84 107.96 207.35 134.24 131.95 140.98 154.31 198.15 253.95 325.00 351.08 503.94 618.49 743.37 947.36 1,145.42 798.08 745.65 573.76 417.95 432.43 492.20 611.96 728.84 528.13 434.88 466.52 434.12 531.09 433.36

Total sales are the dollar value of new sales plus sales made through reinvestment of income dividends from existing accounts, but exclude reinvestment of capital gains distributions. 2 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. 3 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. 1

174



Total Net Assets of the Mutual Fund Industry Billions of dollars, year-end Long-term funds Year

Total

Equity

Bond and income

Money market funds

1960 1965 1970 1975 1976 1977 1978 1979 1980 1981 1982 1983

$17.03 35.22 47.62 45.87 51.28 48.94 55.84 94.51 134.76 241.37 296.68 292.99

$16.00 32.76 45.13 37.49 39.19 34.07 32.67 35.88 44.42 41.19 53.63 76.97

$1.02 2.46 2.49 4.68 8.39 10.98 12.31 13.10 13.98 14.01 23.21 36.63

– – – $3.70 3.69 3.89 10.86 45.53 76.36 186.16 219.84 179.39

Long-term funds Equity Year

Total

Domestic

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$370.68 495.39 715.67 769.17 809.37 980.67 1,065.19 1,393.19 1,642.54 2,069.96 2,155.32 2,811.29 3,525.80 4,468.20 5,525.21 6,846.34 6,964.63 6,974.91 6,383.48 7,402.48 8,095.80 8,891.38 10,398.16 12,000.17 9,602.89 11,112.62 11,832.99 11,631.89 13,052.23 15,034.78 15,852.34

$74.55 103.39 138.98 158.02 171.40 221.45 211.18 365.21 468.41 626.54 691.57 1,052.57 1,440.81 2,021.66 2,586.31 3,456.64 3,369.73 2,947.93 2,273.05 3,118.32 3,626.37 3,929.72 4,472.13 4,694.65 2,738.82 3,564.56 4,055.64 3,856.91 4,326.34 5,728.52 6,234.99

Bond World

Hybrid

Taxable

$5.19 7.94 15.47 17.43 17.98 23.59 28.30 39.52 45.68 114.13 161.19 196.51 285.20 346.37 391.64 585.25 564.75 444.47 369.37 535.05 716.20 955.73 1,360.45 1,718.57 898.60 1,307.98 1,540.98 1,356.08 1,612.41 2,034.20 2,079.33

$11.15 17.61 25.76 29.25 26.35 35.64 35.98 52.04 77.63 142.33 161.40 206.70 248.36 311.90 360.04 374.64 360.92 358.03 335.28 447.57 552.25 621.48 731.50 821.52 562.26 717.58 841.41 883.06 1,029.26 1,267.33 1,351.84

$25.45 83.20 167.63 171.40 168.96 166.25 171.14 239.77 308.37 367.05 302.84 349.21 396.56 457.50 536.96 545.18 545.58 642.96 810.58 925.21 971.03 1,018.68 1,130.52 1,305.51 1,233.18 1,748.11 2,117.07 2,346.90 2,810.53 2,787.10 2,894.45

Money market funds

Municipal

Taxable

Tax-exempt

$20.79 39.44 75.67 76.97 86.73 105.66 120.25 154.20 196.26 254.60 227.31 253.29 253.07 271.89 298.59 271.48 278.41 296.22 330.13 336.31 328.24 338.95 365.09 374.15 337.79 458.50 473.95 497.53 580.17 499.29 566.48

$209.75 207.55 228.35 254.68 272.20 358.62 414.56 452.46 451.35 461.88 501.11 631.32 763.94 901.23 1,166.97 1,413.25 1,611.38 2,026.23 1,988.78 1,749.73 1,589.70 1,690.45 1,969.42 2,617.67 3,338.56 2,916.96 2,473.92 2,399.72 2,406.10 2,447.72 2,464.47

$23.80 36.25 63.81 61.42 65.76 69.47 83.78 89.98 94.84 103.44 109.89 121.69 137.87 157.66 184.71 199.90 233.87 259.08 276.30 290.29 312.00 336.37 369.03 468.09 493.68 398.94 330.01 291.70 287.43 270.61 260.79

Note: Data for funds that invest primarily in other mutual funds were excluded from the series. The data contain a series break beginning in 1984. All funds were reclassified in 1984, and a separate category was created for hybrid funds. Components may not add to the total because of rounding.

MUTUAL FUND TOTALS

175

176


$1,433.95 1,105.24 765.54 1,041.14 1,148.56 1,232.82 1,319.36 1,419.60 808.69 1,085.65 1,248.01 1,178.32 1,318.94 1,724.95 1,856.49

Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$564.75 444.47 369.37 535.05 716.20 955.73 1,360.45 1,718.57 898.60 1,307.98 1,540.98 1,356.08 1,612.41 2,034.20 2,079.33

World

Equity funds

$1,935.78 1,842.69 1,507.51 2,077.18 2,477.81 2,696.90 3,152.78 3,275.05 1,930.13 2,478.91 2,807.64 2,678.58 3,007.39 4,003.57 4,378.50

Total return $360.92 358.03 335.28 447.57 552.25 621.48 731.50 821.52 562.26 717.58 841.41 883.06 1,029.26 1,267.33 1,351.84

Hybrid funds $245.69 311.29 406.26 473.95 518.25 570.10 640.32 760.34 736.40 1,050.03 1,241.29 1,365.08 1,571.98 1,451.22 1,525.18

Investment grade


Capital appreciation

Billions of dollars, year-end

$109.94 109.20 108.11 158.99 167.89 159.36 175.73 175.96 118.23 198.06 243.48 271.18 341.92 419.63 378.48

High yield

World $32.98 31.75 34.12 43.97 52.63 59.95 80.90 110.01 105.65 158.73 246.41 294.42 367.07 429.02 463.73

$124.87 154.14 218.98 197.99 176.61 167.34 153.15 158.19 188.04 210.31 225.43 242.09 298.28 239.42 253.88

$32.10 36.57 43.10 50.31 55.67 61.93 80.42 101.01 84.86 130.99 160.46 174.13 231.28 247.80 273.17

$131.92 139.78 152.72 149.26 144.09 147.46 154.42 155.94 135.09 159.26 156.16 158.89 177.53 144.82 156.16

$146.49 156.44 177.41 187.05 184.15 191.50 210.67 218.21 202.70 299.24 317.80 338.64 402.64 354.47 410.32

Government Multisector State muni National muni

Bond funds

Total Net Assets of the Mutual Fund Industry by Composite Investment Objective

TABLE 4

$1,611.38 2,026.23 1,988.78 1,749.73 1,589.70 1,690.45 1,969.42 2,617.67 3,338.56 2,916.96 2,473.92 2,399.72 2,406.10 2,447.72 2,464.47

Taxable

$233.87 259.08 276.30 290.29 312.00 336.37 369.03 468.09 493.68 398.94 330.01 291.70 287.43 270.61 260.79

Tax-exempt

Money market funds

Data Section 1


Number of Funds of the Mutual Fund Industry Year-end Long-term funds Year

Total

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Equity

361 392 410 421 431 426 452 477 505 526 564 665 857 1,026

Bond and income

323 350 364 366 343 314 302 296 294 289 288 306 340 396 Long-term funds

38 42 46 55 73 76 102 131 150 159 170 180 199 257

Equity Year

Total

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1,243 1,528 1,835 2,312 2,737 2,935 3,079 3,403 3,824 4,534 5,325 5,725 6,248 6,684 7,314 7,791 8,155 8,305 8,243 8,127 8,045 7,977 8,123 8,041 8,039 7,666 7,554 7,587 7,588 7,713 7,923

Domestic 430 519 621 743 897 941 944 985 1,086 1,280 1,463 1,611 1,902 2,183 2,622 3,004 3,315 3,610 3,714 3,659 3,651 3,659 3,748 3,678 3,655 3,419 3,322 3,260 3,218 3,194 3,239

Bond World

29 43 57 81 109 128 155 206 239 306 423 528 668 768 890 949 1,055 1,085 1,018 929 887 912 995 1,060 1,139 1,172 1,193 1,265 1,278 1,345 1,407

Hybrid 89 103 121 164 179 189 192 211 234 281 360 411 465 500 525 531 508 473 458 474 472 481 500 496 511 481 494 519 562 602 661

Money market funds

Taxable

Municipal

159 229 302 415 522 561 584 658 773 951 1,104 1,167 1,244 1,287 1,351 1,375 1,367 1,308 1,295 1,313 1,324 1,315 1,320 1,326 1,311 1,291 1,310 1,348 1,393 1,457 1,531

111 174 247 366 420 443 463 523 628 796 1,012 1,011 981 933 900 887 871 814 770 779 767 740 713 676 640 599 583 563 557 560 557

– – – – 15 36 48 50 61 78 106 179 318 373 Money market funds Taxable

Tax-exempt

331 350 360 389 433 470 505 552 585 627 649 676 669 685 687 704 704 690 677 660 639 593 573 545 534 476 442 431 400 382 365

94 110 127 154 177 203 236 268 279 293 314 321 319 328 339 341 335 325 311 313 305 277 274 260 249 228 210 201 180 173 163

Note: Data for funds that invest primarily in other mutual funds were excluded from the series. The data contain a series break beginning in 1984. All funds were reclassified in 1984, and a separate category was created for hybrid funds.

MUTUAL FUND TOTALS

177

178


1,555 1,723 1,729 1,680 1,650 1,631 1,669 1,577 1,556 1,442 1,393 1,358 1,343 1,327 1,330

Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1,055 1,085 1,018 929 887 912 995 1,060 1,139 1,172 1,193 1,265 1,278 1,345 1,407

World

Equity funds

1,760 1,887 1,985 1,979 2,001 2,028 2,079 2,101 2,099 1,977 1,929 1,902 1,875 1,867 1,909

Total return 508 473 458 474 472 481 500 496 511 481 494 519 562 602 661

Hybrid funds 575 557 575 601 614 609 594 605 595 571 583 579 581 594 605

Investment grade



Year-end

219 224 212 212 217 228 221 223 216 207 210 211 218 231 241

High yield 155 140 126 121 122 123 139 151 161 170 183 217 254 289 347

World 323 296 284 281 275 262 256 243 236 237 229 223 216 214 199

95 91 98 98 96 93 110 104 103 106 105 118 124 129 139

589 550 515 523 513 498 478 448 415 377 361 346 336 331 322

282 264 255 256 254 242 235 228 225 222 222 217 221 229 235


Bond funds

Number of Funds of the Mutual Fund Industry by Composite Investment Objective

TABLE 6

704 690 677 660 639 593 573 545 534 476 442 431 400 382 365

Taxable

335 325 311 313 305 277 274 260 249 228 210 201 180 173 163

Tax-exempt

Money market funds

Data Section 1


Number of Share Classes of the Mutual Fund Industry Year-end Long-term funds Equity Year

Total

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1,243 1,528 1,835 2,312 2,737 2,935 3,177 3,587 4,208 5,562 7,697 9,007 10,352 12,002 13,720 15,262 16,738 18,022 18,983 19,321 20,041 20,554 21,264 21,638 22,262 21,651 21,910 22,282 22,635 23,386 24,222

Domestic 430 519 621 743 897 941 962 1,021 1,189 1,560 2,026 2,442 3,056 3,860 4,872 5,818 6,725 7,738 8,427 8,546 9,002 9,259 9,641 9,706 9,881 9,342 9,206 9,178 9,148 9,224 9,423

Bond World

29 43 57 81 109 128 166 227 263 385 630 845 1,155 1,449 1,770 1,968 2,299 2,511 2,515 2,369 2,357 2,501 2,775 3,030 3,385 3,550 3,710 3,944 4,037 4,258 4,525

Hybrid 89 103 121 164 179 189 199 223 257 347 515 634 749 873 964 1,026 1,007 994 1,030 1,112 1,202 1,344 1,355 1,354 1,424 1,374 1,449 1,561 1,691 1,864 2,027

Money market funds

Taxable

Municipal

Taxable

159 229 302 415 522 561 598 687 877 1,207 1,605 1,844 2,050 2,293 2,532 2,722 2,821 2,874 3,066 3,223 3,377 3,427 3,542 3,640 3,753 3,782 3,990 4,150 4,438 4,721 4,997

111 174 247 366 420 443 490 558 708 1,054 1,660 1,862 1,889 1,978 1,955 1,998 2,031 1,957 1,939 2,040 2,050 1,992 1,938 1,893 1,829 1,757 1,774 1,719 1,698 1,748 1,743

331 350 360 389 433 470 522 591 616 672 858 953 1,005 1,075 1,137 1,230 1,331 1,405 1,463 1,462 1,477 1,464 1,454 1,447 1,443 1,330 1,281 1,255 1,174 1,141 1,101

Tax-exempt 94 110 127 154 177 203 240 280 298 337 403 427 448 474 490 500 524 543 543 569 576 567 559 568 547 516 500 475 449 430 406


MUTUAL FUND TOTALS

179

180


3,232 3,770 3,974 3,950 4,068 4,092 4,245 4,158 4,179 3,928 3,840 3,785 3,770 3,770 3,795

Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2,299 2,511 2,515 2,369 2,357 2,501 2,775 3,030 3,385 3,550 3,710 3,944 4,037 4,258 4,525

World

Equity funds

3,493 3,968 4,453 4,596 4,934 5,167 5,396 5,548 5,702 5,414 5,366 5,393 5,378 5,454 5,628

Total return 1,007 994 1,030 1,112 1,202 1,344 1,355 1,354 1,424 1,374 1,449 1,561 1,691 1,864 2,027

Hybrid funds 1,141 1,190 1,341 1,462 1,551 1,574 1,604 1,655 1,660 1,629 1,707 1,721 1,797 1,845 1,875

Investment grade



Year-end

490 524 528 538 571 612 623 661 680 660 690 704 744 797 834

High yield 311 292 291 291 302 315 367 413 491 544 615 744 891 1,043 1,251

World 679 661 676 703 716 687 666 630 624 634 652 620 626 631 601

200 207 230 229 237 239 282 281 298 315 326 361 380 405 436

1,393 1,325 1,286 1,333 1,333 1,306 1,258 1,220 1,151 1,069 1,065 1,029 1,002 1,010 990

638 632 653 707 717 686 680 673 678 688 709 690 696 738 753


Bond funds

Number of Share Classes of the Mutual Fund Industry by Composite Investment Objective

1,331 1,405 1,463 1,462 1,477 1,464 1,454 1,447 1,443 1,330 1,281 1,255 1,174 1,141 1,101

Taxable

524 543 543 569 576 567 559 568 547 516 500 475 449 430 406

Tax-exempt

Money market funds

TABLE 8

Data Section 1

$10,791 13,109 14,581 15,462 16,018 18,078 19,830 20,536 22,529 24,696 24,557 22,261 26,596 42,987 63,732 77,090 88,013 87,869 45,753 52,940 60,461 62,414 68,461 81,757 88,979

Domestic

$5,751 6,115 7,100 12,466 21,505 23,769 27,074 29,011 25,011 16,494 11,986 8,748 6,988 9,743 18,072 27,784 33,657 57,329 26,525 34,489 36,239 33,441 32,179 32,429 30,383

$16,820 19,403 24,632 30,909 26,604 28,678 28,418 28,315 34,127 30,888 28,581 26,606 25,643 55,428 63,890 63,935 67,962 62,571 33,673 44,126 48,985 48,009 53,638 58,489 56,732

Domestic taxable

Bond

$16,482 29,519 45,593 60,100 56,035 60,318 59,540 61,992 63,628 64,513 68,266 74,467 90,024 94,060 94,841 94,563 94,526 88,920 67,334 77,677 77,140 84,100 90,524 82,871 90,169

Domestic municipal $9,170 7,947 8,674 12,501 10,425 11,698 12,046 11,912 10,454 10,348 9,676 9,102 9,414 11,539 12,847 12,559 13,079 15,682 10,891 13,660 14,965 14,422 18,746 23,737 22,874

Global/ International

Note: Components may not add to the total because of rounding. Totals are inclusive of preferred share classes.

Total

$59,014 76,092 100,581 131,438 130,586 142,540 146,908 151,767 155,749 146,940 143,066 141,185 158,664 213,756 253,382 275,932 297,236 312,371 184,175 222,894 237,790 242,387 263,548 279,282 289,137

Year

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Equity

Total assets Millions of dollars, year-end

Closed-End Funds: Total Assets and Number of Funds by Type of Fund

245 277 370 491 509 498 495 485 491 510 481 489 543 581 618 634 645 662 642 627 624 632 602 599 568

Total 40 39 42 47 49 48 49 45 44 49 53 51 63 75 95 120 128 136 128 117 117 125 125 131 126

Domestic 51 52 61 70 86 91 91 89 83 73 69 64 59 55 61 71 74 92 93 91 87 87 86 85 84


Equity

84 86 99 120 123 119 118 115 123 117 109 109 105 127 137 132 134 131 128 127 130 132 131 132 124

Domestic taxable

Number of funds Year-end

Data Section 2

TABLE 9

Bond

52 85 148 225 219 207 205 204 211 241 220 238 291 297 295 280 276 269 260 260 258 256 223 210 194

18 15 20 29 32 33 32 32 30 30 30 27 25 27 30 31 33 34 33 32 32 32 37 41 40

Domestic Global/ municipal International

Data Section 1

CLOSED-END FUNDS, EXCHANGE-TRADED FUNDS, AND UNIT INVESTMENT TRUSTS

181

TABLE 10

Closed-End Funds: Gross Issuance, Gross Redemptions, and Net Issuance by Type of Fund Millions of dollars, annual Equity funds Year

Total

Data Section 2

Gross issuance1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$24,895 40,810 27,991 21,388 12,745 31,086 275 3,615 14,017 14,990 16,774 17,012 7,699

Domestic


Bond funds Domestic taxable

Domestic municipal


$9,191 11,187 15,424 12,559 7,992 5,973 8 549 3,719 3,850 3,815 4,311 3,996

$3 50 5,714 6,628 2,505 19,764 145 485 114 1,469 533 106 619

$2,309 25,587 5,820 2,046 1,718 2,221 121 876 2,374 1,000 4,088 4,525 516

$13,392 2,954 5 31 196 433 0 1,389 7,454 8,669 6,258 1,643 2,567

$0 1,032 1,028 124 334 2,695 0 317 358 2 2,081 6,428 1

2007 $2,717 2008 22,573 2009 6,875 2010 8,587 2011 8,972 2012 5,459 2013 3,270 2014 2,933 Net issuance3

$1,024 7,060 2,916 1,724 644 974 214 152

$105 1,832 639 55 209 420 649 124

$254 6,891 1,664 474 276 838 604 411

$1,313 6,089 1,627 6,335 7,843 3,226 1,799 2,034

$20 701 30 0 0 0 5 213

2007 2008 2009 2010 2011 2012 2013 2014

$4,949 -7,052 -2,366 1,995 3,206 2,840 4,097 3,844

$19,659 -1,687 -154 59 1,260 113 -543 494

$1,966 -6,770 -788 1,900 724 3,249 3,921 105

$-880 -6,089 -238 1,119 825 3,032 -155 533

$2,675 -700 287 357 2 2,081 6,423 -212

Gross redemptions2

$28,369 -22,298 -3,259 5,430 6,018 11,315 13,742 4,766

1 Gross

issuance of shares is the value of net proceeds from underwritings, additional offerings, and other issuance. Data are not available prior to 2002. 2 Gross redemptions of shares is the value of share repurchases and fund liquidations. Data are not available prior to 2007. 3 Net issuance of shares is the dollar value of gross issuance minus gross redemptions. A positive number indicates that gross issuance exceeded gross redemptions. A negative number indicates that gross redemptions exceeded gross issuance. Data are not available prior to 2007. Note: Components may not add to the total because of rounding. Totals are inclusive of preferred share classes.

182


183

$464 424 1,052 2,411 6,707 15,568 33,873 65,585 82,993 102,143 150,983 227,540 300,820 422,550 608,422 531,288 777,128 991,989 1,048,134 1,337,112 1,674,616 1,974,377

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Equity

$464 424 1,052 2,159 6,200 14,058 29,374 60,529 74,752 86,985 120,430 163,730 186,832 232,487 300,930 266,161 304,044 372,377 400,696 509,338 761,701 935,652

Broad-based

$484 2,507 3,015 5,224 5,919 11,901 20,315 28,975 43,655 64,117 58,374 82,053 103,807 108,548 135,378 202,706 267,523

Sector1

Domestic equity $252 506 1,026 1,992 2,041 3,016 5,324 13,984 33,644 65,210 111,194 179,702 113,684 209,315 276,622 245,114 328,521 398,834 414,805

Global/ International $1,335 4,798 14,699 28,906 35,728 74,528 101,081 109,176 120,016 64,042 56,974

Commodities2

Investment objective

$119 132 169 322 377 656 1,469 3,047

Hybrid $3,915 4,667 8,516 15,004 20,514 34,648 57,209 107,018 137,781 184,222 243,203 245,862 296,376

Bond $464 424 1,052 2,411 6,707 15,568 33,873 65,585 82,993 102,143 150,983 226,205 296,022 407,850 579,517 495,314 701,586 888,198 934,216 1,206,974 1,596,691 1,901,331

Index $245 1,014 2,736 5,049 10,257 14,055 16,508

Actively managed

1940 Act ETFs

Legal status

$1,335 4,798 14,699 28,906 35,728 74,528 101,055 108,868 119,881 63,869 56,538

-

Non–1940 Act ETFs3

2 This

1

This category includes funds both registered and not registered under the Investment Company Act of 1940. category includes funds—both registered and not registered under the Investment Company Act of 1940—that invest primarily in commodities, currencies, and futures. 3 The funds in this category are not registered under the Investment Company Act of 1940. 4 Data for ETFs that invest primarily in other ETFs are excluded from the totals. Note: Components may not add to the total because of rounding. Sources: Investment Company Institute and Strategic Insight Simfund

Total

Year

Millions of dollars, year-end

Exchange-Traded Funds: Total Net Assets by Type of Fund

TABLE 11

Data Section 2


$97 824 1,294 1,580 2,227 2,659 5,204

Funds of funds4

Memo

184


1 1 2 19 19 29 30 80 102 113 119 152 204 359 629 728 797 923 1,134 1,194 1,294 1,411

Total

Broad-based

1 1 2 2 2 3 4 29 34 34 39 60 81 133 197 204 222 243 287 274 292 316

Equity

9 9 26 34 32 33 42 65 119 191 186 179 193 229 222 235 236

Sector1

Domestic equity 17 17 17 17 25 34 39 41 43 49 85 159 225 244 298 368 404 438 494

Global/ International 1 3 16 28 45 49 55 75 79 76 82

Commodities2


5 6 5 6 7 13 15 19

Hybrid 8 6 6 6 6 49 62 98 128 168 202 238 264

Bond 1 1 2 19 19 29 30 80 102 113 119 151 201 343 601 670 727 844 1,028 1,070 1,158 1,228

Index 13 21 25 33 44 61 111

Actively managed

1940 Act ETFs

Legal status

1 3 16 28 45 49 54 73 80 75 72


2 This

1

This category includes funds both registered and not registered under the Investment Company Act of 1940. category includes funds—both registered and not registered under the Investment Company Act of 1940—that invest primarily in commodities, currencies, and futures. 3 The funds in this category are not registered under the Investment Company Act of 1940. 4 Data for ETFs that invest primarily in other ETFs are excluded from the totals. Sources: Investment Company Institute and Strategic Insight Simfund

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year

Year-end

Exchange-Traded Funds: Number of Funds by Type of Fund

TABLE 12

Data Section 2

15 23 27 32 45 38 40

Funds of funds4

Memo

185

$442 -28 443 842 3,160 5,158 10,221 40,591 26,911 35,477 5,737 29,084 16,941 21,589 61,152 88,105 -11,842 28,317 34,653 57,739 99,470 102,335

Broad-based

$484 1,596 1,033 2,735 2,304 3,587 6,514 6,719 9,780 18,122 30,296 14,329 10,187 9,682 14,307 34,434 40,593

Sector1

Domestic equity

Equity

$266 306 553 112 884 1,366 3,792 5,764 15,645 23,455 28,423 48,842 25,243 39,599 41,527 24,250 51,896 62,807 46,642

Global/ International $1,353 2,859 8,475 9,062 10,567 28,410 8,155 2,940 8,889 -29,870 -1,420

Commodities2


$122 58 15 144 72 246 849 1,629

Hybrid $3,729 721 3,778 6,756 5,729 13,318 22,952 45,958 29,652 46,045 52,318 12,195 51,007

Bond

Legal status

$442 -28 443 1,108 3,466 6,195 11,929 42,508 31,012 45,302 15,810 55,021 53,871 65,520 141,555 166,372 87,336 108,141 112,437 171,329 205,323 240,011

Index $281 724 1,711 2,567 5,025 4,468 2,538

Actively managed

1940 Act ETFs

$1,353 2,859 8,475 9,062 10,567 28,410 8,129 2,639 9,041 -29,906 -1,764


$107 237 433 389 510 1,180 2,423

Funds of funds4

Memo

2 This

category includes funds both registered and not registered under the Investment Company Act of 1940. category includes funds—both registered and not registered under the Investment Company Act of 1940—that invest primarily in commodities, currencies, and futures. 3 The funds in this category are not registered under the Investment Company Act of 1940. 4 Data for ETFs that invest primarily in other ETFs are excluded from the totals. Note: Components may not add to the total because of rounding. Sources: Investment Company Institute and Strategic Insight Simfund

$442 -28 443 1,108 3,466 6,195 11,929 42,508 31,012 45,302 15,810 56,375 56,729 73,995 150,617 177,220 116,469 117,982 117,642 185,394 179,885 240,785

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1 This

Total

Year

Millions of dollars, annual

Exchange-Traded Funds: Net Issuance by Type of Fund

TABLE 13

Data Section 2


186


$105,390 102,828 97,925 87,574 73,682 73,125 72,204 84,761 93,943 91,970 74,161 49,249 36,016 35,826 37,267 40,894 49,662 53,040 28,543 38,336 50,567 59,931 71,725 86,504 101,136

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$4,192 4,940 6,484 8,494 9,285 14,019 22,922 40,747 56,413 62,128 48,060 26,467 14,651 19,024 23,201 28,634 38,809 43,295 20,080 24,774 34,112 40,638 51,905 70,850 85,957

Equity

$9,456 9,721 9,976 8,567 7,252 8,094 8,485 6,480 5,380 4,283 3,502 3,784 4,020 3,311 2,635 2,280 2,142 2,066 2,007 3,668 3,780 3,602 4,063 3,560 3,065

Taxable debt $91,742 88,167 81,465 70,513 57,144 51,013 40,796 37,533 32,151 25,559 22,599 18,999 17,345 13,491 11,432 9,980 8,711 7,680 6,456 9,894 12,675 15,691 15,757 12,094 12,114

Tax-free debt

Note: Components may not add to the total because of rounding.

Total trusts

Year


Total net assets

12,131 12,388 13,598 13,740 13,310 12,979 11,764 11,593 10,966 10,414 10,072 9,295 8,303 7,233 6,499 6,019 5,907 6,030 5,984 6,049 5,971 6,043 5,787 5,552 5,381

Total trusts 171 168 230 258 306 301 378 563 872 1,081 1,554 1,500 1,247 1,206 1,166 1,251 1,566 1,964 2,175 2,145 2,212 2,395 2,426 2,428 2,503

Equity 722 678 745 679 568 578 591 513 414 409 369 324 366 320 295 304 319 327 343 438 491 512 553 580 591

Taxable debt

Year-end

Number of trusts

11,238 11,542 12,623 12,803 12,436 12,100 10,795 10,517 9,680 8,924 8,149 7,471 6,690 5,707 5,038 4,464 4,022 3,739 3,466 3,466 3,268 3,136 2,808 2,544 2,287

Tax-free debt

Unit Investment Trusts: Total Net Assets, Number of Trusts, and New Deposits by Type of Trust

TABLE 14

$7,489 8,195 8,909 9,359 8,915 11,264 21,662 38,546 47,675 52,046 43,649 19,049 11,600 12,731 17,125 22,598 29,057 35,836 23,590 22,293 30,936 36,026 43,404 55,628 65,530

Total trusts $495 900 1,771 3,206 3,265 6,743 18,316 35,855 45,947 50,629 42,570 16,927 9,131 10,071 14,559 21,526 28,185 35,101 22,335 16,159 25,003 31,900 40,012 53,719 63,991

Equity $1,349 1,687 2,385 1,598 1,709 1,154 800 771 562 343 196 572 862 931 981 289 294 298 557 2,201 928 765 1,236 916 624

Taxable debt

New deposits


Data Section 2

$5,644 5,609 4,752 4,555 3,941 3,367 2,546 1,919 1,166 1,074 883 1,550 1,607 1,729 1,585 782 578 438 698 3,933 5,006 3,361 2,157 993 915

Tax-free debt

TABLE 15

Liquid Assets and Liquidity Ratio of Long-Term Mutual Funds Year-end Liquidity ratio*

Liquid assets

Millions of dollars

Total

Equity funds

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$12,181 20,593 30,611 37,930 44,980 44,603 48,440 60,385 73,984 99,436 120,430 141,755 151,988 198,826 191,393 219,098 277,164 222,475 208,939 259,641 307,111 303,189 346,768 381,679 296,540 365,787 330,295 461,767 515,396 651,842 725,615

$7,295 10,452 14,612 16,319 17,742 25,602 27,344 30,657 42,417 57,539 70,885 97,743 107,667 145,565 143,516 174,692 225,023 170,361 120,500 154,877 184,140 190,906 218,670 266,285 185,536 169,799 192,757 182,548 200,436 272,507 291,691

Hybrid funds $878 1,413 2,514 2,730 2,986 5,747 4,198 3,309 6,560 16,613 19,929 19,271 17,954 24,645 25,289 20,979 26,798 26,911 25,423 30,654 36,419 43,133 57,461 56,813 52,712 52,845 61,013 70,660 99,570 142,258 148,623

Bond funds

Total

Equity funds

Hybrid funds

Bond funds

$4,007 8,728 13,485 18,881 24,252 13,253 16,899 26,419 25,007 25,284 29,616 24,741 26,367 28,616 22,588 23,427 25,343 25,203 63,016 74,110 86,552 69,150 70,637 58,581 58,291 143,143 76,525 208,559 215,390 237,077 285,301

8.9% 8.2 7.2 8.4 9.5 8.1 8.5 7.1 6.7 6.6 7.8 6.9 5.8 5.8 4.6 4.2 5.4 4.7 5.1 4.8 5.0 4.4 4.3 4.3 5.1 4.7 3.7 5.2 5.0 5.3 5.5

9.1% 9.4 9.5 9.3 9.4 10.4 11.4 7.6 8.3 7.8 8.3 7.8 6.2 6.1 4.8 4.3 5.7 5.0 4.6 4.2 4.2 3.9 3.7 4.2 5.1 3.5 3.4 3.5 3.4 3.5 3.5

7.9% 8.0 9.8 9.3 11.3 16.1 11.7 6.4 8.5 11.7 12.3 9.3 7.2 7.9 7.0 5.6 7.4 7.5 7.6 6.8 6.6 6.9 7.9 6.9 9.4 7.4 7.3 8.0 9.7 11.2 11.0

8.7% 7.1 5.5 7.6 9.5 4.9 5.8 6.7 5.0 4.1 5.6 4.1 4.1 3.9 2.7 2.9 3.1 2.7 5.5 5.9 6.7 5.1 4.7 3.5 3.7 6.5 3.0 7.3 6.4 7.2 8.2

Data Section 3

Year

Percent

* Liquidity ratio is the ratio of liquid assets divided by total net assets at year-end. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

LONG-TERM MUTUAL FUNDS

187

188


6.1% 4.9 4.9 3.7 3.6 3.3 3.4 4.3 6.1 4.5 3.5 3.8 3.6 3.6 3.3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

7.7% 6.2 5.7 5.8 5.5 5.2 4.3 5.2 6.1 3.9 4.4 4.5 4.0 4.5 4.9

World

4.9% 4.8 4.1 4.1 4.2 3.7 3.7 3.6 4.2 2.8 2.9 2.8 2.9 3.0 2.9

Total return 7.4% 7.5 7.6 6.8 6.6 6.9 7.9 6.9 9.4 7.4 7.3 8.0 9.7 11.2 11.0

Hybrid funds 4.5% 3.3 10.7 9.7 8.9 6.5 6.9 2.3 1.1 6.8 0.3 7.2 5.4 6.8 7.4

Investment grade 9.1% 7.7 7.9 6.1 6.1 5.2 4.9 4.6 10.7 5.4 5.8 7.2 5.6 4.3 4.4

High yield -2.2% -3.7 -2.5 3.3 6.1 6.1 12.5 17.0 13.0 13.6 16.5 17.5 15.2 17.3 19.4

World -2.8% -0.5 0.5 1.7 3.8 1.2 -4.1 -0.8 4.4 4.0 -2.5 0.9 2.8 1.0 2.5

Government

Bond funds

-2.2% 0.6 -1.0 7.1 7.5 6.2 2.2 2.8 3.7 6.6 2.7 5.2 6.9 7.0 8.0

Multisector 3.1% 2.3 2.6 2.2 2.9 2.5 2.0 1.8 1.7 2.8 2.1 3.1 3.4 2.0 3.6

State muni

3.5% 3.2 4.2 3.7 6.5 5.7 4.5 4.6 4.9 6.0 5.2 6.6 6.2 6.5 7.6

National muni

Note: Liquidity ratio is the ratio of liquid assets divided by total net assets at year-end. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds

Percent, year-end

Liquidity Ratio of Long-Term Mutual Funds by Composite Investment Objective

TABLE 16

Data Section 3

TABLE 17

Net New Cash Flow* of Long-Term Mutual Funds Millions of dollars, annual Total

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$19,194 73,490 129,991 29,776 -23,119 8,731 21,211 106,213 171,696 242,049 75,160 122,208 231,874 272,030 241,796 169,780 228,874 129,188 120,583 215,884 209,890 192,016 227,078 224,321 -224,900 389,078 243,222 27,953 198,441 159,674 96,090

Equity funds $4,336 6,643 20,386 19,231 -14,948 6,774 12,915 39,888 78,983 127,260 114,525 124,392 216,937 227,106 156,875 187,565 315,711 33,439 -29,326 144,055 171,937 123,967 147,773 73,328 -229,407 -1,952 -24,414 -129,263 -152,680 159,553 25,216

Hybrid funds

Bond funds

$1,801 3,720 6,988 3,748 -3,684 3,183 1,463 7,067 21,725 42,619 21,998 3,738 11,795 15,757 10,265 -13,018 -36,722 7,285 8,043 39,079 53,055 42,754 19,857 40,384 -25,525 19,792 35,295 39,549 44,895 71,293 27,346

$13,058 63,127 102,618 6,797 -4,488 -1,226 6,833 59,258 70,989 72,169 -61,362 -5,922 3,141 29,166 74,656 -4,767 -50,115 88,463 141,865 32,750 -15,102 25,295 59,448 110,609 30,032 371,238 232,342 117,667 306,226 -71,172 43,528

Data Section 3

Year

* Net new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components many not add to the total because of rounding.


