III - Investments

SAVINGS, INVESTMENT & DEBT OWNERSHIP

OWNERSHIP OF EQUITIES AND CORPORATE AND MUNICIPAL BONDS

Equity and debt markets offer individuals and institutional investors the opportunity to participate in the development and expansion of publicly traded companies and municipalities. Equity investments provide an ownership interest in a company through stocks. Debt securities, generally bonds, represent money a corporation or municipality has borrowed from investors and must repay at a specific time and usually at a specific interest rate. Municipal bonds may be tax-exempt.

HOLDINGS OF U.S. CORPORATE EQUITIES, 2003-2007 (1)

($ billions, market value, end of year)

	2003	2004	2005	2006	2007	Percent change 2003-2007
Total	$15,618.5	$17,389.3	$18,512.0	$20,909.3	$21,477.2	37.5%
Household sector	5,767.5	5,938.1	5,874.9	6,178.9	5,454.1	-5.4
State and local governments	84.7	90.0	95.5	102.4	107.4	26.8
Rest of the world (2)	1,674.6	1,904.6	2,039.1	2,454.7	2,797.1	67.0
Commercial banking	15.0	20.3	24.1	35.3	41.5	176.7
Savings institutions	30.4	28.2	26.2	24.9	25.3	-16.8
Property/casualty insurance companies	178.4	196.6	199.5	227.0	235.3	31.9
Life insurance companies	919.3	1,053.9	1,161.8	1,364.8	1,491.5	62.2
Private pension funds	2,096.6	2,333.5	2,537.0	2,755.3	2,766.3	31.9
State and local govt retirement funds	1,421.0	1,600.9	1,715.8	1,927.5	1,987.1	39.8
Federal govt retirement funds	79.9	99.2	112.6	138.1	149.2	86.7
Mutual funds	3,051.3	3,693.6	4,175.7	4,989.6	5,476.9	79.5
Closed-end funds	53.0	82.3	105.6	122.5	146.9	177.2
Exchange-traded funds	146.3	219.0	285.8	402.0	573.7	292.1
Brokers and dealers	100.5	129.1	158.3	186.4	224.8	123.7
(1) Excludes open-end mutual fund shares. (2) Holdings of U.S. issues by foreign residents. Source: Board of Governors of the Federal Reserve System, June 5, 2008.

HOLDINGS OF U.S. CORPORATE EQUITIES, 2007 (1)

(1) Market value, end of year; excludes open-end mutual fund shares.
(2) Holdings of U.S. issues by foreign residents.

Source: Board of Governors of the Federal Reserve System, June, 2008.

HOLDINGS OF U.S. CORPORATE AND FOREIGN BONDS, 2003-2007

($ billions, end of year)

	2003	2004	2005	2006	2007	Percent change, 2003-2007
Total	$6,986.6	$7,860.0	$8,585.2	$9,747.0	$10,711.4	53.3%
Household sector	1,138.3	1,282.7	1,311.9	1,542.0	1,627.3	43.0
State and local governments	111.3	118.2	125.6	133.6	140.4	26.1
Rest of the world (1)	1,330.6	1,559.1	1,764.0	2,201.4	2,497.7	87.7
Commercial banking	481.2	563.6	687.0	780.3	978.7	103.4
Savings institutions	71.9	59.2	80.2	89.2	138.3	92.4
Credit unions	24.3	25.0	23.5	30.6	34.6	42.4
Property/casualty insurance companies	218.9	245.3	262.8	277.0	285.6	30.5
Life insurance companies	1,620.2	1,768.0	1,840.7	1,841.9	1,889.7	16.6
Private pension funds	274.8	267.1	288.1	297.0	313.6	14.1
State and local govt retirement funds	207.4	213.5	227.9	265.6	257.5	24.2
Federal govt retirement funds	3.2	3.0	2.9	2.9	3.0	-6.3
Money market mutual funds	258.7	261.0	263.2	368.3	377.1	45.8
Mutual funds	548.3	622.8	699.2	813.3	972.3	77.3
Closed-end funds	58.8	67.6	68.7	75.1	74.6	26.9
Exchange-traded funds	2.4	3.3	5.3	7.6	13.8	475.0
Government-sponsored enterprises	277.4	414.8	465.7	482.7	464.4	67.4
REITs	19.2	36.8	63.6	80.9	37.3	94.3
Brokers and dealers	228.3	252.2	337.7	397.2	435.6	90.8
Funding corporations	111.3	96.8	67.5	60.4	170.0	52.7
(1) Holdings of U.S. issues by foreign residents. Source: Board of Governors of the Federal Reserve System, June 5, 2008.