189

TABLE 18

Net New Cash Flow and Components of Net New Cash Flow of Equity Mutual Funds Millions of dollars, annual

Data Section 3

Sales Year

Net new cash flow1

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$4,336 6,643 20,386 19,231 -14,948 6,774 12,915 39,888 78,983 127,260 114,525 124,392 216,937 227,106 156,875 187,565 315,711 33,439 -29,326 144,055 171,937 123,967 147,773 73,328 -229,407 -1,952 -24,414 -129,263 -152,680 159,553 25,216

New + exchange $28,705 40,608 87,997 139,596 68,827 89,345 104,334 146,618 201,720 307,356 366,659 433,853 674,323 880,286 1,065,197 1,410,846 1,972,208 1,329,827 1,214,146 1,074,175 1,096,540 1,192,654 1,417,077 1,729,376 1,523,295 1,193,638 1,406,727 1,493,184 1,449,651 1,864,283 2,008,774

New2 $16,586 25,046 50,774 65,093 25,641 46,817 62,872 90,192 134,309 213,639 252,887 282,937 442,372 579,064 699,554 918,600 1,320,049 953,619 894,047 837,496 926,961 1,017,225 1,214,420 1,506,720 1,329,565 1,032,077 1,236,968 1,323,049 1,260,222 1,641,164 1,797,539

Redemptions Exchange3 $12,119 15,562 37,224 74,502 43,186 42,527 41,462 56,427 67,411 93,717 113,772 150,915 231,951 301,222 365,643 492,245 652,159 376,208 320,099 236,679 169,579 175,428 202,658 222,656 193,730 161,560 169,759 170,134 189,428 223,119 211,235

Regular + exchange $24,369 33,965 67,612 120,365 83,774 82,571 91,419 106,730 122,738 180,095 252,134 309,461 457,385 653,180 908,322 1,223,281 1,656,497 1,296,387 1,243,471 930,120 924,603 1,068,686 1,269,304 1,656,048 1,752,702 1,195,589 1,431,141 1,622,447 1,602,331 1,704,730 1,983,559

Regular4 $10,669 17,558 26,051 38,601 33,247 37,229 44,487 53,394 61,465 91,944 141,097 170,402 240,531 362,022 534,256 744,145 1,032,153 891,802 875,677 707,565 758,902 878,158 1,047,381 1,389,144 1,479,005 1,015,446 1,239,215 1,418,034 1,382,128 1,496,822 1,773,298

Exchange5 $13,700 16,406 41,561 81,764 50,528 45,342 46,931 53,336 61,272 88,151 111,037 139,059 216,854 291,158 374,065 479,136 624,345 404,586 367,794 222,555 165,701 190,528 221,923 266,905 273,697 180,143 191,926 204,413 220,202 207,908 210,260

1 Net

new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. 3 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. 4 Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. 5 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding. 2 New

190


TABLE 19

Net New Cash Flow and Components of Net New Cash Flow of Hybrid Mutual Funds Millions of dollars, annual Sales Year

$1,801 3,720 6,988 3,748 -3,684 3,183 1,463 7,067 21,725 42,619 21,998 3,738 11,795 15,757 10,265 -13,018 -36,722 7,285 8,043 39,079 53,055 42,754 19,857 40,384 -25,525 19,792 35,295 39,549 44,895 71,293 27,346

New + exchange $4,118 7,502 13,535 14,948 6,259 11,139 9,671 16,860 32,772 60,610 58,541 43,024 56,783 68,347 82,691 81,917 70,445 83,546 93,685 115,929 143,463 144,267 146,088 206,415 181,437 174,217 205,353 263,052 264,402 335,250 319,132

New2 $3,842 6,976 12,342 12,419 4,601 9,334 7,989 13,754 26,463 49,526 49,043 35,385 47,436 55,264 67,294 67,617 56,973 65,634 75,664 96,811 125,438 126,616 127,532 183,482 155,076 150,048 181,394 233,463 237,734 298,445 287,626

Exchange3

Regular + exchange

$276 526 1,194 2,528 1,658 1,805 1,682 3,106 6,309 11,083 9,498 7,640 9,347 13,084 15,397 14,300 13,473 17,912 18,021 19,117 18,025 17,651 18,555 22,933 26,361 24,169 23,959 29,589 26,669 36,805 31,505

$2,318 3,782 6,548 11,200 9,943 7,956 8,208 9,793 11,047 17,990 36,544 39,286 44,988 52,590 72,426 94,934 107,167 76,260 85,642 76,849 90,407 101,513 126,231 166,031 206,962 154,425 170,058 223,502 219,507 263,956 291,785

Regular4 $2,017 3,161 5,162 7,848 7,521 5,780 5,600 7,011 7,209 11,735 25,298 27,807 31,413 38,265 53,353 69,790 77,219 58,850 67,407 63,329 77,520 86,199 106,066 144,066 165,396 127,179 146,387 190,403 194,900 232,905 264,572

Exchange5 $301 621 1,386 3,353 2,422 2,176 2,608 2,782 3,838 6,256 11,245 11,479 13,575 14,325 19,073 25,145 29,948 17,410 18,234 13,520 12,887 15,314 20,165 21,965 41,566 27,246 23,672 33,099 24,607 31,052 27,213

Data Section 3

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Net new cash flow1

Redemptions

1 Net



191

TABLE 20

Net New Cash Flow and Components of Net New Cash Flow of Bond Mutual Funds Millions of dollars, annual Sales

Data Section 3

Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Net new cash flow1 $13,058 63,127 102,618 6,797 -4,488 -1,226 6,833 59,258 70,989 72,169 -61,362 -5,922 3,141 29,166 74,656 -4,767 -50,115 88,463 141,865 32,750 -15,102 25,295 59,448 110,609 30,032 371,238 232,342 117,667 306,226 -71,172 43,528

New + exchange $25,554 83,359 158,874 123,528 72,174 71,770 80,659 141,674 217,863 262,300 186,908 166,437 203,343 242,309 314,429 299,198 250,918 394,211 515,028 520,683 395,451 402,784 446,377 592,760 709,634 1,006,675 1,089,699 1,103,665 1,246,704 1,307,940 1,278,294

New2 $20,774 74,485 138,240 93,725 47,378 48,602 57,106 108,095 171,991 208,605 131,351 110,451 137,886 176,275 230,934 217,431 187,188 301,477 402,020 428,553 340,549 351,167 391,126 506,964 580,948 856,834 964,459 976,073 1,121,190 1,158,804 1,174,227

Redemptions Exchange3 $4,780 8,874 20,634 29,803 24,796 23,168 23,552 33,580 45,872 53,696 55,556 55,986 65,457 66,034 83,495 81,767 63,730 92,733 113,009 92,130 54,902 51,617 55,251 85,796 128,686 149,841 125,240 127,592 125,514 149,136 104,068

Regular + exchange $12,497 20,232 56,256 116,731 76,662 72,996 73,826 82,416 146,874 190,131 248,270 172,359 200,201 213,143 239,773 303,965 301,033 305,748 373,163 487,934 410,554 377,489 386,929 482,151 679,602 635,437 857,357 985,999 940,478 1,379,112 1,234,766

Regular4 $7,344 13,094 35,776 69,627 51,558 48,517 47,978 56,177 96,628 127,294 162,823 114,686 125,486 140,906 160,071 207,254 220,868 226,197 285,070 376,840 341,466 321,681 329,462 410,366 582,683 525,213 742,628 870,097 838,189 1,190,747 1,137,937

Exchange5 $5,152 7,137 20,480 47,104 25,103 24,480 25,848 26,239 50,246 62,838 85,448 57,673 74,715 72,237 79,702 96,711 80,165 79,551 88,093 111,094 69,088 55,808 57,467 71,785 96,919 110,224 114,729 115,901 102,289 188,366 96,829

1 Net


192


$262,090 -22,779 -52,387 27,126 -11,497 -25,359 -26,842 -43,061 -47,898 -7,217 -26,594 -44,196 -38,846 -2,834 -40,913

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$58,195 -23,206 -4,451 24,361 71,583 106,918 150,935 141,788 -80,384 25,681 56,730 4,140 6,603 141,489 85,432

World

-$4,574 79,425 27,513 92,569 111,851 42,408 23,680 -25,399 -101,126 -20,416 -54,550 -89,206 -120,437 20,897 -19,303

Total return -$36,722 7,285 8,043 39,079 53,055 42,754 19,857 40,384 -25,525 19,792 35,295 39,549 44,895 71,293 27,346

Hybrid funds $5,460 49,253 64,670 31,835 22,382 36,732 36,993 76,108 9,449 202,341 111,385 51,242 106,607 -97,014 9,661

Investment grade -$15,376 880 2,953 21,945 -3,045 -13,529 3,044 -4,822 -6,360 22,384 19,335 21,587 34,257 55,633 -44,211

High yield

World -$4,631 -1,151 -71 4,029 4,310 6,404 10,936 21,132 6,080 32,668 70,076 44,468 41,284 65,723 24,060

-$16,663 24,769 53,048 -22,124 -26,259 -14,211 -17,834 -2,242 20,600 18,950 4,059 3,393 33,743 -51,214 5,752

Government

Bond funds

-$4,439 2,436 4,380 3,903 2,857 5,188 11,204 9,454 -7,554 24,515 15,826 8,593 40,162 14,194 20,280

Multisector

-$5,456 6,293 5,337 -8,309 -7,939 1,232 3,876 3,358 -2,302 6,084 -2,838 -9,890 8,539 -22,420 -1,064

State muni

-$9,010 5,983 11,549 1,471 -7,410 3,480 11,229 7,621 10,119 64,295 14,499 -1,726 41,633 -36,074 29,051

National muni

Note: Net new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds


Net New Cash Flow of Long-Term Mutual Funds by Composite Investment Objective

TABLE 21

Data Section 3


193

194


$574,322 306,550 250,056 250,597 268,027 263,542 301,994 368,273 340,076 273,324 309,473 340,702 335,970 396,090 425,776

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$342,511 251,663 245,152 205,236 184,371 239,620 354,878 479,180 372,414 284,154 379,399 397,965 362,512 510,788 542,613

World

$403,217 395,407 398,839 381,662 474,563 514,063 557,548 659,267 617,076 474,600 548,096 584,382 561,740 734,286 829,150

Total return $56,973 65,634 75,664 96,811 125,438 126,616 127,532 183,482 155,076 150,048 181,394 233,463 237,734 298,445 287,626

Hybrid funds $79,200 127,711 172,587 186,661 165,644 171,630 183,990 247,214 277,177 426,743 450,179 448,943 490,135 467,429 493,473

Investment grade $27,405 36,277 39,665 65,577 48,346 42,226 45,724 55,721 47,425 70,370 96,163 128,890 124,107 172,537 147,595

High yield

World $8,267 8,948 10,920 18,946 18,132 23,786 29,025 45,546 53,561 69,340 129,602 138,829 131,719 192,004 194,172

$24,359 58,987 93,874 71,167 38,512 32,063 29,690 34,593 64,527 90,702 79,464 72,240 109,826 74,507 70,546

Government

Bond funds

$6,787 12,245 15,446 20,968 18,548 21,172 30,147 39,718 37,711 58,029 71,271 76,873 106,435 116,833 128,592

Multisector $16,989 25,028 26,360 20,546 16,820 21,959 25,566 29,590 30,562 28,386 28,530 19,797 30,912 23,833 22,423

State muni

$24,180 32,282 43,168 44,688 34,548 38,331 46,985 54,582 69,983 113,264 109,250 90,501 128,058 111,661 117,425

National muni

Note: New sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds


New Sales of Long-Term Mutual Funds by Composite Investment Objective

TABLE 22

Data Section 3

$343,618 176,020 144,274 94,572 57,575 55,786 64,336 60,884 58,645 44,893 41,942 48,399 45,112 68,226 61,408

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$169,388 85,824 71,084 41,777 27,630 38,396 56,926 68,791 48,079 47,195 55,916 40,005 47,470 44,073 48,129

World

$139,153 114,364 104,741 100,330 84,373 81,246 81,396 92,981 87,005 69,472 71,901 81,730 96,846 110,820 101,698

Total return $13,473 17,912 18,021 19,117 18,025 17,651 18,555 22,933 26,361 24,169 23,959 29,589 26,669 36,805 31,505

Hybrid funds $16,756 32,627 39,454 33,917 23,666 20,833 21,896 41,587 50,417 76,507 58,253 59,218 55,238 52,690 46,085


High yield

World $3,011 2,057 2,373 3,528 2,056 2,780 2,740 4,630 8,506 7,976 9,482 10,801 9,145 26,824 10,140

$15,829 24,779 37,280 18,355 7,023 6,575 5,972 10,226 27,495 18,336 14,513 14,323 14,912 13,320 7,231

Government

Bond funds

$1,662 2,860 3,474 4,713 4,330 4,742 7,027 5,036 10,048 8,641 10,792 10,756 12,957 10,305 9,738

Multisector

$5,304 5,348 5,625 4,288 2,750 2,983 3,450 5,706 7,039 5,161 3,852 3,736 3,685 4,900 3,600

State muni

$10,870 13,686 13,602 10,218 6,135 6,435 6,869 10,680 17,767 20,037 15,280 13,944 16,171 22,131 15,107

National muni

Note: Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds


Exchange Sales of Long-Term Mutual Funds by Composite Investment Objective

TABLE 23

Data Section 3


195

196


$367,939 307,031 276,869 222,877 269,656 274,036 313,742 393,843 375,619 273,761 329,476 377,196 367,669 401,614 465,178

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$288,253 264,414 243,479 183,743 122,228 148,065 223,271 347,697 424,738 258,011 317,314 382,528 354,069 373,695 458,723

World

$375,961 320,356 355,328 300,945 367,018 456,057 510,369 647,604 678,648 483,675 592,425 658,310 660,390 721,514 849,397

Total return $77,219 58,850 67,407 63,329 77,520 86,199 106,066 144,066 165,396 127,179 146,387 190,403 194,900 232,905 264,572

Hybrid funds $71,781 87,986 117,197 150,032 141,777 136,146 146,821 186,051 281,433 248,411 347,313 406,914 393,675 529,940 490,685


High yield

World $11,447 9,538 11,383 15,501 13,819 18,358 18,602 26,374 49,556 40,278 62,812 95,480 91,985 140,878 169,917

$35,865 37,939 53,918 79,437 58,824 43,913 43,975 38,850 59,781 69,920 74,239 69,572 77,394 117,158 63,799

Government

Bond funds

$10,431 10,367 12,043 17,372 15,552 16,059 19,707 29,139 45,632 36,083 55,858 69,333 70,412 101,524 110,865

Multisector $21,877 18,584 20,889 25,700 22,817 20,457 21,692 25,838 32,200 22,762 29,101 28,412 22,815 40,542 23,917

State muni

$31,908 27,401 33,434 41,443 39,625 34,488 36,205 46,949 63,070 56,421 93,398 92,128 89,798 139,022 92,168

National muni

Note: Redemptions are the dollar value of shareholder liquidation of mutual fund shares. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds


Redemptions of Long-Term Mutual Funds by Composite Investment Objective

TABLE 24

Data Section 3

$287,910 198,317 169,848 95,166 67,443 70,651 79,431 78,376 71,000 51,674 48,533 56,100 52,258 65,536 62,918

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$165,451 96,279 77,208 38,910 18,190 23,033 37,597 58,486 76,138 47,657 61,271 51,303 49,310 39,677 46,588

World

$170,983 109,990 120,738 88,479 80,067 96,844 104,895 130,043 126,558 80,812 82,122 97,009 118,634 102,695 100,754

Total return $29,948 17,410 18,234 13,520 12,887 15,314 20,165 21,965 41,566 27,246 23,672 33,099 24,607 31,052 27,213

Hybrid funds $18,715 23,098 30,174 38,711 25,150 19,585 22,073 26,641 36,712 52,499 49,734 50,005 45,090 87,193 39,212


High yield

World $4,463 2,618 1,981 2,945 2,059 1,804 2,227 2,670 6,432 4,371 6,195 9,681 7,594 12,228 10,335

$20,986 21,058 24,188 32,209 12,969 8,936 9,521 8,210 11,642 20,168 15,679 13,597 13,601 21,882 8,225

Government

Bond funds

$2,457 2,301 2,498 4,407 4,468 4,666 6,264 6,161 9,682 6,071 10,379 9,703 8,817 11,420 7,186

Multisector

$5,872 5,499 5,758 7,443 4,692 3,253 3,449 6,099 7,703 4,702 6,119 5,011 3,243 10,611 3,170

State muni

$12,153 12,583 11,787 11,992 8,467 6,798 6,420 10,692 14,562 12,584 16,632 14,043 12,797 30,844 11,313

National muni

Note: Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Data for funds that invest primarily in other mutual funds were excluded from the series.


Year

Equity funds


Exchange Redemptions of Long-Term Mutual Funds by Composite Investment Objective

TABLE 25

Data Section 3


197

TABLE 26

Annual Redemption Rates of Long-Term Mutual Funds Percent Broad redemption rate2

Data Section 3

Narrow redemption rate1 Year

Total

Equity funds

Hybrid funds

Bond funds

Total

Equity funds

Hybrid funds

Bond funds

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

17.4% 19.8 26.5 20.0 17.9 17.5 16.4 17.0 17.8 21.6 17.4 17.0 17.9 19.7 21.7 25.7 24.0 27.9 24.2 20.4 19.7 19.9 22.9 30.3 24.6 25.3 27.6 25.0 25.8 25.0

18.4% 19.6 23.4 18.2 17.1 18.4 16.6 13.4 14.7 17.7 16.2 16.2 17.7 20.0 21.2 25.9 24.3 29.0 22.5 19.0 19.0 19.5 22.7 29.4 23.9 23.7 26.2 24.8 21.8 22.1

22.0% 23.8 28.5 27.1 18.7 15.6 15.9 11.1 10.7 16.7 15.1 13.8 13.7 15.9 19.0 21.0 16.4 19.4 16.2 15.5 14.7 15.7 18.6 23.9 19.9 18.8 22.1 20.4 20.3 20.2

15.5% 19.6 28.3 20.5 18.4 17.0 16.4 21.5 22.6 28.3 20.3 20.0 20.4 20.5 25.1 26.9 25.7 27.4 31.4 26.7 24.2 23.1 25.8 35.9 27.8 31.0 32.0 26.9 35.7 33.7

29.8% 38.6 56.7 36.9 31.9 31.0 28.1 28.8 29.9 35.2 28.9 30.0 30.5 32.2 34.5 39.9 34.2 38.7 31.5 24.7 23.7 23.9 27.1 35.9 29.3 29.2 31.5 28.6 29.5 27.6

35.6% 50.9 73.0 45.9 38.0 37.7 33.1 26.7 28.7 31.6 29.4 30.7 31.9 34.0 34.9 41.5 35.4 41.2 29.5 23.1 23.2 23.7 27.0 34.9 28.1 27.3 30.0 28.7 24.9 24.7

26.3% 30.2 40.7 35.8 25.7 22.9 22.2 17.0 16.4 24.1 21.3 19.8 18.8 21.6 25.8 29.1 21.2 24.7 19.6 18.1 17.3 18.7 21.4 29.9 24.1 21.8 25.9 23.0 23.0 22.3

24.0% 30.7 47.5 30.4 27.7 26.2 24.1 32.7 33.8 43.1 30.4 32.0 30.9 30.6 36.8 36.7 34.7 35.9 40.6 32.1 28.4 27.1 30.4 41.8 33.6 35.7 36.3 30.2 41.3 36.6

1 Narrow

redemption rate is calculated by taking the sum of regular redemptions for the year as a percentage of average net assets at the beginning and end of the period. 2 Broad redemption rate is calculated by taking the sum of regular redemptions and exchange redemptions for the year as a percentage of average net assets at the beginning and end of the period. Note: Data for funds that invest primarily in other mutual funds were excluded from the series.

198


TABLE 27

Portfolio Holdings of Long-Term Mutual Funds and Percentage of Total Net Assets Year-end

Year

Common and preferred Long-term U.S. Total net assets stocks government bonds

Corporate bonds

Municipal bonds

Liquid assets

Other

$141,755 151,988 198,826 191,393 219,098 277,164 222,475 208,939 259,641 307,111 303,189 346,768 381,679 296,540 365,787 330,295 461,767 515,396 651,842 725,615

$6,026 5,645 10,866 9,753 5,204 4,008 1,768 1,910 3,038 8,480 12,536 15,956 21,077 21,531 17,411 7,036 -39,692 -26,089 -3,673 -10,086

Millions of dollars $2,058,275 2,623,994 3,409,315 4,173,531 5,233,193 5,119,386 4,689,603 4,118,402 5,362,460 6,194,101 6,864,553 8,059,704 8,914,408 5,770,655 7,796,729 9,029,066 8,940,472 10,358,707 12,316,444 13,127,081

$1,215,218 1,718,203 2,358,258 3,004,185 4,059,429 3,910,200 3,424,533 2,687,962 3,761,038 4,489,609 5,055,105 6,024,800 6,609,155 3,733,992 5,090,646 5,869,016 5,506,875 6,292,589 8,217,587 8,788,714

$259,107 264,972 282,272 286,592 293,565 309,752 379,740 481,639 504,757 537,297 612,795 644,734 749,427 705,030 849,809 1,084,703 1,185,969 1,380,129 1,208,087 1,223,860

$190,837 238,003 292,770 389,213 388,472 348,928 371,436 417,475 502,000 533,250 549,982 668,282 784,015 676,685 1,021,925 1,258,351 1,318,712 1,603,814 1,730,118 1,831,200

$245,331 245,183 266,324 292,395 267,426 269,334 289,651 320,477 331,986 318,354 330,945 359,163 369,055 336,878 451,151 479,665 506,841 592,868 512,483 567,778

Data Section 3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

100.0% 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

59.0% 65.5 69.2 72.0 77.6 76.4 73.0 65.3 70.1 72.5 73.6 74.8 74.1 64.7 65.3 65.0 61.6 60.7 66.7 67.0

12.6% 10.1 8.3 6.9 5.6 6.1 8.1 11.7 9.4 8.7 8.9 8.0 8.4 12.2 10.9 12.0 13.3 13.3 9.8 9.3

9.3% 9.1 8.6 9.3 7.4 6.8 7.9 10.1 9.4 8.6 8.0 8.3 8.8 11.7 13.1 13.9 14.7 15.5 14.0 13.9

11.9% 9.3 7.8 7.0 5.1 5.3 6.2 7.8 6.2 5.1 4.8 4.5 4.1 5.8 5.8 5.3 5.7 5.7 4.2 4.3

6.9% 5.8 5.8 4.6 4.2 5.4 4.7 5.1 4.8 5.0 4.4 4.3 4.3 5.1 4.7 3.7 5.2 5.0 5.3 5.5

0.3% 0.2 0.3 0.2 0.1 0.1 0.0 0.0 0.1 0.1 0.2 0.2 0.2 0.4 0.2 0.1 -0.4 -0.3 0.0 -0.1

Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.


199

TABLE 28

Portfolio Holdings of Long-Term Mutual Funds as a Percentage of Total Net Assets by Type of Fund Year-end

Data Section 3

Year

Total net assets

Common and preferred Long-term U.S. Corporate stocks government bonds bonds

Total net assets

Municipal bonds

Liquid assets

Other

Millions of dollars

Equity funds 2000 100.0% 2001 100.0 2002 100.0 2003 100.0 2004 100.0 2005 100.0 2006 100.0 2007 100.0 2008 100.0 2009 100.0 2010 100.0 2011 100.0 2012 100.0 2013 100.0 2014 100.0

93.7% 94.3 94.2 95.0 95.2 95.5 95.6 95.2 93.9 95.8 95.7 95.6 95.6 95.6 95.6

0.1% 0.1 0.4 0.2 0.1 0.1 0.1 0.1 0.2 0.1 0.2 0.3 0.3 0.2 0.2

0.4% 0.5 0.8 0.5 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.6 0.6 0.6 0.6

0.0% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

5.7% 5.0 4.6 4.2 4.2 3.9 3.8 4.2 5.1 3.5 3.4 3.5 3.4 3.5 3.5

0.0% 0.0 0.0 0.0 0.1 0.1 0.1 0.2 0.3 0.1 0.1 0.0 0.0 0.0 0.1

$3,934,480 3,392,399 2,642,420 3,653,370 4,342,577 4,885,444 5,832,582 6,413,222 3,637,416 4,872,541 5,596,629 5,212,989 5,938,747 7,762,727 8,314,314

Hybrid funds 2000 100.0% 2001 100.0 2002 100.0 2003 100.0 2004 100.0 2005 100.0 2006 100.0 2007 100.0 2008 100.0 2009 100.0 2010 100.0 2011 100.0 2012 100.0 2013 100.0 2014 100.0

59.1% 59.9 57.4 62.5 63.5 62.6 61.2 60.5 55.4 58.3 60.6 59.3 59.4 61.6 60.1

13.4% 11.9 12.4 10.6 11.0 10.5 10.0 10.3 9.8 9.8 8.8 9.4 8.9 7.9 9.0

19.7% 20.4 22.3 19.7 18.4 19.5 19.5 20.8 24.3 23.4 22.3 22.1 21.1 18.8 19.2

0.3% 0.2 0.2 0.3 0.4 0.4 0.3 0.3 0.4 0.4 0.5 0.5 0.5 0.4 0.5

7.4% 7.5 7.5 6.9 6.6 6.9 8.9 8.0 9.6 7.7 7.3 7.9 9.3 10.7 10.7

0.1% 0.2 0.1 0.0 0.1 0.0 0.1 0.1 0.4 0.5 0.4 0.8 0.8 0.6 0.5

$360,916 358,027 335,276 447,570 552,250 621,479 731,503 821,522 562,262 717,580 841,415 883,056 1,029,257 1,267,329 1,351,839

Bond funds 2000 100.0% 2001 100.0 2002 100.0 2003 100.0 2004 100.0 2005 100.0 2006 100.0 2007 100.0 2008 100.0 2009 100.0 2010 100.0 2011 100.0 2012 100.0 2013 100.0 2014 100.0

1.4% 1.1 0.6 0.8 0.8 0.8 0.8 1.0 0.6 0.8 0.9 0.8 0.9 1.1 1.2

31.1% 35.5 37.6 35.8 36.2 39.6 37.4 38.9 40.8 34.8 38.2 37.8 37.0 32.9 31.3

31.5% 29.9 28.1 31.3 31.7 30.0 33.5 35.0 33.2 37.4 40.0 38.2 39.5 43.7 43.8

32.6% 30.8 28.0 26.2 24.2 23.9 23.6 21.6 21.2 20.1 18.1 17.4 17.1 15.2 16.1

3.1% 2.7 5.5 5.8 6.6 5.1 4.3 3.0 3.6 6.5 3.0 7.4 6.5 7.4 8.4

0.3% 0.0 0.0 0.1 0.4 0.6 0.5 0.6 0.5 0.4 -0.1 -1.7 -1.0 -0.4 -0.7

$823,990 939,177 1,140,707 1,261,520 1,299,274 1,357,630 1,495,619 1,679,664 1,570,978 2,206,609 2,591,022 2,844,428 3,390,704 3,286,388 3,460,928


200


TABLE 29

Paid and Reinvested Dividends of Long-Term Mutual Funds by Type of Fund Millions of dollars, annual Paid dividends Total

Equity funds

1984e 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$7,238 12,719 22,689 31,708 31,966 34,102 33,156 35,145 58,608 73,178 61,261 67,229 73,282 79,522 81,011 95,443 88,215 82,967 82,065 85,926 98,131 115,502 143,500 181,014 181,608 168,019 180,988 202,444 215,277 209,357 235,474

$2,613 3,229 6,328 7,246 6,554 10,235 8,787 9,007 17,023 20,230 17,279 22,567 25,061 27,597 25,495 32,543 27,042 21,390 20,472 24,359 34,708 42,413 60,112 77,563 70,086 58,877 62,196 68,706 83,226 84,509 99,578

Hybrid funds $583 1,098 1,499 1,934 1,873 2,165 2,350 2,337 4,483 6,810 6,662 8,856 9,580 11,319 11,104 12,441 10,848 10,361 9,740 9,920 12,186 16,691 19,134 25,058 26,032 22,213 23,276 29,024 24,919 24,066 29,768

Bond funds

Total

Equity funds

Hybrid funds

Bond funds

$4,042 8,392 14,862 22,528 23,539 21,702 22,018 23,801 37,102 46,137 37,320 35,806 38,642 40,606 44,413 50,458 50,325 51,216 51,853 51,648 51,237 56,397 64,254 78,393 85,490 86,930 95,516 104,714 107,131 100,782 106,128

$4,655 7,731 13,991 18,976 17,494 20,584 21,124 24,300 30,393 38,116 39,136 46,635 53,213 58,423 60,041 69,973 66,277 62,306 62,413 66,870 78,253 94,024 119,074 151,777 152,632 140,359 152,329 172,873 187,063 184,380 210,925

$1,881 2,321 3,706 4,841 4,476 7,119 6,721 7,255 8,845 12,174 12,971 18,286 21,345 23,100 22,377 27,332 23,786 19,251 18,560 22,127 31,427 38,435 54,210 69,596 63,166 53,098 56,385 62,460 76,208 78,082 92,461

$432 768 1,087 1,476 1,217 1,383 1,717 1,898 2,923 4,239 4,907 6,792 8,031 9,413 9,328 10,544 9,537 9,270 8,778 8,840 10,668 14,579 16,989 22,092 23,045 19,388 20,670 25,691 22,663 22,007 27,526

$2,342 4,642 9,197 12,659 11,801 12,082 12,686 15,147 18,625 21,703 21,258 21,558 23,837 25,910 28,336 32,096 32,954 33,786 35,076 35,903 36,158 41,011 47,875 60,090 66,421 67,873 75,275 84,722 88,192 84,291 90,938

Data Section 3

Year

Reinvested dividends

Portions of the paid dividend totals for equity, hybrid, and bond funds are estimated; the total is not estimated. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding. e


201

TABLE 30

Paid and Reinvested Capital Gains of Long-Term Mutual Funds by Type of Fund Millions of dollars, annual

Data Section 3

Paid capital gains Year

Total

Equity funds

1984e 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$6,019 4,895 17,661 22,926 6,354 14,766 8,017 13,917 22,089 35,905 29,744 54,271 100,489 182,764 164,989 237,624 325,841 68,626 16,097 14,397 54,741 129,058 256,915 413,641 132,404 15,300 42,950 73,247 100,174 239,003 397,942

$5,247 3,699 13,942 18,603 4,785 12,665 6,833 11,961 17,294 27,705 26,351 50,204 88,212 160,744 138,681 219,484 305,994 60,088 10,538 7,782 41,581 113,167 235,853 377,682 110,883 5,740 15,739 51,455 66,771 201,806 344,483

Hybrid funds $553 739 1,240 1,605 620 540 443 861 1,488 3,496 2,399 3,322 10,826 19,080 21,572 16,841 18,645 6,105 907 758 6,600 11,895 18,720 32,163 9,786 771 1,290 5,466 5,552 22,646 40,139

Reinvested capital gains Bond funds

Total

Equity funds

Hybrid funds

Bond funds

$219 457 2,478 2,718 948 1,562 742 1,095 3,306 4,704 993 745 1,451 2,941 4,737 1,299 1,202 2,433 4,651 5,857 6,560 3,995 2,342 3,795 11,735 8,789 25,921 16,326 27,851 14,552 13,320

$5,122 3,751 14,275 17,816 4,769 9,710 5,515 9,303 14,906 25,514 24,864 46,866 87,416 164,916 151,105 206,508 298,429 64,820 14,749 12,956 49,896 117,566 236,465 380,921 123,272 13,994 38,961 68,223 93,812 227,685 380,556

$4,655 3,091 11,851 15,449 3,883 8,744 4,975 8,242 12,233 19,954 22,038 43,550 76,638 145,358 127,473 190,300 279,891 56,965 9,838 7,188 38,074 103,208 217,010 347,633 103,801 5,418 14,785 48,128 62,879 191,985 328,738

$338 398 778 1,056 364 348 255 484 1,130 2,687 2,086 2,832 9,769 17,360 19,698 15,229 17,506 5,790 887 703 6,167 10,955 17,509 30,011 9,064 702 1,199 5,239 5,322 21,954 39,181

$129 261 1,646 1,312 522 617 285 577 1,542 2,872 740 484 1,009 2,198 3,935 979 1,032 2,065 4,024 5,065 5,655 3,403 1,946 3,277 10,407 7,874 22,977 14,855 25,611 13,746 12,637

Portions of the paid capital gains totals for equity, hybrid, and bond funds are estimated; the total is not estimated. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding. e

202


203

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Sales

$98,934 186,985 365,087 485,271 421,223 445,453 505,780 608,129 758,476 1,060,359 1,329,329 1,400,702 1,736,884 2,108,981 2,560,074 3,224,301 4,698,192 4,393,114 3,807,392 3,998,766 4,019,273 4,532,166 5,398,108 6,721,251 7,294,533 6,453,779 6,865,622 8,125,258 7,602,772 8,707,219 7,941,490

$20,338 72,511 135,509 45,330 -10,713 26,291 48,940 127,569 190,928 275,155 104,409 149,809 281,370 275,659 301,487 212,878 224,734 295,416 211,578 282,840 290,907 302,208 339,255 377,360 58,518 479,769 468,969 405,643 585,805 518,427 556,185

Net purchases $56,588 80,719 134,446 198,859 112,742 142,771 166,398 250,289 327,518 506,713 628,668 790,017 1,151,262 1,457,384 1,762,565 2,262,505 3,560,671 2,736,933 2,176,363 2,054,379 2,390,924 2,765,100 3,330,057 3,835,574 3,655,854 2,644,973 2,810,540 3,032,247 2,770,631 3,403,950 3,515,100

Purchases $50,900 72,577 118,026 176,004 128,815 141,694 146,580 209,276 261,857 380,855 512,346 686,756 927,266 1,268,983 1,597,311 2,088,544 3,330,417 2,609,657 2,141,754 1,884,711 2,198,578 2,610,805 3,172,222 3,733,130 3,715,557 2,543,511 2,751,737 3,032,854 2,825,999 3,221,274 3,440,319

Sales

Common stock $5,688 8,142 16,421 22,855 -16,073 1,077 19,817 41,013 65,661 125,858 116,321 103,260 223,996 188,401 165,255 173,962 230,254 127,275 34,609 169,667 192,346 154,296 157,835 102,444 -59,703 101,462 58,804 -607 -55,368 182,675 74,781

Net purchases $62,685 178,777 366,150 331,741 297,767 328,973 388,322 485,409 621,886 828,801 805,071 760,494 866,991 927,255 1,098,997 1,174,674 1,362,255 1,951,597 1,842,606 2,227,227 1,919,256 2,069,274 2,407,306 3,263,037 3,697,197 4,288,575 4,524,051 5,498,653 5,417,946 5,821,697 4,982,575

Purchases $48,035 114,408 247,062 309,267 292,407 303,759 359,199 398,853 496,619 679,504 816,983 713,946 809,618 839,997 962,764 1,135,757 1,367,775 1,783,456 1,665,638 2,114,054 1,820,695 1,921,362 2,225,886 2,988,121 3,578,976 3,910,268 4,113,885 5,092,403 4,776,773 5,485,945 4,501,170

Sales

Other securities $14,650 64,369 119,089 22,474 5,359 25,214 29,123 86,556 125,268 149,298 -11,912 46,548 57,373 87,258 136,233 38,917 -5,519 168,141 176,968 113,173 98,561 147,912 181,420 274,916 118,221 378,306 410,166 406,250 641,173 335,752 481,404

Net purchases


Purchases

$119,273 259,496 500,597 530,601 410,509 471,744 554,720 735,698 949,404 1,335,514 1,433,739 1,550,510 2,018,253 2,384,639 2,861,562 3,437,180 4,922,927 4,688,530 4,018,969 4,281,605 4,310,180 4,834,374 5,737,363 7,098,611 7,353,050 6,933,548 7,334,591 8,530,901 8,188,577 9,225,646 8,497,675

Year

Total portfolio


Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Long-Term Mutual Funds

TABLE 31

Data Section 3


204


$54,933 77,327 129,723 196,902 119,861 148,346 187,592 251,773 339,003 500,206 618,004 785,867 1,116,906 1,421,211 1,723,752 2,232,828 3,515,572 2,707,359 2,140,797 1,965,419 2,278,755 2,671,170 3,231,135 3,760,234 3,628,276 2,749,913 2,828,781 2,914,926 2,639,806 3,178,949 3,301,052

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$49,853 70,685 111,233 175,292 130,821 144,753 169,373 207,947 268,868 382,433 508,394 678,060 896,644 1,223,463 1,557,212 2,049,540 3,258,635 2,593,454 2,112,759 1,822,753 2,110,605 2,524,339 3,063,822 3,658,395 3,698,255 2,676,641 2,828,824 2,943,144 2,696,126 2,993,417 3,191,092

Sales

Total portfolio $5,080 6,642 18,491 21,611 -10,959 3,593 18,219 43,827 70,135 117,773 109,610 107,807 220,262 197,748 166,540 183,288 256,937 113,905 28,039 142,666 168,150 146,831 167,313 101,838 -69,979 73,273 -44 -28,218 -56,321 185,531 109,960

Net purchases $49,098 66,762 110,016 170,715 100,888 128,998 151,907 224,117 300,712 451,485 564,380 718,298 1,050,884 1,352,085 1,635,842 2,126,860 3,393,017 2,571,182 2,017,847 1,902,718 2,216,948 2,592,059 3,129,822 3,582,758 3,361,901 2,433,267 2,568,443 2,756,061 2,499,401 3,043,749 3,120,619

Purchases $44,213 61,599 96,512 150,705 113,635 127,026 133,630 186,785 242,319 345,357 456,708 621,699 832,486 1,166,649 1,475,384 1,941,505 3,144,116 2,464,587 1,999,827 1,758,142 2,053,652 2,452,257 2,966,143 3,490,174 3,426,442 2,339,181 2,532,634 2,785,482 2,571,677 2,877,082 3,033,152

Sales

Common stock $4,885 5,163 13,504 20,009 -12,747 1,973 18,277 37,333 58,393 106,128 107,672 96,599 218,397 185,436 160,458 185,355 248,902 106,595 18,020 144,576 163,296 139,803 163,679 92,584 -64,540 94,086 35,809 -29,421 -72,276 166,667 87,467

Net purchases $5,835 10,565 19,708 26,188 18,973 19,348 35,685 27,656 38,291 48,720 53,623 67,569 66,022 69,126 87,909 105,968 122,554 136,177 122,950 62,701 61,807 79,110 101,313 177,476 266,375 316,646 260,338 158,865 140,405 135,200 180,433

Purchases $5,640 9,086 14,721 24,586 17,186 17,728 35,743 21,162 26,549 37,076 51,686 56,361 64,157 56,814 81,827 108,035 114,519 128,867 112,931 64,611 56,953 72,083 97,679 168,221 271,813 337,459 296,191 157,662 124,449 116,335 157,939

Sales

Other securities $195 1,479 4,987 1,601 1,788 1,621 -59 6,494 11,742 11,644 1,937 11,208 1,865 12,312 6,082 -2,067 8,035 7,310 10,019 -1,910 4,854 7,028 3,634 9,255 -5,439 -20,813 -35,853 1,203 15,955 18,864 22,493

Net purchases


Purchases

Year


Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Equity Mutual Funds

TABLE 32

Data Section 3

205

$11,589 19,647 34,746 48,335 28,070 26,747 30,606 41,999 63,564 113,314 134,972 180,638 223,905 255,207 282,651 296,235 308,821 357,557 340,650 360,653 404,955 397,695 408,861 529,061 594,156 477,006 510,872 657,756 716,429 882,473 902,977

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$9,258 14,915 28,007 44,168 31,455 24,864 26,671 33,747 43,131 72,150 110,305 170,864 201,872 234,820 257,096 296,850 335,531 334,161 320,591 312,111 337,219 346,260 381,376 465,049 577,635 443,131 462,374 594,467 655,957 803,240 838,052

Sales $2,331 4,732 6,739 4,168 -3,384 1,883 3,935 8,252 20,433 41,164 24,667 9,774 22,033 20,387 25,555 -615 -26,711 23,396 20,059 48,542 67,736 51,435 27,485 64,011 16,521 33,876 48,498 63,288 60,471 79,233 64,926

Net purchases $7,129 13,378 21,894 26,282 10,628 12,459 13,327 18,657 23,965 49,686 54,808 67,616 92,485 98,109 115,703 128,303 158,039 155,235 145,370 137,490 163,795 165,487 191,740 241,633 281,814 200,907 224,173 253,328 250,876 339,260 364,007

Purchases $5,822 10,513 19,451 23,989 13,833 13,598 11,832 15,435 17,200 30,485 46,429 60,602 88,464 94,976 111,401 138,923 174,998 134,368 129,204 113,785 132,966 150,166 197,120 230,855 273,655 194,826 203,832 228,267 235,393 322,777 379,400

Sales

Common stock $1,308 2,865 2,443 2,293 -3,205 -1,139 1,494 3,222 6,765 19,201 8,380 7,015 4,021 3,132 4,301 -10,620 -16,960 20,868 16,166 23,706 30,829 15,321 -5,380 10,778 8,159 6,081 20,341 25,061 15,483 16,483 -15,394

Net purchases $4,459 6,269 12,853 22,053 17,442 14,288 17,279 23,342 39,599 63,628 80,163 113,021 131,420 157,099 166,948 167,932 150,782 202,322 195,280 223,163 241,160 232,208 217,122 287,428 312,342 276,099 286,699 404,428 465,552 543,212 538,971

Purchases $3,436 4,402 8,556 20,179 17,622 11,266 14,839 18,313 25,931 41,665 63,876 110,262 113,408 139,844 145,694 157,927 160,533 199,794 191,387 198,326 204,253 196,094 184,256 234,194 303,980 248,305 258,542 366,201 420,564 480,463 458,651

Sales

Other securities $1,023 1,867 4,297 1,874 -179 3,022 2,440 5,029 13,667 21,963 16,287 2,759 18,011 17,255 21,254 10,005 -9,751 2,528 3,893 24,837 36,907 36,114 32,865 53,233 8,363 27,794 28,157 38,227 44,988 62,749 80,320

Net purchases


Purchases

Year

Total portfolio


Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Hybrid Mutual Funds

TABLE 33

Data Section 3


206


$52,751 162,522 336,127 285,363 262,577 296,651 336,522 441,926 546,837 721,995 680,764 584,006 677,442 708,221 855,159 908,117 1,098,534 1,623,614 1,537,522 1,955,533 1,626,470 1,765,509 2,097,367 2,809,317 3,130,618 3,706,628 3,994,939 4,958,219 4,832,343 5,164,225 4,293,645

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$39,823 101,385 225,848 265,812 258,947 275,836 309,735 366,435 446,476 605,777 710,631 551,779 638,368 650,698 745,767 877,911 1,104,026 1,465,499 1,374,042 1,863,902 1,571,448 1,661,567 1,952,910 2,597,806 3,018,643 3,334,008 3,574,424 4,587,646 4,250,688 4,910,562 3,912,346

Sales

Total portfolio $12,928 61,137 110,279 19,551 3,630 20,815 26,787 75,490 100,360 116,218 -29,867 32,227 39,075 57,523 109,392 30,205 -5,491 158,115 163,480 91,632 55,022 103,942 144,456 211,511 111,975 372,621 420,515 370,573 581,654 253,663 381,299

Net purchases $361 579 2,537 1,862 1,226 1,314 1,164 7,514 2,840 5,542 9,479 4,103 7,893 7,190 11,020 7,342 9,615 10,515 13,146 14,171 10,181 7,554 8,496 11,183 12,138 10,798 17,925 22,858 20,354 20,940 30,474

Purchases $865 465 2,062 1,310 1,347 1,071 1,118 7,056 2,338 5,013 9,210 4,456 6,316 7,358 10,525 8,115 11,303 10,703 12,723 12,785 11,959 8,382 8,960 12,100 15,460 9,503 15,271 19,105 18,929 21,415 27,766

Sales

Common stock -$504 114 475 553 -121 243 46 458 502 528 269 -353 1,578 -167 496 -773 -1,688 -188 423 1,386 -1,779 -828 -464 -917 -3,321 1,295 2,654 3,752 1,425 -475 2,707

Net purchases $52,390 161,943 333,590 283,501 261,351 295,337 335,358 434,411 543,997 716,453 671,285 579,903 669,549 701,031 844,139 900,774 1,088,919 1,613,099 1,524,376 1,941,363 1,616,290 1,757,955 2,088,871 2,798,134 3,118,480 3,695,830 3,977,014 4,935,361 4,811,989 5,143,285 4,263,172

Purchases $38,958 100,919 223,785 264,502 257,600 274,765 308,617 359,379 444,138 600,763 701,421 547,323 632,052 643,340 735,242 869,796 1,092,722 1,454,796 1,361,320 1,851,117 1,559,489 1,653,185 1,943,950 2,585,706 3,003,183 3,324,504 3,559,153 4,568,541 4,231,760 4,889,147 3,884,580

Sales

Other securities $13,432 61,024 109,805 18,999 3,751 20,572 26,741 75,033 99,858 115,690 -30,136 32,580 37,497 57,691 108,897 30,978 -3,803 158,303 163,057 90,246 56,801 104,770 144,921 212,428 115,297 371,326 417,861 366,820 580,229 254,138 378,592

Net purchases


Purchases

Year


Total Portfolio, Common Stock, and Other Securities: Purchases, Sales, and Net Purchases by Bond Mutual Funds

TABLE 34

Data Section 3

207

$233,554 243,802 292,152 316,096 337,954 428,093 498,341 542,442 546,194 565,319 611,005 753,018 901,807 1,058,886 1,351,678 1,613,146 1,845,248 2,285,310 2,265,075 2,040,022 1,901,700 2,026,822 2,338,451 3,085,760 3,832,236 3,315,893 2,803,922 2,691,422 2,693,523 2,718,332 2,725,260

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$51,800 55,705 63,736 67,589 61,298 74,685 109,376 138,111 151,043 149,180 148,139 181,494 223,790 254,223 312,907 333,726 367,780 461,631 453,157 410,041 379,706 399,330 426,838 760,389 1,490,208 1,107,035 855,021 970,075 928,749 962,009 1,010,783

$157,951 151,849 164,610 187,087 210,897 283,939 305,189 314,346 300,310 312,701 352,972 449,829 540,146 647,005 854,061 1,079,523 1,243,598 1,564,598 1,535,621 1,339,689 1,209,995 1,291,119 1,542,584 1,857,280 1,848,349 1,809,923 1,618,896 1,429,650 1,477,347 1,485,711 1,453,690

$23,802 36,249 63,806 61,420 65,758 69,470 83,777 89,984 94,841 103,439 109,894 121,695 137,871 157,658 184,711 199,897 233,869 259,081 276,297 290,291 311,999 336,373 369,029 468,092 493,680 398,935 330,006 291,697 287,426 270,612 260,787

Taxexempt 425 460 487 543 610 673 741 820 864 920 963 997 988 1,013 1,026 1,045 1,039 1,015 988 973 944 870 847 805 783 704 652 632 580 555 528

Total 158 151 147 154 159 160 176 211 235 265 276 284 277 279 277 281 275 269 259 251 240 221 215 203 200 180 165 166 158 152 148

173 199 213 235 274 310 329 341 350 362 373 392 392 406 410 423 429 421 418 409 399 372 358 342 334 296 277 265 242 230 217

Taxable Government Prime

Number of funds

94 110 127 154 177 203 236 268 279 293 314 321 319 328 339 341 335 325 311 313 305 277 274 260 249 228 210 201 180 173 163

Taxexempt 425 460 487 543 610 673 762 871 914 1,009 1,261 1,380 1,453 1,549 1,627 1,730 1,855 1,948 2,006 2,031 2,053 2,031 2,013 2,015 1,990 1,846 1,781 1,730 1,623 1,571 1,507

Total 158 151 147 154 159 160 183 228 248 286 368 404 413 442 462 488 534 573 581 572 577 570 579 574 584 561 544 544 519 508 512

173 199 213 235 274 310 339 363 368 386 490 549 592 633 675 742 797 832 882 890 900 894 875 873 859 769 737 711 655 633 589


Number of share classes


Total

Year


Millions of dollars

Total net assets

Year-end

94 110 127 154 177 203 240 280 298 337 403 427 448 474 490 500 524 543 543 569 576 567 559 568 547 516 500 475 449 430 406

Taxexempt

Money Market Funds: Total Net Assets, Number of Funds, and Number of Share Classes by Type of Fund

TABLE 35

Data Section 4

MONEY MARKET FUNDS

208


$901,807 1,058,886 1,351,678 1,613,146 1,845,248 2,285,310 2,265,075 2,040,022 1,901,700 2,026,822 2,338,451 3,085,760 3,832,236 3,315,893 2,803,922 2,691,422 2,693,523 2,718,332 2,725,260

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$223,790 254,223 312,907 333,726 367,780 461,631 453,157 410,041 379,706 399,330 426,838 760,389 1,490,208 1,107,035 855,021 970,075 928,749 962,009 1,010,783

$540,146 647,005 854,061 1,079,523 1,243,598 1,564,598 1,535,621 1,339,689 1,209,995 1,291,119 1,542,584 1,857,280 1,848,349 1,809,923 1,618,896 1,429,650 1,477,347 1,485,711 1,453,690

$137,871 157,658 184,711 199,897 233,869 259,081 276,297 290,291 311,999 336,373 369,029 468,092 493,680 398,935 330,006 291,697 287,426 270,612 260,787

Taxexempt $592,604 663,408 835,255 964,686 1,061,605 1,134,703 1,064,418 938,413 852,502 875,933 1,007,853 1,225,493 1,369,819 1,079,959 957,871 949,892 948,575 936,136 905,123

Total $94,786 100,991 121,664 132,915 151,837 169,883 157,011 141,248 126,473 126,244 140,483 185,526 289,731 214,478 189,694 203,677 205,513 205,056 199,533

$387,705 439,670 571,465 675,986 731,051 775,335 715,383 606,553 534,234 546,283 643,327 754,378 776,876 630,098 562,203 549,764 540,086 534,818 515,587


Retail money market funds

$110,113 122,747 142,126 155,785 178,716 189,484 192,025 190,612 191,794 203,406 224,043 285,590 303,212 235,383 205,975 196,451 202,975 196,262 190,003

Taxexempt $309,203 395,478 516,423 648,460 783,644 1,150,607 1,200,657 1,101,608 1,049,199 1,150,888 1,330,598 1,860,267 2,462,417 2,235,935 1,846,051 1,741,530 1,744,948 1,782,197 1,820,137

Total $129,003 153,232 191,243 200,812 215,943 291,748 296,146 268,793 253,233 273,085 286,354 574,863 1,200,476 892,556 665,327 766,398 723,236 756,954 811,250

$152,441 207,334 282,596 403,537 512,547 789,263 820,238 733,136 675,761 744,836 899,258 1,102,902 1,071,474 1,179,825 1,056,693 879,885 937,261 950,893 938,103


Institutional money market funds

$27,758 34,911 42,585 44,111 55,154 69,597 84,272 99,679 120,205 132,968 144,986 182,503 190,467 163,553 124,031 95,247 84,451 74,350 70,784

Taxexempt


Total

Year

All money market funds Taxable Government Prime


Total Net Assets of Money Market Funds by Type of Fund

TABLE 36

Data Section 4

$89,422 103,466 235,457 193,681 159,365 375,291 -45,937 -263,403 -156,744 62,085 245,162 654,412 637,155 -539,150 -524,658 -123,961 -336 15,207 6,338

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$20,572 20,129 45,178 8,486 14,412 86,621 -11,131 -50,998 -36,125 13,182 19,615 319,240 697,443 -414,948 -253,927 107,294 -43,343 29,348 48,232

$58,935 69,107 167,909 174,957 118,354 267,329 -51,060 -222,179 -139,213 28,009 200,115 251,219 -73,523 -28,571 -201,359 -192,601 46,937 2,643 -31,787

$9,915 14,231 22,370 10,238 26,599 21,340 16,254 9,774 18,593 20,895 25,432 83,953 13,235 -95,631 -69,372 -38,654 -3,930 -16,784 -10,107

Taxexempt $52,886 46,620 130,992 82,006 43,572 36,328 -80,175 -151,113 -88,679 2,494 96,345 172,550 114,112 -308,374 -124,114 -1,304 -1,145 -12,192 -30,511

Total $6,181 4,781 15,835 -757 504 13,579 -10,174 -20,609 -15,871 -3,652 9,317 38,769 98,267 -104,057 -25,964 20,461 -781 -1,143 -5,843

$39,505 32,081 100,428 72,935 24,413 12,706 -71,329 -125,596 -75,241 -4,645 70,870 83,156 2,082 -136,412 -69,745 -12,500 -7,552 -4,257 -18,182


Retail money market funds

$7,200 9,758 14,728 9,827 18,655 10,043 1,328 -4,908 2,433 10,791 16,157 50,624 13,763 -67,906 -28,404 -9,265 7,187 -6,792 -6,486

Taxexempt $36,536 56,846 104,465 111,675 115,793 338,963 34,238 -112,290 -68,065 59,591 148,818 481,862 523,043 -230,776 -400,544 -122,657 809 27,399 36,849

Total $14,391 15,347 29,343 9,243 13,908 73,043 -957 -30,389 -20,254 16,834 10,297 280,471 599,176 -310,892 -227,962 86,833 -42,563 30,491 54,075

$19,430 37,026 67,481 102,021 93,941 254,623 20,269 -96,583 -63,971 32,654 129,245 168,062 -75,605 107,841 -131,613 -180,101 54,489 6,900 -13,604


Institutional money market funds

$2,715 4,473 7,642 411 7,944 11,297 14,925 14,682 16,160 10,103 9,276 33,329 -528 -27,725 -40,968 -29,389 -11,117 -9,993 -3,621

Taxexempt

* Net new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

Total

Year

All money market funds Taxable Government Prime


Net New Cash Flow* of Money Market Funds by Type of Fund

TABLE 37

Data Section 4

MONEY MARKET FUNDS

209

TABLE 38

Net New Cash Flow and Components of Net New Cash Flow of Money Market Funds Millions of dollars, annual

Data Section 4

Sales Year

Net new cash flow1

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$35,077 -5,293 33,552 10,072 106 64,132 23,179 6,068 -16,006 -13,890 8,525 89,381 89,422 103,466 235,457 193,681 159,365 375,291 -45,937 -263,403 -156,744 62,085 245,162 654,412 637,155 -539,150 -524,658 -123,961 -336 15,207 6,338

Redemptions

New + exchange

New2

Exchange3

$640,021 848,451 1,026,745 1,147,877 1,130,639 1,359,616 1,461,537 1,841,131 2,449,766 2,756,282 2,725,201 3,234,216 4,156,985 5,127,328 6,407,574 8,080,959 9,826,677 11,737,291 12,008,801 11,177,118 10,874,608 12,493,636 15,706,879 21,314,339 24,452,430 18,683,752 15,771,387 15,248,942 14,292,019 14,977,938 15,318,896

$620,536 826,858 978,041 1,049,034 1,066,003 1,296,458 1,389,439 1,778,491 2,371,925 2,665,987 2,586,478 3,097,225 3,959,014 4,894,226 6,129,140 7,719,310 9,406,287 11,426,804 11,712,587 10,952,544 10,708,117 12,317,491 15,495,624 21,039,253 24,067,371 18,489,354 15,670,167 15,128,198 14,211,602 14,869,310 15,240,222

$19,485 21,592 48,704 98,843 64,636 63,158 72,098 62,640 77,841 90,295 138,722 136,990 197,971 233,102 278,434 361,649 420,391 310,487 296,215 224,574 166,492 176,145 211,255 275,086 385,059 194,399 101,220 120,744 80,417 108,629 78,674

Regular + exchange $604,944 853,743 993,193 1,137,805 1,130,534 1,295,484 1,438,358 1,835,063 2,465,772 2,770,172 2,716,675 3,144,834 4,067,563 5,023,863 6,172,116 7,887,278 9,667,312 11,362,000 12,054,738 11,440,521 11,031,353 12,431,551 15,461,717 20,659,927 23,815,275 19,222,902 16,296,045 15,372,904 14,292,356 14,962,732 15,312,557

Regular4 $586,990 831,067 948,656 1,062,671 1,074,346 1,235,527 1,372,764 1,763,106 2,382,976 2,673,464 2,599,400 3,001,968 3,868,772 4,783,096 5,901,590 7,540,912 9,256,350 11,065,468 11,783,209 11,213,929 10,861,076 12,260,771 15,269,074 20,408,620 23,498,612 19,012,387 16,191,487 15,259,802 14,205,334 14,858,963 15,213,502

Exchange5 $17,953 22,676 44,537 75,133 56,188 59,957 65,594 71,957 82,796 96,707 117,275 142,866 198,791 240,767 270,526 346,367 410,962 296,533 271,530 226,592 170,277 170,779 192,643 251,307 316,663 210,516 104,558 113,102 87,021 103,769 99,055

1 Net


210


TABLE 39

Paid and Reinvested Dividends of Money Market Funds by Type of Fund Millions of dollars, annual Paid dividends

Total

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$16,435 15,708 14,832 15,654 21,618 28,619 30,258 28,604 20,280 18,991 23,737 37,038 42,555 48,843 57,375 69,004 98,219 79,307 32,251 17,041 18,390 50,186 96,423 127,907 93,857 18,619 7,161 5,237 6,618 8,020 7,565

$15,435 14,108 12,432 12,833 17,976 24,683 26,448 25,121 17,197 15,690 20,504 32,855 38,446 44,185 52,164 63,229 90,158 73,361 29,397 15,124 15,899 43,547 85,018 113,177 82,727 16,590 6,708 4,888 6,345 7,794 7,323

Tax-exempt money market funds

Total

Taxable money market funds

$1,000 1,600 2,400 2,821 3,642 3,936 3,810 3,483 3,083 3,302 3,233 4,183 4,108 4,658 5,211 5,775 8,061 5,946 2,854 1,917 2,491 6,638 11,405 14,730 11,130 2,030 453 349 273 226 242

$13,730 12,758 11,514 11,946 15,692 23,050 26,282 22,809 14,596 11,615 16,739 27,985 31,516 37,979 43,443 50,648 72,771 56,367 22,033 11,314 11,889 32,803 61,488 82,457 61,134 11,035 4,447 3,261 4,212 5,206 5,000

$13,061 11,760 9,981 10,136 13,355 20,294 23,226 19,998 12,567 10,007 14,626 24,873 28,448 34,425 39,580 46,602 66,890 51,949 19,940 9,916 10,080 27,951 53,268 71,938 53,455 9,999 4,196 3,074 4,068 5,089 4,876

Tax-exempt money market funds $669 998 1,533 1,810 2,337 2,756 3,056 2,811 2,029 1,607 2,113 3,111 3,068 3,554 3,863 4,046 5,881 4,418 2,093 1,398 1,809 4,852 8,220 10,519 7,680 1,037 252 187 144 117 124

Data Section 4

Year

Taxable money market funds

Reinvested dividends


MONEY MARKET FUNDS

211

212


U.S. Treasury bills 21.0% 23.9 22.8 4.6 5.0 5.0 11.1 21.5 26.0 30.3 24.4 19.8 17.7 15.2 14.3 17.1 14.2 19.2 20.5 20.0 21.4 15.8 14.9 16.3 30.5 25.6 22.9 23.2 25.6 27.1 21.2

Other Treasury securities 7.5% 4.9 7.9 11.2 9.7 6.9 12.2 16.5 16.5 14.1 12.6 13.9 18.5 17.6 17.7 13.0 10.1 9.2 6.4 7.2 4.9 4.4 4.1 5.1 6.2 6.0 8.5 13.2 12.6 14.3 13.5 U.S. government agency Repurchase Certificates of Commercial issues agreements deposit Eurodollar CDs paper 20.4% 33.9% 4.3% 4.3% 7.3% 15.9 38.2 2.9 6.3 6.2 14.4 39.1 4.1 4.9 4.3 22.0 44.9 4.8 7.4 4.0 20.5 58.4 1.2 0.1 3.2 20.6 62.7 0.2 0.1 3.0 20.6 45.7 0.0 0.0 0.3 20.3 40.9 0.0 0.0 0.4 21.6 34.7 0.0 0.0 0.5 20.7 32.8 0.0 0.0 0.3 26.3 34.0 0.0 0.0 0.4 28.5 34.1 0.0 0.0 0.5 25.4 35.2 0.0 0.1 0.7 25.1 37.8 0.1 0.0 1.2 30.4 33.4 0.3 0.0 1.7 37.1 28.2 0.1 0.0 1.4 32.0 37.9 0.0 0.0 1.6 34.5 31.7 0.2 0.0 0.5 33.2 35.5 0.1 0.0 0.5 33.8 36.3 0.3 0.0 0.9 34.5 35.9 0.2 0.0 0.9 28.1 50.0 0.0 0.0 0.2 21.5 58.6 0.1 0.0 0.5 24.1 53.7 0.3 0.0 0.2 36.2 26.8 0.0 0.0 0.1 35.4 30.6 0.0 0.0 1.0 33.3 33.0 0.0 0.0 0.9 28.9 31.6 0.0 0.0 1.0 26.7 33.0 0.0 0.0 0.7 29.4 27.9 0.0 0.0 0.3 31.3 34.7 0.1 0.0 0.5 Corporate notes2 – – – – – – – – – – – – – 0.2% 1.1 1.2 1.5 1.7 1.8 0.8 0.8 0.1 0.0 0.2 0.3 0.4 0.4 0.1 0.1 0.1

Bank notes1 – – – – – – – – – 0.0% 0.0 0.0 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.1 0.2 0.1 0.1 0.0 0.0 0.0

Other assets3 1.3% 1.6 2.5 1.1 2.0 1.5 9.9 0.3 0.6 1.8 2.2 3.1 2.4 2.9 2.0 1.9 2.9 3.3 2.1 -0.3 1.2 0.5 0.3 0.2 -0.1 0.7 0.9 1.5 1.4 0.8 -1.2

46 44 51 35 28 31 46 58 55 61 37 48 49 50 52 48 45 55 52 52 36 27 32 31 48 47 47 45 46 48 44

Days

Average maturity

2 Prior to 1998,

bank notes are included in other assets. corporate notes are included in other assets. 3 Other assets include banker’s acceptances, municipal securities, and cash reserves. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to 100 percent because of rounding.

$51,800 55,705 63,736 67,589 61,298 74,685 109,376 138,111 151,043 149,180 148,139 181,494 223,790 254,223 312,907 333,726 367,780 461,631 453,157 410,041 379,706 399,330 426,838 760,389 1,490,208 1,107,035 855,021 970,075 928,749 962,009 1,010,783

Millions of dollars

Total net assets

1 Prior to 1994,

Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year-end

Asset Composition of Taxable Government Money Market Funds as a Percentage of Total Net Assets

TABLE 40

Data Section 4

213

U.S. Treasury bills 5.9% 4.6 3.6 1.0 1.0 1.3 4.4 5.7 2.7 2.6 2.4 1.4 0.5 0.4 0.4 0.3 0.3 0.4 1.3 1.4 0.3 0.6 0.1 0.8 1.9 2.3 2.7 3.1 3.4 2.2 2.1

Other Treasury securities 0.8% 1.0 1.6 0.9 0.2 0.8 2.2 2.9 2.5 2.4 1.3 0.9 1.6 0.5 0.8 0.3 0.1 0.3 0.3 0.3 0.1 0.1 0.2 0.2 0.5 1.3 1.9 3.8 4.2 4.3 2.6 U.S. government agency Repurchase Certificates of Commercial issues agreements deposit Eurodollar CDs paper 4.1% 3.3% 13.6% 12.0% 47.2% 6.1 3.1 10.0 10.2 55.4 3.6 4.4 10.0 11.6 56.0 6.5 4.8 16.2 8.9 52.3 2.8 2.8 15.2 14.1 54.6 2.0 2.8 14.4 9.3 62.3 4.7 2.9 6.9 8.9 65.5 3.7 10.6 6.9 60.1 4.2 7.5 4.9 10.4 6.9 57.7 11.9 5.9 8.0 3.2 52.6 11.4 5.6 6.4 4.5 53.4 9.2 6.2 8.9 4.5 52.5 9.0 5.1 12.8 4.3 51.0 5.4 5.3 14.7 3.7 52.0 9.6 4.6 13.0 3.6 48.7 6.8 4.8 12.8 3.9 49.2 5.9 3.9 11.7 6.6 50.9 12.3 6.0 14.9 7.3 41.7 11.8 8.1 13.8 7.0 40.1 14.9 8.1 11.6 5.1 35.6 12.0 8.5 14.1 5.7 33.9 4.1 11.8 14.5 6.0 38.5 2.9 9.9 13.9 4.4 39.6 3.1 11.3 15.2 5.5 36.9 12.7 8.4 21.5 4.7 34.1 8.9 8.3 31.6 5.5 28.1 7.8 12.8 28.6 6.7 24.3 9.2 13.6 28.4 3.1 24.6 6.9 16.8 29.5 3.0 23.1 5.7 15.7 33.3 2.3 23.9 5.1 20.9 35.7 1.7 23.0 Bank notes1 – – – – – – – – – – 2.4% 3.7 2.3 3.2 3.9 3.1 3.6 1.5 1.4 2.0 2.6 2.3 2.2 4.0 3.1 2.9 3.2 2.6 3.5 2.7 1.6

Corporate notes2 – – – – – – – – – – – – – – 5.8% 8.4 10.5 11.1 12.0 16.2 17.9 17.9 21.6 16.7 9.3 6.4 6.2 4.5 3.5 4.2 3.9

Other assets3 13.1% 9.5 9.3 9.4 9.4 7.1 4.7 5.8 7.4 13.3 12.7 12.7 13.5 14.8 9.6 10.4 6.5 4.5 4.2 4.6 4.9 4.0 5.2 6.3 3.8 4.8 5.8 7.1 6.1 5.7 3.5

42 42 42 34 32 43 48 56 59 58 38 60 56 57 58 49 53 58 54 59 41 38 49 44 47 50 44 40 45 46 44

Days

Average maturity

2 Prior to 1998,

bank notes are included in other assets. corporate notes are included in other assets. 3 Other assets include banker’s acceptances, municipal securities, and cash reserves. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to 100 percent because of rounding.

$157,951 151,849 164,610 187,087 210,897 283,939 305,189 314,346 300,310 312,701 352,972 449,829 540,146 647,005 854,061 1,079,523 1,243,598 1,564,598 1,535,621 1,339,689 1,209,995 1,291,119 1,542,584 1,857,280 1,848,349 1,809,923 1,618,896 1,429,650 1,477,347 1,485,711 1,453,690

Millions of dollars

Total net assets

1 Prior to 1994,

Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year-end

Asset Composition of Taxable Prime Money Market Funds as a Percentage of Total Net Assets

TABLE 41

Data Section 4

MONEY MARKET FUNDS

TABLE 42

Alternative Strategies Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes Equity funds Total

World

Multisector bond funds

Total


$41,504 31,276 58,317 91,271 104,023 127,507 168,474 170,297

$20,343 17,097 24,432 32,620 33,729 41,045 50,193 58,766

$1,149 $18,619 431 12,574 3,355 28,892 1,776 55,078 3,987 64,171 3,897 80,421 6,666 109,753 7,920 101,323

$1,392 1,174 1,638 1,796 2,136 2,145 1,862 2,288

-$780 -1,239 21,025 23,192 12,423 11,223 35,358 6,785

16 22 24 24 39 35 42 52

21 27 34 52 79 111 128 157

Multisector bond funds

$445 -1,013 7,241 7,295 -3,747 6,088 9,804 6,959

-$47 -446 2,572 726 954 822 2,054 1,298

-$632 208 10,789 14,930 14,795 4,358 23,384 -1,595

-$546 12 424 241 420 -46 116 123

Year-end

18 17 18 20 23 23 23 26

426 499 507 611 743 838 925 1,114

296 320 300 330 350 361 366 408

35 58 65 72 103 85 104 145

54 80 98 157 238 340 407 497

41 41 44 52 52 52 48 64


Data Section 5

Data Section 4

126 138 132 139 149 154 153 167

Hybrid funds


Year-end

181 204 208 235 290 323 346 402

World


Number of funds 2007 2008 2009 2010 2011 2012 2013 2014

Domestic

Net new cash flow

Total net assets

Year 2007 2008 2009 2010 2011 2012 2013 2014

Domestic

Equity funds Hybrid funds

214


TABLE 43

Emerging Markets Debt Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes Total net assets

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


$2,442 2,129 2,585 4,297 5,543 7,408 12,747 16,751 13,459 19,496 37,553 44,702 74,940 64,389 58,649

Net new cash flow


-$288 -412 311 691 635 1,197 2,180 2,278 264 1,947 14,838 12,598 19,868 -4,627 -5,589

Number of funds


23 24 22 19 19 17 22 27 30 32 35 47 65 87 102

48 50 46 43 43 39 57 76 93 99 121 160 212 286 346

Year-end

Year-end


Data Section 5

ADDITIONAL CATEGORIES OF MUTUAL FUNDS

215

TABLE 44

Floating-Rate High-Yield Bond Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes Total net assets

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


$23,791 19,718 13,392 14,968 24,032 27,485 33,619 33,667 17,128 28,330 47,109 59,877 76,619 140,898 118,254

Net new cash flow


-$2,626 -5,114 -5,792 -310 7,449 2,195 5,445 -2,448 -8,169 4,362 15,041 10,158 10,625 59,580 -22,232

Number of funds


16 23 22 20 23 25 23 29 31 31 32 38 41 51 52

30 56 52 49 62 73 84 103 126 122 127 156 169 199 203

Year-end

Year-end

Data Section 5


216


217

$1,426 2,313 3,722 5,403 6,170 9,063 13,404 21,480 35,368 48,310 56,911 63,385 68,960 123,029 199,197 305,749 469,377 638,073 487,081 680,121 915,527 1,036,776 1,274,179 1,576,174 1,718,109

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$211 403 651 900 1,367 2,288 4,596 7,580 12,212 18,676 11,919 11,159 10,311 19,367 27,729 41,279 70,897 96,660 60,606 55,266 80,580 80,699 93,075 128,782 128,178

Equity

$1,215 1,910 3,072 4,503 4,803 6,774 8,808 13,900 23,156 29,634 44,992 52,226 58,649 103,662 171,468 264,470 398,480 541,413 426,475 624,856 834,947 956,076 1,181,104 1,447,392 1,589,931

Hybrid and bond

Net new cash flow2

$131 475 1,134 1,160 567 1,135 2,457 3,380 6,376 6,572 10,401 8,929 11,593 29,859 50,481 79,550 101,347 126,407 61,333 70,430 118,692 119,783 95,138 112,166 70,242

Total -$21 97 205 154 342 633 1,572 1,617 2,006 3,392 3,146 1,313 1,532 3,006 5,260 5,885 13,782 17,276 6,565 4,407 4,964 3,011 -2,651 12,621 11,712

Equity

2 Net

1

$152 378 929 1,006 225 502 885 1,763 4,370 3,180 7,255 7,617 10,061 26,853 45,222 73,665 87,565 109,131 54,768 66,022 113,727 116,772 97,789 99,545 58,530

Hybrid and bond


Funds of funds are mutual funds that invest primarily in other mutual funds. new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Note: Components may not add to the total because of rounding.

Total

Year


Total net assets

20 20 21 24 32 36 45 94 175 212 215 213 268 299 372 472 598 704 840 945 981 1,086 1,156 1,261 1,337

Total 11 10 10 12 15 19 24 41 75 83 58 58 68 70 69 90 119 124 124 131 147 158 164 174 176

Equity

Year-end

Number of funds

9 10 11 12 17 17 21 53 100 129 157 155 200 229 303 382 479 580 716 814 834 928 992 1,087 1,161

Hybrid and bond

Funds of Funds:1 Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes

TABLE 45

Data Section 5


20 20 21 24 32 37 56 148 305 394 414 450 625 716 957 1,292 1,849 2,331 2,784 3,051 3,141 3,408 3,739 4,007 4,241

Total

11 10 10 12 15 19 28 58 112 137 95 94 118 118 126 185 258 295 313 325 348 362 410 417 421

Equity

Year-end

9 10 11 12 17 18 28 90 193 257 319 356 507 598 831 1,107 1,591 2,036 2,471 2,726 2,793 3,046 3,329 3,590 3,820

Hybrid and bond


218


$416 772 1,617 1,953 1,781 2,362 4,522 6,317 12,931 16,749 24,092 22,577 28,193 46,920 76,677 122,744 163,033 226,977 214,276 191,303 290,912 351,447 332,877 405,472 411,451

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$68 192 371 358 583 987 2,321 2,858 4,398 6,861 5,493 3,914 4,937 5,914 9,285 11,395 22,354 33,410 28,503 20,580 21,531 20,730 18,465 33,319 34,778

$348 580 1,246 1,594 1,197 1,376 2,201 3,459 8,532 9,888 18,599 18,663 23,256 41,006 67,392 111,349 140,679 193,567 185,773 170,723 269,381 330,717 314,412 372,153 376,673

Hybrid Equity and bond

$351 579 1,255 1,533 1,341 1,750 3,621 4,753 9,938 12,759 18,607 17,606 23,063 38,405 63,004 105,973 138,808 193,640 183,379 171,942 265,675 323,708 306,877 365,407 370,859

Total $58 142 294 293 389 692 1,847 2,017 3,578 5,575 4,493 3,255 4,149 4,824 7,409 9,035 17,618 26,126 22,942 18,819 20,330 19,619 17,100 30,718 32,838

$293 437 961 1,240 952 1,059 1,774 2,736 6,360 7,184 14,114 14,350 18,914 33,582 55,595 96,938 121,190 167,515 160,436 153,123 245,345 304,089 289,777 334,690 338,021


New3

Sales

$65 194 362 419 439 612 901 1,565 2,993 3,990 5,485 4,971 5,131 8,515 13,674 16,771 24,225 33,336 30,898 19,361 25,237 27,739 26,001 40,064 40,592

Total $10 50 76 65 194 295 474 842 821 1,287 1,000 659 789 1,090 1,876 2,360 4,736 7,284 5,561 1,761 1,201 1,112 1,366 2,601 1,940

$55 143 286 354 245 317 428 723 2,172 2,703 4,485 4,312 4,342 7,425 11,798 14,411 19,489 26,052 25,337 17,600 24,036 26,628 24,635 37,463 38,652


Exchange4

$285 298 483 793 1,213 1,227 2,066 2,937 6,554 10,177 13,690 13,647 16,600 17,062 26,196 43,194 61,686 100,569 152,943 120,873 172,220 231,664 237,740 293,306 341,209

Total $89 95 166 205 241 354 749 1,241 2,392 3,469 2,347 2,601 3,405 2,909 4,026 5,510 8,572 16,134 21,938 16,173 16,567 17,720 21,116 20,698 23,066

$196 203 318 588 972 873 1,317 1,696 4,162 6,708 11,344 11,046 13,195 14,153 22,171 37,684 53,114 84,435 131,006 104,701 155,654 213,944 216,623 272,608 318,143


Regular + exchange

$186 185 303 453 682 768 1,290 1,749 3,766 6,638 9,250 9,546 12,209 12,785 19,742 35,168 48,972 81,898 121,202 102,405 150,225 203,556 212,535 260,259 290,083

Total $87 79 130 156 166 233 519 774 1,541 2,553 1,925 2,018 2,875 2,452 3,459 4,747 7,182 13,073 17,386 14,549 15,167 16,237 19,615 19,202 21,686

$99 105 174 297 517 535 771 975 2,225 4,084 7,325 7,528 9,335 10,333 16,283 30,420 41,790 68,825 103,816 87,855 135,058 187,319 192,920 241,057 268,397


Regular5

Redemptions

2 Net

1

Total $100 113 180 340 531 459 776 1,189 2,788 3,540 4,440 4,101 4,391 4,277 6,455 8,027 12,714 18,671 31,741 18,469 21,995 28,108 25,205 33,046 51,126

Funds of funds are mutual funds that invest primarily in other mutual funds. new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. 3 New sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. 4 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. 5 Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. 6 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Components may not add to the total because of rounding.