HOLDINGS OF U.S. MUNICIPAL SECURITIES AND LOANS, 2003-2007

($ billions, end of year)

	2003	2004	2005	2006	2007	Percent change, 2003-2007
Total	$1,900.5	$2,031.0	$2,225.9	$2,403.2	$2,618.2	37.8%
Household sector	704.1	742.7	821.4	877.4	912.6	29.6
Nonfinancial corporate business	35.4	31.8	32.1	29	32.6	-7.9
Nonfarm noncorporate business	2.7	4.3	4.4	5.0	5.7	111.1
State and local governments	4.4	4.7	4.9	5.3	5.6	27.3
Rest of the world	19.5	26.0	29.0	31.0	33.0	69.2
Commercial banking	132.7	140.8	157.7	180.2	192.4	45.0
Savings institutions	6.3	7.1	8.6	10.7	10.6	68.3
Property/casualty insurance companies	224.2	267.8	313.2	335.2	368.7	64.5
Life insurance companies	26.1	30.1	32.5	36.6	35.3	35.2
State and local govt retirement funds	4.4	1.8	1.7	1.7	0.9	-79.5
Money market mutual funds	292.1	313.8	336.8	370.3	473.5	62.1
Mutual funds	290.2	294.3	311.7	344.4	372.2	28.3
Closed-end funds	89.3	89.1	89.4	89.4	91.6	2.6
Government-sponsored enterprises	44.4	44.6	39.7	36.1	33.3	-25.0
Brokers and dealers	24.9	32	42.9	50.9	50.1	101.2
Source: Board of Governors of the Federal Reserve System, June 5, 2008.

MUTUAL FUND INVESTMENTS

The household sector holds the largest share of the $7.8 trillion mutual fund industry, according to the Federal Reserve. Mutual funds represent a substantial part of individuals’ financial holdings, according to the Investment Company Institute. In 2006, 47 percent of median household financial assets were in mutual funds. (See page_____for further information on the mutual fund sector.)

MUTUAL FUNDS BY HOLDER, 2003 AND 2007 (1)

($ billions, market value, end of year)

	2003		2007
	Amount	Percent of total	Amount	Percent of total
Household sector	$2,904.3	62.4%	$5,135.6	65.6%
Private pension funds	1,126.9	24.2	1,611.1	20.6
State and local govt retirement funds	207.9	4.5	296.6	3.8
Nonfinancial corporate business	125.9	2.7	224.8	2.9
Life insurance companies	91.7	2.0	161.4	2.1
State and local governments	25.9	0.6	32.8	0.4
Commercial banking	17.1	0.4	29.6	0.4
Property/casualty insurance companies	4.3	0.1	7.7	0.1
Credit unions	4.1	0.1	2.1	(2)
Rest of the world	146.1	3.1	327.3	4.2
Total	$4,654.2	100.0%	$7,829.0	100.0%
(1) Open-end investment companies. Excludes money market mutual funds, exchange-traded funds and variable annuity funding vehicles. (2) Less than 0.1 percent. Source: Board of Governors of the Federal Reserve System, June 5, 2008.

OWNERSHIP OF FEDERAL GOVERNMENT DEBT

The buying and selling of government securities is a crucial component of each of the financial sectors. Debt is issued and sold based on the changing needs of the federal government. The average daily trading volume in U.S. Treasury securities was $551 billion in the first quarter of 2007, according to the Securities Industry and Financial Markets Association.

ESTIMATED OWNERSHIP OF U.S. PUBLIC DEBT SECURITIES, 1998-2007

($ billions, end of year)

		Percent of total
Year	Total	Individuals	Mutual funds/ trusts (1)	Banking institutions (2)	Insurance companies	Pension funds (3)	U.S. monetary authorities	State and local govern-ments	Foreign and inter-national	Other (4)
1998	$3,723.7	19.9%	6.9%	6.8%	3.8%	9.3%	12.1%	7.5%	31.3%	2.3%
1999	3,652.7	22.3	6.3	5.6	3.4	9.6	13.1	8.3	29.0	2.4
2000	3,357.8	17.4	6.7	5.9	3.3	9.7	15.2	9.2	30.4	2.1
2001	3,352.7	13.3	7.8	5.7	3.2	8.9	16.5	9.8	32.7	2.2
2002	3,609.8	8.0	7.8	6.1	3.9	8.6	17.4	9.8	35.6	2.8
2003	4,008.2	11.0	7.1	4.8	3.4	7.9	16.6	9.1	37.8	2.3
2004	4,370.7	12.2	5.9	1.8	3.4	7.4	16.4	8.9	41.5	2.4
2005	4,678.0	11.3	5.6	1.1	3.4	7.2	15.9	9.9	42.4	3.2
2006	4,861.7	9.7	5.4	1.0	3.3	7.1	16.0	10.2	43.5	3.7
2007	5,099.2	6.2	7.5	1.6	2.7	7.3	14.5	10.3	45.7	4.2
(1) Includes mutual funds, money market funds, closed-end funds and exchange-traded funds. (2) Includes commercial banks, savings institutions, credit unions and brokers and dealers. (3) Includes state and local government, federal government and private pension funds. (4) Includes nonfinancial corporate institutions, nonfarm noncorporate institutions, government-sponsored enterprises and ABS issuers. Source: Board of Governors of the Federal Reserve System, June 5, 2008.