Total

Year

New + exchange


Funds of Funds:1 Components of Net New Cash Flow2

TABLE 46

Data Section 5

$3 16 36 49 75 121 230 468 850 916 421 583 530 456 567 763 1,390 3,061 4,552 1,623 1,400 1,482 1,501 1,496 1,380

$97 97 144 291 456 338 546 721 1,938 2,624 4,019 3,518 3,861 3,820 5,888 7,264 11,324 15,610 27,189 16,845 20,596 26,625 23,704 31,551 49,746


Exchange6

$27,805 32,573 57,042 97,759 170,302 264,998 387,411 384,039 370,560 327,417 455,293 554,044 618,699 747,491 854,715 601,728 835,422 1,016,713 1,093,749 1,311,077 1,733,629 2,052,963

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$19,790 22,752 41,744 73,856 129,857 201,791 284,588 272,462 249,452 200,989 273,691 317,826 334,012 379,765 394,593 252,956 328,647 375,949 376,582 429,698 574,380 669,483

S&P 500

World

Hybrid and bond Total S&P 500

$3,338 3,863 6,442 11,241 21,221 35,051 63,386 72,009 73,598 69,426 112,480 147,819 171,377 218,166 257,850 177,975 256,365 325,276 357,624 439,633 638,869 767,596

$1,281 2,095 2,846 4,124 5,329 7,962 13,130 12,644 11,128 11,050 18,218 28,236 42,792 66,647 95,695 50,125 92,507 122,751 121,445 161,212 215,545 242,924

$3,396 3,863 6,009 8,538 13,894 20,193 26,307 26,923 36,381 45,952 50,903 60,163 70,518 82,913 106,577 120,672 157,903 192,736 238,098 280,534 304,835 372,959

$6,428 3,348 11,815 24,780 34,847 46,143 61,603 25,592 26,735 25,255 35,234 40,130 27,877 32,974 61,145 34,927 55,976 57,560 54,828 59,043 114,376 148,386

$3,994 1,871 8,820 18,447 25,208 30,977 38,063 10,783 9,113 4,818 14,231 11,739 -317 -5,908 -1,440 7,666 8,195 -808 -6,868 -7,139 5,541 12,567

$953 515 1,038 3,192 5,230 8,499 16,102 10,668 8,859 12,152 16,538 16,078 11,731 20,134 29,192 23,337 16,646 15,024 24,600 22,134 46,541 48,325

Other domestic

Equity

Other domestic

Equity

Annual

Net new cash flow*

Year-end

Total net assets

$501 436 512 1,033 818 1,568 2,241 1,664 1,181 1,669 2,199 5,661 8,456 10,674 16,915 -6,000 4,000 19,076 17,202 15,523 28,309 38,403

World


Total

Year

Millions of dollars

Index Mutual Funds: Total Net Assets and Net New Cash Flow

TABLE 47

Data Section 5


219

$980 525 1,446 2,108 3,591 5,099 5,197 2,477 7,582 6,616 2,266 6,651 8,007 8,074 16,478 9,924 27,135 24,268 19,895 28,525 33,984 49,091

Hybrid and bond

220


70 82 87 105 132 156 197 271 286 313 321 328 322 343 354 359 357 365 382 372 371 382

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

39 43 48 60 72 86 97 120 126 132 128 127 119 125 125 122 113 111 111 103 96 95

S&P 500

World

Total S&P 500

15 17 18 22 27 37 59 99 110 124 134 146 147 157 159 163 151 161 169 166 171 182

6 7 7 7 12 15 20 26 24 28 30 28 29 33 37 41 49 50 57 58 58 58

10 15 14 16 21 18 21 26 26 29 29 27 27 28 33 33 44 43 45 45 46 47

74 96 110 143 205 252 323 465 518 578 601 633 647 699 735 754 757 776 856 871 880 906

43 54 63 86 115 148 166 221 238 255 253 262 258 272 276 278 259 253 260 247 234 232

15 17 19 25 38 52 95 163 197 221 243 269 279 303 312 316 291 301 337 349 363 400

Other domestic

Equity Hybrid and bond

Equity

Other domestic


Number of funds


Total

Year

Year-end

Index Mutual Funds: Number of Funds and Number of Share Classes

TABLE 48

Data Section 5

6 10 11 11 21 25 31 43 43 53 56 55 62 70 83 95 107 121 144 153 156 148

World

10 15 17 21 31 27 31 38 40 49 49 47 48 54 64 65 100 101 115 122 127 126

Hybrid and bond

S&P 500

$13,399 $9,029 11,980 8,106 21,853 15,916 42,680 31,828 73,274 54,494 102,843 75,186 145,582 101,675 136,385 92,019 122,247 72,936 127,752 68,085 136,830 67,688 159,310 74,967 163,344 70,763 189,915 69,619 259,454 93,691 249,581 87,082 243,411 69,398 279,016 70,013 330,845 93,679 338,948 93,429 432,830 111,144 511,584 142,880

Total

$1,560 1,283 2,107 4,893 10,219 15,515 26,755 29,049 28,055 34,211 44,593 53,947 56,374 73,333 92,086 82,141 66,308 84,010 107,165 110,994 146,421 178,375

$746 824 1,019 1,855 2,173 3,014 4,544 6,091 4,643 5,161 5,998 9,403 13,523 19,890 30,539 26,258 24,960 50,914 44,919 44,029 59,647 72,752

World

Hybrid and bond Total S&P 500

$2,064 1,767 2,811 4,103 6,388 9,128 12,608 9,225 16,612 20,295 18,550 20,992 22,684 27,074 43,138 54,099 82,744 74,079 85,081 90,496 115,619 117,577

$11,308 $7,926 10,257 7,187 17,669 13,095 34,903 26,165 54,093 41,160 79,382 59,457 112,686 81,540 107,344 75,990 94,018 58,654 99,640 57,060 104,703 54,472 128,162 63,371 131,335 58,818 152,437 59,125 200,076 76,300 201,211 74,131 181,737 60,024 212,865 59,437 268,319 80,167 277,651 79,206 345,802 95,555 436,358 121,824

$1,283 1,130 1,883 4,182 6,562 11,405 18,994 20,141 20,960 24,922 31,680 40,622 43,402 57,380 71,958 64,725 52,130 64,648 83,055 89,369 119,032 152,698

Other domestic

Equity

Equity

Other domestic

New1

New + exchange

$455 579 800 1,463 1,816 2,157 3,232 4,863 3,946 4,505 5,178 7,915 11,275 16,061 23,650 22,355 19,406 32,063 36,824 35,357 50,086 62,364

World $1,644 1,361 1,891 3,093 4,555 6,362 8,920 6,351 10,458 13,154 13,372 16,253 17,840 19,871 28,169 40,000 50,177 56,716 68,274 73,720 81,129 99,473

Hybrid and bond $2,091 1,723 4,184 7,776 19,181 23,461 32,896 29,041 28,229 28,112 32,127 31,148 32,009 37,478 59,378 48,369 61,674 66,151 62,526 61,296 87,028 75,225

Total

2 Exchange

1

New sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. sales are the dollar value of mutual fund shares switched into funds within the same fund group. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year


Index Mutual Funds: New Sales and Exchange Sales

TABLE 49

Data Section 5


221

$1,104 919 2,821 5,663 13,334 15,728 20,135 16,029 14,282 11,026 13,216 11,597 11,945 10,494 17,391 12,951 9,374 10,577 13,512 14,223 15,588 21,056

S&P 500

$277 153 224 711 3,657 4,109 7,761 8,908 7,096 9,289 12,913 13,325 12,971 15,953 20,129 17,416 14,178 19,361 24,110 21,625 27,389 25,677

Other domestic

Equity

Exchange2

$291 245 219 392 357 857 1,312 1,228 697 656 820 1,488 2,248 3,828 6,889 3,903 5,554 18,851 8,096 8,672 9,561 10,388

World

$420 405 920 1,010 1,834 2,767 3,688 2,875 6,154 7,141 5,178 4,739 4,844 7,203 14,969 14,099 32,567 17,362 16,807 16,776 34,490 18,104

Hybrid and bond

222


$6,971 8,632 10,038 17,900 38,427 56,700 83,979 110,793 95,512 102,497 101,596 119,180 135,467 156,941 198,309 214,654 187,435 221,456 276,017 279,905 318,454 363,198

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$5,036 6,236 7,096 13,382 29,286 44,208 63,612 81,237 63,823 63,267 53,457 63,228 71,080 75,527 95,131 79,416 61,203 70,821 100,548 100,568 105,603 130,313

S&P 500

$607 768 1,069 1,700 4,988 7,016 10,653 18,381 19,196 22,059 28,056 37,869 44,643 53,200 62,894 58,804 49,662 68,985 82,565 88,859 99,880 130,050

Other domestic

$245 387 507 822 1,355 1,446 2,303 4,427 3,462 3,492 3,800 3,742 5,067 9,215 13,625 32,258 20,960 31,839 27,717 28,506 31,338 34,349

World $1,084 1,241 1,365 1,995 2,797 4,029 7,411 6,749 9,030 13,679 16,284 14,341 14,677 18,999 26,659 44,175 55,609 49,811 65,186 61,971 81,634 68,486

Hybrid and bond S&P 500

$5,304 $4,022 7,177 5,426 7,721 5,738 13,578 10,330 24,753 19,824 40,024 32,563 60,809 48,336 80,788 61,735 68,474 47,792 74,963 48,625 76,804 42,814 90,044 50,340 102,053 54,621 118,531 59,556 141,088 71,405 167,817 62,324 133,211 49,794 162,503 56,993 219,553 81,877 212,633 79,623 248,683 89,331 308,639 112,519

Total $449 645 935 1,429 2,468 4,256 7,050 11,959 12,731 15,223 20,548 26,886 32,287 39,111 42,808 43,144 38,167 54,782 64,654 62,278 81,112 109,906

Other domestic

Equity

Equity

$118 243 337 566 779 973 1,276 2,816 2,597 2,819 3,407 3,061 4,108 6,775 10,081 28,061 17,725 14,737 20,333 21,662 25,139 28,141

World $715 863 711 1,253 1,681 2,232 4,146 4,278 5,353 8,296 10,035 9,756 11,036 13,089 16,794 34,288 27,525 35,991 52,689 49,071 53,100 58,073

Hybrid and bond $1,667 1,455 2,316 4,321 13,674 16,676 23,170 30,005 27,038 27,534 24,792 29,136 33,414 38,410 57,221 46,837 54,223 58,953 56,464 67,273 69,772 54,559

Total $1,014 810 1,358 3,052 9,462 11,646 15,276 19,501 16,030 14,642 10,643 12,888 16,459 15,971 23,726 17,092 11,409 13,828 18,671 20,945 16,271 17,795

S&P 500 $158 123 135 271 2,520 2,760 3,603 6,422 6,465 6,835 7,508 10,982 12,356 14,088 20,086 15,660 11,495 14,203 17,911 26,582 18,768 20,144

Other domestic

Equity

Exchange2

$127 144 170 256 576 473 1,027 1,611 865 673 393 681 959 2,441 3,544 4,197 3,236 17,102 7,384 6,844 6,198 6,207

World

2 Exchange

1

Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

Total

Year

Regular1

Regular + exchange


$369 379 654 742 1,116 1,797 3,265 2,471 3,677 5,383 6,249 4,585 3,641 5,910 9,865 9,887 28,084 13,820 12,497 12,901 28,534 10,413

Hybrid and bond

Index Mutual Funds: Redemptions and Exchange Redemptions

TABLE 50

Data Section 5

TABLE 51

Inflation-Protected and Treasury Inflation-Protected Mutual Funds: Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes Total

Treasury inflation-protected

Total

Total net assets

Year 2010 2011 2012 2013 2014

Inflationprotected

$98,326 120,065 137,116 95,942 92,360


$10,112 13,266 13,226 12,218 14,968

$9,181 11,425 7,338 -31,504 -3,089

Number of funds 59 63 68 69 65

50 52 56 57 56

$7,346 9,900 8,289 -31,383 -5,869

$1,835 1,525 -951 -120 2,780


Year-end

2010 2011 2012 2013 2014

Treasury inflation-protected

Net new cash flow


$108,438 133,330 150,342 108,160 107,328

Inflationprotected

Year-end

9 11 12 12 9

200 217 234 242 232

170 183 197 205 205

30 34 37 37 27


Data Section 5


223

224


Small cap

$-1,510 -2,380 -3,781 -4,434 -3,970 1,860 -1,783 -5,465 -6,398 3,182 -10,061

Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mid cap

Large cap

$365,645 377,231 379,207 393,968 224,911 294,640 327,217 326,621 385,120 506,890 553,506

$-6,726 -6,191 -8,471 -704 -9,602 -982 -1,083 -6,628 -5,353 -2,789 -14,887

Mid cap

$-10,973 -16,583 -18,896 -27,204 -13,884 -9,420 -12,832 6,580 2,008 -12,235 -16,612

Large cap

Growth funds

$144,182 153,494 156,733 177,801 91,841 127,603 159,163 145,985 161,065 213,250 212,407

Multi cap

$3,442 -3,324 4,041 9,005 -11,332 -9,293 -19,261 -33,635 -38,862 -16,798 -28,551

Multi cap

$348,495 381,045 414,190 480,751 276,504 365,994 399,028 355,760 377,791 491,707 508,039

$7,451 2,970 3,653 -4,619 -1,936 1,124 1,313 -4,981 -8,707 -3,971 -10,217

Small cap

$97,716 108,707 130,100 122,045 78,536 104,214 130,444 120,523 133,256 175,810 170,379

Small cap

Year-end

Large cap $418,598 464,347 570,240 577,987 339,754 416,942 457,150 435,889 472,021 591,825 630,876

$21,072 13,677 -1,544 -1,511 -8,764 2,475 342 -4,924 -7,337 2,711 -4,238

Mid cap $28,751 19,863 21,344 -4,610 -18,880 -7,542 -13,495 -18,546 -29,504 -25,886 -20,600

Large cap

Value funds

Annual

Net new cash flow

$111,824 135,441 155,866 158,450 88,563 121,015 146,281 135,407 152,781 209,207 221,202

Mid cap

Value funds

Total net assets

Multi cap

$5,632 3,018 6,181 5,730 -15,198 -3,480 -2,303 -174 -10,646 14,473 9,030

Multi cap

$156,404 169,401 197,391 203,448 111,198 140,769 159,489 155,979 175,072 242,906 272,937

$8,729 3,312 885 -5,886 -7,609 1,383 150 -474 -6,255 7,721 -7,594

Small cap

$97,094 108,504 123,102 119,792 71,867 96,987 120,735 116,868 144,854 207,507 208,209

Small cap


Small cap

$101,728 106,921 114,522 119,593 67,787 94,830 116,796 107,188 115,903 165,836 158,996

Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Growth funds

Millions of dollars

Mutual Funds by Market Capitalization: Total Net Assets and Net New Cash Flow by Type of Fund

TABLE 52

Data Section 5

Large cap $804,228 843,752 974,531 1,017,004 637,320 817,289 923,238 911,556 1,037,955 1,402,025 1,621,872

$9,117 3,159 1,152 -4,612 -14,118 -1,019 -650 -5,656 -5,774 7,980 -2,099

Mid cap

$12,460 -12,397 -14,435 -4,973 -3,444 3,485 -10,097 -12,239 -10,909 29,367 40,290

Large cap

Blend funds

$146,278 164,955 193,651 202,391 109,537 149,165 182,499 172,318 192,146 265,990 287,573

Mid cap

Blend funds Multi cap

$18,639 8,807 6,444 -4,918 -31,176 -16,841 -29,809 -42,212 -41,304 -11,499 -23,876

Multi cap

$645,668 701,795 807,898 873,932 493,352 632,531 687,801 630,045 699,308 908,305 965,447

225

258 266 267 246 237 213 207 205 199 192 189

Small cap

657 675 688 653 652 606 580 592 582 561 561

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

412 406 390 351 346 329 316 309 299 287 288

Large cap

671 686 698 699 695 634 610 592 568 556 557

Mid cap

1,033 1,042 1,023 960 997 950 915 903 890 873 885

Large cap

Growth funds

255 255 256 245 245 220 207 198 189 180 179

Mid cap

Growth funds

592 593 592 544 555 537 522 493 474 485 465

Multi cap

247 243 232 209 210 192 182 169 164 165 160

Multi cap

474 524 558 582 595 560 561 582 597 592 609

Small cap

193 208 214 219 221 202 197 203 208 204 212

Small cap


Small cap

Year

Year-end

384 397 398 400 396 370 359 341 332 325 328

Large cap

409 447 502 533 560 527 537 540 544 548 586

Mid cap

972 1,048 1,075 1,106 1,111 1,026 1,027 999 962 954 985

Large cap

Value funds


156 166 185 196 201 190 185 181 178 175 185

Mid cap

Value funds

Number of funds

496 507 512 532 549 501 515 544 569 598 620

Multi cap

195 199 199 200 202 189 192 201 211 213 218

Multi cap

414 439 451 480 471 450 431 435 437 477 520

Small cap

176 182 187 196 186 177 171 172 166 178 187

Small cap

Mutual Funds by Market Capitalization: Number of Funds and Number of Share Classes by Type of Fund

TABLE 53

Data Section 5


325 343 353 374 405 383 360 382 378 366 355

1,224 1,205 1,266 1,257 1,303 1,249 1,236 1,221 1,181 1,183 1,213

Large cap

504 482 497 490 491 464 458 439 419 413 417

Large cap

Blend funds Mid cap

137 139 142 146 149 140 134 140 136 131 129

Mid cap

Blend funds

620 654 679 684 708 718 699 690 710 736 740

Multi cap

256 255 257 254 253 245 233 225 225 228 233

Multi cap

TABLE 54

Retirement Mutual Funds:1 Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes Total

Hybrid

Bond

Money market

Total

Total net assets

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Equity

$19,896 $3,768 44,901 8,479 73,505 28,815 115,007 39,880 162,530 54,625 121,937 46,339 199,142 70,086 255,357 85,897 244,127 92,785 282,871 182,290 372,406 240,421 381,929 266,799

$1,818 2,597 3,673 5,161 7,785 8,652 12,667 15,317 17,606 22,425 23,867 33,011

$7,652 5,371 5,038 5,266 7,032 9,917 13,076 13,982 9,233 9,375 7,882 7,266

$9,833 $9,295 20,259 18,470 39,825 20,146 34,315 26,354 46,401 31,582 46,180 31,189 40,493 28,460 40,646 28,191 19,225 6,235 28,191 -1,859 26,326 7,717 4,676 -14,086

Data Section 5

306 449 509 576 654 730 718 720 734 763 789 852

46 101 148 202 249 333 385 378 405 430 485 511

Money market

$1,872 3,447 19,087 6,867 10,919 11,225 9,149 9,662 8,232 26,418 17,229 11,718

$453 653 1,029 1,174 2,467 1,904 2,461 1,856 2,381 3,491 1,841 7,846

-$1,786 -2,310 -437 -80 1,434 1,861 423 937 2,377 141 -461 -803


Year-end

431 673 796 925 1,073 1,249 1,305 1,319 1,377 1,458 1,548 1,669

Bond


Number of funds 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Hybrid

Net new cash flow2


$33,135 61,349 111,030 165,314 231,972 186,845 294,970 370,553 363,751 496,961 644,576 689,005

Equity

Year-end

69 109 124 129 150 167 183 202 220 250 262 293

10 14 15 18 20 19 19 19 18 15 12 13

611 913 1,246 1,600 1,849 2,055 2,163 2,064 2,147 2,335 2,537 2,748

408 582 748 887 991 1,063 1,085 1,053 1,063 1,121 1,174 1,291

82 158 269 461 573 699 750 674 709 800 921 957

102 147 197 217 246 255 294 304 342 385 421 477

19 26 32 35 39 38 34 33 33 29 21 23

1 Retirement

mutual funds include share classes and funds that are primarily available to retirement plans or IRAs. The table includes data for funds that invest primarily in other funds. 2 Net new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Note: Components may not add to the total because of rounding.

226


$9,949 23,800 32,244 46,859 70,758 70,973 65,162 80,204 82,825 78,171 82,316 86,438

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$2,404 4,547 21,069 10,686 17,981 20,171 17,734 21,249 24,678 56,405 57,588 62,463

Hybrid

$1,156 1,468 2,108 2,277 4,341 5,026 6,522 6,639 7,012 8,817 9,433 14,255

Bond

$40,898 30,826 33,828 37,776 24,488 31,069 33,238 69,288 92,253 36,308 36,170 32,118

Money market $2,303 1,221 1,501 3,511 3,949 5,142 17,779 14,849 10,389 10,090 15,034 19,853

Equity

Sales

$180 161 215 517 641 1,576 3,062 1,580 2,058 5,193 11,814 15,843

Hybrid $125 90 122 229 452 653 1,278 707 1,507 781 560 542

Bond

Exchange4

$154 169 167 303 712 1,192 858 609 866 606 569 427

Money market $2,745 6,246 13,006 22,957 41,247 39,887 36,292 52,432 74,369 77,727 77,102 105,668

Equity $663 1,177 2,028 4,001 7,243 9,154 8,068 11,660 16,333 28,190 39,497 46,464

Hybrid $719 792 1,053 1,162 2,080 3,360 3,641 4,921 5,518 5,664 7,522 6,404

Bond

Regular5

$42,588 32,980 34,053 37,728 22,965 29,668 32,757 68,364 90,162 36,285 36,636 32,891

Money market $212 306 593 1,060 1,878 5,039 18,190 14,430 12,610 12,393 12,531 14,708

Equity

Redemptions

2 Net

1

Retirement mutual funds include share classes and funds that are primarily available to retirement plans or IRAs. The table includes data for funds that invest primarily in other funds. new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. 3 New sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. 4 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund family. 5 Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. 6 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Components may not add to the total because of rounding.

Equity

Year

New3


Retirement Mutual Funds:1 Components of Net New Cash Flow2

$48 84 170 336 460 1,368 3,579 1,508 2,171 6,990 12,676 20,124

Hybrid

$110 113 147 171 246 415 1,699 568 621 442 629 547

Bond

Exchange6

TABLE 55

Data Section 5


227

$250 326 379 430 801 732 916 596 579 488 564 457

Money market

TABLE 56

Sector Mutual Funds: Total Net Assets and Net New Cash Flow by Type of Fund Millions of dollars Total net assets Year-end

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Consumer Financial $1,042 1,290 1,096 1,436 1,631 1,405 1,928 2,147 1,776 2,439 3,113 3,546 4,675 6,431 7,017

$16,087 13,901 10,885 13,138 12,917 11,837 12,269 8,518 4,857 5,941 6,286 4,548 5,901 9,285 9,415

Health $45,921 40,545 30,087 36,803 40,147 45,398 44,744 43,967 31,337 32,440 32,507 35,884 44,105 74,767 103,447

Natural resources

Precious Technology/ metals Real estate Telcom

Utilities

Other sectors

$22,908 17,744 11,275 13,481 19,201 28,390 34,589 45,669 23,240 30,327 33,332 34,785 35,400 40,149 41,556

$3,917 2,940 2,082 2,412 2,974 3,189 3,950 4,826 1,766 2,986 4,597 3,906 5,001 8,173 8,969

Precious Technology/ metals Real estate Telcom

Utilities

Other sectors

-$203 -28 480 456 419 1,016 717 -214 832 2,249 2,353 -1,336 152 -1,425 -165

$1,015 -953 -2,076 -292 1,571 3,311 556 1,992 -3,397 254 -848 701 -1,994 -1,409 3,783

-$187 -198 -288 -145 148 121 -49 257 -488 386 724 -286 173 977 91

$2,955 $1,108 2,429 1,276 2,230 2,431 3,307 4,158 5,844 4,215 12,048 6,928 14,723 9,741 22,312 11,804 9,967 7,776 17,496 14,785 22,853 22,926 20,998 17,029 22,041 15,293 30,960 6,790 36,904 6,005 Net new cash flow

$11,675 13,509 17,745 31,653 49,927 59,158 81,329 53,738 33,503 44,126 56,830 61,665 77,033 79,034 106,106

$103,853 62,339 31,308 46,929 42,403 34,366 32,891 34,169 16,331 27,610 30,738 26,680 28,570 41,486 45,358

Annual

Data Section 5

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Consumer Financial -$122 254 11 9 3 -209 29 94 209 82 101 262 544 794 47

-$534 -962 -1,603 -940 -1,535 -1,586 -1,017 -2,617 96 -457 -626 -885 56 859 -256

Health

Natural resources

$9,256 236 -2,895 -767 -387 836 -4,137 -3,378 -3,025 -3,163 -2,407 478 1,385 8,582 7,645

$236 -182 -70 327 1,414 3,483 789 1,724 -268 1,767 1,470 1,193 564 5,411 5,823

$339 430 3,612 5,177 7,050 3,000 4,395 -15,282 1,791 492 1,695 916 4,307 241 5,186

$43,837 -4,458 -6,211 73 -6,165 -8,541 -4,456 -2,745 -3,847 1,768 -1,391 -2,346 -1,515 1,972 85


228


TABLE 57

Sector Mutual Funds: Number of Funds and Number of Share Classes by Type of Fund Year-end Number of funds Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Consumer Financial 7 9 12 11 14 14 18 19 19 19 19 19 20 19 19

34 41 42 38 40 41 40 40 38 36 35 32 33 32 31

Health

Natural resources

38 57 63 58 59 53 57 52 48 41 38 34 35 35 34

19 18 15 16 17 18 20 20 21 20 21 26 28 32 36

Precious Technology/ metals Real estate Telcom 11 10 11 11 11 11 12 11 11 11 11 10 11 11 11

74 75 79 91 94 93 97 96 92 90 88 84 85 88 88

132 155 145 124 115 103 108 98 88 79 74 69 66 68 67

Utilities

Other sectors

34 40 35 33 34 32 38 39 41 37 35 33 36 41 37

16 17 19 19 20 19 23 25 22 23 21 21 24 24 24

Utilities

Other sectors

75 89 91 88 91 94 107 113 117 105 96 89 100 109 96

23 25 28 28 29 27 37 42 33 41 36 36 43 44 40

Number of share classes Year

12 17 22 19 27 26 33 41 42 42 42 43 47 41 41

73 88 92 85 92 95 93 95 91 80 79 72 73 72 70

Health

Natural resources

91 145 171 155 159 137 147 133 124 101 97 80 83 83 80

33 32 26 33 34 38 41 47 52 50 54 75 85 97 106

Precious Technology/ metals Real estate Telcom 19 21 24 26 27 27 30 34 37 37 38 33 36 34 34

151 156 172 214 238 240 246 252 246 246 251 243 246 261 271

283 350 348 290 279 260 267 249 218 199 190 184 182 188 181

Data Section 5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Consumer Financial



229

230


$487 805 1,408 4,508 7,014 8,788 12,372 14,902 25,901 43,756 71,223 114,560 182,905 159,830 255,590 339,772 375,810 480,743 618,016 702,632

Target date

Lifestyle $2,259 5,693 12,906 20,905 27,835 30,928 33,095 34,523 55,832 85,414 130,794 189,034 237,958 175,591 230,950 264,155 261,932 292,387 358,530 394,448

Net new cash flow2

$1,194 2,583 4,138 6,015 4,928 7,581 7,696 8,095 19,040 28,336 57,166 66,792 91,920 54,424 52,116 48,615 40,367 50,218 55,250 41,648

Total $185 216 193 1,153 1,311 3,598 3,795 3,708 7,221 12,903 22,256 33,023 56,200 41,897 43,442 44,431 41,557 52,948 52,968 44,583

Target date

Lifestyle $1,009 2,367 3,945 4,862 3,618 3,983 3,902 4,386 11,819 15,432 34,910 33,769 35,720 12,527 8,674 4,184 -1,189 -2,730 2,282 -2,935


2 Net

include data for funds that invest primarily in other funds. new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. Note: Components may not add to the total because of rounding.

$2,746 6,497 14,314 25,413 34,849 39,716 45,467 49,425 81,733 129,170 202,017 303,594 420,863 335,421 486,540 603,926 637,742 773,130 976,546 1,097,080

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1 Categories

Total

Year


Total net assets

26 44 77 110 130 146 147 171 192 241 324 422 494 613 643 638 674 682 760 797

Total 6 9 12 17 19 24 25 25 45 84 127 184 245 338 379 377 412 430 491 528

Target date

Year-end

Number of funds Lifestyle 20 35 65 93 111 122 122 146 147 157 197 238 249 275 264 261 262 252 269 269 50 70 141 199 240 279 351 432 499 740 1,128 1,559 1,837 2,215 2,350 2,327 2,484 2,598 2,927 3,036

Total

Year-end

10 9 17 23 30 42 82 82 120 263 465 783 1,035 1,367 1,513 1,491 1,620 1,754 2,031 2,142

Target date

Lifestyle 40 61 124 176 210 237 269 350 379 477 663 776 802 848 837 836 864 844 896 894


Target Date and Lifestyle Mutual Funds:1 Total Net Assets, Net New Cash Flow, Number of Funds, and Number of Share Classes

TABLE 58

Data Section 5

$282 622 513 1,306 1,831 4,267 4,787 5,282 8,083 16,442 26,754 39,913 76,155 78,539 80,328 107,618 131,659 143,656 171,407 186,196

Target date

Lifestyle

$1,008 2,771 5,067 7,549 8,832 10,767 10,621 12,953 19,498 25,228 50,358 49,584 61,517 48,978 38,138 42,356 40,759 39,052 46,324 54,002

Sales Total $364 564 1,066 2,782 3,144 4,621 4,179 3,691 5,321 8,713 11,647 17,113 23,456 22,099 15,172 20,606 22,271 19,668 30,991 33,593

$9 12 33 1,354 1,707 2,845 2,576 2,307 3,390 5,474 7,692 11,157 17,041 16,120 11,554 16,623 17,914 15,988 25,303 28,093

Target date

Exchange4 $355 552 1,033 1,428 1,436 1,776 1,602 1,384 1,931 3,239 3,955 5,956 6,415 5,979 3,618 3,983 4,356 3,680 5,687 5,500

Lifestyle

Total $304 989 1,763 3,557 6,102 8,302 8,510 10,901 11,038 17,571 25,919 31,232 56,637 73,878 68,193 104,940 131,977 133,050 166,957 187,264

$100 406 331 641 1,000 1,654 1,844 2,340 2,521 6,274 8,633 12,662 28,507 38,386 39,388 67,373 90,802 92,069 121,592 129,048

Target date

Regular5 $203 583 1,432 2,916 5,102 6,648 6,665 8,561 8,518 11,296 17,287 18,571 28,131 35,492 28,805 37,567 41,176 40,981 45,365 58,216

Lifestyle $155 385 746 2,066 2,776 3,772 3,381 2,930 2,824 4,477 5,673 8,586 12,570 21,314 13,329 17,025 22,343 19,107 26,514 44,878

Total

Redemptions

include data for funds that invest primarily in other funds. new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. 3 New sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. 4 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. 5 Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. 6 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Components may not add to the total because of rounding.

2 Net

1 Categories

Total

$1,289 3,393 5,580 8,856 10,663 15,034 15,408 18,235 27,581 41,670 77,111 89,497 137,672 127,517 118,467 149,974 172,417 182,707 217,731 240,198

Year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

New3


$5 11 22 867 1,227 1,861 1,724 1,541 1,731 2,739 3,558 5,385 8,490 14,375 9,053 12,437 17,215 14,626 22,150 40,658

Target date

Exchange6

Target Date and Lifestyle Mutual Funds:1 Components of Net New Cash Flow2

TABLE 59

Data Section 5


231

Lifestyle $151 373 723 1,199 1,549 1,912 1,656 1,389 1,093 1,738 2,116 3,201 4,080 6,938 4,277 4,588 5,129 4,481 4,364 4,221

232


$28,749 91,056 109,868 152,403 176,370 259,813 349,341 473,331 615,152 818,958 816,800 742,258 638,949 837,443 973,910 1,072,894 1,266,934 1,398,318 928,693 1,187,610 1,339,176 1,298,460 1,439,578 1,654,071 1,686,125

$14,974 69,138 80,934 104,823 121,153 187,702 260,959 364,286 474,961 656,877 652,421 558,654 438,603 619,018 738,444 822,105 975,532 1,052,868 598,524 792,083 886,357 800,129 875,004 1,050,470 1,065,119

Equity

$8,355 13,734 21,046 39,740 44,339 60,042 73,189 92,571 116,337 128,349 131,342 138,848 152,276 182,773 202,106 217,090 249,210 292,727 255,199 338,231 404,265 449,458 520,642 563,809 583,882

Hybrid and bond $5,420 8,184 7,888 7,841 10,878 12,069 15,193 16,474 23,853 33,732 33,037 44,756 48,070 35,652 33,361 33,699 42,192 52,723 74,971 57,296 48,554 48,873 43,932 39,792 37,124

Money market $3,083 6,174 12,884 26,088 22,066 20,824 40,133 40,470 44,259 38,543 48,461 21,583 -1,286 29,827 33,505 16,404 29,712 31,780 -6,059 10,033 -2,313 -21,340 -32,827 -56,170 -69,003

Total $1,866 5,097 8,708 16,423 15,998 18,604 32,699 33,743 27,857 30,736 58,314 4,861 -12,763 34,969 33,592 13,254 17,018 1,581 -30,615 -3,644 -25,375 -48,213 -55,367 -61,392 -58,542

Equity $323 1,498 4,363 9,834 3,763 2,214 5,063 6,316 10,362 -460 -7,790 8,035 11,151 6,929 2,595 4,449 7,192 22,948 5,018 32,483 32,773 26,737 27,672 7,860 -7,796

$895 -420 -188 -169 2,305 5 2,371 411 6,040 8,267 -2,063 8,687 327 -12,071 -2,683 -1,299 5,501 7,251 19,538 -18,806 -9,711 136 -5,132 -2,638 -2,665

Hybrid and bond Money market

Net new cash flow*


331 354 366 428 507 665 800 937 1,162 1,353 1,562 1,750 1,903 1,889 1,881 1,882 1,926 1,900 1,897 1,830 1,772 1,737 1,724 1,731 1,723

Total 145 150 157 192 245 344 435 535 703 868 1,051 1,248 1,389 1,364 1,351 1,356 1,391 1,367 1,369 1,307 1,256 1,222 1,195 1,180 1,149

Equity 134 147 151 176 202 250 290 323 377 404 431 413 422 437 443 443 454 455 449 450 446 451 469 494 518

Hybrid and bond

Year-end

Number of funds


1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total


Total net assets

Variable Annuity Mutual Funds: Total Net Assets, Net New Cash Flow, and Number of Funds

TABLE 60

Data Section 5

52 57 58 60 60 71 75 79 82 81 80 89 92 88 87 83 81 78 79 73 70 64 60 57 56

Money market

233

$9,994 16,408 24,779 42,392 48,010 53,101 84,933 105,222 141,464 212,025 334,936 346,166 342,193 283,007 261,715 246,396 280,246 343,465 380,350 312,904 337,448 330,907 308,491 295,312 256,023

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$4,714 9,034 13,294 22,738 25,661 31,661 53,188 67,005 83,457 130,900 222,945 197,831 183,758 169,043 170,082 162,387 191,872 218,138 198,130 150,971 164,882 144,679 128,108 142,685 132,893

Equity

$1,808 3,368 6,634 13,146 10,907 9,326 13,056 15,290 23,227 22,004 20,128 33,707 48,179 54,392 46,592 48,220 51,529 73,991 94,051 100,405 139,602 149,977 151,807 121,879 94,929

$3,473 4,006 4,851 6,508 11,443 12,114 18,689 22,926 34,780 59,120 91,863 114,628 110,256 59,572 45,042 35,789 36,846 51,336 88,169 61,528 32,964 36,252 28,575 30,748 28,201

Money market

Sales

$1,082 838 1,568 1,131 7,017 8,674 12,656 24,210 37,136 40,818 36,326 31,716 34,170 28,791 26,407 19,598 22,318 37,045 25,445 22,650 17,325 16,269 14,248 23,205 9,591

Total $450 331 740 576 4,064 4,984 7,190 13,017 18,967 22,080 22,822 15,928 16,428 15,307 14,396 10,599 10,823 19,701 11,112 14,589 6,755 6,816 10,720 14,353 4,669

Equity $183 174 350 325 429 727 864 2,348 5,502 2,985 1,852 5,185 7,160 5,944 5,711 3,403 3,425 8,247 5,114 3,767 6,742 6,865 2,118 5,993 1,607

$449 333 478 230 2,525 2,963 4,602 8,846 12,668 15,753 11,652 10,604 10,583 7,540 6,300 5,595 8,070 9,097 9,220 4,294 3,828 2,589 1,410 2,859 3,316

Hybrid and Money bond market

Exchange3

$6,993 10,294 12,014 16,352 25,933 32,283 44,729 65,377 99,141 174,418 287,230 325,676 344,224 253,526 228,278 230,118 250,509 317,180 390,038 302,742 339,508 352,265 340,384 349,726 324,386

Total $2,941 3,967 4,745 6,425 9,941 13,201 20,497 33,408 54,024 100,392 166,186 190,977 194,374 136,061 136,344 148,067 173,300 215,814 227,293 154,821 188,495 189,868 181,579 201,508 189,768

Equity $1,465 1,920 2,348 3,410 6,830 7,234 8,041 9,905 14,964 22,275 27,483 27,510 38,908 46,632 44,382 44,472 44,350 55,877 90,601 69,691 108,612 125,488 124,982 113,350 103,575

Hybrid and bond

Regular4

$2,587 4,407 4,921 6,517 9,161 11,849 16,191 22,063 30,153 51,750 93,561 107,189 110,942 70,832 47,552 37,578 32,859 45,488 72,144 78,231 42,401 36,910 33,824 34,867 31,043

Money market $1,000 778 1,450 1,084 7,029 8,668 12,726 23,586 35,199 39,883 35,571 30,623 33,425 28,445 26,340 19,472 22,344 31,550 21,816 22,778 17,578 16,251 15,181 24,960 10,232

Total

Redemptions

$357 301 581 467 3,786 4,840 7,182 12,871 20,542 21,853 21,267 17,921 18,574 13,319 14,543 11,666 12,376 20,444 12,564 14,382 8,517 9,840 12,616 16,922 6,335

2 New

1

$203 124 273 227 742 606 815 1,417 3,403 3,174 2,288 3,346 5,281 6,774 5,325 2,702 3,412 3,413 3,546 1,999 4,959 4,616 1,271 6,661 758

$440 352 596 390 2,501 3,223 4,729 9,298 11,254 14,856 12,017 9,356 9,570 8,351 6,472 5,104 6,555 7,693 5,706 6,397 4,102 1,795 1,293 1,377 3,139

Hybrid and Money bond market

Exchange5 Equity

Net new cash flow is the dollar value of new sales minus redemptions combined with net exchanges. sales are the dollar value of new purchases of mutual fund shares. This does not include shares purchased through reinvestment of dividends in existing accounts. 3 Exchange sales are the dollar value of mutual fund shares switched into funds within the same fund group. 4 Regular redemptions are the dollar value of shareholder liquidation of mutual fund shares. 5 Exchange redemptions are the dollar value of mutual fund shares switched out of funds and into other funds within the same fund group. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

Total

Year

Hybrid and bond

New2


Variable Annuity Mutual Funds: Components of Net New Cash Flow 1

TABLE 61

Data Section 5


TABLE 62

Total Net Assets of Mutual Funds Held in Individual and Institutional Accounts Millions of dollars, year-end Year

Total

Equity

Hybrid

Bond

Money market

$6,964,634 6,974,913 6,383,477 7,402,482 8,095,801 8,891,373 10,398,137 12,000,168 9,602,891 11,112,623 11,832,988 11,631,894 13,052,230 15,034,776 15,852,341

$3,934,480 3,392,399 2,642,420 3,653,370 4,342,577 4,885,444 5,832,582 6,413,222 3,637,416 4,872,541 5,596,629 5,212,989 5,938,747 7,762,727 8,314,314

$360,916 358,027 335,276 447,570 552,250 621,479 731,503 821,522 562,262 717,580 841,415 883,056 1,029,257 1,267,329 1,351,839

$823,990 939,177 1,140,707 1,261,520 1,299,274 1,357,630 1,495,619 1,679,664 1,570,978 2,206,609 2,591,022 2,844,428 3,390,704 3,286,388 3,460,928

$1,845,248 2,285,310 2,265,075 2,040,022 1,901,700 2,026,822 2,338,451 3,085,760 3,832,236 3,315,893 2,803,922 2,691,422 2,693,523 2,718,332 2,725,260

$3,726,670 3,215,167 2,491,013 3,463,587 4,093,544 4,576,622 5,437,561 5,986,591 3,388,810 4,503,074 5,130,806 4,778,381 5,447,329 7,157,267 7,663,417

$350,537 347,782 325,811 435,131 536,248 600,437 704,116 792,386 544,230 693,742 807,872 844,223 987,061 1,209,698 1,291,976

$753,419 855,593 1,047,210 1,168,540 1,205,962 1,235,488 1,358,138 1,521,986 1,425,757 2,009,477 2,338,145 2,578,389 3,066,238 2,954,172 3,104,217

$1,411,942 1,683,820 1,657,012 1,487,338 1,368,522 1,390,586 1,598,787 2,088,648 2,479,575 2,082,689 1,775,308 1,722,462 1,724,783 1,707,219 1,669,228

$207,810 177,232 151,407 189,783 249,033 308,822 395,021 426,630 248,606 369,467 465,823 434,607 491,418 605,460 650,897

$10,379 10,245 9,465 12,439 16,002 21,042 27,386 29,136 18,031 23,839 33,542 38,832 42,195 57,631 59,863

$70,571 83,584 93,497 92,980 93,312 122,143 137,481 157,678 145,220 197,132 252,877 266,039 324,465 332,216 356,710

$433,306 601,490 608,064 552,684 533,178 636,235 739,664 997,112 1,352,661 1,233,204 1,028,615 968,960 968,740 1,011,114 1,056,032

Total 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Individual accounts 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$6,242,568 6,102,362 5,521,045 6,554,596 7,204,277 7,803,133 9,098,602 10,389,611 7,838,372 9,288,981 10,052,131 9,923,455 11,225,411 13,028,356 13,728,839

Data Section 6

Institutional accounts* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$722,066 872,551 862,432 847,885 891,524 1,088,239 1,299,535 1,610,557 1,764,519 1,823,642 1,780,857 1,708,438 1,826,819 2,006,421 2,123,502

* Institutional accounts include accounts purchased by an institution, such as a business, financial, or nonprofit organization. Institutional accounts do not include primary accounts of individuals issued by a broker-dealer. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

234


TABLE 63

Total Net Assets of Institutional Investors in Mutual Funds by Type of Institution and Type of Fund Millions of dollars, year-end Year 2006

2007

2008

2009

2010

2011

2012

2013

Business corporations $605,919 135,407 7,856 34,654 428,003 752,596 136,905 8,306 38,276 569,109 916,758 70,419 5,702 29,355 811,283 896,961 106,237 7,989 47,265 735,470 752,449 121,499 10,952 54,091 565,907 695,581 102,346 12,042 51,684 529,509 699,023 109,141 11,217 59,217 519,448 770,167 136,640 15,299 59,084 559,144 815,013 150,438 15,660 68,765 580,150

Financial institutions1 $392,457 117,135 8,295 26,783 240,243 474,827 119,384 10,216 30,836 314,390 496,069 64,968 5,708 28,624 396,769 505,916 89,282 7,126 41,527 367,982 513,067 108,061 10,187 54,861 339,957 484,560 94,629 11,390 57,819 320,721 510,828 96,889 13,941 68,607 331,391 539,879 118,295 17,246 70,180 334,158 566,443 121,086 18,062 78,664 348,631

Nonprofit organizations $125,403 55,242 4,848 25,411 39,902 150,177 60,760 4,500 24,435 60,482 135,287 32,882 2,717 22,868 76,820 147,414 44,777 3,665 29,010 69,963 153,520 49,360 4,261 33,325 66,574 146,589 45,695 4,794 36,041 60,058 153,066 52,675 5,186 40,130 55,074 169,662 64,180 7,419 36,469 61,593 185,283 65,465 7,682 40,014 72,122

Other2 $175,755 87,219 6,388 50,633 31,515 232,957 109,580 6,114 64,131 53,132 216,404 80,338 3,904 64,373 67,789 273,352 129,171 5,060 79,331 59,790 361,821 186,903 8,142 110,599 56,177 381,709 191,937 10,606 120,495 58,671 463,902 232,712 11,851 156,511 62,828 526,713 286,344 17,667 166,483 56,218 556,762 313,908 18,459 169,267 55,129

Data Section 6

2014

Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market Total Equity Hybrid Bond Money market

Total $1,299,535 395,003 27,386 137,481 739,664 1,610,557 426,630 29,136 157,678 997,112 1,764,519 248,606 18,031 145,220 1,352,661 1,823,642 369,467 23,839 197,132 1,233,204 1,780,857 465,823 33,542 252,877 1,028,615 1,708,438 434,607 38,832 266,039 968,960 1,826,819 491,418 42,195 324,465 968,740 2,006,421 605,460 57,631 332,216 1,011,114 2,123,502 650,897 59,863 356,710 1,056,032

1 Financial

institutions include credit unions, investment clubs, accounts of banks not held as fiduciaries, insurance companies, and other financial organizations. 2 Other institutional investors include state and local governments, funds holding mutual fund shares, and other institutional accounts not classified. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

INSTITUTIONAL INVESTORS IN THE MUTUAL FUND INDUSTRY

235

TABLE 64

Total Net Assets of Institutional Investors in Taxable Money Market Funds by Type of Institution and Type of Fund1 Millions of dollars, year-end Year 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Data Section 6

2011

2012

2013

2014

Total Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds Total Institutional funds Retail funds

$409,466 305,180 104,286 575,181 469,167 106,014 578,112 485,551 92,561 515,153 429,149 86,005 486,612 406,837 79,775 578,538 485,208 93,330 677,610 582,316 95,294 919,892 807,813 112,079 1,265,490 1,141,552 123,937 1,157,743 1,059,673 98,070 971,055 882,599 88,456 923,001 835,898 87,102 921,982 846,066 75,916 967,143 895,654 71,489 1,013,032 943,830 69,202

Business corporations $201,985 137,226 64,759 300,471 235,624 64,847 303,148 247,671 55,477 270,469 221,267 49,202 277,235 228,681 48,554 322,944 270,964 51,980 388,596 324,826 63,770 517,835 447,602 70,233 748,320 672,189 76,130 678,917 617,034 61,883 523,805 470,349 53,456 494,801 442,179 52,622 483,275 437,390 45,885 523,505 475,961 47,544 545,170 499,074 46,097

Financial institutions2 $158,334 134,543 23,791 219,136 195,663 23,473 226,645 202,475 24,170 194,259 173,539 20,720 161,810 146,630 15,180 197,002 172,306 24,697 221,779 208,179 13,600 294,356 273,550 20,806 377,468 350,450 27,018 353,677 332,846 20,831 328,133 306,445 21,688 312,442 290,467 21,975 322,483 303,243 19,241 327,287 312,847 14,440 342,748 329,067 13,681

Nonprofit organizations $22,987 14,951 8,037 27,975 18,193 9,783 27,673 20,186 7,487 32,223 22,473 9,751 28,909 18,941 9,968 32,896 23,672 9,224 37,856 26,698 11,158 57,470 43,408 14,062 74,803 60,632 14,171 68,124 57,764 10,360 65,252 56,440 8,812 58,686 50,996 7,689 53,961 47,365 6,596 60,631 55,146 5,485 70,608 64,887 5,722

Other3 $26,160 18,460 7,699 27,599 19,687 7,912 20,646 15,219 5,427 18,202 11,870 6,333 18,659 12,586 6,073 25,696 18,266 7,430 29,379 22,613 6,766 50,232 43,254 6,977 64,900 58,282 6,618 57,025 52,029 4,996 53,865 49,365 4,500 57,072 52,256 4,815 62,262 58,067 4,194 55,721 51,701 4,020 54,506 50,802 3,703

1 Institutional

funds are sold primarily to institutional investors or institutional accounts. This includes accounts that are purchased by an institution, such as a business, financial, or nonprofit organization. Retail funds are sold primarily to individual investors and include variable annuity mutual funds. 2 Financial institutions include credit unions, investment clubs, accounts of banks not held as fiduciaries, insurance companies, and other financial organizations. 3 Other institutional investors include state and local governments, funds holding mutual fund shares, and other institutional accounts not classified. Note: Data for funds that invest primarily in other mutual funds were excluded from the series. Components may not add to the total because of rounding.

236


TABLE 65

Worldwide Total Net Assets of Mutual Funds Millions of U.S. dollars, year-end 2007

2008

2009

2010

2011

2012

2013

2014

$26,130,201 13,421,794 6,789 615,365 698,397 24,444 1,203 75,428 N/A 12,000,168 8,934,861 138,709 149,842 N/A N/A 7,595 104,083 81,136 1,989,690 372,072 29,807 12,573 951,371 419,687 25,103 2,685,065 N/A 113,759 74,709 45,542 29,732 390 7,175 4,762 4,219 396,534 194,955 176,282 22,609 897,460 3,678,325 1,192,988 434,063 818,421 108,582 713,998 329,979 14,925 4,956 2,090 58,323 95,221 95,221

$18,919,299 10,581,230 3,867 479,321 416,031 17,587 1,098 60,435 N/A 9,602,891 6,231,116 93,269 105,057 226 N/A 5,260 65,182 48,750 1,591,082 237,986 12,189 9,188 720,486 263,588 20,489 1,860,763 N/A 77,379 41,157 17,782 13,572 326 2,026 3,841 2,067 270,983 113,331 135,052 15,404 504,681 2,037,536 841,133 276,303 N/A 62,805 575,327 221,992 10,612 1,985 1,263 46,116 69,417 69,417

$22,945,270 12,578,245 4,470 783,970 565,156 34,227 1,309 70,659 5,832 11,112,623 7,545,531 99,628 106,721 256 N/A 5,436 83,024 66,131 1,805,641 317,543 12,434 11,052 860,515 279,474 30,329 2,293,973 N/A 95,512 71,170 23,025 15,808 1,134 3,182 4,222 2,610 269,611 170,277 168,260 19,426 729,141 2,715,233 1,198,838 381,207 N/A 130,284 660,666 264,573 17,657 2,224 1,488 58,297 106,261 106,261

$24,711,508 13,599,181 5,179 980,448 636,947 38,243 1,470 98,094 5,812 11,832,988 7,903,389 94,670 96,288 302 N/A 5,508 89,800 71,210 1,617,176 333,713 8,627 11,532 1,014,104 234,313 35,387 2,512,874 N/A 85,924 84,505 25,595 11,004 1,713 3,917 4,349 2,663 216,915 205,449 261,893 19,545 854,413 3,067,323 1,455,850 364,985 N/A 111,421 785,504 266,495 19,562 2,290 2,184 59,032 141,615 141,615

$23,801,209 13,534,659 6,808 1,008,928 753,606 33,425 1,266 92,743 5,989 11,631,894 7,220,298 81,038 81,505 291 N/A 4,445 84,891 62,193 1,382,068 293,011 5,213 7,193 1,061,051 180,754 32,606 2,277,465 2,132 69,156 79,999 18,463 7,321 2,388 3,072 3,191 2,279 195,220 179,707 273,061 14,048 816,537 2,921,276 1,440,128 339,037 N/A 87,519 745,383 226,716 23,709 2,984 2,363 53,437 124,976 124,976

$26,844,414 15,147,007 9,185 1,070,998 856,504 37,900 1,484 112,201 6,505 13,052,230 8,230,059 89,125 81,651 324 N/A 5,001 103,506 73,985 1,473,085 327,640 6,011 8,570 1,276,601 181,720 31,951 2,641,964 3,033 76,145 98,723 25,883 7,509 2,613 N/A 2,951 2,370 191,284 205,733 310,686 16,478 985,517 3,322,198 1,667,128 437,449 N/A 114,489 738,488 267,582 31,145 3,159 3,566 59,192 145,150 145,150

$30,047,406 17,173,504 11,179 1,018,641 940,580 39,291 1,933 120,518 6,586 15,034,776 9,374,830 90,633 91,528 504 N/A 5,131 118,702 88,462 1,531,500 382,976 6,742 12,158 1,439,867 215,553 36,235 3,030,665 3,160 85,304 109,325 27,858 9,625 4,000 N/A 3,292 2,506 248,234 252,878 397,080 14,078 1,166,834 3,356,204 1,624,081 460,332 N/A 107,895 774,126 285,173 34,185 3,464 4,662 62,286 142,868 142,868

$31,381,425 18,012,199 15,630 989,542 981,804 44,166 2,092 119,504 7,121 15,852,341 9,576,475 83,522 90,211 496 2,058 5,563 121,092 86,621 1,391,271 359,867 5,256 11,375 1,547,343 238,327 28,875 3,208,264 3,522 75,751 112,223 26,098 8,564 4,932 N/A 4,183 2,553 274,049 279,094 407,890 15,292 1,182,184 3,646,276 1,601,132 708,884 N/A 134,630 780,636 312,150 41,560 4,156 5,078 58,049 146,474 146,474

N/A = not available Note: Funds of funds are not included except for France, Italy, and Luxembourg. Data include home-domiciled funds, except for Hong Kong, the Republic of Korea, and New Zealand, which include home- and foreign-domiciled funds. Components may not add to the total because of rounding. Source: International Investment Funds Association

WORLDWIDE MUTUAL FUND TOTALS

237

Data Section 7

World Americas Argentina Brazil Canada Chile Costa Rica Mexico Trinidad and Tobago United States Europe Austria Belgium Bulgaria Croatia Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Liechtenstein Luxembourg Malta Netherlands Norway Poland Portugal Romania Russia Slovakia Slovenia Spain Sweden Switzerland Turkey United Kingdom Asia and Pacific Australia China Hong Kong India Japan Korea, Rep. of New Zealand Pakistan Philippines Taiwan Africa South Africa

TABLE 66

Worldwide Number of Mutual Funds

Data Section 7

Year-end World Americas Argentina Brazil Canada Chile Costa Rica Mexico Trinidad and Tobago United States Europe Austria Belgium Bulgaria Croatia Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Liechtenstein Luxembourg Malta Netherlands Norway Poland Portugal Romania Russia Slovakia Slovenia Spain Sweden Switzerland Turkey United Kingdom Asia and Pacific Australia China Hong Kong India Japan Korea, Rep. of New Zealand Pakistan Philippines Taiwan Africa South Africa

2007

2008

2009

2010

2011

2012

2013

2014

66,362 15,474 241 3,381 2,038 1,260 93 420 N/A 8,041 35,210 1,070 1,655 N/A N/A 66 500 379 8,243 1,462 230 212 2,898 924 391 8,782 N/A 450 511 188 180 41 533 54 106 2,940 477 567 294 2,057 14,847 N/A 341 1,162 555 2,997 8,609 623 64 40 456 831 831

69,049 16,476 253 4,169 2,015 1,484 85 431 N/A 8,039 36,780 1,065 1,828 81 N/A 76 489 389 8,301 1,675 239 270 3,097 742 335 9,351 N/A 458a 530 210 184 52 528 56 125 2,944 508 572 304 2,371 14,909 N/A 429 N/A 551 3,333 9,384 643 83 43 443 884 884

67,533 16,935 252 4,744 2,075 1,691 64 407 36 7,666 34,899 1,016 1,845 85 N/A 78 483 377 7,982 2,067 210 264 2,721 675 348 9,017 N/A N/A 487 208 171 51 480 54 125 2,588 506 509 286 2,266 14,795 N/A 547 N/A 590 3,656 8,703 702 96 41 460 904 904

69,492 17,992 254 5,618 2,117 1,912 68 434 35 7,554 35,292 1,016 1,797 90 N/A 80 490 366 7,791 2,106 213 276 2,899 650 409 9,353 N/A N/A 507 214 171 56 462 58 130 2,486 504 653 311 2,204 15,265 N/A 660 N/A 658 3,905 8,687 700 125 43 487 943 943

72,607 19,749 281 6,513 2,655 2,150 63 464 36 7,587 35,713 1,003 1,723 92 N/A 80 500 368 7,744 2,051 196 152 3,085 659 437 9,462 59 495 507 226 173 105 472 63 137 2,474 508 664 337 1,941 16,198 N/A 831 N/A 680 4,196 9,064 709 137 47 534 947 947

73,235 21,095 291 7,468 2,866 2,286 66 488 42 7,588 34,470 995 1,529 95 N/A 80 495 375 7,392 2,059 177 167 3,167 600 535 9,435 54 497 406 259 157 62 N/A 58 131 2,349 456 667 351 1,922 16,703 N/A 1,065 N/A 692 4,384 9,121 700 139 48 554 967 967

76,206 22,026 297 8,072 2,963 2,385 66 487 43 7,713 34,743 981 1,432 98 N/A 85 510 369 7,154 2,012 166 182 3,345 661 657 9,500 69 501 573 264 153 64 N/A 54 114 2,267 484 765 373 1,910 18,375 N/A 1,415 N/A 699 4,922 9,876 694 152 47 570 1,062 1,062

79,669 22,962 302 8,560 3,164 2,418 66 486 43 7,923 35,163 938 1,209 103 82 106 530 352 7,082 2,039 143 189 3,462 719 587 9,839 63 561 616 278 137 72 N/A 67 111 2,238 510 815 395 1,920 20,373 N/A 1,763 N/A 723 5,404 11,063 632 159 52 577 1,171 1,171

Year-end data are not available. Data are as of September. N/A = not available Note: Funds of funds are not included except for France, Italy, and Luxembourg. Data include home-domiciled funds, except for Hong Kong, the Republic of Korea, and New Zealand, which include home- and foreign-domiciled funds. Source: International Investment Funds Association a

238


TABLE 67

Worldwide Net Sales of Mutual Funds Millions of U.S. dollars, annual 2007

2008

$1,533,877 1,204,570 N/A 16,880 61,286 3,282 N/A 10,154 N/A 1,112,968 101,766 -4,864 N/A N/A N/A 198 1,893 3,535 -49,354 -18,531 -2,643 2,436 N/A -81,538 3,636 255,689 -5,732 6,870 N/A N/A -5,707 93 N/A 689 637 -23,273 2,228 15,074 N/A 430 217,849 N/A N/A 6,834 27,357 120,308 61,081 254 2,922 -15 -892 9,692 9,692

$275,791 606,278 N/A -32,653 17,495 -1,167 N/A -3,418 N/A 626,021 -443,035 -18,147 N/A -151 N/A -1,561 -4,000 -11,387 -68,351 -32,746 -11,382 -1,755 N/A -107,691 2,317 -102,257 N/A -6,117a 40 -1,423 -11,169 125 N/A -897 -433 -84,149 3,754 17,851 N/A -3,506 105,561 N/A 35,721b N/A 2,754 5,430 58,818 226 -612 -453 3,677 6,987 6,987

2009 $271,121 79,056 N/A 47,317 12,074 9,921 N/A 8,572 -150 1,322 166,653 -4,746 N/A 8 N/A -263 2,419 5,475 6,164 11,935 -1,124 776 N/A -10,925 5,087 95,059 N/A N/A 6,689 859 1,120 760 N/A 80 27 -15,858 10,203 7,343 2,324 43,241 13,908 N/A -35,612 N/A 43,029 32,571 -27,836 1,363 -3 11 385 11,504 11,504

2010 $206,612 -23,621 N/A 58,316 23,797 416 171 18,382 -45 -124,658 218,363 -2,301 N/A 51 N/A 55 5,204 936 -110,856 13,835 -1,424 936 133,942 -29,921 261 152,608 N/A 225 4,807 1,278 -3,684 561 N/A 308 21 -30,938 7,371 4,063 2,608 68,417 -3,092 N/A -15,115 N/A -35,950 68,847 -19,604 1,281 -208 318 -2,661 14,962 14,962

2011 $104,907 171,273 N/A 49,995 37,032 -423 432 4,005 107 80,125 -122,470 -6,675 N/A 8 N/A -536 2,537 -1,709 -125,565 -5,018 -1,489 -1,136 85,666 -41,900 353 -31,962 -53 -9,532 4,380 -1,764 -2,858 351 N/A -1,040 -103 -11,803 5,843 9,067 -1,228 13,696 49,475 N/A 27,179 N/A 532 33,028 -15,605 1,784 769 536 1,252 6,629 6,629

2012 $910,369 503,929 N/A 56,099 50,697 813 -221 6,869 292 389,380 255,867 236 N/A 16 N/A 161 8,038 3,223 -30,528 -464 -330 37 117,666 -14,020 2,685 125,591 599 -1,017 7,048 3,931 -538 432 N/A -451 -140 -13,580 652 15,887 166 30,567 136,777 N/A 90,505 N/A 15,832 21,526 6,822 2,468 10 629 -1,015 13,796 13,796

2013 $896,139 476,926 N/A 34,713 64,965 5,394 -305 7,705 -13 364,467 299,064 -2,257 N/A 129 N/A 256 7,439 5,617 -99,007 7,608 -741 2,856 74,644 16,704 -726 203,107 -295 875 4,727 2,610 1,354 1,075 N/A 148 -54 30,744 8,708 5,780 969 26,794 100,080 N/A -3,842 N/A 2,724 102,980 -4,876 231 -89 1,480 1,472 20,069 20,069

2014 $1,333,658 433,302 4,511b 777 90,035 8,550 341 10,442 292 318,354 617,973 -1,380 N/A 36 -51 676 8,175 7,584 -26,976 3,374 -301 1,164 149,568 43,109 -1,812 310,061 506 -5,553 17,184 1,927 -3 1,288 N/A 896 52 47,685 15,488 20,819 -644 25,102 272,360 N/A 167,834 N/A 7,651 64,505 32,631 3,551 28 -4 -3,835 10,022 10,022

a Year-end

data are not available. Data are for January through September. are only for October through December. N/A = not available Note: Net sales is a calculation of total sales minus total redemptions plus net exchanges. Funds of funds are not included except for France, Italy, and Luxembourg. Data include home-domiciled funds, except for Hong Kong, the Republic of Korea, and New Zealand, which include home- and foreign-domiciled funds. Components may not add to the total because of rounding. Source: International Investment Funds Association b Data

WORLDWIDE MUTUAL FUND TOTALS

239

Data Section 7

World Americas Argentina Brazil Canada Chile Costa Rica Mexico Trinidad and Tobago United States Europe Austria Belgium Bulgaria Croatia Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Liechtenstein Luxembourg Malta Netherlands Norway Poland Portugal Romania Russia Slovakia Slovenia Spain Sweden Switzerland Turkey United Kingdom Asia and Pacific Australia China Hong Kong India Japan Korea, Rep. of New Zealand Pakistan Philippines Taiwan Africa South Africa

Appendix A

How U.S.-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation This appendix provides an overview of how investment company operations and features serve investors, examines the tax treatment of funds, and describes the core principles underlying investment company regulation. The Origins of Pooled Investing..................................................................................................................... 240 The Different Types of U.S. Investment Companies.................................................................................... 242 The Organization of a Mutual Fund............................................................................................................... 243 Tax Features of Mutual Funds......................................................................................................................... 249 Core Principles Underlying the Regulation of U.S. Investment Companies............................................. 255

The Origins of Pooled Investing The investment company concept dates to the late 1700s in Europe, according to K. Geert Rouwenhorst in The Origins of Mutual Funds, when “a Dutch merchant and broker…invited subscriptions from investors to form a trust...to provide an opportunity to diversify for small investors with limited means.” The emergence of “investment pooling” in England in the 1800s brought the concept closer to U.S. shores. In 1868, the Foreign and Colonial Government Trust formed in London. This trust resembled the U.S. fund model in basic structure, providing “the investor of moderate means the same advantages as the large capitalists...by spreading the investment over a number of different stocks.” Perhaps more importantly, the British fund model established a direct link with U.S. securities markets, helping to finance the development of the post– Civil War U.S. economy. The Scottish American Investment Trust, formed on February 1, 1873, by fund pioneer Robert Fleming, invested in the economic potential of the United States, chiefly through American railroad bonds. Many other trusts followed that not only targeted investment in America, but also led to the introduction of the fund investing concept on U.S. shores in the late 1800s and early 1900s.

240

APPENDIX A

The first mutual, or open-end, fund was introduced in Boston in March 1924. The Massachusetts Investors Trust introduced important innovations to the investment company concept by establishing a simplified capital structure, continuous offering of shares, the ability to redeem shares rather than hold them until dissolution of the fund, and a set of clear investment restrictions and policies. The stock market crash of 1929 and the Great Depression that followed hampered the growth of pooled investments until a succession of landmark securities laws, beginning with the Securities Act of 1933 and concluding with the Investment Company Act of 1940, reinvigorated investor confidence. Renewed investor confidence and many innovations led to relatively steady growth in industry assets and number of accounts. Four Principal Securities Laws Govern Investment Companies The Investment Company Act of 1940

Regulates the structure and operations of investment companies through a combination of registration and disclosure requirements and restrictions on day-to-day operations. The Investment Company Act requires the registration of all investment companies with more than 100 investors. Among other things, the Act addresses investment company capital structures, custody of assets, investment activities (particularly with respect to transactions with affiliates and other transactions involving potential conflicts of interest), and the duties of fund boards.

The Investment Advisers Act of 1940

Regulates investment advisers. Requires all advisers to registered investment companies and other large advisers to register with the SEC. The Advisers Act contains provisions requiring fund advisers to meet recordkeeping, custodial, reporting, and other regulatory responsibilities.

The Securities Exchange Act of 1934

Regulates the trading, purchase, and sale of securities, including investment company shares. The 1934 Act also regulates brokerdealers, including investment company principal underwriters and others that sell investment company shares, and requires them to register with the SEC. In 1938, the Securities Exchange Act of 1934 was revised to add Section 15A, which authorized the SEC to create self-regulatory organizations. Pursuant to this authority, in 1939 a self-regulatory organization for broker-dealers—which is now known as the Financial Industry Regulatory Authority (FINRA)—was created. Through its rules, inspections, and enforcement activities, FINRA, with oversight by the SEC, continues to regulate the conduct of broker-dealers, thereby adding another layer of protection for investors.

The Securities Act of 1933

Requires the registration of public offerings of securities, including investment company shares, and regulates such offerings. The 1933 Act also requires that all investors receive a current prospectus describing the fund.

HOW U.S.-REGISTERED INVESTMENT COMPANIES OPERATE AND THE CORE PRINCIPLES UNDERLYING THEIR REGULATION

241

The Different Types of U.S. Investment Companies Fund sponsors in the United States offer four types of registered investment companies: open-end investment companies (commonly called mutual funds), closed-end investment companies, exchange-traded funds (ETFs), and unit investment trusts (UITs). The vast majority of investment companies are mutual funds, both in terms of number of funds and assets under management. Mutual funds can have actively managed portfolios, in which a professional investment adviser creates a unique mix of investments to meet a particular investment objective, or passively managed portfolios, in which the adviser seeks to track the performance of a selected benchmark or index. One hallmark of mutual funds is that they issue redeemable securities, meaning that the fund stands ready to buy back its shares at their current net asset value (NAV). The NAV is calculated by dividing the total market value of the fund’s assets, minus its liabilities, by the number of mutual fund shares outstanding. Money market funds are one type of mutual fund; a defining feature of money market funds is that they seek to maintain a stable NAV. Money market funds offer investors a variety of features, including liquidity, a market-based rate of return, and the goal of returning principal, all at a reasonable cost. These funds, which are typically publicly offered to all types of investors, are registered investment companies that are regulated by the Securities and Exchange Commission (SEC) under U.S. federal securities laws, including Rule 2a-7 under the Investment Company Act. That rule contains numerous risk-limiting conditions concerning portfolio maturity, quality, diversification, and liquidity intended to help a fund achieve its objectives. In 2014, the SEC adopted amendments to Rule 2a-7 that will require institutional prime (funds that primarily invest in corporate debt securities) and institutional municipal money market funds to maintain a floating NAV for transactions based on the current market value of the securities in their portfolios; funds must comply with this requirement by October 2016. Government money market funds and retail money market funds (funds designed to limit all beneficial owners of the funds to natural persons) will be allowed to continue using the amortized cost or penny rounding method of pricing or both to seek to maintain a stable share price. The 2014 amendments also give money market fund boards of directors the ability to impose liquidity fees or to suspend redemptions temporarily if a fund’s level of weekly liquid assets falls below a certain threshold.

242

APPENDIX A

Unlike mutual funds, closed-end funds do not issue redeemable shares. Instead, they issue a fixed number of shares that trade intraday on stock exchanges at market-determined prices. Investors in a closed-end fund buy or sell shares through a broker, just as they would trade the shares of any publicly traded company. For more information on closed-end funds, see chapter 4 on page 78. ETFs are described as a hybrid of other types of investment companies. They are structured and legally classified as mutual funds or UITs (discussed below), but trade intraday on stock exchanges like closed-end funds. ETFs only buy and sell fund shares directly to authorized participants in large blocks, often 50,000 shares or more. For more information on ETFs, see chapter 3 on page 56. UITs are also a hybrid, with some characteristics of mutual funds and some of closed-end funds. Like closed-end funds, UITs typically issue only a specific, fixed number of shares, called units. Like mutual funds, the units are redeemable, but unlike mutual funds, generally the UIT sponsor will maintain a secondary market in the units so that redemptions do not deplete the UIT’s assets. A UIT does not actively trade its investment portfolio—instead it buys and holds a set of particular investments until a set termination date, at which time the trust is dissolved and proceeds are paid to shareholders. For more information on UITs, see page 20.

The Organization of a Mutual Fund A mutual fund typically is organized under state law either as a corporation or a business trust (sometimes called a statutory trust). The three most popular forms of organization are Massachusetts business trusts, Maryland corporations, and Delaware statutory trusts (Figure A.1).1 Historically, Massachusetts business trusts have been the most popular—in part because the very first mutual fund was formed as a Massachusetts business trust. This was a common form of organization at the time for pools that invested in real estate or public utilities and it provided a model for others to follow. Over the last few decades, the percentage of funds organized as Massachusetts business trusts has declined as more and more funds have formed as Maryland corporations, as well as Delaware statutory 1

More than 1,000 funds, or about 10 percent, have chosen other forms of organization, such as limited liability partnerships, or other domiciles, such as Ohio or Minnesota.


243

trusts, the most fashionable form of mutual fund organization. Developments in the late 1980s gave asset management companies other attractive choices. For example, in 1987, Maryland revised its law to align it with interpretations of the Investment Company Act of 1940 concerning when funds are required to hold annual meetings. As a result, Maryland corporations became more competitive with the Massachusetts business trust as a form of organization for mutual funds. In 1988, Delaware—already a popular domicile for U.S. corporations—adopted new statutory provisions devoted specifically to business trusts (since renamed statutory trusts). One such provision is the ability to file a 1031 exchange under IRC §1031, allowing for the deferment of capital gains. This and other benefits, such as management of the trust and limited liability afforded to the trust’s beneficial owners, have led to its current dominance over other forms of mutual fund organization. Mutual funds have officers and directors (if the fund is a corporation) or trustees (if the fund is a business trust). 2 The fund’s board plays an important role, described in more detail on page 259, in overseeing fund operations. FIGURE A.1

The Most Popular Forms of Mutual Fund Organization Percentage of funds, year-end 2014 10% Other

15% Maryland corporations

36% Massachusetts business trusts

39% Delaware statutory trusts Number of funds: 10,409 Note: Data include mutual funds that do not report statistical information to the Investment Company Institute and mutual funds that invest primarily in other mutual funds.

2

244

For ease of reference, this appendix refers to all directors and trustees as directors and all boards as boards of directors.

APPENDIX A

Unlike other companies, a mutual fund is typically externally managed; it is not an operating company and it has no employees in the traditional sense. Instead, a fund relies upon third parties or service providers—either affiliated organizations or independent contractors—to invest fund assets and carry out other business activities. Figure A.2 shows the primary types of service providers usually relied upon by a fund. Although it typically has no employees, a fund is required by law to have written compliance policies and procedures that govern the operations of the fund and the fund’s administrator, investment adviser, transfer agent, and principal underwriter and that are reasonably designed to ensure the fund’s compliance with the federal securities laws. All funds must also have a chief compliance officer (CCO), whose appointment must be approved by the fund’s board and who must annually produce a report for the board regarding the adequacy of the fund’s compliance policies and procedures, the effectiveness of their implementation, and any material compliance matters that have arisen. FIGURE A.2

Organization of a Mutual Fund Shareholders

Sponsor/ Investment adviser

Administrator

Board of directors

Independent public accountant

Principal underwriter

Fund

Custodian

Transfer agent


245

Shareholders Like shareholders of other companies, mutual fund shareholders have specific voting rights. These include the right to elect directors at meetings called for that purpose and the right to approve material changes in the terms of a fund’s contract with its investment adviser, the entity that manages the fund’s assets. For example, a fund’s management fee cannot be increased and a fund’s investment objectives or fundamental policies cannot be changed unless a majority of shareholders vote to approve the increase or change.

Sponsors Setting up a mutual fund is a complicated process performed by the fund’s sponsor, which is typically the fund’s investment adviser. The fund sponsor has a variety of responsibilities. For example, it must assemble the group of third parties needed to launch the fund, including the persons or entities charged with managing and operating the fund. The sponsor provides officers and affiliated directors to oversee the fund and recruits unaffiliated persons to serve as independent directors. Some of the major steps in the process of starting a mutual fund include organizing the fund under state law, registering the fund with the SEC as an investment company pursuant to the Investment Company Act of 1940, and registering the fund shares for sale to the public pursuant to the Securities Act of 1933. 3 Unless otherwise exempt from doing so, the fund also must make filings and pay fees to each state (except Florida) in which the fund’s shares will be offered to the public. The Investment Company Act also requires that each new fund have at least $100,000 of seed capital before distributing its shares to the public; this capital is usually contributed by the sponsor or adviser in the form of an initial investment.

3

246

For more information on the requirements for the initial registration of a mutual fund, see the SEC’s Investment Company Registration and Regulation Package, available at www.sec.gov/divisions/ investment/invcoreg121504.htm.

APPENDIX A

Advisers Investment advisers have overall responsibility for directing the fund’s investments and handling its business affairs. The investment advisers have their own employees, including investment professionals who work on behalf of the fund’s shareholders and determine which securities to buy and sell in the fund’s portfolio, consistent with the fund’s investment objectives and policies. In addition to managing the fund’s portfolio, the adviser often serves as administrator to the fund, providing various “back-office” services. As noted earlier, a fund’s investment adviser is often the fund’s initial sponsor and its initial shareholder through the seed money invested to create the fund. To protect investors, a fund’s investment adviser and the adviser’s employees are subject to numerous standards and legal restrictions, including restrictions on transactions that may pose conflicts of interest. Like the mutual fund, investment advisers are required to have their own written compliance programs that are overseen by CCOs and to establish detailed procedures and internal controls designed to ensure compliance with all relevant laws and regulations.

Administrators A fund’s administrator handles the many back-office functions for a fund. For example, administrators often provide office space, clerical and fund accounting services, data processing, and bookkeeping and internal auditing; they also may prepare and file SEC, tax, shareholder, and other reports. Fund administrators also help maintain compliance procedures and internal controls, subject to oversight by the fund’s board and CCO.


247

Principal Underwriters Investors buy and redeem fund shares either directly through a fund’s transfer agent or indirectly through a broker-dealer that is authorized to sell fund shares. In order to offer a particular fund’s shares, however, a broker-dealer must have a sales agreement with the fund. The role of a fund’s principal underwriter is to act as the agent for the fund in executing sales agreements that authorize broker-dealers to offer for sale and sell fund shares. While principal underwriters must register under the Securities Exchange Act of 1934 as broker-dealers, they (1) do not operate as full‑service broker-dealers, (2) typically are not involved in offering or selling fund shares to retail investors, and (3) do not establish or maintain accounts for retail investors.

Transfer Agents Mutual funds and their shareholders rely on the services of transfer agents to maintain records of shareholder accounts, calculate and distribute dividends and capital gains, and prepare and mail shareholder account statements, federal income tax information, and other shareholder notices. Some transfer agents also prepare and mail statements confirming shareholder transactions and account balances. Additionally, they may maintain customer service departments, including call centers, to respond to shareholder inquiries.

Auditors Auditors certify the fund’s financial statements. The auditors’ oversight role is described more fully on page 260.

248

APPENDIX A

Tax Features of Mutual Funds Mutual funds are subject to special tax rules set forth in subchapter M of the Internal Revenue Code. Unlike most corporations, mutual funds are not subject to taxation on their income or capital gains at the entity level, provided that they meet certain gross income, asset, and distribution requirements. To qualify as a regulated investment company (RIC) under subchapter M, at least 90 percent of a mutual fund’s gross income must be derived from certain sources, including dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of stock, securities, or foreign currencies. In addition, at the close of each quarter of the fund’s taxable year, at least 50 percent of the value of the fund’s total net assets must consist of cash, cash items, government securities, securities of other funds, and investments in other securities which, with respect to any one issuer, represent neither more than 5 percent of the assets of the fund nor more than 10 percent of the voting securities of the issuer. Further, no more than 25 percent of the fund’s assets may be invested in the securities of any one issuer (other than government securities or the securities of other funds), the securities (other than the securities of other funds) of two or more issuers that the fund controls and are engaged in similar trades or businesses, or the securities of one or more qualified publicly traded partnerships. If a mutual fund satisfies the gross income and asset tests and thus qualifies as a RIC, the fund is eligible for the tax treatment provided by subchapter M, including the ability to deduct from its taxable income the dividends it pays to shareholders, provided that the RIC distributes at least 90 percent of its income (other than net capital gains) each year. A RIC may retain up to 10 percent of its income and all capital gains, but the retained income is taxed at regular corporate tax rates. Therefore, mutual funds generally distribute all, or nearly all, of their income and capital gains each year. The Internal Revenue Code also imposes an excise tax on RICs, unless a RIC distributes by December 31 at least 98 percent of its ordinary income earned during the calendar year, 98.2 percent of its net capital gains earned during the 12-month period ending on October 31 of the calendar year, and 100 percent of any previously undistributed amounts. Mutual funds typically seek to avoid this charge—imposed at a 4 percent rate on the “underdistributed” amount—by making the required “minimum distribution” each year.


249

Mutual Fund Assets by Tax Status Fund investors are responsible for paying tax on the amount of a fund’s earnings and gains distributed to them, whether they receive the distributions in cash or reinvest them in additional fund shares. Investors often attempt to lessen the impact of taxes on their investments by investing in tax-exempt funds and tax-deferred retirement accounts and variable annuities. As of year-end 2014, 5 percent of all mutual fund assets were held in taxexempt funds, and 53 percent were invested in tax-deferred accounts held by households. FIGURE A.3

58 Percent of Mutual Fund Assets Were Held in Tax-Deferred Accounts and TaxExempt Funds Percentage of assets, year-end 2014

31% Taxable household 53% Tax-deferred household 10% Taxable nonhousehold 5% Tax-exempt funds Total mutual fund assets: $15.9 trillion Note: Components do not add to 100 percent because of rounding.

250

APPENDIX A

Types of Distributions Mutual funds make two types of taxable distributions to shareholders: ordinary dividends and capital gains. Ordinary dividend distributions come primarily from the interest and dividends earned by the securities in a fund’s portfolio and net short-term gains, if any, after expenses are paid by the fund. These distributions must be reported as dividends on an investor’s tax return and are taxed at the investor’s ordinary income tax rate. A top tax rate of 15 percent is provided for “qualified dividend” income received by most taxpayers; the top rate for this income is 20 percent for certain “high-income individuals.” Some dividends paid by mutual funds may qualify for these lower top tax rates. Long-term capital gains distributions represent a fund’s net gains, if any, from the sale of securities held in its portfolio for more than one year. A top tax rate of 15 percent is provided for most investors’ long-term capital gains (however, a 20 percent top tax rate applies to certain high-income individuals and a lower rate applies to some taxpayers). Certain high-income individuals also are subject to a 3.8 percent tax on “net investment income” (NII). The tax on NII applies to interest, dividends, and net capital gains, including those received from a mutual fund. To help mutual fund shareholders understand the impact of taxes on the returns generated by their investments, the SEC requires mutual funds to disclose standardized after-tax returns for one-, five-, and 10-year periods. After-tax returns, which accompany before-tax returns in fund prospectuses, are presented in two ways:

»» After taxes on fund distributions only (preliquidation) »» After taxes on fund distributions and an assumed redemption of fund shares (postliquidation)


251

Types of Taxable Shareholder Transactions An investor who sells mutual fund shares usually incurs a capital gain or loss in the year the shares are sold; an exchange of shares between funds in the same fund family also results in either a capital gain or loss. Investors are liable for tax on any capital gain arising from the sale of fund shares, just as they would be if they sold a stock, bond, or other security. Capital losses from mutual fund share sales and exchanges, like capital losses from other investments, may be used to offset other capital gains in the current year and thereafter. In addition, up to $3,000 of capital losses in excess of capital gains ($1,500 for a married individual filing a separate return) may be used to offset ordinary income. The amount of a shareholder’s gain or loss on fund shares is determined by the difference between the cost basis of the shares (generally, the purchase price—including sales loads—of the shares, whether acquired with cash or reinvested dividends) and the sale price. Many funds voluntarily have been providing cost basis information to shareholders or computing gains and losses for shares sold. New tax rules enacted in 2012 require all brokers and funds to provide cost basis information to shareholders, as well as to indicate whether any gains or losses are long-term or short-term, for fund shares acquired on or after January 2, 2012.

Tax-Exempt Funds Tax-exempt bond funds distribute amounts attributable to municipal bond interest. These “exempt-interest dividends” are exempt from federal income tax and, in some cases, state and local taxes. Tax-exempt money market funds invest in short-term municipal securities or equivalent instruments and also pay exempt-interest dividends. Even though income from these funds generally is tax-exempt, investors must report it on their income tax returns. Tax-exempt funds provide investors with this information and typically explain how to handle exempt-interest dividends on a state-by-state basis. For some taxpayers, portions of income earned by tax-exempt funds also may be subject to the federal alternative minimum tax.

252

APPENDIX A

Mutual Fund Ordinary Dividend Distributions Ordinary dividend distributions represent income—primarily from interest and dividends earned by securities in a fund’s portfolio—after expenses are paid by the fund. Mutual funds distributed $243 billion in dividends to fund shareholders in 2014. Bond and money market funds accounted for 47 percent of all dividend distributions in 2014. Fifty-six percent of all dividend distributions were paid to tax-exempt fund shareholders and tax-deferred household accounts. Another 38 percent were paid to taxable household accounts. FIGURE A.4

Dividend Distributions Billions of dollars, 2000–2014

Year

Tax-deferred household and taxexempt funds

Taxable household

Taxable nonhousehold

Total

2000

$75

$87

$24

$186

2001

69

71

22

162

2002

59

43

12

114

2003

58

37

8

103

2004

66

41

10

117

2005

85

60

20

166

2006

116

89

36

240

2007

145

117

47

309

2008

139

98

38

275

2009

110

62

15

187

2010

112

64

12

188

2011

122

73

12

208

2012

129

80

13

222

2013

124

80

14

217

2014

136

92

16

243

Note: Components may not add to the total because of rounding.


253

Mutual Fund Capital Gains Distributions Capital gains distributions represent a fund’s net gains, if any, from the sale of securities held in its portfolio. When gains from these sales exceed losses, they are distributed to fund shareholders. Mutual funds distributed $398 billion in capital gains to shareholders in 2014. Sixty-three percent of these distributions were paid to tax-deferred household accounts, and another 33 percent were paid to taxable household accounts. Equity, bond, and hybrid funds can distribute capital gains, but equity funds typically account for the bulk of these distributions. In 2014, 63 percent of stock fund share classes made a capital gains distribution, and 83 percent of these share classes distributed more than 2.0 percent of their assets as capital gains. FIGURE A.5

Capital Gains Distributions* Billions of dollars, 2000–2014

Year

Tax-deferred household

Taxable household

Taxable nonhousehold

Total

2000

$195

$117

$13

$326

2001

51

16

2

69

2002

10

6

1

16

2003

8

6

1

14

2004

31

21

3

55

2005

79

43

8

129

2006

165

78

14

257

2007

262

130

22

414

2008

98

28

7

132

2009

11

4

1

15

2010

23

17

3

43

2011

39

30

4

73

2012

59

37

5

100

2013

145

83

11

239

2014

249

132

17

398

* Capital gains distributions include long-term and short-term capital gains. Note: Components may not add to the total because of rounding.

254

APPENDIX A

Core Principles Underlying the Regulation of U.S. Investment Companies Embedded in the structure and regulation of mutual funds and other registered investment companies are several core principles that provide important protections for shareholders.

Transparency Funds are subject to more extensive disclosure requirements than any other comparable financial product, such as separately managed accounts, collective investment trusts, and private pools. The cornerstone of the disclosure regime for mutual funds and ETFs is the prospectus.4 Mutual funds and ETFs are required to maintain a current prospectus, which provides investors with information about the fund, including its investment objectives, investment strategies, risks, fees and expenses, and performance, as well as how to purchase, redeem, and exchange fund shares. Importantly, the key parts of this disclosure with respect to performance information and fees and expenses are standardized to facilitate comparisons by investors. Mutual funds and ETFs may provide investors with a summary prospectus containing key information about the fund, while making more information available on the Internet and on paper upon request. Mutual funds and ETFs also are required to make statements of additional information (SAIs) available to investors upon request and without charge. The SAI conveys information about the fund that, while useful to some investors, is not necessarily needed to make an informed investment decision. For example, the SAI generally includes information about the history of the fund, offers detailed disclosure on certain investment policies (such as borrowing and concentration policies), and lists officers, directors, and other persons who control the fund.

4

Closed-end funds and UITs also provide investors with extensive disclosure, but under a slightly different regime that reflects the way shares of these funds trade. Both closed-end funds and UITs file an initial registration statement with the SEC containing a prospectus and other information related to the initial offering of their shares to the public.


255

The prospectus, SAI, and certain other required information are contained in the fund’s registration statement, which is filed electronically with the SEC and is publicly available via the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Mutual fund and ETF registration statements are amended at least once each year to ensure that financial statements and other information do not become stale. 5 These funds also amend registration statements throughout the year as necessary to reflect material changes to their disclosure. In addition to registration statement disclosure, funds provide shareholders with several other disclosure documents. Shareholders receive audited annual and unaudited semiannual reports within 60 days after the end and the midpoint of the fund’s fiscal year. These reports contain updated financial statements, a list of the fund’s portfolio securities,6 management’s discussion of financial performance, and other information current as of the date of the report. Following their first and third quarter, funds file an additional form with the SEC, Form N-Q, disclosing the complete schedule of their portfolio holdings. Finally, funds annually disclose how they voted on specific proxy issues at portfolio companies on Form N-PX. Funds are the only shareholders required to publicly disclose each and every proxy vote they cast. Funds are not required to mail Form N-Q and Form N-PX to shareholders, but the forms are publicly available via the SEC’s EDGAR database. The combination of prospectuses, SAIs, annual and semiannual shareholder reports, Form N-Qs, and Form N-PXs provide the investing public, regulators, media, and other interested parties with far more information on funds than is available for other types of investments. This information is easily and readily available from most funds and the SEC. It is also available from private-sector vendors, such as Morningstar, that are in the business of compiling publicly available information on funds in ways that might benefit investors.

Section 10(a)(3) of the Securities Act of 1933 prohibits investment companies that make a continuous offering of shares from using a registration statement with financial information that is more than 16 months old. This gives mutual funds and ETFs four months after the end of their fiscal year to amend their registration statements. 6 A fund is permitted to include a summary portfolio schedule in its shareholder reports in lieu of the complete schedule, provided that the complete portfolio schedule is filed with the SEC and is provided to shareholders upon request, free of charge. The summary portfolio schedule includes each of the fund’s 50 largest holdings in unaffiliated issuers and each investment that exceeds 1 percent of the fund’s NAV. 5

256

APPENDIX A

Daily Valuation and Liquidity Nearly all funds offer shareholders liquidity and objective, market-based valuation of their investments at least daily. ETF and closed-end fund shares are traded intraday on stock exchanges at market-determined prices, giving shareholders real-time liquidity and pricing. Mutual fund shares are redeemable on a daily basis at a price that reflects the current market value of the fund’s portfolio securities, calculated according to pricing methodologies established by each fund’s board of directors. The value of each security in the fund’s portfolio is determined either by a market quotation, if a market quotation is readily available, or at fair value as determined in good faith. The daily pricing process is a critically important core compliance function that involves numerous staff, the fund board, and pricing vendors. The fair valuation process, a part of the overall pricing process, receives particular scrutiny from funds, their boards of directors, regulators, and independent auditors. Under SEC rules, all funds must adopt written policies and procedures that address the circumstances under which securities may be fair valued, and must establish criteria for determining how to assign fair values in particular instances.7 This daily valuation process results in a NAV for the fund. The NAV is the price used for all mutual fund share transactions occuring that day—new purchases, sales (redemptions), and exchanges from one fund to another within the same fund family. 8 It represents the current mark-to-market value of all the fund’s assets, minus liabilities (e.g., fund expenses), divided by the total number of outstanding shares. Mutual funds release their daily NAVs to investors and others after they complete the pricing process, generally around 6:00 p.m. eastern time. Daily fund prices are available through fund toll-free telephone services, websites, and other means.

ICI has published several papers on the mutual fund valuation process. For more information, see ICI’s two white papers titled Valuation and Liquidity Issues for Mutual Funds (February 1997 and March 2002) and two installments of ICI’s Fair Value Series, “An Introduction to Fair Valuation” (2005) and “The Role of the Board” (2007). ICI also has a two-volume compendium of SEC releases, staff letters, and enforcement actions related to the mutual fund valuation process, which is available at www.ici.org/pdf/ pub_11_valuation_volume1.pdf and www.ici.org/pdf/pub_11_valuation_volume2.pdf. 8 The pricing process is also critical for ETFs, although for slightly different reasons. ETFs operate like mutual funds with respect to transactions with authorized participants that trade with the ETF in large blocks, often of 50,000 shares or more. The NAV is the price used for these large transactions. Closedend funds are not required to strike a daily NAV, but most do so in order to provide the market with the ability to calculate the difference between the fund’s market price and its NAV. That difference is called the fund’s premium or discount. 7


257

The Investment Company Act of 1940 requires mutual funds to process transactions based upon “forward pricing,” meaning that shareholders receive the next computed NAV following the fund’s receipt of their transaction order. For example, for a fund that prices its shares at 4:00 p.m.,9 orders received prior to 4:00 p.m. receive the NAV determined that same day at 4:00 p.m. Orders received after 4:00 p.m. receive the NAV determined at 4:00 p.m. on the next business day. Forward pricing is an important protection for mutual fund shareholders. It is designed to minimize the ability of shareholders to take advantage of fluctuations in the price of the securities in the fund’s portfolio that occur after the fund calculates its NAV. When a shareholder redeems shares in a mutual fund, he or she can expect to be paid promptly. Mutual funds may not suspend redemptions of their shares (subject to certain extremely limited exceptions)10 or delay payments of redemption proceeds for more than seven days. At least 85 percent of a mutual fund’s portfolio must be invested in liquid securities.11 In part to ensure that redemptions can be made, a security is generally deemed to be liquid if it can be sold or disposed of in the ordinary course of business within seven days at approximately the price at which the mutual fund has valued it. Many funds adopt a specific policy with respect to investments in illiquid securities; these policies are sometimes more restrictive than the SEC requirements.

Oversight and Accountability All funds are subject to a strong system of oversight from both internal and external sources. Internal oversight mechanisms include boards of directors, which include independent directors, and written compliance programs overseen by CCOs, both at the fund and adviser levels. External oversight is provided by the SEC, the Financial Industry Regulatory Association (FINRA), and external service providers, such as certified public accounting firms.

Funds must price their shares at least once every business day at a time determined by the fund’s board. Many funds price at 4:00 p.m. eastern time or when the New York Stock Exchange closes. 10 From time to time, natural disasters and other emergencies occur that disrupt fund pricing, but Section 22(e) of the Investment Company Act prohibits funds from suspending redemptions unless the SEC declares an emergency or the New York Stock Exchange closes or restricts trading. The SEC has not declared an emergency in more than 20 years. During that period, the NYSE has closed and funds have suspended redemptions on several occasions, such as during Hurricane Sandy in 2012. 11 Money market funds are held to a stricter standard, and must limit illiquid investments to 5 percent of the portfolio. 9

258

APPENDIX A

Fund Boards Mutual funds, closed-end funds, and most ETFs have boards. The role of a fund’s board of directors is primarily one of oversight. The board of directors typically is not involved in the day-to-day management of the fund company. Instead, day-to-day management is handled by the fund’s investment adviser or administrator pursuant to a contract with the fund. Investment company directors review and approve major contracts with service providers (including, notably, the fund’s investment adviser), approve policies and procedures to ensure the fund’s compliance with federal securities laws, and undertake oversight and review of the performance of the fund’s operations. Directors devote substantial time and consider large amounts of information in fulfilling these duties, in part because they must perform all their duties in “an informed and deliberate manner.” Fund boards must maintain a particular level of independence. The Investment Company Act of 1940 requires at least 40 percent of the members of a fund board to be independent from fund management. An independent director is a fund director who does not have any significant business relationship with a mutual fund’s adviser or underwriter. In practice, most fund boards have far higher percentages of independent directors. As of year-end 2012, independent directors made up three-quarters of boards in approximately 85 percent of fund complexes.12 Independent fund directors play a critical role in overseeing fund operations and are entrusted with the primary responsibility for looking after the interests of the fund’s shareholders. They serve as watchdogs, furnishing an independent check on the management of funds. Like directors of operating companies, they owe shareholders the duties of loyalty and care under state law. But independent fund directors also have specific statutory and regulatory responsibilities under the Investment Company Act beyond the duties required of other types of directors. Among other things, they oversee the performance of the fund, approve the fees paid to the investment adviser for its services, and oversee the fund’s compliance program.

12

See Overview of Fund Governance Practices, 1994–2012 for a description of the study that collects data on this and other governance practices. Available at www.idc.org/pdf/pub_13_fund_governance.pdf.


259

Compliance Programs The internal oversight function played by the board has been greatly enhanced in recent years by the development of written compliance programs and a formal requirement that all funds have CCOs. Rules adopted in 2003 require every fund and adviser to have a CCO who administers a written compliance program reasonably designed to prevent, detect, and correct violations of the federal securities laws. Compliance programs must be reviewed at least annually for their adequacy and effectiveness, and fund CCOs are required to report directly to the independent directors. Regulatory Oversight Internal oversight is accompanied by a number of forms of external oversight and accountability. Funds are subject to inspections, examinations, and enforcement by their primary regulator, the SEC. Fund underwriters and distributors also are overseen by FINRA, a self-regulatory organization. Funds affiliated with a bank may additionally be overseen by banking regulators. All funds are subject to the antifraud jurisdiction of each state in which the fund’s shares are offered for sale or sold. Auditors A fund’s financial statement disclosure is also subject to several internal and external checks. For example, annual reports include audited financial statements certified by a certified public accounting firm subject to oversight by the Public Company Accounting Oversight Board (PCAOB). This ensures that the financial statements are prepared in conformity with generally accepted accounting principles (GAAP) and fairly present the fund’s financial position and results of operations. Sarbanes-Oxley Act Like officers of public companies, fund officers are required to make certifications and disclosures required by the Sarbanes-Oxley Act. For example, they must certify the accuracy of the financial statements.

260

APPENDIX A

Additional Regulation of Advisers In addition to the system of oversight applicable directly to funds, investors enjoy protections through SEC regulation of the investment advisers that manage fund portfolios. All advisers to registered funds are required to register with the SEC, and are subject to SEC oversight and disclosure requirements. Advisers also owe a fiduciary duty to each fund they advise, meaning that they have a fundamental legal obligation to act in the best interests of the fund pursuant to a duty of undivided loyalty and utmost good faith.

Limits on Leverage The inherent nature of a fund—a professionally managed pool of securities owned pro rata by its investors—is straightforward and easily understood by investors. The Investment Company Act of 1940 fosters simplicity by prohibiting complex capital structures and limiting funds’ use of leverage. The Investment Company Act imposes various requirements on the capital structure of mutual funds, closed-end funds, and ETFs, including limitations on the issuance of “senior securities” and borrowing. These limitations greatly minimize the possibility that a fund’s liabilities will exceed the value of its assets. Generally speaking, a senior security is any debt that takes priority over the fund’s shares, such as a loan or preferred stock. The SEC historically has interpreted the definition of senior security broadly, taking the view that selling securities short, purchasing securities on margin, and investing in many types of derivative instruments, among other practices, may create senior securities.


261

The SEC also takes the view that the Investment Company Act prohibits a fund from creating a future obligation to pay unless it “covers” the obligation. A fund generally can cover an obligation by owning the instrument underlying that obligation. For example, a fund that wants to take a short position in a certain stock can comply with the Investment Company Act by owning an equivalent long position in that stock. The fund also can cover by earmarking or segregating liquid securities equal in value to the fund’s potential exposure from the leveraged transaction. The assets set aside to cover the potential future obligation must be liquid, unencumbered, and marked-to-market daily. They may not be used to cover other obligations and, if disposed of, must be replaced. The Investment Company Act also limits borrowing. With the exception of certain privately arranged loans and temporary loans, any promissory note or other indebtedness would generally be considered a prohibited senior security.13 Mutual funds and ETFs are permitted to borrow from a bank if, immediately after the bank borrowing, the fund’s total net assets are at least three times total aggregate borrowings. In other words, the fund must have at least 300 percent asset coverage. Closed-end funds have a slightly different set of limitations. They are permitted to issue debt and preferred stock, subject to certain conditions, including asset coverage requirements of 300 percent for debt and 200 percent for preferred stock. Many funds voluntarily go beyond the prohibitions in the Investment Company Act, adopting policies that further restrict their ability to issue senior securities or borrow. Funds often, for example, adopt a policy stating that they will borrow only as a temporary measure for extraordinary or emergency purposes and not to finance investment in securities. In addition, they may disclose that, in any event, borrowings will be limited to a small percentage of fund assets (such as 5 percent). These are meaningful voluntary measures, because under the Investment Company Act, a fund’s policies on borrowing money and issuing senior securities cannot be changed without the approval of fund shareholders.

13

262

Temporary loans cannot exceed 5 percent of the fund’s total net assets and must be repaid within 60 days.

APPENDIX A

Custody To protect fund assets, the Investment Company Act requires all funds to maintain strict custody of fund assets, separate from the assets of the adviser. Although the Act permits other arrangements,14 nearly all funds use a bank custodian for domestic securities. International securities are required to be held in the custody of an international bank or securities depository. A fund’s custody agreement with a bank is typically far more elaborate than the arrangements used for other bank clients. The custodian’s services generally include safekeeping and accounting for the fund’s assets, settling securities transactions, receiving dividends and interest, providing foreign exchange services, paying fund expenses, reporting failed trades, reporting cash transactions, monitoring corporate actions at portfolio companies, and tracing loaned securities. The strict rules on the custody and reconciliation of fund assets are designed to prevent theft and other fraud-based losses. Shareholders are further insulated from these types of losses by a provision in the Investment Company Act that requires all mutual funds to have fidelity bonds designed to protect them against possible instances of employee larceny or embezzlement.

14

The Investment Company Act contains six separate custody rules for the possible types of custody arrangements for mutual funds, closed-end funds, and ETFs. UITs are subject to a separate rule that requires the use of a bank to maintain custody. See section 17(f) of the Investment Company Act of 1940 and SEC Rules 17f-1 through 17f-7 thereunder.


263

Prohibitions on Transactions with Affiliates The Investment Company Act of 1940 contains a number of strong and detailed prohibitions on transactions between the fund and fund insiders or affiliated organizations (such as the corporate parent of the fund’s adviser). Many of these prohibitions were part of the original statutory text of the Act, enacted in response to instances of overreaching and self-dealing by fund insiders during the 1920s in the purchase and sale of portfolio securities, loans by funds, and investments in related funds. The SEC’s Division of Investment Management has said that “for more than 50 years, [the affiliated transaction prohibitions] have played a vital role in protecting the interests of shareholders and in preserving the industry’s reputation for integrity; they continue to be among the most important of the Act’s many protections.” 15 Although there are a number of prohibitions in the Investment Company Act relating to affiliated transactions relating to affiliated transactions, three are particularly noteworthy:

»» Generally prohibiting direct transactions between a fund and an affiliate »» Generally prohibiting joint transactions, where the fund and affiliate are acting together vis-à-vis a third party

»» Preventing investment banks from placing or “dumping” unmarketable securities with an affiliated fund by generally prohibiting the fund from buying securities in an offering syndicated by an affiliated investment bank

Diversification Both tax and securities law provide diversification standards for funds registered under the Investment Company Act. As discussed in detail above, under the tax laws, all mutual funds, closed-end funds, and ETFs, as well as most UITs, qualify as RICs and, as such, must meet a tax diversification test every quarter. The effect of this test is that a fund with a modest cash position and no government securities would hold securities from at least 12 different issuers. Another tax diversification restriction limits the amount of an issuer’s outstanding voting securities that a fund may own.

15

264

See Protecting Investors: A Half Century of Investment Company Regulation, Report of the Division of Investment Management, Securities and Exchange Commission (May 1992), available at www.sec.gov/ divisions/investment/guidance/icreg50-92.pdf. The Division of Investment Management is the division within the SEC responsible for the regulation of funds. APPENDIX A

The securities laws set higher standards for funds that elect to be diversified. If a fund elects to be diversified, the Investment Company Act requires that, with respect to at least 75 percent of the portfolio, no more than 5 percent may be invested in the securities of any one issuer and no investment may represent more than 10 percent of the outstanding voting securities of any issuer. Diversification is not mandatory, but all mutual funds, closed-end funds, and ETFs must disclose whether or not they are diversified under the Act’s standards. In practice, most funds that elect to be diversified are much more highly diversified than they need to be to meet these two tests. As of December 2014, for example, the median number of stocks held by U.S. equity funds was 98.16

16

This number is the median among U.S. actively managed and index equity funds, excluding sector funds.


265

Appendix B

Significant Events in Fund History 1774

Dutch merchant and broker Adriaan van Ketwich invites subscriptions from investors to form a trust, the Eendragt Maakt Magt, with the aim of providing investment diversification opportunities to investors of limited means.

1868

The Foreign and Colonial Government Trust, the precursor to the U.S. investment fund model, is formed in London. This trust provides “the investor of moderate means the same advantages as large capitalists.”

1924

The first mutual funds are established in Boston.

1933

The Securities Act of 1933 regulates the registration and offering of new securities, including mutual fund and closed-end fund shares, to the public.

1934

The Securities Exchange Act of 1934 authorizes the Securities and Exchange Commission (SEC) to provide for fair and equitable securities markets.

1936

The Revenue Act of 1936 establishes the tax treatment of mutual funds and their shareholders. Closed-end funds were covered by the Act in 1942.

1940

The Investment Company Act of 1940 is signed into law, setting the structure and regulatory framework for registered investment companies. The forerunner to the National Association of Investment Companies (NAIC) is formed. The NAIC will become the Investment Company Institute.

1944

The NAIC begins collecting investment company industry statistics.

1951

The total number of mutual funds surpasses 100, and the number of shareholder accounts exceeds one million for the first time.

1954

Households’ net purchases of fund shares exceed those of corporate stock. NAIC initiates a nationwide public information program emphasizing the role of investors in the U.S. economy and explaining the concept of investment companies.

1955

The first U.S.-based international mutual fund is introduced.

1961

The first tax-free unit investment trust is offered. The NAIC changes its name to the Investment Company Institute (ICI) and welcomes fund advisers and underwriters as members.

266

APPENDIX B

1962

The Self-Employed Individuals Tax Retirement Act creates savings opportunities (Keogh plans) for self-employed individuals.

1971

Money market funds are introduced.

1974

The Employee Retirement Income Security Act (ERISA) creates the individual retirement account (IRA) for workers not covered by employer-sponsored retirement plans.

1976

The Tax Reform Act of 1976 permits the creation of municipal bond funds. The first retail index fund is offered.

1978

The Revenue Act of 1978 creates new Section 401(k) retirement plans and simplified employee pensions (SEPs).

1981

The Economic Recovery Tax Act establishes “universal” IRAs for all workers. IRS proposes regulations for Section 401(k).

1986

The Tax Reform Act of 1986 reduces IRA deductibility.

1987

ICI welcomes closed-end funds as members.

1990

Mutual fund assets top $1 trillion.

1993

The first exchange-traded fund (ETF) shares are issued.

1996

Enactment of the National Securities Markets Improvement Act of 1996 (NSMIA) provides a more rational system of state and federal regulation, giving the SEC exclusive jurisdiction for registering and regulating mutual funds, exchangelisted securities, and larger advisers. States retain their antifraud authority and responsibility for regulating non-exchange-listed offerings and smaller advisers. The Small Business Job Protection Act creates SIMPLE plans for employees of small businesses.

1997

The Taxpayer Relief Act of 1997 creates the Roth IRA and eliminates restrictions on portfolio management that disadvantage fund shareholders.

1998

The SEC approves the most significant disclosure reforms in the history of U.S. mutual funds, encompassing “plain English,” fund profiles, and improved risk disclosure.

1999

The Gramm-Leach-Bliley Act modernizes financial services regulation and enhances financial privacy.

SIGNIFICANT EVENTS IN FUND HISTORY

267

2001

Enactment of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 significantly expands retirement savings opportunities for millions of working Americans.

2003

The Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) provides mutual fund shareholders with the full benefits of lower tax rates on dividends and capital gains.

2006

Enactment of the Pension Protection Act (PPA) and the Tax Increase Prevention and Reconciliation Act provides incentives for investors of all ages to save more in taxdeferred and taxable investment accounts.

2008

The SEC votes to adopt the Summary Prospectus rule. Reserve Primary Fund fails to maintain $1.00 NAV, becoming the second money market fund in 25 years to “break a dollar.”

2009

Money market fund assets hit $3.9 trillion, their highest level to date. The Money Market Working Group, a task force of senior industry executives, submits its report to the ICI Board. The Board endorses the Working Group’s call for immediate implementation of new regulatory and oversight standards for money market funds.

2010

The SEC adopts new rules and amendments to regulations governing money market funds. In Jones v. Harris, the U.S. Supreme Court unanimously upholds the Gartenberg standard under which courts have long considered claims of excessive fund advisory fees. Enactment of the RIC Modernization Act streamlines and updates technical tax rules, benefiting shareholders by making funds more efficient.

2011

In Business Roundtable et al. v. SEC, the United States Court of Appeals for the District of Columbia Circuit vacated the SEC’s proxy access rule for failing to adequately evaluate the rule’s costs and benefits. ICI Global—the first industry body exclusively advancing the perspective of global investment funds—is formed.

2014

268

The SEC adopted sweeping changes to the rules that govern money market funds, building upon the changes to money market fund regulation adopted by the SEC in 2010.

APPENDIX B

Glossary adviser. An organization employed by a mutual fund to give professional advice on the fund’s investments and asset management practices. Also known as investment adviser. after-tax return. The total return of a fund after the effects of taxes on distributions and/ or redemptions have been assessed. Funds are required by federal securities law to calculate after-tax returns using standardized formulas based upon the highest tax rates. (Consequently, they are not representative of the after-tax returns of most mutual fund shareholders.) These standardized after-tax returns are not relevant for shareholders in tax-deferred retirement accounts. aggressive. An investment approach that accepts above-average risk of loss in return for potentially above-average investment returns. Contrast conservative. annual report. A report that a fund sends to its shareholders that discusses the fund’s performance over the past fiscal year and identifies the securities in the fund’s portfolio on the last business day of the fund’s fiscal year. The annual report includes audited financial statements. See also semiannual report. appreciation. An increase in an investment’s value. Contrast depreciation. asset allocation. The proportion of different investment classes—such as stocks, bonds, and cash equivalents—that investors hold in their portfolios. asset class. A group of securities or investments that have similar characteristics and behave similarly in the marketplace. Three common asset classes are equities (e.g., stocks), fixed income (e.g., bonds), and cash equivalents (e.g., money market funds). assets. Securities, cash, and receivables owned by a fund. authorized participant. An entity, usually an institutional investor, that submits orders to the exchange-traded fund (ETF) for the creation and redemption of ETF “creation units.” automatic reinvestment. A fund service giving shareholders the option to purchase additional shares using dividend and capital gains distributions. average portfolio maturity. The average maturity of all the securities in a bond or money market fund’s portfolio. back-end load. See contingent deferred sales load (CDSL). balanced fund. A fund with an investment objective of both long-term growth and income, to be achieved through investment in stocks and bonds. basis point. One one-hundredth of 1 percent (0.01 percent); thus, 100 basis points equals 1 percentage point. When applied to $1.00, 1 basis point is $0.0001; 100 basis points equals one cent ($0.01). Basis points are often used to simplify percentages written in decimal form. GLOSSARY

269

bear market. A period during which the majority of securities prices in a particular market (such as the stock market) drop substantially. One generally accepted measure is a price decline of 20 percent or more over at least a two-month period. Contrast bull market. benchmark. A standard against which the performance of a security or a mutual fund can be measured. For example, Barclays Capital Aggregate Bond Index is a benchmark index for many bond mutual funds. Many equity mutual funds are benchmarked to the S&P 500 index. See also index. bond. A debt security issued by a company, municipality, or government agency. A bond investor lends money to the issuer and, in exchange, the issuer promises to repay the loan amount on a specified maturity date; the issuer usually pays the bondholder periodic interest payments over the life of the loan. bond fund. A fund that invests primarily in bonds and other debt instruments. breakpoints. The dollar amounts at which many mutual funds offer reduced fees to investors. There are two kinds of breakpoints. One kind is a reduction in sales charges (load fees) to investors when they initially purchase fund shares. The amount of the discount varies, depending upon the amount of the investment: the more invested, the greater the likelihood of surpassing a breakpoint and thus receiving a discount. The other kind of breakpoint is a reduction in management fees that fund advisers may charge their associated funds as fund assets surpass a given level. break the dollar. A phrase used to describe when the net asset value (NAV) of a money market fund is repriced from its stable $1.00 NAV, an event that could be triggered by a deviation greater than one-half of 1 percent (one-half cent, or $0.0050) between the fund’s mark-to-market value (shadow price) and its stable $1.00 NAV. Also known as break the buck. broker. See broker-dealer. broker-dealer. A broker is a person or company engaged in the business of effecting transactions in securities for the account of others, and is often paid by commission. A dealer is any person or company engaged in the business of buying and selling securities for their own account. A broker-dealer is a firm that acts as both a broker and a dealer. bull market. A period during which a majority of securities prices in a particular market (such as the stock market) rise substantially. Contrast bear market. capital gain. An increase in the value of an investment, calculated by the difference between the net purchase price and the net sale price. Contrast capital loss. capital gains distributions. Profits distributed to shareholders resulting from the sale of securities held in the fund’s portfolio. capital loss. A decline in the value of an investment, calculated by the difference between the net purchase price and the net sale price. Contrast capital gain.

270

GLOSSARY

catch-up contribution. Individuals aged 50 or older are permitted to make contributions to an individual retirement account (IRA) or employer-sponsored retirement savings plan in excess of the annual contribution limit. In 2014, the catch-up limit was $1,000 for IRAs, $2,500 for SIMPLE plans, and $5,500 for 401(k) plans. certificate of deposit (CD). A savings certificate entitling the bearer to receive interest. A CD bears a fixed maturity date, has a specified fixed interest rate, and can be issued in any denomination. CDs generally are issued by commercial banks and currently are insured by the Federal Deposit Insurance Corporation (FDIC) up to a maximum of $250,000. CDs generally are offered at terms ranging from one month to five years. closed-end fund. A type of investment company that issues a fixed number of shares that trade intraday on stock exchanges at market-determined prices. Investors in a closed-end fund buy or sell shares through a broker, just as they would trade the shares of any publicly traded company. commercial paper. Short-term, unsecured notes issued by a corporation to meet immediate short-term needs for cash, such as the financing of accounts payable, inventories, and shortterm liabilities. Maturities typically range from overnight to 270 days. Commercial paper is usually issued by corporations with high credit ratings and sold at a discount from face value. commission. A fee paid to a broker or other sales agent for services related to transactions in securities. common stock. An investment that represents a share of ownership in a corporation. compounding. The cumulative effect that reinvesting an investment’s earnings can have by generating additional earnings of its own. Over time, compounding can produce significant growth in the value of an investment. conservative. An investment approach that aims to grow capital over the long term, focusing on minimizing risk. Contrast aggressive. contingent deferred sales load (CDSL). A fee imposed by some funds when shares are redeemed (sold back to the fund) during the first few years of ownership. Also known as back-end load. corporate bond. A bond issued by a corporation, rather than by a government. The credit risk for a corporate bond is based on the ability of the issuing company to repay the bond. Coverdell Education Savings Account (ESA). This type of account, formerly known as an education IRA, is a tax-advantaged trust or custodial account set up to pay the qualified education expenses of a designated beneficiary. creation unit. A specified number of shares issued by an exchange-traded fund (ETF) in large blocks, generally between 25,000 and 200,000 shares. Authorized participants that buy creation units either keep the ETF shares that make up the creation unit or sell all or part of them on a stock exchange.

GLOSSARY

271

credit quality. A term used in portfolio management to describe the creditworthiness of an issuer of fixed-income securities and to indicate the likelihood that the issuer will be able to repay its debt. credit risk. The possibility that a bond issuer may not be able to pay interest or repay its debt. Also known as default risk. See also default. credit spread. The additional yield required of a debt security beyond that of a risk-free alternative (such as a U.S. Treasury instrument of the same maturity). custodian. An organization, usually a bank, that safeguards the securities and other assets of a mutual fund. default. A failure by an issuer to: (1) pay principal or interest when due, (2) meet nonpayment obligations, such as reporting requirements, or (3) comply with certain covenants in the document authorizing the issuance of a bond (an indenture). defined benefit (DB) plan. An employer-sponsored pension plan in which the amount of future benefits an employee will receive from the plan is defined, typically by a formula based on salary history and years of service. The amount of contributions the employer is required to make will depend on the investment returns experienced by the plan and the benefits promised. Contrast defined contribution plan. defined contribution (DC) plan. An employer-sponsored retirement plan, such as a 401(k) plan or a 403(b) plan, in which contributions are made to individual participant accounts. Depending on the type of DC plan, contributions may be made by the employee, the employer, or both. The employee’s benefits at retirement or termination of employment are based on the employee and employer contributions and earnings and losses on those contributions. See also 401(k) plan and 403(b) plan. Contrast defined benefit plan. depreciation. A decline in an investment’s value. Contrast appreciation. director. Mutual fund directors oversee the management and operations of a fund organized as a corporation and have a fiduciary duty to represent the interests of shareholders. Because a fund has no employees, it relies on the adviser and other service providers to run the fund’s day-to-day operations. Directors focus on the performance and fees of these entities under their respective contracts, and monitor potential conflicts of interest. Fund directors have the same responsibilities as fund trustees. See also independent director and trustee. distribution. (1) The payment of dividends and capital gains, (2) a term used to describe a method of selling fund shares to the public, or (3) a term used to describe a withdrawal of funds from a retirement plan. diversification. The practice of investing broadly across a number of different securities, industries, or asset classes to reduce risk. Diversification is a key benefit of investing in mutual funds and other investment companies that have diversified portfolios. dividend. Money that an investment fund or company pays to its shareholders, typically from its investment income, after expenses. The amount is usually expressed on a per-share basis.

272

GLOSSARY

dollar-cost averaging. The practice of investing a fixed amount of money at regular intervals, regardless of whether the securities markets are declining or rising, in the hopes of reducing average share cost by acquiring more shares when prices are low and fewer shares when prices are high. education IRA. See Coverdell Education Savings Account (ESA). emerging market. Generally, economies that are in the process of growth and industrialization, such as those in Africa, Asia, Eastern Europe, Latin America, and the Middle East. While relatively undeveloped, these economies may hold significant growth potential in the future. May also be called developing markets. equity. A security or investment representing ownership in a company—unlike a bond, which represents a loan to a borrower. Often used interchangeably with stock. equity fund. A fund that concentrates its investments in equities. Also known as a stock fund. exchange privilege. A fund option enabling shareholders to transfer their investments from one fund to another within the same fund family as their needs or objectives change. Typically, fund companies allow exchanges several times a year for a low fee or no fee. exchange-traded fund (ETF). An investment company, typically a mutual fund or unit investment trust, whose shares are traded intraday on stock exchanges at market-determined prices. Investors may buy or sell ETF shares through a broker just as they would the shares of any publicly traded company. ex-dividend date. With regard to mutual funds, this is the day on which declared distributions (dividends or capital gains) are deducted from the fund’s assets before it calculates its net asset value (NAV). The NAV per share will drop by the amount of the distribution per share. expense ratio. A measure of what it costs to operate a fund—disclosed in the prospectus and shareholder reports—expressed as a percentage of its assets. face value. The stated principal or redemption value of a bond; the amount that a bond’s issuer must repay at the bond’s maturity date. fair value. The price for a security that the fund might reasonably expect to receive upon its current sale. federal funds. Non-interest-bearing deposits held by member banks at the Federal Reserve. Financial Industry Regulatory Authority (FINRA). A self-regulatory organization with authority over U.S. broker-dealer firms that distribute mutual fund shares as well as other securities. FINRA operates under the supervision of the SEC. financial statements. The written record of the financial status of a fund or company, usually published in the annual report. The record generally includes a balance sheet, income statement, and other financial statements and disclosures.

GLOSSARY

273

529 plan. An investment program, offered by state governments, designed to help pay future qualified higher education expenses. States offer two types of 529 plans: prepaid tuition programs allow contributors to establish an account in the name of a student to cover the cost of a specified number of academic periods or course units in the future at current prices; and college savings plans allow individuals to contribute to an investment account to pay for a student’s qualified higher education expenses. fixed-income securities. Securities that pay a fixed rate of return in the form of interest or dividend income. forward pricing. The concept describing the price at which mutual fund shareholders buy or redeem fund shares. Shareholders must receive the next computed share price following the fund’s receipt of a shareholder transaction order. 457 plan. An employer-sponsored retirement plan that enables employees of state and local governments and other tax-exempt employers to make tax-deferred contributions from their salaries to the plan. 401(k) plan. An employer-sponsored retirement plan that enables employees to make taxdeferred contributions from their salaries to the plan. See also defined contribution plan. 403(b) plan. An employer-sponsored retirement plan that enables employees of universities, public schools, and nonprofit organizations to make tax-deferred contributions from their salaries to the plan. See also defined contribution plan. front-end load. A fee imposed by some funds at the point of purchase to cover selling costs. fund family. A group or complex of mutual funds, each typically with its own investment objective, that is managed and distributed by the same company. funds of funds. Mutual funds that primarily hold and invest in shares of other mutual funds rather than investing directly in individual securities. fund supermarket. A brokerage platform that provides access to funds from a wide range of fund families. government securities. Any debt obligation issued by a government or its agencies (e.g., Treasury bills issued by the United States). See also U.S. Treasury securities. growth and income fund. A fund that has a dual strategy of capital appreciation (growth) and current income generation through dividends or interest payments. growth fund. A fund that invests primarily in the stocks of companies with above-average risk in return for potentially above-average gains. These companies often pay small or no dividends and their stock prices tend to be more volatile from day to day. hedge fund. A private investment pool for qualified (typically wealthy) investors that, unlike a mutual fund, is exempt from SEC registration. hybrid fund. A mutual fund that invests in a mix of equity and fixed-income securities.

274

GLOSSARY

income distributions. Dividends, interest, and/or short-term capital gains paid to a mutual fund’s shareholders. Operating expenses are deducted from income before it is distributed to shareholders. income fund. A fund that primarily seeks current income generation rather than capital appreciation. independent director. A fund director or trustee who does not have any significant business relationship with a mutual fund’s adviser or underwriter. An independent director better enables the fund board to provide an independent check on the fund’s management. See also director and trustee. index. A portfolio of securities that tracks the performance of a particular financial market or subset of it (e.g., stock, bond, or commodity markets) and serves as a benchmark against which to evaluate a fund’s performance. The most common index for equity funds is the S&P 500. See also benchmark. index mutual fund. A fund designed to track the performance of a market index. The fund’s portfolio of securities is either a replicate or a representative sample of the designated market index. Often referred to as passively managed portfolios. individual retirement account (IRA). A tax-deferred account set up by or for an individual to hold and invest funds for retirement. inflation. The overall general upward price movement of goods and services in an economy, generally as a result of increased spending that exceeds the supply of goods on the market. Inflation is one of the major risks to investors over the long term because it erodes the purchasing power of their savings. inflation risk. The risk that the purchasing power of the future value of assets or income will be lower due to inflation. initial public offering (IPO). A corporation’s or closed-end fund’s first offering of stock or fund shares to the public. institutional investor. The businesses, nonprofit organizations, and other similar investors who own funds and other securities on behalf of their organizations. This classification of investors differs from individual or household investors who own the majority of investment company assets. interest/interest rate. The fee charged by a lender to a borrower, usually expressed as an annual percentage of the principal. interest rate risk. Risk of gain or loss on a security due to possible changes in interest-rate levels. When interest rates rise, the market value of a debt security will fall, and vice versa. intraday indicative value (IIV). A real-time estimate of an exchange-traded fund’s (ETF) intraday value. Third-party providers calculate and disseminate this measure every 15 to 60 seconds during securities market trading hours.

GLOSSARY

275

investment adviser. See adviser. investment company. A corporation, trust, or partnership that invests pooled shareholder dollars in securities appropriate to the organization’s objective. Mutual funds, closed-end funds, unit investment trusts, and exchange-traded funds are the main types of SEC-registered investment companies. investment objective. The goal (e.g., current income, long-term capital growth) that a mutual fund pursues on behalf of its investors. investment return. The gain or loss on an investment over a certain period, expressed as a percentage. Income and capital gains or losses are included in calculating the investment return. investment risk. The possibility of losing some or all of the amounts invested or not gaining value in an investment. issuer. The company, municipality, or government agency that issues securities, such as stocks, bonds, or money market instruments. Keogh. A tax-favored investment vehicle covering self-employed individuals, partners, and owners of unincorporated businesses; also called an H.R. 10 plan. These were first made available by Congress in 1962, but today operate under rules very similar to those for retirement plans for a corporation’s employees. level load. A combination of an annual 12b-1 fee (typically 1 percent) and a contingent deferred sales load fee (also often 1 percent) imposed by funds when shares are sold within the first year after purchase. See also contingent deferred sales load and 12b-1 fee. lifecycle fund. See target date fund. lifestyle fund. Mutual funds that maintain a predetermined risk level and generally use words such as “conservative,” “moderate,” or “aggressive” in their names to indicate the fund’s risk level. Also known as target risk fund. liquidity. The ability to gain ready access to invested money. Mutual funds are liquid because their shares can be redeemed for the next computed net asset value (NAV) on any business day. In the securities market, a security is said to be liquid if the spread between bid and ask prices is narrow and reasonably sized trades can take place at those quotes. load. See sales charge. load fund. A mutual fund that imposes a sales charge—either when fund shares are purchased (front-end load) or redeemed (contingent deferred sales load)—or a fund that charges a 12b-1 fee greater than 0.25 percent. long-term funds. A mutual fund industry designation for all funds other than money market funds. Long-term funds are broadly divided into equity (stock), bond, and hybrid funds. management fee. The amount paid by a mutual fund to the investment adviser for its services.

276

GLOSSARY

market value. The price at which a security was last traded or a price based on its current ask or bid prices. maturity. The date by which an issuer promises to repay a bond’s face value. money market. The global financial market for short-term borrowing and lending where short-term instruments such as Treasury bills (T-bills), commercial paper, and repurchase agreements are bought and sold. money market fund. A mutual fund that invests in short-term, high-grade, fixed-income securities, and seeks the highest level of income consistent with preservation of capital (i.e., maintaining a stable share price). MuniFund Term Preferred (MTP) shares. Exchange-listed closed-end fund preferred shares that have a fixed dividend rate set at the time of issuance. MTP shares have a mandatory redemption period (usually five years) unless they are redeemed or repurchased earlier by the fund. Unlike fixed-rate preferred stock previously issued, MTP shares were created for issuance by closed-end funds investing in municipal bonds. mutual fund. An investment company registered with the SEC that buys a portfolio of securities selected by a professional investment adviser to meet a specified financial goal (investment objective). Mutual funds can have actively managed portfolios, in which a professional investment adviser creates a unique mix of investments to meet a particular investment objective, or passively managed portfolios, in which the adviser seeks to track the performance of a selected benchmark or index. One hallmark of mutual funds is that they issue redeemable securities, meaning that the fund stands ready to buy back its shares at their current net asset value (NAV). See also open-end investment company. net asset value (NAV). The per-share value of an investment company, calculated by subtracting the fund’s liabilities from the current market value of its assets and dividing by the number of shares outstanding. Mutual funds calculate their NAVs at least once daily. net new cash flow. The dollar value of new sales minus redemptions, plus net exchanges. A positive number indicates new sales plus exchanges into funds exceeded redemptions plus exchanges out of funds. A negative number indicates redemptions plus exchanges out of funds exceeded new sales plus exchanges into funds. no-load fund. A mutual fund whose shares are sold without a sales commission and without a 12b-1 fee of more than 0.25 percent per year. open-end investment company. The legal name for a mutual fund, indicating that it stands ready to redeem (buy back) its shares from investors. operating expenses. Business costs paid from a fund’s assets. These include management fees, 12b-1 fees, and other expenses. payroll deduction plan. An arrangement that some employers offer where employees can authorize their employer to deduct a specified amount from their salaries at stated times to buy mutual fund shares.

GLOSSARY

277

pooled investing. The basic concept behind mutual funds in which a fund aggregates the assets of investors who share common financial goals. A fund uses the pooled assets to buy a diversified portfolio of investments, and each mutual fund share purchased represents ownership in all the fund’s underlying securities. portfolio. A collection of securities owned by an individual or an institution (such as a mutual fund) that may include stocks, bonds, money market instruments, and other securities. portfolio manager. A specialist employed by a mutual fund’s adviser to invest the fund’s assets in accordance with predetermined investment objectives. portfolio turnover rate. A measure of how frequently securities are bought and sold within a fund during a year. The portfolio turnover rate usually is expressed as a percentage of the total value of a fund. prepayment risk. The possibility that a bond owner will receive his or her principal investment back from the issuer prior to the bond’s maturity date. principal. See face value. prospectus. The official document that describes an investment company to prospective investors. The prospectus contains information required by the SEC, such as investment objectives and policies, risks, services, and fees. puttable preferred stock. See Variable Rate Demand Preferred (VRDP) shares. redeem. To sell mutual fund shares back to the fund. Mutual fund shares may be redeemed on any business day. An investor receives the next computed share price, called net asset value (NAV), minus any deferred sales charge or redemption fee. redemption price. The amount per share that mutual fund shareholders receive when they redeem. registered investment company. A company that is required to register as an investment company with the SEC under the Investment Company Act of 1940 and is also required to register the public offering of its shares under the Securities Act of 1933. The definition of investment company in the Investment Company Act of 1940 generally includes any company that is engaged primarily in the business of investing, reinvesting, or trading in securities. regulated investment company (RIC). An investment company or trust eligible under subchapter M of the Internal Revenue Code to eliminate tax at the fund level by distributing all of its taxable income to its shareholders. The fund’s income thus is taxed only once, at the investor level. To qualify as a RIC, a corporation must be registered at all times during the taxable year under the Investment Company Act of 1940 and must derive at least 90 percent of its income from certain sources, including dividends, interest, and capital gains. It also must distribute at least 90 percent of the dividends and interest received. Mutual funds and closedend funds are both regulated investment companies. reinvestment privilege. An option whereby shareholders may elect to use dividend and capital gains distributions to automatically buy additional fund shares.

278

GLOSSARY

repurchase agreements. A form of short-term funding for dealers. The dealer sells the securities to investors, usually on an overnight basis, and buys them back at a higher price reflecting the cost of funding. Also known as a repo. required minimum distribution (RMD). Minimum distribution rules require that beginning at age 70½, the entire amount of a traditional IRA or 401(k) account be distributed over the expected life of the individual (or the joint lives of the individual and designated beneficiary). Distributing less than the required amount will result in a tax penalty. Roth IRAs are not subject to required minimum distributions during the account holder’s lifetime. return. The gain or loss of a security in a particular period. It is usually quoted as a percentage. RIC. See regulated investment company. risk. The degree of uncertainty associated with the return on an asset. risk/return tradeoff. The principle that an investment must offer a higher expected return as compensation for the likelihood of higher volatility in returns. risk tolerance. An investor’s willingness to lose some or all of an investment in exchange for greater potential returns. rollover. The transfer of an investor’s assets from one qualified retirement plan (including an IRA) to another—due to changing jobs, for instance—without a tax penalty. Roth 401(k) plan account. A type of account within a 401(k) plan to which after-tax contributions are made, and from which qualified distributions of contributions and earnings are tax free. Roth IRA. An individual retirement plan, first available in 1998, that permits only after-tax contributions; earnings are not taxed, and qualified distributions of earnings and principal are generally tax-free. sales charge. An amount charged for the sale of some fund shares, usually those sold by brokers or other sales professionals. By regulation, mutual fund sales charges are capped. The charge may vary depending on the amount invested and the fund chosen. Also known as the load. SAR-SEP IRA (salary reduction simplified employee pension). A SEP IRA with a salary reduction feature (see SEP IRA). The Small Business Job Protection Act of 1996, which created SIMPLE IRAs, prohibited the formation of new SAR-SEP IRAs, which were created in 1986. secondary market. Market in which an investor purchases or sells certain investment company shares (closed-end, UIT, and ETF) from another investor through an intermediary such as a broker-dealer. sector fund. A fund that invests in a particular or specialized segment of the marketplace, such as stocks of companies in the software, healthcare, or real estate industries. Securities and Exchange Commission (SEC). The primary U.S. government agency responsible for the regulation of the day-to-day operations and disclosure obligations of registered investment companies. GLOSSARY

279

securitization. The process of aggregating similar instruments, such as loans or mortgages, into a negotiable security, such as the creation of mortgage-backed securities. security. A general term for stocks, bonds, mutual funds, and other investments. semiannual report. A report a fund sends to its shareholders that discusses the fund’s performance over the first six months of the fiscal year and identifies the securities in the fund’s portfolio on the last business day of the first six months of the fiscal year. See also annual report. separate account. An insurance company account that is segregated or separate from the insurance company’s general assets. Also refers to a fund managed by an investment adviser for a single plan. SEP IRA (simplified employee pension plan). A retirement program created in 1978 that consists of individual retirement accounts for all eligible employees, to which the employer can contribute according to certain rules. A fairly simple, inexpensive plan to establish and administer, a SEP IRA can be attractive to small businesses and self-employed individuals. series fund. A group of different mutual funds, each with its own investment objective and policies, that is structured as a single corporation or business trust. share. A representation of ownership in a company or investment fund. Also a synonym for stock. share classes. Some mutual funds offer investors different types of shares known as classes (e.g., Class A, institutional shares). Each class will invest in the same portfolio of securities and will have the same investment objectives and policies, but each class will have different shareholder services and/or distribution arrangements with different fees and expenses and, therefore, different performance results. A multiclass structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the time that they expect to remain invested in the fund). shareholder. An investor who owns shares of a mutual fund or other company. short-term fund. See money market fund. SIMPLE IRA (savings incentive match plan for employees). A simplified tax-favored retirement plan created in 1996 that small employers can set up for the benefit of their employees. stable value fund. An investment fund that seeks to preserve principal and to provide consistent returns and liquidity. Stable value funds include collective investment funds sponsored by banks or trust companies or contracts issued by insurance companies. S&P 500 index. A daily measure of stock market performance based on 500 U.S. stocks chosen for market size, liquidity, and industry group representation. statement of additional information (SAI). The supplementary document to a prospectus that contains more detailed information about a fund; also known as “Part B” of the prospectus.

280

GLOSSARY

stock. A share of ownership or equity in a corporation. stock fund. See equity fund. summary prospectus. Pursuant to an SEC rule adopted in 2009, all funds must provide their investors with a brief summary (generally three to four pages) in plain English of the key information in the fund’s full (lengthy) statutory prospectus. The summary prospectus must contain the following items in standardized order and cannot include additional information, nor omit required information: investment objectives/goals; fee and expense tables; principal investment strategies, principal risks and performance table; and management information. See also prospectus. target date fund. A hybrid fund that follows a predetermined reallocation of risk over a working career and into retirement for a person expecting to retire at the target date of the fund (which is usually included in the fund’s name). These funds invest in a mix of asset classes and typically rebalance their portfolios over time to become more conservative and income producing. Also known as lifecycle fund. target risk fund. See lifestyle fund. tender offer. In a closed-end fund tender offer, shareholders are given a limited opportunity to sell a portion of their shares back to the fund at a price—the tender price. Generally, the tender price is close to the fund’s NAV and is higher than the market price. total net assets. The total amount of assets, less any liabilities, a fund holds as of a certain date. total return. A measure of a fund’s performance that encompasses all elements of return: dividends, capital gains distributions, and changes in net asset value (NAV). Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains distributions, expressed as a percentage of the initial investment. traditional IRA. The first type of individual retirement account, created in 1974. Individuals may make tax-deductible or nondeductible (depending on income and other requirements) contributions to these accounts. See also individual retirement account (IRA). transfer agent. The internal or external organization that a mutual fund uses to prepare and maintain records relating to shareholder accounts. Treasury bill (T-bill). A short-term debt obligation of the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks), or six months (26 weeks). trustee. A member of the board of trustees of a fund organized as a business or statutory trust. Mutual fund trustees oversee the management and operations of the fund and have a fiduciary duty to represent the interests of shareholders. Fund trustees have the same responsibilities as fund directors. See also director.

GLOSSARY

281

12b-1 fee. A mutual fund fee, named for the SEC rule that permits it, used to pay distribution costs such as compensation to financial advisers for initial and ongoing assistance. If a fund has a 12b-1 fee, it will be disclosed in the fee table of a fund’s prospectus. underwriter. A mutual fund underwriter enters into sales agreements with retail distributors (e.g., broker-dealers) of the mutual fund. To sell fund shares, a retail distributor must have executed a contract with a fund or its principal underwriter, which authorizes the distributor to offer and sell fund shares to the public. Generally speaking, a fund’s underwriter is not involved in the offer or sale of fund shares to investors. unit investment trust (UIT). A type of fund with some characteristics of mutual funds and some of closed-end funds. Like mutual funds, UITs issue redeemable shares. Like closedend funds, however, UITs typically issue only a specific, fixed number of shares. A UIT does not actively trade its investment portfolio, instead buying and holding a set of particular investments until a set termination date, at which time the trust is dissolved and proceeds are paid to shareholders. U.S. Treasury securities. Debt securities issued by the U.S. government and secured by its full faith and credit. Treasury securities are the debt financing instruments of the U.S. federal government, and they are often referred to simply as Treasuries. There are four types of Treasury securities: Treasury bills, Treasury bonds, Treasury notes, and Treasury inflation protected securities (TIPS). See also Treasury bill. variable annuity. An investment contract sold by an insurance company. Capital is accumulated, often through mutual fund investments, with the option to convert to an income stream in retirement. Variable Rate Demand Preferred (VRDP) shares. A type of puttable preferred stock that is similar to auction market preferred stock (AMPS) in that they pay dividends at variable rates, and sell orders are filled to the extent there are bids. Rates are set through remarketings, and if there are more sell orders than bids, a third party (commonly referred to as a liquidity provider) purchases the VRDP shares. withdrawal plan. A fund service allowing shareholders to receive income or principal payments from their fund account at regular intervals. yield. A measure of income (dividends and interest) earned by the securities in a fund’s portfolio less the fund’s expenses during a specified period. A fund’s yield is expressed as a percentage of the maximum offering price per share on a specified date. yield curve. The graphical depiction of the relationship between the yield on bonds of the same credit quality but different maturities. The most frequently reported yield curve compares the yields on three-month, two-year, five-year, and 30-year U.S. Treasury securities. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates.

282

GLOSSARY

Index A page number with an f indicates a figure; an n indicates a note; a t indicates a table. Page numbers in bold indicate a definition. 12b-1 fees, 92, 98, 102, 103, 105, 282

advisers (continued)

401(k) plans, 274

mutual fund, 245f, 246, 247, 258, 259 as purchase sources, 104, 122, 122f, 123f

account balances, 149, 149f

regulation of, 241, 261

asset allocation, 145–47, 146f, 147f assets, 124f, 137f, 141, 141f

affiliated transaction prohibitions, 264

employer contributions to, 142–43, 142f, 143f

Africa region, 10f, 59f, 237t, 238t, 239t

equity funds, 110, 111f

after-tax return, 269

household financial assets in, 12, 13f, 136f

age demographics

investment options, 144, 144f

401(k) owners, 149, 149f

investor demographics, 129f, 145–47, 146f, 147f, 149, 149f

bond fund owners, 40–41, 41f

lifestyle funds in, 164f

Internet use and, 129, 129f

loan activity, 150

IRA owners, 139–40, 139f, 140f, 154, 156, 157f

mutual fund assets in, 120–21, 121f, 122f, 123f, 161, 162f

mutual fund owners, 40, 41f, 115f, 116–19, 116f

generational mutual fund ownership, 117, 117f

retirement account owners, 139–40

mutual fund fees, 104, 106f, 108–11, 109f, 111f

risk tolerance and, 40, 40f

purchase sources, 120–21, 121f, 122f, 123f, 124f

agency securities, 14f, 15, 52–53, 53f, 212t, 213t

services and expenses, 104, 106f, 108–11, 109f, 111f

aggressive, 269

target date funds in, 144f, 145, 146f, 148–49, 148f, 164f

alternative minimum tax, 252

403(b) plans, 274

alternative strategies funds, 43–44, 44f, 214t

assets, 124f, 137f, 141, 141f

American Taxpayer Relief Act of 2012, 165

household financial assets in, 13f, 136f

Americas region, 10f, 59f, 237t, 238t, 239t

investor demographics, 129f

annual reports, 256, 260, 269


annuities, 75, 75f, 88, 88f, 137, 137f, 151f. See also variable

mutual fund assets in, 121f, 122f, 123f, 161, 162f

annuities


appreciation, 269

target date funds in, 164f

Asia and Pacific region, 10f, 59f, 237t, 238t, 239t

457 plans, 274

asset allocation, 41–42, 145–47, 146f, 147f, 156, 157f, 269

assets, 124f, 137f, 141, 141f

asset allocation funds, 42. See also hybrid funds

household financial assets in, 13f, 136f

asset-based fees, 105–6, 108

investor demographics, 129f

asset class, 269


assets, 269

mutual fund assets in, 121f, 122f, 123f, 162f

asset-weighted turnover rate, 37, 37f


auditors, 248, 260

target date funds in, 164f

authorized participants, 62–66, 63f, 269

529 plans, 30f, 124f, 165–66, 166f, 167f, 274

automatic reinvestment, 269 average portfolio maturity, 269

A accountants, 122, 122f, 123f, 245f actively managed domestic equity funds, 18, 47

B Baby Boom Generation, 117, 117f

actively managed ETFs, 59, 61, 73, 183t, 184t, 185t

back-end load, 92, 269

actively managed mutual funds, 96, 96f, 98–99, 99f, 242

back-end load share classes, 103, 106, 107f

administrators, 245f, 247

balanced funds, 269. See also hybrid funds; lifestyle funds; target date funds

advisers, 269 compensation of, 104, 105

401(k) investment options, 144f, 145, 146f, 147

as intermediaries, 15, 15f, 33

characteristics, 42, 163

IRA rollovers and, 154, 155f

non–target date, 144f, 145, 146f, 156

INDEX

283

balanced funds (continued)

bond funds (continued)

retirement assets in, 156, 157f, 160, 161, 162, 162f

taxable, 101f, 175t, 177t, 179t

bank notes, 212t, 213t

taxable closed-end, 82f, 181t, 182t

banks

tax-exempt, 252

as custodians, 263

total net assets, 175t, 176t, 226t, 234t

as intermediaries, 15, 15f money market fund trends and, 51, 51f

total portfolio, common stock, and other securities: purchases, sales, and net purchases, 206t

as mutual fund purchase sources, 122, 122f, 123f

trends, 26, 38–41, 39f, 40f, 41f variable annuity, 232t, 233t

retirement assets held by, 151f basis points, 92n, 269

bond funds of funds, 217t, 218t

bear market, 270

bond index funds, 45, 45f, 46f, 97f, 99f, 219t, 220t, 221t, 222t

benchmark, 270 blend funds, 224t, 225t

bond market, 32

boards of directors, 244, 245f, 246, 258–59

bonds, 270. See also bond funds; municipal bonds

bond and income funds, 175t, 177t

directly held, 11, 12f, 88, 88f

bond closed-end funds, 79f, 82–83, 82f, 83f, 86, 181t, 182t

IRA investments in, 151, 151f, 152, 156, 157f

bond ETFs, 67f, 70, 70f, 71, 71f, 183t, 184t, 185t

net new cash flow, 33

bond funds, 270. See also government bond funds; high-yield bond funds; investment grade bond funds; multisector bond funds; municipal bond funds; world bond funds

returns on, 32, 38, 39f tender option, 85, 87, 87f breakpoints, 102, 270 break the dollar, 270

401(k) investment options, 144f, 145, 146f

BrightScope, 142

alternative strategies, 214t

broad-based domestic equity ETFs, 58, 70, 70f, 71f, 183t,

assets, 8, 10, 26, 28, 29f

184t, 185t

asset share at largest complexes, 18

broker, 270

capital gains distributions, 254

brokerage firms, 15, 15f, 150, 151f, 241

capital gains paid and reinvested, 202t

broker-dealer, 68, 270

closed-end, 79f, 82–83, 82f, 83f, 86, 181t, 182t

bull market, 270

corporate, 38

business corporation assets, 13, 28, 49, 235t, 236t

demand for, 28, 30, 38 demographic effects on, 40–41, 41f dividends paid and reinvested, 201t, 252, 253 exchange redemptions, 192t, 197t exchange sales, 192t, 195t expenses, 92, 93f, 99f, 100, 101f, 105f household investments in, 29, 30f, 88, 88f individual accounts, 234t institutional accounts, 234t, 235t IRA investments in, 156, 157f liquidity, 187t, 188t mortgage-backed securities, 38 net new cash flow, 18, 30, 31f, 33, 35f, 38–41, 39f, 189t, 192t, 193t, 226t, 227t new sales, 192t, 194t number of funds, 177t, 178t, 226t

C capital appreciation equity funds exchange redemptions, 197t exchange sales, 195t liquidity, 188t net new cash flow, 193t new sales, 194t number of funds, 178t number of share classes, 180t redemptions, 196t total net assets, 176t capital gain, 270 capital gains distributions, 10, 251, 252, 254, 254f, 270 capital gains paid and reinvested, 202t capital loss, 252, 270

number of share classes, 179t, 180t, 226t

catch-up contributions, 152, 271

portfolio holdings and percentage of total net assets, 200t

certificates of deposit (CDs), 212t, 213t, 271

CDSL (contingent deferred sales load), 103, 271

redemptions, 192t, 196t, 198t

CFTC (Commodity Futures Trading Commission), 60

retirement assets in, 120, 160, 161f, 162, 162f, 226t, 227t

Chicago Board Options Exchange Volatility Index (VIX), 35 Class A, B, or C shares. See share classes

returns on, 38, 39f

closed-end funds, 271

short-term, 38

assets, 9f, 81–82, 81f, 181t

target date funds’ effect on, 41

bond, 79f, 82–83, 82f, 83f, 86, 181t, 182t

284

INDEX

closed-end funds (continued)

creation units, 62–63, 63f, 271

characteristics, 78, 80, 243

credit quality, 272

common shares, 80

credit risk, 272

creation of, 80

credit spread, 272

custody rules, 263n

currency ETFs, 58, 60

disclosure requirements, 255n

custodians, 245f, 263, 272

distributions, 84, 84f diversification standards, 264–65 domestic bond, 82f, 83f, 181t, 182t domestic equity, 82f, 83, 83f, 181t, 182t equity, 82–83, 82f, 83f, 86, 181t, 182t global/international, 82f, 83f, 181t, 182t household investments in, 11f, 12f, 88–89, 88f, 89f IRA investments in, 151f leverage ability, 85–87, 85f, 86f, 87f, 261–62 liquidations or closures, 81 liquidity and valuation, 257 municipal bond, 82f, 83, 83f, 181t, 182t net issuance, 10, 83, 83f, 182t number of funds, 22, 22f, 81, 81f, 181t preferred shares, 80, 81, 83, 86, 86f, 262 pricing, 257, 257n8 redemptions, 182t shareholder characteristics, 88–89, 88f, 89f taxable bond, 82f, 83f, 181t, 182t trading, 80 commercial paper, 14, 14f, 212t, 213t, 271 commission, 271 commodities funds, 8 commodity ETFs, 58, 60, 70, 70f, 71f, 73, 74f, 183t, 184t, 185t

D default, 272 defined benefit (DB) plans, 132, 135, 136f, 137–39, 137f, 138f, 139f, 153, 272. See also pension funds defined contribution (DC) plans, 272. See also 401(k) plans; 403(b) plans; 457 plans; Keoghs; Thrift Savings Plan asset location, 122f assets, 141, 141f characteristics, 141 household investments in, 11f, 12, 13f, 136f, 137–40, 139f, 140f IRA rollovers from, 153 lifestyle funds in, 164f mutual fund assets in, 12, 120–21, 121f, 124, 124f, 160–62, 161f, 162f mutual fund fees, 104, 108 owner demographics, 129, 129f, 136f, 139–40, 140f percentage of retirement assets in, 131f purchase sources, 122f, 123f retirement resource pyramid and, 132, 135, 136f target date funds in, 41, 164f U.S. assets, 137–40, 137f, 138f, 140f Delaware statutory trusts, 243–44, 244f demographics. See also age demographics

Commodity Exchange Act, 60

401(k) plan participants, 129f, 145–47, 146f, 147f, 149, 149f

Commodity Futures Trading Commission (CFTC), 60

bond fund investors, 40–41, 41f

commodity markets, 70

closed-end fund investors, 88–89, 88f, 89f

common stock, 199t, 200t, 271

DC plan investors, 136f, 139–40, 140f

common stock purchases, sales, and net purchases, 203t,

education level, 129f

204t, 205t, 206t

education savings investors, 166, 167f

company stock holdings, 145, 146f

ETF investors, 75–77, 75f, 76f, 77f

compliance programs, 245, 247, 257, 258, 260

income level, 116–19, 118f, 119f, 129f, 133, 136f

compounding, 40, 271

Internet use by shareholders, 129, 129f

confidence of consumers, 31–32, 128f, 128, 241

investment goals and, 133, 134f

Congressional Budget Office (CBO), 134

IRA investors, 139–40, 139f, 140f, 154, 156, 157f

conservative, 271

mutual fund investors, 115f, 116–19, 116f, 118f, 119f

consumer sector funds, 228t, 229t

mutual fund trends and, 26, 28, 30

consumer spending, 31–32

retirement plan investors, 134f, 139–40, 139f

contingent deferred sales load (CDSL), 103, 271

depreciation, 272

corporate bond funds, 38. See also investment grade

derivative instruments, 261

bond funds

directors, 244, 245f, 246, 258–59, 272

corporate bonds, 14f, 15, 199t, 200t, 271

disclosure, 255–56

corporate notes, 212t, 213t

discount brokers, 122–23, 122f, 123f

cost basis, 252

distributions, 272

Coverdell Education Savings Accounts (ESAs), 124f, 165–66, 167f, 271 INDEX

capital gains, 10, 202t, 251, 252, 254, 254f dividend, 10, 201t, 211t, 251, 252, 253, 253f

285

distributions (continued) from IRAs, 158–60, 158f, 159f diversification, 36, 264–65, 272

employer-sponsored retirement plans (continued) fee structures for, 102

dividend, 272

household accounts, 120–24, 121f, 122f, 123f, 124f, 139–40, 139f, 140f, 154

dividend distributions, 10, 201t, 211t, 251, 252, 253, 253f

purchase sources, 120, 121f, 122f, 123f

dollar-cost averaging, 273

retirement resource pyramid and, 132–36, 133f

domestic bond closed-end funds, 82f, 83f, 181t, 182t

target date and lifestyle fund assets, 164f

domestic bond funds, 144, 144f

U.S. assets, 137–40, 137f

domestic equity closed-end funds, 82f, 83, 83f, 181t, 182t

employment, investment industry, 23–25, 23f, 24f, 25f

domestic equity ETFs, 47, 47f, 67f, 70–71, 70f, 71f, 183t,

equities. See also stock

184t, 185t domestic equity funds 401(k) investment options, 144 actively managed, 18, 47

401(k) investment options, 145, 147, 147f directly held, 11, 12f, 88, 88f investment company assets, 14, 14f IRA assets in, 156, 157f


equity, 273

assets, 8, 10

equity closed-end funds, 82–83, 82f, 83f, 86, 181t, 182t

expense ratios, 94f

equity ETFs, 67f, 183t, 184t, 185t

net cash flow, 36

equity funds, 273. See also capital appreciation equity funds; domestic equity funds; equity index funds; total return equity funds; world equity funds

number of funds, 177t number of share classes, 179t retirement accounts, 162

401(k) investment options, 110, 111f, 144f, 145, 146f

retirement assets in, 162f


total net assets, 8, 175t

capital gains distributions, 254

trends in, 18

capital gains paid and reinvested, 202t

domestic equity index funds, 18, 45–47, 45f, 46f, 47f, 219t, 220t, 221t, 222t

closed-end, 82–83, 82f, 83f, 86, 181t, 182t demand for, 28

domestic high-yield bond ETFs, 67f

diversification of, 265

domestic municipal bond closed-end funds, 82f, 83f, 181t,

dividends paid and reinvested, 201t

182t domestic sector equity ETFs, 70, 70f, 71f, 73, 74f, 183t, 184t, 185t domestic taxable bond closed-end funds, 82f, 83f, 181t, 182t

E economic climate, 18–19, 26, 28, 30, 31–32, 43, 126f, 140 Economic Growth and Tax Relief Reconciliation Act (EGTRRA), 165 EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system, 256

exchange redemptions, 190t, 197t exchange sales, 190t, 195t expenses, 90, 91f, 93f, 95f, 96, 96f, 100, 101f, 105f, 108–11, 109f, 111f household investments in, 29, 30f, 88, 88f individual accounts, 234t institutional accounts, 234t, 235t in IRAs, 156, 157f liquidity, 187t, 188t net new cash flow, 30, 31f, 33, 34, 34f, 35f, 189t, 190t, 193t, 226t, 227t new sales, 190t, 194t

education IRA. See Coverdell Education Savings Accounts

number of funds, 177t, 178t, 226t

emerging market, 273


emerging markets bond ETFs, 67f emerging markets debt mutual funds, 215t


emerging markets equity ETFs, 67f

redemptions, 190t, 196t, 198t

emerging markets ETFs, 71f Employee Benefit Research Institute (EBRI), 145

retirement assets in, 120, 149, 160, 161f, 162, 162f, 226t, 227t

Employee Retirement Income Security Act (ERISA), 150, 152

total net assets, 8, 26–28, 29f, 175t, 176t, 226t, 234t

employer-sponsored retirement plans. See also 401(k) plans; 403(b) plans; 457 plans; defined contribution plans; Keoghs; Roth 401(k); SAR-SEP IRAs; SEP IRAs; SIMPLE IRAs

total portfolio, common stock, and other securities: purchases, sales, and net purchases, 204t

asset location, 120–21

trends, 26, 28, 29f, 34–36, 34f, 35f turnover rate, 37, 37f variable annuity, 232t, 233t equity funds of funds, 217t, 218t

286

INDEX

equity index funds

exchange-traded funds (ETFs) (continued)

assets, 45, 45f, 46f

institutional investors in, 13, 62–63

domestic, 18, 45–47, 45f, 46f, 47f, 219t, 220t, 221t, 222t

IRA investments in, 151, 151f

exchange sales, 221t

leverage limits, 261–62

expenses, 96–99, 96f, 97f, 99f, 101f

liquidations, 72, 72f

net new cash flow, 45, 45f, 219t

liquidity, 257

new sales, 221t

mutual funds compared with, 67–68

number of funds and share classes, 220t

natural resources, 73, 74f

redemptions and exchange redemptions, 222t

net asset value, 62, 64, 67

S&P 500, 219t, 220t, 221t, 222t

net issuance, 10, 69–70, 69f, 70f, 185t

total net assets, 219t

nonregistered, 60, 60f, 69f, 183t, 184t, 185t

world, 45, 45f, 46f, 219t, 220t, 221t, 222t

number of funds, 22, 22f, 60f, 72, 72f, 184t

large-, mid-, and small-cap equity, 71, 71f

ERISA (Employee Retirement Income Security Act), 150, 152

origination of, 61–64

ESAs (Coverdell Education Savings Accounts), 124f, 165–66, 167f, 271

pricing, 64–65, 68, 257, 257n8

ETFs. See exchange-traded funds

redemptions, 64, 65

euro-denominated securities, 8

registered, 60, 60f, 69f, 183t, 184t, 185t

eurodollar CDs, 212t, 213t

regulation of, 60, 255–56, 263n

European mutual fund market, 10f, 59f, 237t, 238t, 239t

secondary markets, 66, 67f

eurozone economic climate, 32

sector, 73

exchange privilege, 253, 273

sector equity, 183t, 184t, 185t

exchanges of shares, 252

shareholders, 75–77, 75f, 76f, 77f

exchange-traded funds (ETFs), 273

sponsors, 56, 61

primary markets, 66, 67f

actively managed, 59, 61, 73, 183t, 184t, 185t

total net assets, 9f, 59, 59f, 60f, 71f, 183t

arbitrage opportunities, 65

trading, 62, 64–67, 67f, 68

assets, 8, 56, 57, 59, 59f, 71f, 183t

transparency, 59, 64

assets at largest complexes, 17–18, 17f

ex-dividend date, 273

assets worldwide, 10f, 59, 59f

exempt-interest dividends, 252

authorized participants, 62–64, 62–66, 63f

expense ratio, 94–96, 94f, 273. See also mutual fund

bond, 67f, 70, 70f, 71, 71f, 183t, 184t, 185t broad-based domestic equity, 58, 70, 70f, 71f, 183t, 184t, 185t

expenses and fees

F

characteristics, 58–59, 243

face value, 273

commodity-based, 58, 60, 70, 70f, 71f, 73, 74f, 183t, 184t, 185t

Federal Employees Retirement System (FERS), 137f, 141

creation of, 62–63, 63f, 65, 72, 72f currency-based, 58, 60 demand for, 10, 56, 69–74, 69f, 70f, 71f, 72f, 74f

fair value, 257, 273 federal funds, 273 federal government employee retirement assets, 135, 136f, 137, 137f, 138, 138f, 141

diversification with, 264–65

Federal Reserve, 32, 38, 51, 54

domestic equity, 47, 47f, 67f, 70–71, 70f, 71f, 183t, 184t, 185t

Financial Industry Regulatory Authority (FINRA), 241, 258,

financial advisers. See advisers 260, 273

domestic sector equity, 70, 70f, 71f, 73, 74f, 183t, 184t, 185t

financial institution assets, 29, 235t, 236t

emerging markets, 71f

financial sector funds, 228t, 229t

funds of funds structure, 183t, 184t, 185t

financial statements, 273

futures-based, 58, 60, 73

fixed annuities, 75, 75f, 88, 88f, 137f

global/international equity, 67f, 70, 70f, 71, 71f, 183t, 184t, 185t

fixed-income securities, 40–41, 61, 75, 156, 157f, 162, 162f,

history, 58–59

floating-rate high-yield bond mutual funds, 216t

household investments in, 11f, 12f, 75–77, 75f, 76f, 77f

foreign securities, 61, 62. See also global/international

hybrid, 70, 70f, 71f, 183t, 184t, 185t index-based, 47, 47f, 58, 61, 183t, 184t, 185t

INDEX

274

entries; world entries forward pricing, 68, 258, 274

287

front-end load, 92, 104, 105f, 107f, 274

high-yield bond funds (continued)

front-end load share classes, 102, 106, 107f

number of share classes, 180t

full-service brokers, 122, 122f, 123f

redemptions, 38, 196t

fund family, 274


funds of funds, 41, 183t, 184t, 185t, 217t, 218t, 274

homeownership as retirement resource, 132, 133f, 135

fund supermarkets, 103, 108, 112, 122–23, 122f, 123f, 274

household financial assets. See also demographics; mutual fund shareholders; individual investors; specific classification, such as bond funds

futures ETFs, 58, 60, 73

G Generation X, 117, 117f GICs (guaranteed investment contracts), 144, 144f, 145, 146f GI Generation, 117, 117f global economic climate, 28, 30, 32, 34, 34f global equity funds, 34, 34f global/international closed-end funds, 82f, 83f, 181t, 182t global/international equity ETFs, 70, 70f, 71, 71f, 183t, 184t, 185t government agency securities, 14f, 15, 52–53, 53f, 212t, 213t government bond funds exchange redemptions, 197t exchange sales, 195t

401(k) plans, 12, 13f, 136f 403(b) plans, 13f, 136f 457 plans, 13f, 136f asset location of, 120–21, 121f, 122f, 123f capital gains distributions, 254, 254f defined contribution plans, 11f, 12, 13f, 136f, 137–40, 139f, 140f directly held stocks and bonds, 11, 12f dividend distributions, 253, 253f education savings plans, 165–66, 166f, 167f employer-sponsored retirement plans, 120–24, 121f, 122f, 123f, 124f, 139–40, 139f, 140f, 154 ETFs, 11f, 12f, 75–77, 75f, 76f, 77f investment company holdings, 11, 11f

liquidity, 188t

investment goals and, 28, 33, 113, 115f, 119, 133, 134f, 165

net new cash flow, 193t

investor sentiment and, 31–32, 125, 125f

new sales, 194t

IRAs, 11f, 12, 13f, 120–21, 121f, 124, 124f, 136f, 137–40, 139f, 140f, 152–55, 152f, 156, 157f

number of funds, 178t number of share classes, 180t redemptions, 196t

mutual funds, 11–12, 11f, 12f, 13f, 28–29, 30f, 33, 88f, 89f, 95, 114–19, 114f, 115f, 124, 124f


mutual funds by tax status, 250, 250f

government bond holdings, 199t, 200t

purchase sources, 104, 120, 121f, 122–23, 122f, 123f

government employee retirement assets, 135, 136f, 137,

retirement accounts, 12, 13f, 120–24, 121f, 122f, 123f, 124f, 134f, 136f, 137–40, 139f, 140f

137f, 138, 138f, 141 government money market funds, 48f, 49, 207t, 208t, 209t, 212t

retirement resource pyramid and, 132–36, 133f risk tolerance and, 35, 40, 40f

government securities, 274

taxable accounts, 12, 250, 250f, 253, 253f, 254, 254f

Greece, 32

tax-deferred accounts, 250, 250f, 253, 253f, 254, 254f

gross domestic product, 31

tax-exempt accounts, 250, 250f, 253, 253f

growth and income funds, 274

variable annuities, 12f, 75, 75f, 88, 88f

growth funds, 100, 101f, 224t, 225t, 274

housing market, 31

guaranteed investment contracts (GICs), 144, 144f, 145,

hybrid ETFs, 70, 70f, 71f, 183t, 184t, 185t

146f

hybrid funds, 274. See also target date (lifecycle) funds alternative strategies, 214t

H health sector funds, 228t, 229t hedge funds, 274 high-yield bond funds ETF, 66, 67f exchange redemptions, 197t exchange sales, 195t floating-rate, 216t liquidity, 188t net new cash flow, 193t new sales, 194t number of funds, 178t

288

assets, 8, 28, 29f capital gains distributions, 254 capital gains paid and reinvested, 202t closed-end fund owner holdings of, 88f demand for, 28, 42, 42f dividends paid and reinvested, 201t exchange redemptions, 191t, 197t exchange sales, 191t, 195t expenses, 92, 93f, 100, 101f, 105f household investments in, 29, 30f individual accounts, 234t INDEX

hybrid funds (continued) institutional accounts, 234t, 235t lifestyle, 163, 230t, 231t

individual investors. See also demographics; household financial assets; mutual fund shareholders; shareholder sentiment

liquidity, 187t, 188t

bond funds held by, 234t

net new cash flow, 26, 30, 31f, 33, 35f, 42, 42f, 189t, 191t, 193t, 226t, 227t

equity funds held by, 234t

new sales, 191t

fees and share classes, 107f

number of funds, 177t, 178t, 226t

hybrid funds held by, 234t


market conditions’ effect on, 33


mutual fund investments, 114–19, 114f, 115f, 116f

redemptions, 191t, 196t, 198t retirement assets in, 120, 226t, 227t

ETFs held by, 69, 75–77, 75f, 76f, 77f

total net assets held by, 234t individual retirement accounts (IRAs), 275. See also Roth IRAs; SEP IRAs; SAR-SEP IRAs; SIMPLE IRAs


asset location, 120–21

total portfolio, common stock and other securities: purchases, sales, and net purchases, 205t

assets, 137–40, 137f, 138f, 139f, 151, 151f

trends, 26, 28, 29f, 42, 42f

bonds held in, 151f, 157

variable annuity, 232t, 233t

catch-up contributions, 152

bond funds, 157f

hybrid funds of funds, 217t, 218t

characteristics, 150

hybrid index funds, 45, 45f, 46f, 97f, 219t, 220t, 221t, 222t

contributions to, 152, 153, 153f distributions from, 158–60, 158f, 159f

I IIV (intraday indicative value), 64, 275 income distributions, 275. See also distributions, dividend income funds, 275 income of mutual fund investors. See demographics independent directors, 258–59, 275 independent financial planners, 122, 122f, 123f independent fund advisers, 15, 15f index, 275 index bond funds. See bond index funds index equity funds. See equity index funds index ETFs, 47, 47f, 58, 61, 72, 183t, 184t, 185t index mutual funds, 275. See also bond index funds; equity index funds assets, 26, 45, 45f asset share at largest complexes, 18 domestic equity, 18, 45–47, 45f, 46f, 47f, 219t, 220t, 221t, 222t exchange sales, 221t expenses and fees, 97–99, 97f, 99f hybrid, 45, 45f, 97f hybrid and bond, 219t, 220t, 221t, 222t net cash flows, 18 net new cash flow, 45, 45f, 219t new sales, 221t number of funds, 97f, 220t number of share classes, 220t redemptions and exchange redemptions, 222t S&P 500, 219t, 220t, 221t, 222t total net assets, 45, 46f, 97f, 219t trends, 26, 45–47, 45f, 46f, 47f, 97–99, 97f, 99f world equity, 45, 45f, 46f, 219t, 220t, 221t, 222t

INDEX

equities held in, 151f, 156, 157f equity funds, 156, 157f ETFs, 151f household investments in, 11f, 12, 13f, 120–21, 121f, 124, 124f, 136f, 137–40, 139f, 140f, 152–55, 152f, 156, 157f investor demographics, 139–40, 139f, 140f, 154, 156, 157f investor portfolios, 156, 157f lifestyle funds in, 164f money market funds in, 156, 157f mutual fund fees, 106f mutual funds held in, 12, 120–21, 124, 124f, 151, 151f, 160–61, 162f percentage of retirement assets in, 131f purchase sources, 121f, 122f required minimum distribution (RMD), 158, 279 retirement resource pyramid and, 132, 133f, 135, 136f rollovers, 153–54, 153f, 155f target date funds in, 156, 157f, 164f inflation, 275 inflation-protected mutual funds, 223t inflation risk, 275 initial public offering (IPO), 275 institutional investors, 275 bond funds held by, 234t, 235t equity funds held by, 234t, 235t ETFs held by, 13, 62–63, 69 hybrid funds held by, 234t, 235t market events effect on, 33 money market funds held by, 13, 29, 30f mutual funds held by, 29, 30f

289

institutional investors (continued)

investment grade bond funds

total net assets held by, 234t, 235t, 236t

exchange redemptions, 197t

types, 235t, 236t


institutional money market funds

liquidity, 188t

demand for, 13, 28, 29, 30f, 48–50


government, 208t, 209t

new sales, 194t

net new cash flow, 48–49, 49f, 50f, 209t

number of funds, 178t

nonfinancial business assets, 50, 50f


prime, 208t, 209t

redemptions, 196t

taxable, 208t, 209t, 236t tax-exempt, 208t, 209t

total net assets, 176t investment objectives, 55, 100, 101f, 170, 246, 276


investment professionals. See advisers

trends, 28, 29f, 48–54, 48f, 49f, 50f, 51f, 53f

investment return, 276

institutional no-load share classes, 94, 107f

investment risk, 276. See also risk tolerance

insurance companies, 15, 15f, 122, 122f, 123f

investor sentiment, 35, 125, 125f, 126f, 127f

interest, 275

IPO (initial public offering), 275

interest rate risk, 275

IRA Investor Database, 153, 156

interest rates, 26, 30, 32, 38, 51, 70, 275

IRAs. See individual retirement accounts

interest rate spread, 51, 51f

issuers, 276

intermediaries, 15, 15f, 22, 22f international bond funds, 144f international equity ETFs, 67f

K Keoghs, 13f, 124f, 137f, 141, 141f, 151f, 162f, 164f, 276

international equity funds, 144

L

international stock market performance, 8, 34, 34f, 36, 71

large-cap domestic equity ETFs, 71, 71f

Internet use by shareholders, 129, 129f

large-cap equity portfolios, 98, 100

intraday indicative value (IIV), 64, 275

large-cap mutual funds, 224t, 225t

investment advisers. See advisers

level load, 92, 276

Investment Advisers Act of 1940, 241

level-load share classes, 103, 106f, 107f

investment companies, 276. See also closed-end funds; exchange-traded funds; money market funds; mutual fund entries; regulation of investment companies; unit investment trusts

leverage, 85–87, 85f, 86f, 87f, 261–62 lifecycle funds. See target date funds life insurance companies, 137f, 146f, 147f, 148f, 151f lifestyle (target risk) funds, 162f, 163, 230t, 231t, 276

assets, 8, 9f

liquid assets, 187t, 199t, 200t

corporate equity held by, 14f

liquidity, 187t, 188t, 257–58, 276

definition, 8n

load (sales charge), 92, 104–8, 279

directly held stocks and bonds vs., 11, 12f

load funds, 276

employment data, 23–25, 23f, 24f, 25f

load share classes, 102–3

entering and leaving business, 16–19, 16f, 17f, 19f

local government employee retirement plans, 137, 137f,

history, 240–41, 266–68

138, 138f

household investments in, 11–12, 12f

long-term bond yields, 32

net new cash flow, 10, 12f, 17f

long-term capital gains, 251, 252, 254f

number of, 16–19, 16f, 17f, 22, 22f

long-term interest rates, 32, 38, 70

pooled investing origins, 240–41

long-term mutual funds, 276. See also bond funds; equity funds; hybrid funds; mutual fund entries

role of, 14–15 securities held by, 14, 14f, 15

annual redemption rates, 198t

types, 15, 15f, 22, 22f, 242

assets, 8, 30f

Investment Company Act of 1940, 67. See also regulation of investment companies

capital gains paid and reinvested, 202t demand for, 28, 29f

12b-1 fees, 102


ETF authorization and, 58, 60


regulatory requirements, 241, 242, 244, 246, 258, 259, 261–62, 263, 264, 265

exchange sales, 195t expense ratios, 94–96, 94f household asset location, 120

290

INDEX

long-term mutual funds (continued)

money market funds (continued)

institutional investments in, 29, 30f

net new cash flow, 10, 30, 31f, 48, 48f, 49f, 51f, 209t, 210t, 226t, 227t

liquid assets and liquidity ratio, 187t, 188t

new sales, 210t

market share, 106f, 107f

number of funds, 177t, 178t, 207t, 226t

net new cash flow, 10, 16, 17f, 30, 31f, 33, 34, 35f, 106f, 107f, 189t, 193t

number of share classes, 179t, 180t, 207t, 226t

new sales, 194t

redemptions, 210t

portfolio holdings and percentage of total net assets, 199t, 200t

reforms to, 52–53, 53f

redemptions, 196t, 198t

retail, 49f, 51, 51f, 208t, 209t, 236t

retirement assets in, 124f, 160, 162f

retirement assets in, 120, 124, 124f, 160, 161f, 162, 162f, 226t, 227t

household investments in, 12f, 29, 30f

total net assets, 107f, 199t total portfolio, common stock, and other securities: purchases, sales, net purchases, 203t long-term U.S. government bonds, 199t, 200t

prime, 14, 52–53, 53f, 207t, 208t, 209t, 213t

regulation of, 52–53, 53f, 242

total net assets, 175t, 176t, 207t, 208t, 226t, 234t trends, 28, 29f, 48–54, 48f, 49f, 50f, 51f, 53f variable annuity, 232t, 233t yields, 51

M management fees, 246, 276 market capitalization, 224t, 225t market value, 277 Maryland corporations, 243–44, 244f Massachusetts business trusts, 243–44, 244f maturity, 277 mid-cap equity ETFs, 71f mid-cap equity portfolios, 98, 100 mid-cap mutual funds, 224t, 225t Millennial Generation, 117, 117f money market, 277 money market deposit accounts, 51, 51f money market funds, 144, 144f, 145, 146f, 277. See also institutional money market funds; retail money market funds; taxable money market funds; tax-exempt money market funds asset composition of, 212t, 213t

money purchase plans, 141f Morningstar, 256 mortgage-backed securities, 38 MSCI All Country World Daily Total Return Index, 34, 34f MTP (MuniFund Term Preferred) shares, 277 multi-cap mutual funds, 224t, 225t multisector bond funds alternative strategies, 214t exchange redemptions, 197t exchange sales, 195t liquidity, 188t net new cash flow, 193t new sales, 194t number of funds, 178t number of share classes, 180t redemptions, 196t total net assets, 176t

assets, 8, 28, 29f, 30f, 226t, 234t

municipal bond closed-end funds, 82f, 83f, 181t, 182t


municipal bond mutual funds. See also national municipal bond funds; state municipal bond funds

closed-end fund owner holdings of, 88f commercial paper holdings, 14, 14f demand for, 48 dividend distributions, 253 dividends paid and reinvested, 211t exchange redemptions, 210t exchange sales, 210t expenses, 100, 101f Federal Reserve lending facilities, 54 government, 207t, 208t, 209t, 212t household investments in, 29, 30f, 124, 124f individual accounts, 234t institutional, 49f, 208t, 209t, 236t investment company assets, 14 investor goals, 28 in IRAs, 156 liquidity requirements, 258n11 INDEX

expense ratios, 101f number of funds, 177t number of share classes, 179t total net assets, 175t municipal bonds, 14f, 15, 199t, 200t, 252 MuniFund Term Preferred (MTP) shares, 277 mutual fund characteristics compliance programs, 245, 247, 257, 258, 260 custody rules, 263 definition and overview, 242 disclosure and transparency, 255–56 distribution types, 251, 253f, 254f diversification standards, 264–65 ETFs compared with, 67–68 history, 266–68 leverage limits, 261–62

291

mutual fund characteristics (continued)

mutual fund industry data (continued)

liquidity requirements, 257–58

net new cash flow, 10, 26, 30, 31f, 189–93t

net asset value, 62, 64, 242, 257–58

new sales, 174t

organizational structure, 243–48, 244f, 245f

number of funds, 22, 22f, 173t, 177t, 178t

oversight and accountability, 258–61


pricing, 68, 257–58

redemptions, 174t

prohibited transactions, 261–62, 264

research publications, xi

redeemable securities, 242, 257–58

total net assets, 9f, 26, 173t, 175t, 176t, 234t

tax features, 249–54, 250f, 253f, 254f

total net assets by tax status, 250, 250f

turnover rate, 37, 37f valuation, 257–58 mutual fund companies, 16–19, 16f, 17f, 19f. See also investment companies investor views of, 125, 125f as purchase sources, 122–23, 122f, 123f mutual fund expenses and fees. See also specific classification, such as equity funds

total sales, 174t mutual funds, 277. See also investment companies; long-term mutual funds; money market funds; mutual fund characteristics; mutual fund industry data; regulation of investment companies asset location, 120–21 commercial paper holdings by, 14, 14f creation of, 246

12b-1 fees, 92, 98, 102, 103, 105

demand for, 26, 28–30, 29f, 30f, 31f

401(k) plans, 104, 106f, 108–11, 109f, 111f

entering and leaving business, 16–19, 19f

actively managed funds, 96, 96f

equity investments percentage, 162

all-in fees, 110

ETF investments by, 13

asset-based, 105–6, 108

history, 240–41

back-end load, 92, 103, 106, 107f DC plans, 104, 108

household investments in, 11–12, 11f, 12f, 13f, 28–29, 30f, 88f, 89f, 95, 114–19, 114f, 115f, 124, 124f

economies of scale and, 95, 98, 111

IRA assets, 12, 120–21, 151, 151f

expense ratios, 92, 94–96, 100, 101f

market cap equity, 224t, 225t

front-end load, 92, 102, 104, 105f, 106, 107f

by market capitalization, 224t, 225t

fund size and, 94, 94f

net new cash flow, 30

index funds, 97–99, 97f, 99f

openings, mergers, and liquidations, 19, 19f

institutional no-load shares, 94, 107f

prime money market fund holdings, 14

investment objectives and, 100, 101f

regulation of, 255–65

level-load, 92, 103, 106f, 107f

sponsors, 16–19, 16f, 17f, 19f, 245f, 246

load fees, 104–8

trading, 68

management fees, 246 no-load shares, 94, 103, 106–8, 106f, 107f

variable annuities in, 11f, 12, 12f, 30f, 75, 75f, 88, 88f mutual fund shareholders. See also demographics

ongoing expenses, 92

asset location, 120–21, 122f, 123f

share class and, 104–8, 105f, 107f

characteristics, 112, 115f

shareholder views about, 95–96, 95f, 96f, 99

confidence of, 128, 128f, 241

structures of, 102–3, 105f, 107f

investment goals of, 28, 113, 115f, 119, 133, 134f, 165

target date funds, 96, 96f, 101f

investor sentiment, 125, 125f

trends, 90–99, 93f, 94f, 95f, 96f, 99f

lower expense desires of, 95–96, 95f, 96f, 99

mutual fund industry data. See also bond funds; equity funds; hybrid funds; long-term mutual funds; money market funds; mutual fund trends assets, U.S., 6, 7f, 26, 28, 29f, 30f asset share at largest complexes, 17–18, 17f

purchase sources, 68, 120, 121f, 122–23, 122f, 123f risk tolerance of, 35, 40, 40f, 77, 77f, 126, 126f, 127f taxable transactions by, 252 voting rights, 245f, 246 mutual fund trends

assets worldwide, 10f, 237t, 238t, 239t

alternative strategies funds, 43–44, 44f

capital gains paid and reinvested, 10, 202t

assets, U.S., 26–28, 29f, 30, 30f

dividends paid and reinvested, 10, 201t

assets worldwide, 34, 34f, 36

equity funds, 162

bond funds, 28, 29f, 38–41, 39f, 40f, 41f


equity funds, 26, 28, 29f, 34–36, 34f, 35f


hybrid funds, 26, 28, 29f, 42, 42f

investment objective classifications, 170

index funds, 45–47, 45f, 46f, 47f, 97–99, 97f, 99f

IRA assets, 151, 151f

investor demand and, 26, 28–30, 29f, 30f, 31f

292

INDEX

mutual fund trends (continued)

prime money market funds, 14, 48f, 52–53, 53f, 207t, 208t,

money market funds, 28, 29f, 48–54, 48f, 49f, 50f, 51f, 53f

principal. See face value

net new cash flow, 26, 30, 31f, 33

principal underwriters, 245f, 248

209t, 213t

private-sector retirement plans. See defined benefit plans;

N national municipal bond funds exchange redemptions, 197t exchange sales, 195t liquidity, 188t net new cash flow, 193t new sales, 194t

defined contribution plans profit-sharing plans, 141f prohibited transactions, 261–62, 264 prospectuses, 255–56, 278 Public Company Accounting Oversight Board (PCAOB), 260 puttable preferred stock. See Variable Rate Demand Preferred shares

number of funds, 178t number of share classes, 180t redemptions, 196t total net assets, 176t

R real estate sector funds, 228t, 229t redeem, 278

natural resources ETFs, 73, 74f

redeemable securities, 242, 257–58

natural resources mutual funds, 228t, 229t

redemption price, 278

net asset value (NAV), 62, 64, 242, 257–58, 277

registered investment advisers. See advisers

net investment income (NII), 251

registered investment companies, 278

net new cash flow, 30, 277

registration statements, 256

New York Stock Exchange closures, 258n10

regulated investment companies (RICs), 249, 264, 278

no-load share classes, 94, 103, 106–8, 106f, 107f, 277

regulation of investment companies

nonfinancial business assets, 13, 29, 50, 50f, 136

core principles, 255–65

nonprofit organization assets, 29, 235t, 236t

custody rules, 263

non–target date balanced funds, 144f, 145, 146f, 156

diversification standards, 264

non-U.S. fund advisers, 15, 15f

ETFs, 60, 255–56 legislation, 241

O oil and gas prices, 32 open-end investment companies, 242, 277. See also mutual fund entries operating expenses, 277 organizational structure of mutual funds, 243–48, 244f, 245f

P

leverage limits, 261–62 liquidity, 257–58 money market funds, 52–53, 242 mutual funds, 255–65 organizational structure, 243–48, 244f, 245f oversight and accountability, 258–61 prohibited transactions, 261–62, 264

passively managed portfolios, 97, 242. See also index mutual funds payroll deduction plans, 277

taxation and, 249–54, 250f, 253, 253f, 254, 254f transparency and disclosure, 255–56 valuation, 257–58

PCAOB (Public Company Accounting Oversight Board), 260

reinvestment privilege, 278

pension funds, 13, 49, 132, 137, 137f, 138, 138f. See also

repurchase agreements, 52–53, 53f, 212t, 213t, 279

defined benefit plans

required minimum distribution (RMD), 158, 279

Pension Protection Act (PPA), 41, 165

retail investors. See individual investors

pooled investing, 240–41, 278

retail money market funds, 49f, 51, 51f, 208t, 209t, 236t

pooled investment products, 145, 146f, 147f, 148, 148f

retirement mutual funds, 226t, 227t

portfolio, 278


portfolio leverage, 85, 85f, 86f, 87, 87f


portfolio managers, 278

net new cash flow, 226t, 227t

portfolio turnover rate, 37, 37f, 278

new sales, 227t

PPA (Pension Protection Act), 41, 165

no-load share classes, 107f, 108

precious metals sector funds, 228t, 229t


preferred stock, 199t, 200t


prepayment risk, 278

redemptions, 227t

pricing process, 257–58


INDEX

293

retirement plans. See also defined benefit plans; defined contribution plans; employer-sponsored retirement plans; individual retirement accounts as first purchase sources, 120–23, 121f, 122f, 123f

savings goals of investors, 113, 115f, 119, 133, 134f, 165–66, 166f, 167f savings incentive match plans for employees. See SIMPLE IRAs

research publications, xii

savings institutions, 122, 122f, 123f

resource pyramid and, 132–36, 133f, 135f, 136f

secondary market, 279

unfunded pension liabilities, 138, 138f

Section 529 plans, 30f, 124f, 165–66, 166f, 167f, 274

U.S. assets, 124, 124f, 137–40, 138f, 139f, 140f

sector equity ETFs, 73, 74f, 183t, 184t, 185t

retirement savings. See also 401(k) plans; defined contribution (DC) plans; employer-sponsored retirement plans; individual retirement accounts; specific classification, such as bond funds

sector funds, 98, 100, 101f, 228t, 229t, 279

asset location, 120–21 assets, 124f, 160–62, 162f fees, 104 as first purchase sources, 120–23, 121f, 122f, 123f household accounts, 12, 13f, 120–24, 121f, 122f, 123f, 124f, 134f, 136f, 137–40, 139f, 140f investment goals and, 113, 115f, 119, 133, 134f return, 279 reverse repurchase agreements, 85, 87, 87f RICs (regulated investment companies), 249, 264, 278 risk, 279 risk/return tradeoff, 279 risk tolerance, 35, 40, 40f, 77, 77f, 126, 126f, 127f, 279 RMD (required minimum distribution), 158, 279 rollover, 153–54, 153f, 155f, 279 Roth 401(k) plan account, 279 Roth IRAs, 279 asset allocation, 156, 157f catch-up contributions, 152 characteristics, 150 contributions or rollovers into, 153 distributions from, 158, 158f household accounts, 121, 124f, 139f, 152, 152f investor demographics, 154, 156, 157f near-retiree retirement accounts, 136f target date and lifestyle fund assets, 164f U.S. retirement assets and, 137f “R” share classes, 106f

Securities Act of 1933, 60, 241, 246, 256n5 Securities and Exchange Commission (SEC), 279. See also regulation of investment companies 12b-1 fees, 92, 98, 102, 103, 105 affiliated transaction prohibitions, 264 custody rules, 263n disclosure requirements of, 251, 256 ETF regulation by, 58, 59 money market fund regulation by, 52–53, 53f, 242 registration with, 246, 255n regulatory authority of, 241, 258, 260 valuation and liquidity requirements, 257 Securities Exchange Act of 1934, 241, 248 securitization, 280 security, 280 selling short, 43, 261–62 semiannual reports, 256, 280 senior securities, 261–62 separate account, 280 SEP IRAs (simplified employee pension plans), 280 characteristics, 150 household accounts, 122f, 124f, 139f, 152, 152f mutual fund assets in, 162f near-retiree retirement accounts, 136f purchase sources, 121f, 122f, 123f target date and lifestyle fund assets, 164f U.S. retirement assets and, 137f series funds, 280 series trusts, 18 share, 280 share classes, 94, 94f, 102–3, 106-8, 106f, 107f, 173t, 179t, 180t, 207t, 280

S SAI (statement of additional information), 255–56, 280

shareholders, 280. See also mutual fund shareholders

sales charge (load), 92, 104–8, 279

shareholder sentiment, 35, 125, 125f

Sarbanes-Oxley Act, 260

short positions, 43, 261–62

SAR-SEP IRAs (salary reduction simplified employee pensions), 279

short-term bond funds, 38 short-term capital gains, 251, 254f


short-term funds. See money market funds

household accounts, 122f, 124f, 139f, 152, 152f

short-term interest rates, 51

mutual fund assets in, 162f

Silent Generation, 117, 117f

near-retiree retirement accounts, 136f

SIMPLE IRAs (savings incentive match plans for employees), 280

purchase sources, 121f, 122f, 123f target date and lifestyle fund assets, 164f


U.S. retirement assets and, 137f

household accounts, 122f, 124f, 139f, 152, 152f mutual fund assets in, 162f

294

INDEX

SIMPLE IRAs (continued) near-retiree retirement accounts, 136f

T target date (lifecycle) funds, 230t, 231t, 281

purchase sources, 121f, 123f

in 401(k) plans, 144f, 145, 146f, 148–49, 148f, 164f

target date and lifestyle fund assets, 164f

by account type, 164f

U.S. retirement assets and, 137f

bond fund flows and, 41

simplified employee pension plans. See SEP IRAs

characteristics, 41, 148–49, 163

small-cap equity ETFs, 71f


small-cap equity portfolios, 98, 100

expenses and fees, 96, 96f, 101f

small-cap mutual funds, 224t, 225t

in IRAs, 156

Social Security, 132–35, 133f, 135f

retirement assets in, 41, 156, 157f, 162f, 163, 164f

S&P 500 index, 32, 35, 36, 46, 46f, 58, 126, 126f, 280

target risk (lifestyle) funds. See lifestyle (target risk) funds

S&P 500 index funds, 219t, 220t, 221t, 222t

taxable bond closed-end funds, 82f, 83f, 181t, 182t

sponsors, 16–19, 16f, 17f, 19f, 245f, 246

taxable bond funds, 101f, 175t, 177t, 179t

stable value funds, 145, 280

taxable government money market funds, 207t, 208t, 209t,

state government employee retirement plans, 137, 137f, 138, 138f

212t taxable money market funds

statement of additional information (SAI), 255–56, 280

asset composition, 212t, 213t

state municipal bond funds



institutional, 208t, 209t, 236t


net new cash flow, 51f, 209t

liquidity, 188t

number of funds, 178t, 207t



new sales, 194t

retail, 51f, 208t, 209t


total net assets, 175t, 176t, 177t, 207t, 208t, 236t


taxable prime money market funds, 207t, 208t, 209t, 213t

redemptions, 196t

tax-deferred accounts, 250, 250f, 253, 253f


tax-exempt bond funds, 252

stock, 281

tax-exempt money market funds

common, 199t, 200t, 203t, 204t, 205t, 206t

dividend distributions, 252

company, 145, 146f


directly held, 11, 12f

institutional, 208t, 209t

investment company assets, 14, 14f

net new cash flow, 48f, 209t

in IRAs, 151, 151f


margin purchases of, 261


as portfolio holdings, 199t, 200t

retail, 208t, 209t

preferred, 199t, 200t short positions, 261–62 stock bonus plans, 141f

total net assets, 175t, 176t, 177t, 207t, 208t tax-exempt mutual funds, 250, 250f, 252, 253, 253f tax features of mutual funds

stock funds. See equity funds

assets by tax status, 250, 250f

stock market performance

cost basis, 252

equity fund flows and, 34–36, 34f

distribution types, 251, 253, 253f, 254, 254f

ETF demand and, 70

diversification standards, 264

global indexes, 32

exchanges of shares, 252

international, 8, 34, 34f, 36

net investment income tax, 251

investment company assets and, 8

RIC qualification, 249

market risk and volatility, 35

taxable transactions, 252

mutual fund trends and, 26, 32, 34–36, 34f

tax-exempt funds, 252

shareholder risk tolerance and, 35, 126, 126f, 127f

Taxpayer Relief Act of 1997, 152

U.S. stock indexes, 8, 32, 35, 36

Taxpayer Relief Act of 2012, 165

structural leverage, 85–86, 85f, 86f summary portfolio schedule, 256n6 summary prospectus, 281

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, 165 T-bills (Treasury bills), 51, 212t, 213t, 281 technology/telecom sector funds, 228t, 229t tender offer, 81, 281

INDEX

295

tender option bonds, 85, 87, 87f

U.S. Treasury securities, 14f, 15, 52–53, 53f, 212t, 213t, 282

thrift deposits, 151f

utilities sector funds, 228t, 229t

thrifts, 15, 15f Thrift Savings Plan (TSP), 137f, 141 total net assets, 281. See also mutual fund industry data; specific classification, such as closed-end funds total return, 281

V valuation process of funds, 257–58 value funds, 101f, 224t, 225t variable annuities, 282 closed-end fund owner holdings of, 88, 88f

total return equity funds

in ETF-owning households, 75, 75f


holdings by tax status, 250


household investments in, 11f, 12, 12f, 30f, 75, 75f, 88, 88f

liquidity, 188t net new cash flow, 193t

as IRA assets, 151f

new sales, 194t

no-load share classes, 107f


retirement assets in, 124f, 137f

number of share classes, 180t redemptions, 196t total net assets, 176t traditional IRAs, 281. See also individual retirement accounts

total net assets, 107f variable annuity mutual funds, 232t, 233t Variable Rate Demand Preferred (VRDP) shares, 282 VIX (Chicago Board Options Exchange Volatility Index), 35

transfer agents, 245f, 248, 281 transparency, 255–56

W

Treasury bills (T-bills), 51, 212t, 213t, 281

Wilshire 5000 index, 36

Treasury bonds, 32, 38

withdrawal plans, 282

Treasury inflation-protected mutual funds, 223t

world bond funds

Treasury securities, 14f, 15, 52–53, 53f, 212t, 213t


trends. See mutual fund trends


trustees, 244, 281

liquidity, 188t

turnover rate, 37, 37f

net new cash flow, 193t new sales, 194t

U


underwriters, 245f, 248, 282


unit investment trusts (UITs), 282

redemptions, 196t

characteristics, 20–21, 243 custody rules, 263n diversification standards, 264

total net assets, 176t world equity funds alternative strategies, 214t

household investments in, 11f


new deposits, 10, 186t


number of, 21f, 22, 22f, 186t

expense ratios, 100, 101f

regulation of, 255n, 263n

liquidity, 188t

total net assets, 9f, 21f, 186t

net new cash flow, 34, 34f, 36, 193t

U.S. corporate equity, 14f

new sales, 194t

U.S. dollar performance, 8, 32, 36


U.S. economic climate, 18–19, 26, 28, 31–32, 43, 126f, 140

number of share classes, 179t, 180t

U.S. government agency issues, 14f, 15, 52–53, 53f, 212t,

redemptions, 196t

213t

retirement assets in, 162, 162f

U.S. government bonds, 199t, 200t U.S. government bond funds. See government bond funds U.S. government employee retirement assets, 135, 136f, 137–38, 137f, 138f, 141 U.S. Labor Department, 150 U.S. mutual fund assets, 6, 7f, 26, 28, 29f, 30f. See also mutual fund industry data U.S. retirement system, 124, 132–40, 133f, 135f, 136f, 137f,

total net assets, 8, 27, 175t, 176t world equity index funds, 45, 45f, 46f, 219t, 220t, 221t, 222t worldwide mutual fund assets, 10f, 237t, 238t, 239t

Y yield, 282 yield curve, 282

139f, 140f

296

INDEX